BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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                                 THIRD READING


          Bill No:  SB 203
          Author:   Correa (D)
          Amended:  3/31/11
          Vote:     21

           
           SEN. PUBLIC EMPLOYMENT & RETIREMENT COMM.  :  5-0, 4/11/11
          AYES:  Negrete McLeod, Walters, Gaines, Padilla, Vargas


           SUBJECT  :    County retirement boards:  alternate 
          members/elections

           SOURCE  :     California Retired County Employees Association


           DIGEST  :    This bill makes various changes to the process 
          for filling vacancies on boards of retirement and boards of 
          investment in counties operating retirement systems under 
          the County Employees' Retirement Law of 1937.

           ANALYSIS  :    Existing County Employees' Retirement Law of 
          1937 ('37 Act) sets forth the composition of the 
          nine-member Board of Retirement for any '37 Act county 
          retirement association, as follows:

          1.The county treasurer.

          2.Two general (non-safety) members elected by the general 
            members of the system (second and third members).

          3.Four members who are qualified electors not in any way 
            connected with county government, except one may be a 
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            county supervisor, appointed by the board of supervisors 
            (fourth, fifth, sixth and ninth members).

          4.One safety member elected by the safety members of the 
            system (seventh member).

          5.One retired member elected by the retired members of the 
            system (eighth member).

          6.An alternate seventh member who is an eligible safety 
            member of the system.

          7.An alternate retired member of the system who is the 
            alternate for the eighth member (only in San Bernardino 
            County and other counties that adopt this option).

          Existing '37 Act law creates an independent Board of 
          Investment in Los Angeles County and sets forth the 
          nine-member composition of that board in a manner 
          substantially similar to the composition of the boards of 
          retirement.

          This bill makes technical changes to these provisions, 
          including clarifying references to the alternate seventh 
          member.

          Existing law provides that the alternate members, unless 
          prohibited by a resolution or regulation of the board, have 
          the same rights, privileges, responsibilities, and access 
          to closed sessions as other specified board members, and 
          may participate in deliberations of the boards whether or 
          not other elected board members, including the seventh and 
          eighth members, are present.

          This bill eliminates the ability of a board, by resolution 
          or board regulation, to prohibit an alternate member from 
          participation in deliberations and having the same rights, 
          privileges, responsibilities, and access to closed sessions 
          as other specified boards.

          Existing law provides that, in counties without an 
          alternate retired member, the alternate seventh member may 
          vote in place of the second, third, seventh, or eighth 
          member if one of those members is absent, and allows the 

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          seventh member to fill a vacancy in one of those positions 
          until a successor qualifies.

          In counties with an alternate retired member, the alternate 
          retired member may only vote if the regular eighth member 
          is absent and may only fill a vacancy left by the regular 
          eighth member.

          This bill clarifies that if the county has an alternate 
          seventh member and an alternate retired member, the 
          alternate seventh member shall act on behalf of an absent 
          second, third, or seventh member, and may not act on behalf 
          of the eighth or alternate retired member unless both are 
          absent from the board meeting.

          Existing law prescribes the manner of appointing an 
          alternate retired member for the eighth member of the board 
          of retirement.  If there is a vacancy with respect to the 
          eighth member the alternate retired member is required to 
          fill the vacancy until a successor qualifies.

          This bill specifies that if there is a vacancy with respect 
          to the eighth member, the alternate retired member will 
          fill the vacancy for the remainder of the eighth member's 
          term in office.

          Existing law provides that if a vacancy on the board occurs 
          for any cause or on the expiration of the term of office of 
          any member, a successor shall be chosen in the same manner 
          as was his predecessor, except that if an election to fill 
          a vacancy for the second, third, seventh or eighth member 
          has been called and only one member has been duly 
          nominated, the board of supervisors shall order that no 
          election be held and shall direct the clerk to cast a 
          unanimous ballot in favor of such nominated member.

          This bill revises and recasts provisions governing the 
          process for filling vacancies on both the boards of 
          retirement and boards of investment to provide the 
          following:

          1.For vacancies in the fifth, sixth, seventh, or ninth 
            member positions, the board of supervisors is required to 
            appoint a replacement for the duration of the current 

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            term forthwith.  For vacancies in the seventh member 
            position, candidates will be a safety member from a group 
            which is not represented by an incumbent alternate 
            seventh member.  The successful candidate will serve for 
            the duration of the current term.

          2.For vacancies in the second, third, fourth, or eighth (if 
            there is no alternate retired member), the board is 
            required to cause an election to be held at the earliest 
            possible date to fill the vacancy.  These vacancies will 
            be filled for the remainder of the current term unless 
            only six months or less remain of that term, in which 
            case a single election may be held to fill the remainder 
            of the current term and the succeeding term.

          3.For vacancies with respect to the alternate retired 
            member position, the board of retirement is required to 
            appoint a replacement alternate member in the same manner 
            as prescribed for the initial appointment of an alternate 
            retired member.

          4.If an election has been called due to the expiration of 
            the term of office of any member or to fill a vacancy for 
            the second, third, seventh, eighth, or alternate seventh 
            member of a board of retirement, or for the second, 
            third, seventh, or eighth member positions on a board of 
            investment, and only one candidate has been duly 
            nominated, the board of supervisors shall order that no 
            election be held and shall direct the clerk to cast a 
            unanimous ballot in favor of such nominated candidate.

           Prior Legislation

           AB 2526 (Berryhill), 2007-08 Session, made various changes 
          to the process for filling vacancies on boards of 
          retirement and boards of investment in counties operating 
          retirement systems under the '37 Act.  (Failed passage in 
          Senate Public Employment and Retirement Committee)

          SB 414 (Correa), 2009-10 Session, made various changes to 
          the process for filling vacancies on boards of retirement 
          and boards of investment in counties operating retirement 
          systems under the '37 Act.  Passed the Senate with a vote 
          of 23-11 on August 19, 2010.  The bill was subsequently 

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          vetoed by the Governor Schwarzenegger.  In his veto 
          message, the Governor stated"

            "Among other things, this bill prohibits a county 
            retirement board from limiting the role of an alternate 
            member's participation in board meetings and 
            committees.  It also mandates that an election to fill 
            board vacancies be held at the earliest possible date.  
            Both of these provisions are unnecessarily limiting of 
            the flexibility of these local entities."

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   
          Local:  No

           SUPPORT  :   (Verified  4/13/11)

          California Retired County Employees Association (source)


           ARGUMENTS IN SUPPORT  :    According to the sponsor, the 
          California Retired County Employees Association, "Nothing 
          in statute requires the board of supervisors or county 
          board of retirement, as applicable, to expeditiously fill 
          vacancies on the board of retirement.  This can affect the 
          board's ability to obtain a quorum for official meetings.  
          It can also deny the various stakeholders of the retirement 
          system proper representation on the board."

          The sponsor also notes that alternate board members have 
          the same fiduciary responsibility and liability as regular 
          board members.  Therefore, it is necessary that no 
          potential limitation to their activities exist.

          In order to carry out their responsibilities they must be 
          involved in, and have access to, every aspect of the 
          board's business so that when called upon to vote, they 
          possess all of the same information as regular board 
          members.

          Finally, the bill reduces the costs of elections by 
          allowing one election to fill both the remaining term of a 
          vacant position and the succeeding term when the remaining 
          term is of six months or less.


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          CPM:cm  4/13/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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