California Legislature—2015–16 Regular Session

Assembly Bill No. 584

Introduced by Assembly Member Cooley

February 24, 2015

An act to amend Sections 10600, 10601, 10602, 10605, and 10606 of, and to amend the heading of Chapter 5 (commencing with 10600) of Part 2 of Division 2 of Title 2 of, the Government Code, relating to public employee retirement systems.

LEGISLATIVE COUNSEL’S DIGEST

AB 584, as introduced, Cooley. Public employee retirement systems.

Existing law creates the Joint Legislative Retirement Committee, prescribes the composition of the committee, and requires the committee to study and review the benefits, programs, actuarial condition, practices, investments and procedures of, and all legislation relating to, retirement systems for public officers and employees in this state as well as trends in the field of retirement. Existing law requires a copy of each bill that affects any public employee retirement system to be transmitted to the committee. Existing law requires the committee to establish a board of experts, the composition of which is prescribed, and to retain an independent actuary as a consultant to the board of experts. Existing law makes a statement of legislative findings in this regard.

This bill would rename the committee the Joint Pension Administration and Sustainability Committee and, in addition to the duties described above, would require the committee to make reports and recommendations to the Legislature and its respective houses on these retirement issues. The bill would revise the composition of the committee to reflect current legislative practice. The bill would require the committee to transmit an analysis for each bill submitted to it, including an actuarial opinion if appropriate, to the policy committee that is responsible for the bill. The bill would require the committee to retain a legal advisor recognized for expertise in pension and investment law and an academician from a California university with recognized expertise in investing, pension administration, and the operation of financial markets to act as consultants to its board of experts. The bill would revise the statement of legislative findings associated with these provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

The heading of Chapter 5 (commencing with
Section 10600) of Part 2 of Division 2 of Title 2 of the Government
Code is amended to read:

 

Chapter  5. Joint begin delete Legislative Retirement end delete begin insert Pension
Administration and Sustainability end insert Committee

 

SEC. 2.  

Section 10600 of the Government Code is amended
to read:

10600.  

begin insert (a) end insert begin insert   end insert The Legislature finds that the retirement of officers
and employees of the state, school districts, and many cities,
counties, and public jurisdictions in the state, is provided under
several independently administered and highly complex begin delete and
technical statutes, and that development end delete begin insert systems that all share the
distinctive feature of being organized to achieve results over the
30- to 40-year time frame that corresponds to the typical length
of workers’ careers. end insert

begin insert

(b) These pension systems are organized and administered under
highly technical statutes and protected by constitutional provisions.
Certain provisions in the California Constitution, which are
patterned upon the Employee Retirement Income Security Act,
commonly known as ERISA, require that pension funds be invested
for the sole interests of the beneficiaries and for the exclusive
purpose of providing benefits and establish a standard of conduct
that makes persons managing the pension systems fiduciaries with
respect to how they manage the money.

end insert

begin insert (c) end insert begin insert   end insert begin insert D end insert begin insert evelopment end insert and change in begin delete such end delete begin insert these end insert systems are
interrelated and have important long-range implications both with
respect to cost and to the begin delete rights of public employees end delete begin insert end insert begin insert retirement
expectations of public employees and also the state and national
economy, as the ability of persons to enter into retirement with a
source of income to spend on goods and services in retirement
provides an important source of demand for goods and services
during economic downturns to assist eventual recovery as well as
assisting the ability of public entities to transition their workforces
to younger entry level employees as older workers are able to
retire even during an economic downturn, thereby creating
openings end insert . begin delete The end delete

begin insert (d) end insert begin insert   end insert begin insert The end insert Legislature recognizes the need begin delete of coordination of such end delete
begin insert to coordinate this end insert change and development and for continuing
study and analysis of begin delete such end delete begin insert these end insert systems and legislation affecting
them. begin delete The Legislature also recognizes the need to recommend
legislation to change employers’ and employees’ contributions
through increased portfolio yield. end delete

begin insert (e) end insert begin insert   end insert Therefore, it is the desire of the Legislature to provide for
such continuing study and analysis by a joint legislative committee.

SEC. 3.  

Section 10601 of the Government Code is amended
to read:

10601.  

begin insert (a) end insert begin insert   end insert The Joint begin delete Legislative Retirement end delete begin insert Pension
Administration and Sustainability end insert Committee is hereby created.
The committee shall study and review the benefits, programs,
actuarial condition, practices, investments begin insert , end insert and procedures of, and
all legislation relating to begin insert , end insert the retirement systems for public officers
and employees in this state and the trends and developments in
the field of begin delete retirement end delete begin insert retirement, and make reports and
recommendations thereon to the Legislature and its respective
houses end insert . The committee has a continuing existence and may meet,
act, and conduct its business at any place within this state during
begin delete the end delete sessions of the Legislature begin insert , end insert or any recess thereof, and in the
interim period between sessions. A copy of each bill begin delete which end delete begin insert that end insert
affects any public employee retirement system shall be transmitted
to the committee begin insert , and the committee shall transmit an analysis,
including an actuarial opinion if appropriate, to the policy
committee responsible for the bill end insert .

begin insert

(b) A report submitted pursuant to the Legislature subdivision
(a) shall be submitted in compliance with Section 9795.

end insert

SEC. 4.  

Section 10602 of the Government Code is amended
to read:

10602.  

The committee shall consist of a member from each of
the following Senate committees: Banking and begin delete Commerce, end delete begin insert end insert
begin insert Financial Institutions, Governance and Finance, Health, Insurance,
Labor and end insert Industrial Relations, begin delete Local Government, end delete begin insert and end insert Public
Employment and Retirement, begin delete and Revenue and Taxation end delete and a
member from each of the following Assembly begin delete committees: end delete
begin insert committees: Accountability end insert begin insert and Administrative Review, Banking
and end insert Finance, Insurance begin delete and Commerce end delete , Labor and Employment,
Local Government, Public begin delete Employees and Retirement end delete begin insert Employees,
Retirement and Social Security end insert , and Revenue and Taxation. The
members shall be selected in the manner provided for in the Joint
Rules of the Senate and Assembly. The committee shall elect its
own chairman. Vacancies occurring in the membership of the
committee between general sessions of the Legislature shall be
filled in the manner provided for in the Joint Rules of the Senate
and Assembly. A vacancy shall be deemed to exist as to any
member of the committee whose term is expiring whenever such
member is not reelected at the General Election.

SEC. 5.  

Section 10605 of the Government Code is amended
to read:

10605.  

begin insert (a) end insert begin insert   end insert The committee shall establish a board of experts.
The board of experts shall include: the Controller, the chairpersons
of the investment committees of the Board of Administration of
the Public Employees’ Retirement System and begin insert of end insert the Teachers’
Retirement Board begin insert of the Teachers’ Retirement System end insert , the
begin delete presidents end delete begin insert president and chairperson end insert of those boards, begin insert respectively, end insert
the executive officers of those systems, the chiefs of investment
of those systems, the chief actuaries of those systems, the pension
managers and treasurers of two corporations, a manager of a city
pension fund, and a manager of a county pension fund.

begin insert (b) end insert begin insert   end insert The committee shall retain as begin delete a consultant end delete begin insert consultants end insert to
the board of experts an independent actuary begin insert a legal advisor
recognized for expertise in pension and investment law and an
academician from a California university with recognized expertise
in investing, pension administration, and the operation of financial
markets end insert .

begin insert (c) end insert begin insert   end insert The board of experts shall be reimbursed for its actual and
necessary expenses.

SEC. 6.  

Section 10606 of the Government Code is amended
to read:

10606.  

begin insert (a) end insert begin insert   end insert There shall be held during the last week of March
of each year a joint meeting of the begin delete committee end delete begin insert Joint Pension
Administration and Sustainability Committee end insert , the board of experts,
the Board of Administration of the Public Employees’ Retirement
System, the Teachers’ Retirement Board, the executive officers
of those systems, and the State Treasurer, to review the
performance of the systems. The annual reports of those systems
and the financial reports and reports of operations shall be
presented at the meeting.

begin insert (b) end insert begin insert   end insert begin insert (1) end insert begin insert   end insert At the meeting, the State Treasurer shall present a
review of the investment practices of the Public Employees’
Retirement System and the State Teachers’ Retirement System
and shall transmit a copy of the report to the committee.

begin insert

(2) A report submitted pursuant to paragraph (2) shall be
submitted in compliance with Section 9795.

end insert