BILL ANALYSIS Ó AB 584 Page 1 Date of Hearing: April 8, 2015 ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL SECURITY Rob Bonta, Chair AB 584 (Cooley) - As Amended April 6, 2015 SUBJECT: Public employee retirement systems SUMMARY: Revises and renames the joint legislative committee established in statute to review legislation and programs related to public employee retirement systems in California. Specifically, this bill: 1)Renames the Joint Legislative Retirement Committee (JLRC) as the Joint Pension Administration and Sustainability Committee (JPASC) and revises the Legislative findings associated with the establishment of the JPASC. 2)Requires the JPASC, in addition to the duties of the JLRC described below, to make reports and recommendations to the Legislature on retirement system related issues, as specified. 3)Requires the JPASC to transmit to the policy committee responsible for the bill, an analysis, including an actuarial opinion if appropriate, on each bill that affects any public retirement system. AB 584 Page 2 4)Specifies the membership of the JPASC to reflect current legislative practice. 5)Requires the JPASC to retain as additional consultants to the board of experts (see below), a legal advisor with expertise in pension and investment law, and an academician from a California university with expertise in investing, pension administration, and the operation of financial markets. EXISTING LAW: 1)Establishes, through legislation enacted in 1963, the Joint Legislative Retirement Committee (JLRC) to 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 and the trends and developments in the field of retirement. 2)Requires a copy of each bill which affects any public employee retirement system to be transmitted to the JLRC. 3)Specifies the membership of the JLRC and prescribes how vacancies between general sessions of the Legislature will be filled. 4)Authorizes the JLRC to make rules governing its own proceedings, to create subcommittees, to assign studies, inquiries, or investigations, to these subcommittees, as specified. 5)Authorizes the JLRC to appoint and fix salaries of AB 584 Page 3 professional and other employees and specifies that funds for the support of the JLRC will be provided from the Contingent Funds of the Assembly and Senate in the same manner as other joint committees. 6)Requires the JLRC to establish a board of experts, as specified, and to retain an independent actuary as a consultant to the board. 7) Requires, in March of each year, a joint meeting to be held of the JLRC, the board of experts, the boards and executive officers of the California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System (CalSTRS), and the State Treasurer, to review the performance of CalPERS and CalSTRS. The annual reports, and other specified reports are required to be presented at the meeting. 8)Requires the State Treasurer to present a review of the investment practices of CalPERS and CalSTRS at the joint meeting. FISCAL EFFECT: Unknown. COMMENTS: While the JLRC was established in 1963, the Committee is not aware of it operating, or complying with any of its statutory requirements, during the last several decades. Both the Senate and the Assembly have standing policy committees whose jurisdiction includes all of the public retirement systems in the state. AB 584 Page 4 According to the author, "California's pension system is critical to ensuring our economy is strong, but the system itself is under attack. Pensions are generally confusing and unfamiliar to the public at large. Existing law provides for a joint legislative committee structure which has its purpose in taking a methodical approach in deepening the understanding of how pension systems operate. This type of committee which focuses on complex subjects provides an extremely useful tool in the legislative toolkit to operate alongside the regular standing committee process." "The key purpose of AB 584, given this committee is already in current law, is to update the statute and to promote the importance of pensions in our economy. The committee-now renamed the Joint Pension Administration and Sustainability Committee-would be required to compose an analysis of bills submitted to it and retain a legal advisor who is an expert in pension and investment law, and an academician from a California university with an expertise in investing and pension administration. The bill also updates the committee membership to reflect current Assembly and Senate standing committees." The author concludes. "California's pension system is critical to our multitude of public employees and also our state's economy as a whole, since the ability of seniors to enter into retirement with a robust and safe pension ensures economic activity. It also encourages public employees to retire, even during hard economic times. This permits public entities to hire younger employees, who can then form households and engage in spending that supports economic growth." AB 584 Page 5 REGISTERED SUPPORT / OPPOSITION: Support None on file AB 584 Page 6 Opposition None on file Analysis Prepared by:Karon Green / P.E.,R., & S.S. / (916) 319-3957