BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 203
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          SENATE THIRD READING
          SB 203 (Correa)
          As Amended May 31, 2011
          Majority vote 

           SENATE VOTE  :37-3  
           
           PUBLIC EMPLOYEES    5-0                                         
           
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          |Ayes:|Furutani, Allen, Harkey,  |     |                          |
          |     |Ma, Wieckowski            |     |                          |
          |     |                          |     |                          |
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           SUMMARY  :  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 ('37 Act).  Specifically,  this 
          bill  :   

          1)Renames the alternate member for the 7th member, as specified, 
            as the "alternate 7th member."

          2)Specifies that if there is a vacancy with respect to the 8th 
            member, the alternate retired member will fill the vacancy for 
            the remainder of the 8th member's term in office instead of 
            just until a successor qualifies.

          3)Revises and recasts provisions governing the process for 
            filling vacancies on both the boards of retirement and boards 
            of investment to provide the following:

             a)   For vacancies in the 2nd, 3rd, 7th, 8th (if there is no 
               alternate retired member), or alternate 7th member 
               positions, the board is required to cause an election to be 
               held at the earliest possible date to fill the vacancy;

             b)   Vacancies in the 2nd, 3rd, or 8th member positions will 
               be filled for the remainder of the current term unless only 
               six months or less remain of that term, in which case the 
               successful candidate will serve for the remainder of the 
               term and for the succeeding term;

             c)   For vacancies in the 7th member position, candidates 








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               will be a safety member from a group which is not 
               represented by an incumbent alternate 7th member, as 
               specified.  The successful candidate will serve for the 
               duration of the current term;

             d)   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;

             e)   For vacancies in the 2nd, 3rd, 4th, or 8th member 
               positions on a board of investments, the board is required 
               to cause an election to be held at the earliest possible 
               date to fill the vacancy.  Vacancies in the 2nd, 3rd, 4th, 
               and 8th member positions will be filled for the remainder 
               of the current term unless only six months or less remain 
               of that term, in which case the successful candidate will 
               serve for the remainder of the term and for the succeeding 
               term; and,

             f)   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 2nd, 3rd, 7th, 8th or alternate 7th member of a board 
               of retirement, or for the 2nd, 3rd, 4th, or 8th 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.

          4)Deletes the authority of a board of retirement to prohibit, by 
            resolution or regulation, an alternate member's ability to 
            participate in the deliberations of the board or its 
            committees.

           EXISTING LAW  :

          1)Sets forth the composition of the nine-member board of 
            retirement for any '37 Act county retirement system as 
            follows:

             a)   The county treasurer;









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             b)   Two general (non-safety) members elected by the general 
               members of the system (2nd and 3rd members);

             c)   Four members who are qualified electors not in any way 
               connected with county government, except one may be a 
               county supervisor, appointed by the board of supervisors 
               (4th, 5th, 6th, and 9th members);

             d)   One safety member elected by the safety members of the 
               system (7th member); and,

             e)   One retired member elected by the retired members of the 
               system (8th member).

          2)Provides for an alternate member who is the candidate for the 
            7th member from the group of safety members that is not 
            represented by a board member who received the highest number 
            of votes for all candidates in that group, as specified.  
            Unless prohibited by the board, the alternate member may 
            participate in the deliberations at periodic meetings of the 
            county board of retirement and, unless prohibited by a 
            resolution or regulation, has the same rights, privileges, 
            responsibilities, and access to closed sessions as other 
            specified board members.

          3)Prescribes the manner of appointing an alternate retired 
            member to the office of the 8th member of the board of 
            retirement.  If there is a vacancy with respect to the 8th 
            member, the alternate retired member is required to fill the 
            vacancy until a successor qualifies.  The alternate retired 
            member is authorized to hold positions on committees of the 
            board independent of the 8th member and to participate in the 
            deliberations of the board or its committees regardless of 
            whether the 8th member is present, unless prohibited by the 
            board.

          4)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 or her 
            predecessor, except that if an election to fill a vacancy for 
            the 2nd, 3rd, 7th or 8th 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.








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           FISCAL EFFECT  :  None

           COMMENTS  :  According to the author, "There is nothing in the 
          statute that requires the board of supervisors or board of 
          retirement, as applicable, to move expeditiously to fill 
          vacancies on the board of retirement.  This can affect the 
          ability to obtain a quorum for meetings.  It can also affect 
          proper representation of the various stakeholders of the 
          retirement system."

          Supporters add, "?the rationale for eliminating the potential 
          limitation on the activities of the alternate members is that 
          the alternate members have the same fiduciary responsibility 
          (and liability) as the regular members of the board and, 
          therefore, must be involved in, and have access to, every aspect 
          of the board's business so that, when called upon to vote, he or 
          she is in possession of all of the same information as the 
          regular board members."

          This bill is similar to SB 414 (Correa) from last year which was 
          vetoed by Governor Schwarzenegger.  In his veto message, the 
          Governor states, in part, "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."

          This bill is also similar to AB 2526 (Berryhill) of 2008 which 
          failed passage in the Senate Public Employment and Retirement 
          Committee.


           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916) 
          319-3957 


                                                                FN: 0001222












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