BILL ANALYSIS Ó
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Senator Mark Leno, Chair
2015 - 2016 Regular
Bill No: AB 130 Hearing Date: August 27,
2015
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|Author: |Committee on Budget |
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|Version: |August 25, 2015 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Anita Lee |
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Subject: California State University: fees: investments.
Summary: This bill provides statutory changes to amend the California
State University's existing investment authority.
Background:Existing law limits the California State University
(CSU) to only invest student tuition fees; enterprise funds,
such as housing revenues, parking revenues, health center fees,
and other self-supporting programs; and other revenues only in
low-risk, fixed-income securities, such as bonds or
interest-bearing notes on obligations that are guaranteed as to
principle and interest by a federal agency of the United States;
or bonds, notes, and warrants of this state. These same
investment restrictions apply to all other state agencies except
the University of California.
Proposed Law: This bill makes statutory changes to laws
governing the investment authority of the CSU. Specifically,
this bill:
1.Allows to CSU to invest up to 30 percent of specified funds,
upon approval by the CSU Trustees, the treasurer or by the
chief fiscal officer of a campus of the CSU, in a broader
array of investment options than current law allows. This bill
allows CSU to invest in mutual funds subject to registration
by, and under the regulatory authority of, the United States
Securities and Exchange Commission; or, in real estate
investment trusts.
AB 130 (Committee on Budget) Page 2
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2.Requires all monies earned with this expanded investment
authority to be used on deferred maintenance or capital outlay
projects. However, if there are investment losses, CSU shall
not request funding from the Legislature or the Department of
Finance to compensate for investment losses or raise student
tuition fees as a result.
3.Establishes procedures for the CSU to follow regarding this
change, specifically this bill requires the CSU Board of
Trustees to establish a committee of advisors, including the
state treasurer or a deputy state treasurer, and independent
investment experts to help determine the appropriate
investment opportunities.
4.Requires CSU to submit an annual investment performance report
to the Legislature and Department of Finance describing
investment returns, comparisons to benchmarks, holdings,
market values, and fees.
5.Requires the trustees to receive an investment performance
report quarterly describing investment returns, comparisons to
benchmarks, holdings, market values, and fees.
6.Includes a ramp-up period through 2020 in which CSU is limited
to specified amounts of funding it can use to invest: $200
million in the first year, $400 million in the second year,
and $600 million in the third year. After July 1, 2020, it
will be allowed to use up to 30 percent of specified funds for
these purposes, which currently could amount to about $1
billion.
Support: None on file.
Opposed: None on file.
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