BILL ANALYSIS Ó SB 203 Page 1 SENATE THIRD READING SB 203 (Correa) As Amended May 31, 2011 Majority vote SENATE VOTE :37-3 PUBLIC EMPLOYEES 5-0 ----------------------------------------------------------------- |Ayes:|Furutani, Allen, Harkey, | | | | |Ma, Wieckowski | | | | | | | | ----------------------------------------------------------------- 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 SB 203 Page 2 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; SB 203 Page 3 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. SB 203 Page 4 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 SB 203 Page 5