BILL ANALYSIS Ó
AB 996
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
996 (Medina) - As Introduced February 26, 2015
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|Policy |Public Employees, |Vote:|5 - 1 |
|Committee: |Retirement/Soc Sec | | |
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Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
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:
AB 996
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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.
COMMENTS:
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)
319-2081