Senate Bill No. 1412

Introduced by Senator Block

February 19, 2016

An act to amend Sections 89724 and 89725 of, and to add Section 89726 to, the Education Code, relating to the California State University, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

SB 1412, as introduced, Block. California State University: investments.

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.

This bill would authorize the Treasurer or chief fiscal officer of a campus of the California State University to invest that money 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.

Existing law establishes the California State University Special Projects Fund, which consists of grants, revenues, and funds that are appropriated 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.

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. Because the bill would authorize the expenditure of moneys from a continuously appropriated fund for new purposes, it would make an appropriation.

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.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 89724 of the Education Code is amended
to read:

89724.  

(a)  All money received begin delete 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. Money end delete begin insert 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.

end insert begin insert

(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.

end insert

begin insert (b) end insert begin insert   end insert begin insert (1) end insert begin insert   end insert begin insert Money end insert 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. begin delete Money end delete

begin insert (2) end insert begin insert   end insert begin insert Money end insert 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 begin delete 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 such investment
shall also be used for those scholarships and loans. Money end delete begin insert provide. end insert

begin insert end insert
begin insert (3) end insert begin insert   end insert begin insert Money end insert 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 and in investment certificates or
withdrawal shares in federal or state credit unions which are doing
business in this state and which have their accounts insured by the
National Credit Union Administration. Any money so invested or
deposited shall be invested or deposited in certificates, shares, or
accounts fully covered by the insurance. end delete begin insert Code. end insert

begin insert (4) end insert begin insert   end insert begin insert Money received under Sections 89720 and 89721, and
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 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. 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 begin delete such end delete purposes begin delete as may be end delete
established by the trustees consistent with the terms and conditions
of the gift, bequest, devise, donation, or agreement under Sections
89720 and 89721. begin delete Except end delete

begin insert (5) end insert begin insert   end insert begin insert Except end insert 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.

begin delete

(b)

end delete

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 begin delete their end delete begin insert the end insert deposit begin insert of that money end insert in the State
Treasury.

SEC. 2.  

Section 89725 of the Education Code is amended to
read:

89725.  

begin insert (a) end insert begin insert   end insert Notwithstanding any begin delete other end delete begin delete 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 delete

All such

end delete

begin insert (b) end insert begin insert   end insert begin insert All end insert 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 delete

Provision

end delete

begin insert (c) end insert begin insert   end insert begin insert Provision end insert 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 delete

Notwithstanding

end delete

begin insert (d) end insert begin insert   end insert begin insert Notwithstanding end insert any begin delete other end delete begin delete 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.

begin delete

Moneys

end delete

begin insert (e) end insert begin insert   end insert begin insert Moneys end insert in 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 begin delete Code. All end delete begin insert Code, or, in
accordance with Section 89726, 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 end insert interest or other earnings received pursuant
to those investments shall be collected by the begin delete Treasurer end delete begin insert Treasurer, end insert
and shall be deposited in the begin delete State Treasury to the credit of the
California State University Special Projects Fund. end delete begin insert fund. end insert

SEC. 3.  

Section 89726 is added to the Education Code, to read:

89726.  

(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
employees of the California State University.

(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, 30 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, and shall not be used for ongoing operations.

(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.