BILL ANALYSIS �
AB 205
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Rob Bonta, Chair
AB 205 (Pan) - As Introduced: January 30, 2013
SUBJECT : Public employees' retirement: pension fund
management.
SUMMARY : Adds the board of retirement or board of investments
of a retirement system established under the County Employees'
Retirement Law of 1937 ('37 Act) to the list of public
retirement system board that are authorized to prioritize
investment in in-state infrastructure projects over alternative
out-of-state projects if the investments are consistent with its
fiduciary responsibility.
EXISTING LAW :
1)Provides, under the state Constitution by Proposition 162, the
California Pension Protection Act of 1992, that the boards of
California's public retirement systems have "plenary authority
and fiduciary responsibility for investment of monies and
administration of the system." Under Proposition 162, the
Legislature also retained its authority to, by statute, to
prohibit certain investments by a retirement board where it is
in the public interest to do so, and provided that the
prohibition satisfies the standards of fiduciary care and
loyalty required of a retirement board pursuant to this
section.
The Constitution also states, "The members of the retirement
board of a public pension or retirement system shall discharge
their duties with respect to the system solely in the interest
of, and for the exclusive purposes of providing benefits to,
participants and their beneficiaries, minimizing employer
contributions thereto, and defraying reasonable expenses of
administering the system."
2)As enacted by SB 955 (Pavley and Rubio), Chapter 760, Statutes
of 2012:
a) Authorizes the California Public Employees' Retirement
System (CalPERS) and the California State Teachers'
AB 205
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Retirement System (CalSTRS) to prioritize investment in
in-state infrastructure projects over alternative
out-of-state projects if the investments are consistent
with its fiduciary responsibility.
b) Authorizes CalPERS and CalSTRS, consistent with their
fiduciary duties and the standard for prudent investment,
to prioritize investment in in-state infrastructure
projects over a comparable out-of-state infrastructure
project.
c) Defines infrastructure to include telecommunications,
power, transportation, ports, petrochemicals, and
utilities.
d) States the Legislature's intent to encourage the board
to prioritize investment in in-state infrastructure
projects over a comparable out-of-state infrastructure
project.
e) Specifies that nothing in the bill requires CalPERS or
CalSTRS to take action that is inconsistent with its
plenary authority and fiduciary responsibilities.
FISCAL EFFECT : This bill has been keyed non-fiscal by
Legislative Counsel.
COMMENTS : According to the sponsor, the Service Employees
International Union (SEIU), "AB 205 would authorize the '37 Act
retirement systems to give preference to infrastructure
investments in California when determining which investments to
participate in. At the urging of SEIU and other public employee
organizations, CalPERS and CalSTRS have both dedicated
investment resources toward investment in California
infrastructure, CalPERS has set aside $800 million to be
directly invested in projects that create California jobs in our
communities."
REGISTERED SUPPORT / OPPOSITION :
Support
SEIU California (Sponsor)
Opposition
AB 205
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None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957