BILL ANALYSIS Ó
AB 1163
Page 1
Date of Hearing: January 8, 2014
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Rob Bonta, Chair
AB 1163 (Levine) - As Amended: January 6, 2014
SUBJECT : Public Employees' Retirement System: Board of
Administration: education.
SUMMARY : Requires the Board of Administration (Board) of the
California Public Employees' Retirement System (CalPERS) to
adopt a policy for providing board member education, as
specified. Specifically, this bill :
1)Requires the Board to establish a policy for providing
education for board members.
2)Requires the policy to include, at a minimum, the following:
a) Appropriate topics for education;
b) A process for determining whether or not a program,
training, or educational session qualifies as board member
education;
c) A minimum requirement of 24 hours of education within
the first two years of becoming a board member and for
every subsequent two year period the person remains on the
board; and,
d) Maintaining a record of board member compliance with the
policy and to post the policy, along with information on
board member compliance, on the retirement system's
Internet Web site.
EXISTING LAW :
1)Establishes CalPERS and designates the Board of Administration
with responsibility for the management and control of CalPERS,
including the exclusive control of the administration and
investment of the retirement fund. Administration and
investment responsibility of the Board also includes the
California Employers' Retiree Benefit Trust, Legislators'
Retirement System, the Judges' Retirement System, the Judges'
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Retirement System II, the 457 Deferred Compensation Program,
and the Long-Term Care Program. In addition, the Board
administers the Public Employees' Medical and Hospital Care
Act and the state's contract with the federal government for
Social Security.
2)Establishes the composition of the Board which consists of 13
members who are elected, appointed, or hold office ex officio
as follows:
a) Six elected members:
i) Two elected by and from all CalPERS members;
ii) One elected by and from all active State members;
iii) One elected by and from all active CalPERS school
members;
iv) One elected by and from all active CalPERS public
agency members (employed by contracting public agencies);
and,
v) One elected by and from the retired members of
CalPERS.
b) Three appointed members:
i) Two appointed by the Governor - an elected official
of a local government and an official of a life insurer;
and,
ii) One public representative appointed jointly by the
Speaker of the Assembly and the Senate Rules Committee.
c) Four ex officio members:
i) The State Treasurer;
ii) The State Controller;
iii) The Director of the California Department of Human
Resources; and,
iv) A designee of the State Personnel Board.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, "In October of 2011,
Governor Brown proposed a twelve-point pension reform plan.
This plan included changing the composition of the CalPERS
Board. Ultimately much of the reform plan was adopted in the
form of AB 340 (Furutani 2012, known as the Public Employees'
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Pension Reform Act PEPRA), but board composition was not
changed. The stated purpose of reforming board composition was
to bring financial sophistication to the board. This bill would
achieve that goal while maintaining the existing board
structure."
The author concludes, "AB 1163 would build upon both PEPRA and
board policy in a way that will codify the commitment to
increase the financial expertise on the board while bringing
greater information about board member financial training to the
public."
According to CalPERS, the Board is "?committed to continuous
learning and adaptation to changing conditions, and its members
currently engage in training associated with their fiduciary,
investment, actuarial and other responsibilities through
participation in internal workshops and industry conferences.
The Board also conducts a regular assessment of its performance
and capabilities, identifies the skills and capabilities
required to fulfill its fiduciary roles and responsibilities,
and maintains an inventory of existing trustee skills and
capabilities, as well as strengths, weaknesses, gaps and
priority development needs.
"The Board recognizes the ability of continuous learning to
enhance its oversight and control of the numerous health and
retirement benefit programs it administers. That is why it is
currently developing a Board Education Policy to provide current
and future Board members additional opportunities to improve
their knowledge and abilities through a formal education
program."
CalPERS concludes, "The Board recently adopted a set of Key
Competencies, in order to provide a foundational element for an
official Board Education Policy. They specify more than 20
criteria in the areas of board governance, health care, pension
plans, financial markets and communication, and include such
things as understanding financial statements, balance sheets,
economic principles and actuarial methodologies. These
competencies will be part of the existing CalPERS Board
Governance Policy and will be used to develop future training
and educational opportunities for Board members. As part of
this process, the Board's Governance Committee has reviewed best
practices in board member education conducted by other public
pension systems, and will be presented with a draft Board
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Education Policy at its February meeting."
This bill is similar to AB 1519 (Wieckowski), Chapter 15,
Statutes of 2012, which requires the boards of retirement or
investments for the 20 retirement systems established pursuant
to the County Employees' Retirement Law of 1937 to adopt a
policy for providing board member education, as specified.
REGISTERED SUPPORT / OPPOSITION :
Support
California Professional Firefighters
Opposition
None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957