BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 996

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          Date of Hearing:  April 29, 2015


                                 Jimmy Gomez, Chair

          996 (Medina) - As Introduced February 26, 2015

          |Policy       |Public Employees,              |Vote:|5 - 1        |
          |Committee:   |Retirement/Soc Sec             |     |             |
          |             |                               |     |             |
          |             |                               |     |             |

          Urgency:  No  State Mandated Local Program:  YesReimbursable:   


          This bill requires (i) the California State Teachers' Retirement  
          System (CalSTRS) to include in its 403(b) investment information  
          website "side-by-side comparison" information on registered  
          403(b) vendors, and (ii) all school districts, community college  
          districts, and county offices of education to adopt a policy  
          regarding campus access by 403(b) vendors.

          FISCAL EFFECT:


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          1)Minor, and likely absorbable, IT costs to CalSTRS to update  
            its 403(b) website with the side-by-side vendor comparison.

          2)Potentially significant, reimbursable costs to school  
            districts, community college districts, and county offices of  
            education to adopt policies with respect to 403(b) vendors.   
            For example, if half of the state's districts submitted the  
            minimum $1,000 state mandate claim, total reimbursable costs  
            would exceed $500,000.


          1)Purpose.  CalSTRS members need access to transparent and  
            impartial information on 403(b) plans in order to make  
            responsible investment choices.  According to the author,  
            educators are often lured into less secure products by  
            unsavory sales tactics, including on-campus sales pitches.   
            Current practice regarding 403(b) vendor access to campuses  
            varies considerably by school district.  The author believes  
            requiring school districts to enact formal policies for vendor  
            campus access, district officials will be able to control  
            coercive vendor practices.  Furthermore, by updating the  
            CalSTRS 403(b) comparison website, educators will have better  
            access to investment information and resources.

          2)Further Clarifications.  Opponents, led by several large  
            insurance and investment advisors, have requested the CalSTRS  
            website be further clarified to distinguish different product  
            categories, such as mutual funds, variable annuities, and  
            fixed annuities.  Those opponents have also requested  
            clarifications to the school policy requirement to make clear  
            it is not intended to change or alter policies already in  
            place, but only to require school entities to officially  
            maintain such policies and ensure they comply with Internal  
            Revenue Service, California Insurance Code, and any applicable  


                                                                     AB 996

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            insurance committee or collective bargaining committee rules.

          Analysis Prepared by:Joel Tashjian / APPR. / (916)