BILL ANALYSIS Ó
SENATE COMMITTEE ON
PUBLIC EMPLOYMENT AND RETIREMENT
Dr. Richard Pan, Chair
2015 - 2016 Regular
Bill No: SB 216 Hearing Date: 4/13/15
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|Author: |Pan |
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|Version: |2/12/15 As introduced |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Glenn Miles |
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Subject: California Public Employees' Retirement System:
annual housekeeping bill
SOURCE: California Public Employees' Retirement System
(CalPERS)
DIGEST: SB 216 is CalPERS' annual housekeeping bill and makes
technical and non-controversial changes to CalPERS-administered
portions of the Government Code.
ANALYSIS:
Existing law:
1)Grants CalPERS, under the Constitution, plenary authority over
investment decisions and specifically authorizes CalPERS to
invest in accordance with modern portfolio theory.
2)Requires CalPERS to submit a review of its assets to the
Legislature and contracting agencies on a quarterly basis and
provides that the report include specific information,
including the cost basis and market value of investments by
asset class.
3)Provides that a CalPERS member who returns to active service
after an approved medical leave or parental leave may purchase
service credit for that period of absence, as specified.
This bill:
SB 216 (Pan) Page 2 of ?
1)Repeals an obsolete statute dating from 1987 that required
CalPERS to give first priority to investing not less than 25%
of all funds available for new investment in a fiscal year to
investment securities and products related to specified real
property located in the state. This bill also eliminates
corresponding obsolete reporting requirements.
2)Changes, from quarterly to semi-annually, the period by which
CalPERS must produce its asset and performance report and
submit it to the Legislature. The bill also eliminates the
requirement that the report include the cost basis for
CalPERS' holdings and instead requires that the report include
asset performance data based on a time-weighted return and a
comparison to alternative portfolios based on policy
benchmarks approved by the CalPERS board.
3)Clarifies that a member who wishes to purchase service credit
for an approved medical leave or parental leave must do so
after returning to active public employment and prior to
retirement.
Background
CalPERS annually sponsors "housekeeping" legislation to provide
technical and non-controversial amendments to portions of the
Government Code that CalPERS administers.
Proposition 162 granted public retirement systems plenary
authority over the systems' investment programs. Moreover,
Proposition 21 authorized public retirement systems to invest
assets in accordance with modern portfolio theory. Certain
requirements in the statutes predate these constitutional
changes and this bill repeals and updates certain of these
outdated provisions with regard to CalPERS' investment program.
Some investment program reporting requirements have also become
outdated and do not reflect current practices. According to
CalPERS, this bill will save money by allowing CalPERS to sync
legislative reporting with other investment reports CalPERS
produces, include more useful information while eliminating
requirements for information that CalPERS does not currently
provide, and allow more flexibility in reporting to keep current
with industry standards as they change in the future.
SB 216 (Pan) Page 3 of ?
Finally, CalPERS' general rules regarding service credit
purchases require that an individual must be actively employed
by a CalPERS employer or one of the reciprocal public employers
at the time of the service credit purchase election. The
election must be made prior to the retirement election. Two
individual service credit elections do not make this
specifically clear, creating confusion for individuals who wish
to purchase service credit under those options.
Prior/Related Legislation
AB 2472 (Assembly Public Employees, Retirement and Social
Security Committee, Chapter 237, Statutes of 2014), CalPERS
annual housekeeping bill, makes technical and non-controversial
changes to CalPERS- administered portions of the Government
Code.
SB 215 (Beall, Chapter 778, Statutes of 2013), CalPERS annual
housekeeping bill, makes technical and non-controversial changes
to CalPERS- administered portions of the Government Code.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
California Public Employees' Retirement System (source)
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: According to the sponsor, "These
changes are clarifying technical or minor policy changes
necessary for administrative purposes, identified through the
performance of normal business processes."