BILL ANALYSIS Ó
AB 736
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ASSEMBLY THIRD READING
AB
736 (Cooley)
As Introduced February 25, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
|----------------+------+----------------------+----------------------|
|Public |6-0 |Bonta, Waldron, | |
|Employees | |Cooley, Jones-Sawyer, | |
| | |O'Donnell, Rendon | |
| | | | |
|----------------+------+----------------------+----------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Jones, Quirk, Rendon, | |
| | |Wagner, Weber, Wood | |
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SUMMARY: Expands the list of positions for which the Teachers'
Retirement Board (TRB) has the authority to set the compensation
and terms and conditions of employment to include the chief
operating officer (COO) and chief financial officer (CFO), as
specified. Specifically, this bill:
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1)Adds the COO and CFO to the list of positions for which the TRB
has the authority to set the compensation and terms and
conditions of employment.
2)Makes technical changes to the list of key employees who are
prohibited for two years from working for private interests to
influence the TRB after leaving employment with the California
State Teachers' Retirement System (CalSTRS).
EXISTING LAW:
1)Requires the TRB to establish compensation for the system's
executive officer, chief actuary, general counsel, chief
investment officer, and other investment officers and portfolio
managers whose positions are designated managerial.
2)States that the compensation level for these positions is to be
comparable to other public retirement systems and financial
services companies and, when these positions are filled through
a general civil service appointment, that the candidates be
selected from an eligible list based on an open examination.
3)States that except for the executive officers of both systems,
these positions are subject to a modified civil service
selection process, and the boards are able to take action
against these personnel for causes related to their fiduciary
duty, including the failure to meet specified performance
objectives.
4)Prohibits individuals employed in these positions from being
paid to influence the actions of the retirement system, or
decisions of its governing board for two years following the end
of their employment with the retirement system.
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FISCAL EFFECT: According to the Assembly Appropriations
Committee, annual increased salary costs to CalSTRS in the range
of $125,000 to $250,000, depending on the market for COO and CFO
pay and terms of employment.
COMMENTS: According to the sponsor, CalSTRS, "This bill seeks to
improve CalSTRS ability to attract and retain a COO and CFO, key
positions that require specialized expertise to manage the
increasingly complex financial and operational components of the
largest teacher pension fund in the world. Although CalSTRS has
been fortunate to develop a strong executive management team, to
proactively plan for the succession of these vulnerable top-level
executive positions, prudent business practices and fiduciary
obligations dictate that the board positions the organization to
attract and recruit from among the best and the brightest in the
industry. The most qualified candidates are likely to be found
outside civil service in similarly large financial institutions in
the private sector, endowments or other large public pension
systems."
This bill is similar to the introduced version of AB 125
(Wieckowski) of the 2013-14 Regular Session, which would have
expanded the list of positions for which the TRB has the authority
to set the compensation and terms and conditions of employment to
include the COO and CFO and would have prohibited the salary for
the COO and CFO from exceeding 110% of the maximum salary payable
to an investment director of the retirement system. AB 125 was
amended in the Senate to delete these provisions and to change the
author.
This bill is also similar to AB 1735 (Wieckowski) of 2012, which
would have expanded the list of positions for which TRB has the
authority to set the compensation and terms and conditions of
employment to include the COO and the CFO and would have
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prohibited the salary for the COO and CFO from exceeding 150% of
the Governor's salary. AB 1735 was held in the Senate
Appropriations Committee.
AB 1042 (Allen), Chapter 688, Statutes of 2011, authorized the
CalPERS Board of Administration to appoint and set the
compensation of a chief financial officer.
SB 269 (Soto), Chapter 856, Statutes of 2003, allowed the CalPERS
Board of Administration and the TRB to set compensation and terms
and conditions of employment of certain key positions.
AB 1317 (Mullin), Chapter 333, Statutes of 2007, expanded the list
of positions to include the general counsel.
Analysis Prepared by:
Karon Green / P.E.,R., & S.S. / (916) 319-3957
FN: 0000589