Amended in Assembly April 6, 2015

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 begin insert Section end insert 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 amended, 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 begin delete and its respective houses end delete 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 Pension Administration and
Sustainability Committee

 

SEC. 2.  

Section 10600 of the Government Code is amended
to read:

10600.  

(a) 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 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.

(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.

(c) Development and change in these systems are interrelated
and have important long-range implications both with respect to
cost and to the 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.

(d) The Legislature recognizes the need to coordinate this change
and development and for continuing study and analysis of these
systems and legislation affecting them.

(e) 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.  

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

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

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 Financial
Institutions, Governance and Finance, Health, Insurance, Labor
and Industrial Relations, and Public Employment and Retirement,
and a member from each of the following Assembly committees:
Accountability and Administrative Review, Banking and Finance,
Insurance, Labor and Employment, Local Government, Public
Employees, Retirement and Social Security, 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.  

(a) 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 of the Teachers’
Retirement Board of the Teachers’ Retirement System, the
president and chairperson of those boards, respectively, 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.

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

(c) 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.  

(a) There shall be held during the last week of March
of each year a joint meeting of the Joint Pension Administration
and Sustainability Committee, 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.

(b) (1) 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.

(2) A report submitted pursuant to paragraph begin delete (2) end delete begin insert (1) end insert shall be
submitted in compliance with Section 9795.