as amended, Cooley. Public
begin delete retirement: pensionend delete funds: disclosures.
The California Constitution commits to the retirement board of a public pension or retirement system plenary authority and fiduciary responsibility for investment of moneys and administration of the system. Existing law requires a retirement board to develop and implement a policy requiring disclosure of payments to placement agents, as defined, in connection with system investments in or through external managers that includes prescribed elements. Existing law requires disclosure of campaign contributions or gifts made by a placement agent to any member of a public pension retirement board, as specified. Existing law requires a public retirement system to obtain an actuarial valuation of the system not less than triennially and submit audited financial statements to the State Controller who then publishes a report on the financial condition of public retirement systems.
This bill, for contracts entered into on and after January 1, 2017, would require a public pension or retirement
begin delete systemend delete to require begin delete private equity fund managers, partnerships, portfolio companies, and affiliatesend delete to make specified disclosures regarding begin delete fees and expensesend delete
in connection with begin delete limited partner agreementsend delete on a form prescribed by the system. Consistent with requirements relating to public records, the bill would require a public pension or retirement begin delete systemend delete to disclose the information received in connection with begin delete the limited partner agreementsend delete
at least once annually at a meeting open to the public. The bill would make a statement of legislative intent. Because this bill would impose new requirements on local entities relating to the collection of information and its presentation at an open meeting, it would impose a state-mandated local program.
The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose.
This bill would make legislative findings to that effect.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
It is the intent of the Legislature in enacting this
2section to increase the transparency of fees paid by public pension
begin delete private equity general partners.end delete Pension funds pay significant fees to begin delete private equity firmsend delete
5 and do not have sufficient
6information regarding the character and amount of those fees. As
7fiduciaries, public fund trustees have a duty to maximize
8investment returns in order to ensure promised benefits are
9adequately funded and to minimize taxpayer costs. Because fees
begin delete private equity general partnersend delete reduce returns, public fund trustees need to be able to see
2and understand all of the fees they are charged.
Section 7514.7 is added to the Government Code, to
(a) Every public pension or retirement
begin delete systemend delete shall require begin delete its
7private equity fund managers, partnerships, portfolio companies,
8and affiliatesend delete
9 to make the following disclosures, on a form prescribed by the
begin delete system, in regard to each limited partner agreement:end delete
11(1) The fees and expenses that the retirement system
12pays directly to the
begin delete private equity fund managers and partnerships
13subject to the agreement.end delete
14(2) The fees and expenses not included in paragraph (1)
15that are paid from the
begin delete private equity fund,end delete
16 including carried interest, to the
begin delete private equity fund general partners
17and affiliates.end delete
18(3) The fees and expenses paid by
begin delete the private equity
19portfolio companies to the private equity fund general partners
20and affiliates.end delete
begin deleteConsistent with the requirements of Section 6254.26, a end delete
25public pension or retirement
begin delete systemend delete shall disclose begin delete the information received
at least once annually at
27pursuant to subdivision (a)end delete
28a meeting open to the
begin delete public.end delete
34(c) For purposes of this
begin delete section, the following definitions shall
4 “Carried interest” means a share of the profits of
begin delete a private that is due to
5equity fundend delete
begin delete theend delete
6 fund manager or general partner.
8“Private equity” means an asset class consisting of equity
9securities and debt in operating companies that are not publicly
10traded on a stock exchange.
11(d) This section shall apply to contracts the system entered into,
12extended, renewed, or amended on or after January 1, 2017.
The Legislature finds and declares that Section 1 of
14this act, which adds Section 7514.7 to the Government Code,
15furthers, within the meaning of paragraph (7) of subdivision (b)
16of Section 3 of Article I of the California Constitution, the purposes
17of that constitutional section as it relates to the right of public
18access to the meetings of local public bodies or the writings of
19local public officials and local agencies. Pursuant to paragraph (7)
20of subdivision (b) of Section 3 of Article I of the California
21Constitution, the Legislature makes the following findings:
22The information in the disclosures required under subdivisions
23(a) and (b) of Section 7514.7 of the Government Code
begin delete areend delete
24 necessary to ensure public confidence in the integrity of
25 investments made by retirement boards pursuant to
begin delete limited partner
No reimbursement is required by this act pursuant to
28Section 6 of Article XIII B of the California Constitution because
29the only costs that may be incurred by a local agency or school
30district under this act would result from a legislative mandate that
31is within the scope of paragraph (7) of subdivision (b) of Section
323 of Article I of the California Constitution.