BILL ANALYSIS �
AB 125
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Date of Hearing: April 17, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 125 (Wieckowski) - As Introduced: January 14, 2013
Policy Committee: PERSSVote:7-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill adds the chief operating officer (COO) and chief
financial officer (CFO) to the list of positions for which the
Teachers' Retirement Board has the authority to set the
compensation and terms and conditions of employment, and
prohibits the salary for the COO and CFO from exceeding 110% of
the maximum salary payable to a CalSTRS investment director.
FISCAL EFFECT
Increased special fund costs to CalSTRS of approximately
$200,000, if the salaries are adjusted using the flexibility in
this bill. The ceiling in the bill currently allows an annual
salary of $264,000. The actual costs will depend on the
compensation packages developed by the Teachers' Retirement
Board.
Any increase in CalSTRS costs could create commensurate General
Fund pressure either directly through state support or
indirectly through state payments to school districts.
COMMENTS
1)Rationale . According to the author, current law subjects the
COO and CFO to state civil service restrictions. The author
argues this limitation constrains the California State
Teachers' Retirement System's (CalSTRS) ability to recruit
highly qualified candidates that possess the specialized
competencies required for financial management in a large
public pension fund. The author notes that the type of
experience needed to manage the risks associated with a large
pension fund is likely to be found in an applicant from other
AB 125
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pension funds or private sector financial institutions, where
salaries exceed what CalSTRS can currently pay.
2)CalSTRS . The sponsor of the bill, CalSTRS, states the bill
enhances their ability to plan for the succession of
vulnerable top level executive positions, particularly those
responsible for managing the increasingly complex financial
and operation components of the largest teacher pension fund
in the nation. This bill also improves CalSTRS' ability to
attract and retain employees for key executive positions that
require specialized expertise, and allows the board to recruit
from broader sources.
CalSTRS contends the bill will result in savings because it
will improve their ability to avoid future financial and
operational risk due to the board's increased ability to
recruit and retain the most highly qualified employees.
3)Previous legislation .
a) AB 1735 (Wieckowski) of 2012 was substantially similar
to this bill. The bill was held in the Senate
Appropriations Committee.
b) 269 (Soto), Chapter 856, Statutes of 2003, allowed the
CalPERS Board of Administration and the Teachers'
Retirement Board to set compensation and terms and
conditions of employment of certain key positions.
c) AB 1317 (Mullin), Chapter 333, Statutes of 2007,
expanded the list of key positions to include the general
counsel.
4)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081