Amended in Assembly August 25, 2015

Senate Bill No. 104

Introduced by Committee on Budget and Fiscal Review

January 9, 2015

begin delete An act relating to the Budget Act of 2015. end delete begin insert An act to amend Sections 89724 and 89725 of, and to add Section 89726 to, the Education Code, relating to the California State University. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 104, as amended, Committee on Budget and Fiscal Review. begin delete Budget Act of 2015. end delete begin insert California State University: fees: investments. end insert

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Existing law authorizes the Treasurer or chief fiscal officer of a campus of the California State University to invest certain money received by the California State University in eligible securities and in investment certificates or withdrawal shares in federal or state credit unions doing business in this state as long as any money invested in this manner is fully insured by the National Credit Union Administration.

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This bill would authorize the Treasurer or chief fiscal officer of a campus of the California State University to invest certain of those moneys in mutual funds subject to registration by, and under the regulatory authority of, the United States Securities and Exchange Commission, or in real estate investment trusts. The bill would impose specified requirements on the Trustees of the California State University relating to those types of investments.

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Existing law establishes the California State University Special Projects Fund, which consists of grants, revenues, and funds for the operation, support, and development of research, workshops, conferences, institutes, and special projects in the California State University. Existing law authorizes the Treasurer to invest money from the fund in eligible securities.

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This bill would authorize the Treasurer or chief fiscal officer of a campus of the California State University to invest the money in the California State University Special Projects Fund in mutual funds subject to registration by, and under the regulatory authority of, the United States Securities and Exchange Commission, or in real estate investment trusts.

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This bill would limit the total amount invested in these mutual funds and real estate investment trusts to specified amounts for each fiscal year, until, commencing with the 2019-20 fiscal year, up to 30% of that money could be invested in these asset categories.

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This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2015.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Section 89724 of the end insert begin insert Education Code end insert begin insert is amended
to read: end insert

89724.  

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(a)  All money received in accordance with the
following shall be appropriated for the support of the California
State University in addition to other amounts as may be
appropriated by the Legislature:

end insert begin insert

(1) All money received from the sale of California State
University publications.

end insert begin insert

(2) All money received under an agreement entered into
pursuant to Section 89036.

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(3) Except as to the fees and charges specified in subdivisions
(g) and (h) of Section 89721, all money collected as fees from
students of the California State University and received from other
persons under Sections 89030, 89036 to 89039, inclusive, 89700,
89705, 89708, 89709, 89720, and 89721, and money received
pursuant to Section 2080.8 of the Civil Code.

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(a)

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begin insert (b) end insert   begin delete All money received from the sale of publications pursuant
to Section 90500, all money received under an agreement entered
into pursuant to Section 89036, and, except as to the fees and
charges specified in subdivisions (g) and (h) of Section 89721, all
money collected as fees from students in any state university and
from other persons under Section 89030, Sections 89036 to 89040,
inclusive, and Sections 89700, 89705, 89708, 89709, 89720, and
89721, and by reason of Section 2080.9 of the Civil Code, is hereby
appropriated for the support of the California State University in
addition to such other amounts as may be appropriated therefor
by the Legislature. end delete Money received under Sections 89720 and
89721, or received begin delete by reason of end delete begin insert pursuant to end insert Section begin delete 2080.9 end delete begin insert 2080.8 end insert
of the Civil Code, is appropriated begin insert pursuant to subdivision (a) end insert
without regard to fiscal year. Money received begin delete by reason of end delete begin insert pursuant
to end insert Section begin delete 2080.9 end delete begin insert 2080.8 end insert of the Civil Code shall be used for student
scholarships and loans pursuant to any regulations the trustees
shall provide, and while held pending the grant of a scholarship
or loan, may be invested by the Treasurer upon approval of the
trustees, in those eligible securities listed in Section 16430 of the
Government Code. All interest or other earnings received pursuant
to begin delete such end delete begin insert that end insert investment shall also be used for those scholarships
and loans. Money received begin delete by reason of end delete begin insert pursuant to end insert Sections 89720
and 89721 may be invested, upon approval of the trustees, by the
Treasurer or by the chief fiscal officer of a campus of the California
State University, in those eligible securities listed in Section 16430
of the Government begin delete Code end delete begin insert Code. Money received pursuant to Section
2080.8 of the Civil Code, may be invested, upon approval of the
trustees end insert and in begin delete investment certificates or withdrawal shares in
federal or state credit unions which are doing business in this state
and which have their accounts insured end delete begin insert accordance with Section
89726, end insert by the begin delete National Credit Union Administration. Any money
so invested or deposited shall be invested or deposited end delete begin insert chief fiscal
officer of a campus of the California State University, end insert in
begin delete certificates, shares, end delete begin insert mutual funds subject to registration by, and
under the regulatory authority of, the United States Securities and
Exchange Commission, end insert or begin delete accounts fully covered by the insurance. end delete
begin insert in real estate investment trusts. end insert All interest and other earnings
received pursuant to the investment of money received begin delete by reason
of end delete begin insert pursuant to end insert Sections 89720 and 89721 shall also be used for
such purposes as may be established by the trustees consistent with
the terms and conditions of the gift, bequest, devise, donation, or
agreement under Sections 89720 and 89721. Except as otherwise
provided with respect to money received begin delete by reason of end delete begin insert pursuant to end insert
Section begin delete 2080.9 end delete begin insert 2080.8 end insert of the Civil Code and Sections 89720 and
begin delete 89721 of this code, end delete begin insert 89721, end insert all money received pursuant to this
section shall augment the support appropriation to the California
State University for the fiscal year to which the collections apply.

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(b)

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begin insert (c) end insert  All money received from the sale or the disposition of real
property acquired by or on behalf of a begin delete particular state university end delete
begin insert campus of the California State University end insert by gift, devise, or
donation pursuant to Section 89720 or pursuant to the predecessor
of that section is hereby appropriated to the trustees for expenditure
for capital outlay for the acquisition and improvement of real
property for the begin delete particular state university, end delete begin insert campus, end insert in addition to
any other amounts appropriated begin delete therefor end delete by the Legislature. All
money received from the sale or other disposition of personal
property, other than money, acquired by or on behalf of a begin delete particular
state university end delete begin insert campus of the California State University end insert by gift,
bequest, or donation pursuant to Section 89720 or begin delete pursuant to end delete the
predecessor of that section is hereby appropriated to the trustees
for expenditure for capital outlay for, or the acquisition and
improvement of real or personal property for, the begin delete particular state
university, end delete begin insert campus, end insert in addition to other amounts appropriated
begin delete therefor end delete by the Legislature. No money shall be expended by the
trustees under this subdivision without the approval of the Director
of Finance. The money shall augment the support or capital outlay
appropriation of the California State University current at the date
of issuance of the Controller’s receipt begin delete therefor end delete as may be designated
by the trustees prior to their deposit in the State Treasury.

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begin insert SEC. 2. end insert   

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begin insert Section 89725 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

89725.  

begin insert (a) end insert begin insert   end insert begin insert end insert Notwithstanding any begin delete other provision of end delete law to
the contrary, grants, revenues, and funds of any nature received
by the trustees for research, workshops, conferences, institutes,
and special projects from the state, federal government, local
government, or private persons, may be transmitted to the Treasurer
and, if transmitted, shall be deposited in the begin delete State Treasury to the
credit of the end delete California State University Special Projects Fund,
which begin delete fund end delete is hereby begin delete created. end delete begin insert established in the State Treasury. end insert

begin insert (b) end insert begin insert   end insert All begin delete such end delete grants, revenues, and funds begin insert deposited in the
California State University Special Projects Fund end insert are begin delete hereby end delete
appropriated without regard to fiscal begin delete years end delete begin insert year end insert to the trustees for
the operation, support, and development of research, workshops,
conferences, institutes, and special projects in the California State
University.

begin insert (c) end insert begin insert   end insert Provision shall be made by the trustees for reimbursements
to the General Fund for the cost of space and services furnished
to projects funded by the California State University Special
Projects Fund.

begin insert (d) end insert begin insert   end insert Notwithstanding any begin delete other provision of the end delete law to the
contrary, the trustees shall have authority to establish the rules and
procedures under which the fund shall operate. All expenditures
shall be made in accordance with the rules and procedures, without
prior approval of the Department of General Services or the
Department of Finance. begin delete All expenditures shall receive an annual
postaudit by the Audits Division of the Department of Finance.
This requirement for an annual postaudit shall be effective until
July 1, 1992. On and after July 1, 1992, the expenditures end delete
begin insert Expenditures end insert from the fund shall be audited as frequently as the
Audits Division begin insert of the Department of Finance end insert deems appropriate.

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Moneys

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begin insert (e) end insert begin insert   end insert begin insert (1) end insert begin insert   end insert begin insert Except as provided end insert in begin insert paragraph (2), moneys in end insert the
California State University Special Projects Fund may be invested
by the begin delete Treasurer, end delete begin insert Treasurer or by the chief fiscal officer of a
campus of the California State University, end insert upon approval of the
begin delete trustees end delete begin insert trustees, only end insert in begin delete those end delete eligible securities listed in Section
16430 of the Government Code. begin delete All interest or other earnings
received pursuant to those investments shall be collected by the
Treasurer and shall be deposited in the State Treasury to the credit
of the California State University Special Projects Fund. end delete

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(2) Money received pursuant to Section 2080.8 of the Civil
Code, may be invested, upon approval of the trustees and in
accordance with Section 89726, by the Treasurer or by the chief
fiscal officer of a campus of the California State University, in
mutual funds subject to registration by, and under the regulatory
authority of, the United States Securities and Exchange
Commission, or in real estate investment trusts. All interest or
other earnings received pursuant to those investments shall be
collected by the Treasurer and shall be deposited in the fund.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 89726 is added to the end insert begin insert Education Code end insert begin insert , to read: end insert

begin insert

begin insert 89726. end insert   

(a) (1) The trustees may invest in securities or
investments not listed in Section 16430 of the Government Code
only if the trustees have established a committee to provide advice
and expertise on investments.

(2) A majority of the members of the committee shall be
individuals who have investment expertise and who are not trustees.

(3) The trustees shall allow the Treasurer to serve as a member
of the committee or to appoint a deputy treasurer to serve as a
member of the committee.

(b) The total amount invested in securities or investments not
listed in Section 16430 of the Government Code shall not exceed
the following amounts:

(1) In the fiscal year ending June 30, 2017, two hundred million
dollars ($200,000,000).

(2) In the fiscal year ending June 30, 2018, four hundred million
dollars ($400,000,000).

(3) In the fiscal year ending June 30, 2019, six hundred million
dollars ($600,000,000).

(4) In the fiscal year ending June 30, 2020, and each fiscal year
thereafter, thirty percent of all moneys invested pursuant to
Sections 89724 and 89725.

(c) (1) The trustees shall receive an investment performance
report quarterly and distribute an annual report to the Legislature,
in compliance with Section 9795 of the Government Code, and the
Department of Finance.

(2) The investment performance reports shall include investment
returns, comparisons to benchmarks, holdings, market values, and
fees.

(d) Any additional moneys earned through investments in
securities or investments not listed in Section 16430 of the
Government Code shall be used only for capital outlay or
maintenance.

(e) The trustees shall not submit a request to the Department
of Finance or the Legislature for any funds to compensate for
investment loss resulting from investments in securities or
investments not listed in Section 16430 of the Government Code.

(f) The trustees shall not cite investment loss resulting from
investments in securities or investments not listed in Section 16430
of the Government Code to justify approval of an increase in
student tuition or fees.

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SECTION 1.  

It is the intent of the Legislature to enact statutory
changes relating to the Budget Act of 2015.

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