BILL ANALYSIS Ó
AB 2348
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL
SECURITY
Rob Bonta, Chair
AB 2348
(Levine) - As Introduced February 18, 2016
SUBJECT: Department of Finance: infrastructure investment
SUMMARY: Authorizes the Department of Finance (DOF) to identify
infrastructure projects in California where DOF can guarantee a
rate of return on investments made by the California Public
Employees' Retirement System (CalPERS), the California State
Teachers' Retirement System (CalSTRS) or a 1937 Act County
Retirement System ('37 Act Retirement System) in that
infrastructure project, as specified. Specifically, this bill:
1)Authorizes DOF to evaluate and identify California
infrastructure projects for which they can guarantee a rate of
return on investments made in the project by CalPERS, CalSTRS,
or a '37 Act Retirement System.
2)Establishes the Reinvesting in California Special Fund (Fund)
in the State Treasury to be used to pay the rate of return
guaranteed by DOF.
3)Specifies that the guaranteed rate of return is subject to the
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availability of money in the Fund.
4)Prohibits General Fund moneys from being deposited in the
Fund.
5)States that it is the intent of the Legislature to identify
special fund moneys, including trust fund moneys, that can be
used for these purposes.
FISCAL EFFECT: Unknown.
COMMENTS: According to the author, "California has a large
infrastructure funding gap that is growing every day.
California Forward estimates that the state will need to spend
$835 billion over the next decade to meet our water,
transportation, and K-12 infrastructure needs alone. The U.S
Environmental Protection Agency has put California at the top of
the list for water system needs.
"CalPERS and CalSTRS are the two largest public pension funds in
the United States. CalPERS manages a $300 billion pension fund
that has a diverse portfolio of investments. Only 1/3 of 1/10
of 1 percent of CalPERS holdings are in California
Infrastructure. CalPERS states in their Winter, 2016
Perspective report that CalPERS invested $107.7 million in seven
California-based infrastructure projects, which support 1,300
California jobs. If CalPERS were to increase its investment in
California-based infrastructure projects to just 1/10 of 1
percent, this would produce an additional 2,600 California jobs.
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"CalSTRS manages a nearly $180 billion pension fund. CalSTRS
established an infrastructure investment portfolio in 2010 that
is intended to control risk and maximize returns. The current
policy on CalSTRS infrastructure investment specifies the amount
of infrastructure investments that are to occur around the globe
including in the United States and Canada, but does not specify
how much investment should occur in California.
"Private pension funds have already established policies to make
substantial investments in infrastructure. These investments
allow these funds to meet their financial responsibilities while
investing in jobs for their members. This bill encourages
similar investments by public employee pension funds."
REGISTERED SUPPORT / OPPOSITION:
Support
Pacific Merchant Shipping Association
State Building and Construction Trades Council of California,
AFL-CIO
AB 2348
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Opposition
None on file
Analysis Prepared by:Karon Green / P.E.,R., & S.S. / (916)
319-3957