BILL NUMBER: SB 923 CHAPTERED
BILL TEXT
CHAPTER 737
FILED WITH SECRETARY OF STATE SEPTEMBER 28, 2012
APPROVED BY GOVERNOR SEPTEMBER 28, 2012
PASSED THE SENATE AUGUST 31, 2012
PASSED THE ASSEMBLY AUGUST 31, 2012
AMENDED IN ASSEMBLY AUGUST 31, 2012
AMENDED IN ASSEMBLY SEPTEMBER 8, 2011
AMENDED IN ASSEMBLY SEPTEMBER 7, 2011
AMENDED IN ASSEMBLY AUGUST 30, 2011
AMENDED IN SENATE MAY 31, 2011
AMENDED IN SENATE MAY 3, 2011
AMENDED IN SENATE APRIL 11, 2011
AMENDED IN SENATE MARCH 24, 2011
INTRODUCED BY Senator De León
FEBRUARY 18, 2011
An act to add Sections 100002 and 100043.5 to the Government Code,
relating to retirement savings plans.
LEGISLATIVE COUNSEL'S DIGEST
SB 923, De León. Retirement savings plans.
SB 1234 of the 2011-12 Regular Session would establish the
California Secure Choice Retirement Savings Trust, to be administered
by the California Secure Choice Retirement Savings Investment Board,
containing 7 members.
This bill would, contingent upon the enactment of SB 1234, instead
expand the board membership to 9 members, as specified. The bill
would further prohibit the board from opening the trust program for
enrollment without a subsequent authorizing statute.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 100002 is added to the Government Code, to
read:
100002. (a) (1) There is hereby created within state government
the California Secure Choice Retirement Savings Investment Board,
which shall consist of nine members, with the Treasurer serving as
chair, as follows:
(A) The Treasurer.
(B) The Director of Finance, or his or her designee.
(C) The Controller.
(D) An individual with retirement savings and investment expertise
appointed by the Senate Committee on Rules.
(E) An employee representative appointed by the Speaker of the
Assembly.
(F) A small business representative appointed by the Governor.
(G) A public member appointed by the Governor.
(H) Two additional members appointed by the Governor.
(2) Members of the board appointed by the Governor, the Senate
Committee on Rules, and the Speaker of the Assembly shall serve at
the pleasure of the appointing authority.
(b) All members of the board shall serve without compensation.
Members of the board shall be reimbursed for necessary travel
expenses incurred in connection with their board duties.
(c) A board member, program administrator, and other staff of the
board shall not do any of the following:
(1) Directly or indirectly have any interest in the making of any
investment made for the program, or in the gains or profits accruing
from any investment made for the program.
(2) Borrow any funds or deposits of the trust, or use those funds
or deposits in any manner, for himself or herself or as an agent or
partner of others.
(3) Become an endorser, surety, or obligor on investments by the
board.
(d) The board and the program administrator and staff shall
discharge their duties with respect to the trust solely in the
interest of the program participants as follows:
(1) For the exclusive purposes of providing benefits to program
participants and defraying reasonable expenses of administering the
program.
(2) By investing with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with those matters would use in the
conduct of an enterprise of a like character and with like aims.
(e) (1) The board shall annually prepare and adopt a written
statement of investment policy that includes a risk management and
oversight program. The board shall consider the statement of
investment policy and any changes in the investment policy at a
public hearing.
(2) The investment policy shall adhere to the following guiding
principles:
(A) The primary objective of the investment policy is to preserve
the safety of principal and provide a stable and low-risk rate of
return.
(B) The investment policy shall mitigate risk by maintaining a
balanced investment portfolio that provides assurance that no single
investment or class of investments will have a disproportionate
impact on the total portfolio.
(3) The following list represents the entire range of asset
categories that the board may consider and the only types of
investments which shall be permitted for the investment of funds:
(A) Domestic equities and international equities.
(B) Medium-term and long-term debt obligations of domestic
corporations.
(C) United States government and government sponsored entity debt
obligations.
(D) Real estate commingled funds that invest in publicly traded
real estate securities.
(E) Money market instruments, cash, and money market mutual funds
that are registered in the United States and denominated in United
States dollars.
(F) Investments in mutual funds, but limited to existing, rated
mutual funds, that are registered in the United States and
denominated in United States dollars.
(G) Insurance agreements.
(H) FDIC-insured bank products.
(4) Equities shall not exceed 50 percent of the overall asset
allocation of the fund.
(5) The investment policy shall also adhere to the following
restrictions:
(A) Borrowing for investment purposes, or leverage, is prohibited.
(B) Instruments known as variable rate demand notes, floaters,
inverse floaters, leveraged floaters, and equity-linked securities
are not permitted. Investment in any instrument, which is commonly
considered a "derivative" instrument, including, but not limited to,
options, futures, swaps, caps, floors, and collars, is prohibited.
(C) Contracting to sell securities not yet acquired in order to
purchase other securities for purposes of speculating on developments
or trends in the market is prohibited.
(6) The risk management and oversight program shall be designed to
ensure that an effective risk management system is in place to
monitor the risk levels of the California Secure Choice Retirement
Savings Program investment portfolio and ensure that the risks taken
are prudent and properly managed. The program shall be managed to
provide an integrated process for overall risk management on both a
consolidated and disaggregated basis, and to monitor investment
returns as well as risk to determine if the risks taken are
adequately compensated compared to applicable performance benchmarks
and standards.
(f) The board shall approve an investment management entity or
entities, the costs of which shall be paid out of funds held in the
trust and shall not be attributed to the administrative costs of the
board in operating the trust. Not later than 30 days after the close
of each month, the board shall place on file for public inspection
during business hours a report with respect to investments made
pursuant to this section and a report of deposits in financial
institutions. The investment manager shall report the following
information to the board within 20 days following the end of the each
month:
(1) The type of investment, name of the issuer, date of maturity,
and the par and dollar amount invested in each security, investment,
and money within the program fund.
(2) The weighted average maturity of the investments within the
program fund.
(3) Any amounts in the program fund that are under the management
of private money managers.
(4) Any amounts in the program fund that are under the management
of the Board of Administration of the Public Employees' Retirement
System.
(5) The market value as of the date of the report and the source
of this valuation for each security within the program fund.
(6) A description of compliance with the statement of investment
policy.
SEC. 2. Section 100043.5 is added to the Government Code, to read:
100043.5. The board shall not open the program for enrollment
until a subsequent authorizing statute is enacted that expresses the
approval of the Legislature for the program to be fully implemented.
SEC. 3. This act shall become operative if this bill and Senate
Bill 1234 of the 2011-12 Regular Session of the Legislature are both
enacted and become law and this bill is enacted last, in which case
Section 100002 of the Government Code, as added by this bill, shall
become operative and Section 100002 of the Government Code as added
by Senate Bill 1234 shall not become operative.