BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 205
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          ASSEMBLY THIRD READING
          AB 205 (Pan)
          As Introduced January 30, 2013
          Majority vote 

           PUBLIC EMPLOYEES    5-2                                         
           
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          |Ayes:|Bonta, Jones-Sawyer,      |     |                          |
          |     |Mullin, Rendon,           |     |                          |
          |     |Wieckowski                |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Allen, Harkey             |     |                          |
          |     |                          |     |                          |
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           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 boards 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 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  








                                                                  AB 205
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            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'  
               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  :  None.  This bill is keyed non-fiscal by the  
          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."








                                                                  AB 205
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           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916)  
          319-3957 


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