BILL NUMBER: AB 1052 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Cooley
FEBRUARY 26, 2015
An act to amend Sections 22203 and 22257 of the Education Code,
and to amend Sections 20172 and 20190 of the Government Code,
relating to retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 1052, as introduced, Cooley. Retirement board authority:
investments.
The California Constitution grants the retirement board of a
public pension or retirement system plenary authority and fiduciary
responsibility for investment of moneys and administration of the
system, as specified. The California Constitution also requires the
retirement board of a public pension or retirement system, consistent
with the exclusive fiduciary responsibilities vested in it, to have
the sole and exclusive power to provide for actuarial services in
order to assure the competency of the assets of the public pension or
retirement system.
The Teachers' Retirement Law creates the State Teachers'
Retirement System for the provision of service, disability, and other
benefits to members. The law requires the assets of the plan,
including, but not limited to, employee contributions, employer
contributions, and investment income, to be deposited into the
Teachers' Retirement Fund, and continuously appropriates the fund
for, among other things, the payment of member benefits. The Teachers'
Retirement Law authorizes the board to appoint investment managers
to manage the assets of the fund.
This bill would specify that the board is authorized to enter into
agreements for the investment of the fund or appoint investment
managers to manage the assets of the fund under the terms and
utilizing the processes the board deems necessary and consistent with
its fiduciary duties, as specified.
The Public Employees' Retirement Law (PERL) creates the Public
Employees' Retirement System (PERS) and the Public Employees'
Retirement Plan for the provision of pension benefits to members.
PERL requires the assets of the system, including, but not limited
to, employee contributions, employer contributions, and investment
income, to be deposited into the Public Employees' Retirement Fund, a
continuously appropriated fund. PERL grants the Board of
Administration of PERS exclusive control of and fiduciary
responsibility for the investment of the fund and authorizes the
board to retain a bank or trust company to serve as a custodian for
services in connection with the investment of the fund.
This bill would specify that the board of administration is
authorized to enter into agreements with a bank or trust company for
those services and to invest the assets of the fund under the terms,
conditions, and processes the board deems necessary and consistent
with its fiduciary duties and is not required to comply with any law
or rule pertaining to state contracting to do so.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 22203 of the Education Code is amended to read:
22203. The board has exclusive control of the investment of the
Teachers' Retirement Fund. Except as otherwise restricted by the
California Constitution and by law, the board may in its discretion
invest the assets of the fund through the purchase, holding, or sale
thereof of any investment, financial instrument, or financial
transaction when the investment, financial instrument, or financial
transaction is prudent in the informed opinion of the board.
Notwithstanding any other law, the board, in exercising its
discretion pursuant to this section, may enter into agreements,
contracts, or other arr angements solely under the terms,
conditions, and covenants and utilizing the processes the board deems
necessary and consistent with its fiduciary duties.
SEC. 2. Section 22257 of the Education Code is amended to read:
22257. (a) Notwithstanding Section 22203,
any other law, the board may contract with or appoint one or
more investment managers to manage the assets of the retirement
fund. fund under the terms, conditions, and
covenants and utilizing the processes the board deems necessary and
consistent with its fiduciary duties. If the board has acted
with care, skill, prudence, and diligence in meeting the requirements
of Sections 22252 and 22253 in selecting and monitoring the
investment managers, then, notwithstanding Sections 22250, 22252,
22253, 22254, and 22256, no board member shall be liable for the acts
or omissions of the investment managers or be under any obligation
to invest or otherwise manage any assets of the retirement fund that
are subject to the management of the investment managers.
(b) Incorporation of the fiduciary duty set forth in Section 22250
into the terms of a contract between the system and an investment
manager shall be admissible as evidence that the board has acted with
care, skill, prudence, and diligence in the selection of the
investment manager.
SEC. 3. Section 20172 of the Government Code is amended to read:
20172. Notwithstanding any other provision of
law, the board may retain a bank or trust company to serve as
custodian for safekeeping, delivery, securities valuation, investment
performance reporting, and other services in connection with
investment of the retirement fund. The board, without compliance
with any law, rule, provision, or procedure pertaining to state
contracting, may enter into agreements, contracts, or other
arrangements with a bank or trust company for custodian and
custodian-related services under the terms, conditions, and processes
the board deems necessary and consistent with its fiduciary duties.
Notwithstanding Section 13340, all moneys in the fund are
continuously appropriated, without regard to fiscal years, for
payments which shall be made upon warrants drawn by the Controller
upon demands made by the board. Upon demand of the board, warrants
shall be drawn for the purpose of making payments by electronic fund
transfers.
SEC. 4. Section 20190 of the Government Code is amended to read:
20190. The board has exclusive control of the investment of the
retirement fund. Except as otherwise restricted by the California
Constitution and by law, the board may, in its discretion, invest the
assets of the fund through the purchase, holding, or sale thereof of
any investment, financial instrument, or financial transaction when
the investment, financial instrument, or financial transaction is
prudent in the informed opinion of the board. In exercising its
discretion pursuant to this section, the board, without compliance
with any law, rule, provision, or procedure pertaining to state
contracting, may enter into agreements, contracts, or other
arrangements with a bank or trust company for custodian and
custodian-related services under the terms, conditions,
and processes the board deems necessary and consistent with its
fiduciary duties.