BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 736|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: AB 736
Author: Cooley (D)
Amended: 5/10/16 in Senate
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE: 5-0, 6/13/16
AYES: Pan, Morrell, Beall, Hall, Moorlach
SENATE APPROPRIATIONS COMMITTEE: 6-1, 8/11/16
AYES: Lara, Beall, Hill, McGuire, Mendoza, Nielsen
NOES: Bates
ASSEMBLY FLOOR: 80-0, 6/1/15 - See last page for vote
SUBJECT: State teachers retirement: executive positions
SOURCE: California State Teachers Retirement System
DIGEST: This bill authorizes the Teachers' Retirement Board
(TRB) to set the compensation and terms and conditions of
employment for one chief operating officer (COO) and the chief
financial officer (CFO) of the California State Teachers'
Retirement System's (CalSTRS) by exempting those positions from
statutory civil service provisions, as specified. This bill
also changes the list of key employees who may not represent
private interests before TRB for two years after leaving CalSTRS
employment.
ANALYSIS:
Existing law:
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1)Requires the TRB to establish compensation for CalSTRS'
executive officer, chief actuary, general counsel, chief
investment officer, and other investment officers and
portfolio managers whose positions are designated managerial.
2)Requires that the compensation level for these positions 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 chief executive officer who serves
at the pleasure of the board, these positions are subject to a
modified civil service selection process, and the board may
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, upon
separation from employment, from being paid by a subsequent
employer to influence the actions of the retirement system or
decisions of its governing board for two years following the
end of employment with the retirement system.
This bill:
1)Expands the list of positions for which the TRB has the
authority to set the compensation and terms and conditions of
employment to include one COO and the CFO.
2)Limits the annual percentage increase in salary authorized by
this bill to ten percent for the 2017-18 fiscal year and five
percent for any fiscal year thereafter for a person who served
as COO or CFO on January 1, 2016, and who does not separate
from service in that position prior to the date on which the
increase is applied.
3)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 CalSTRS.
Related/Prior Legislation
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AB 125 (Wieckowski, 2013) 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. The bill was
amended in the Senate to delete these provisions and to change
the author.
AB 1735 (Wieckowski, 2012) 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 prohibited the salary for the
COO and CFO from exceeding 150% of the Governor's salary. AB
1735 died in the Senate Appropriations Committee.
AB 1042 (Allen, Chapter 688, Statutes of 2011) authorized the
CalPERS board to appoint and set the compensation of a chief
financial officer.
AB 1317 (Mullin, Chapter 333, Statutes of 2007) expanded the
list of key positions for which the CalPERS board and TRB could
set compensation and terms of employment to include the general
counsel.
SB 269 (Soto, Chapter 856, Statutes of 2003) authorized the
CalPERS board and TRB to set compensation and terms and
conditions of employment of certain key positions.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to Senate Appropriations Committee this bill would
result in increased annual salary costs to CalSTRS of up to
$189,300, excluding cost of living adjustments. The actual
amount of the increase would depend on future hiring decisions
by TRB.
SUPPORT: (Verified8/11/16)
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California State Teachers' Retirement System (source)
California Teachers Association
California Retired Teachers Association
OPPOSITION: (Verified8/11/16)
None received
ARGUMENTS IN SUPPORT: 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."
ASSEMBLY FLOOR: 80-0, 6/1/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
Prepared by:Glenn Miles / P.E. & R. / (916) 651-1519
8/15/16 20:01:57
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