BILL ANALYSIS
Appropriations Committee Fiscal Summary
1632 (Figueroa)
Hearing Date: 5/17/04 Amended: 5/11/04
Consultant: Maureen Ortiz Policy Vote: Judiciary
5-2
P. E. & R. 3-2
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BILL SUMMARY: SB 1632 requires public pension systems to
obtain specified information from corporations within the
internal equity index fund of their investment portfolios.
It requires each system to report to the Legislature
regarding the corporate information received, and to make
the report available to the public. Each corporation that
submits information will be required to include a
certification that the information is true and complete.
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Fiscal Impact (in thousands)
Major Provisions 2004-05 2005-06
2006-07 Fund
PERS admin costs $135 $270
$270 PERF
STRS admin costs $200 $140
$140 TRF
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STAFF COMMENTS: This bill meets the criteria to be placed
on the Suspense file. CalSTRS indicates that the first
year costs will be approximately $200,000. After that,
they will most likely contract out the duties of data
collection at a cost of about $50,000, and will need 1 PY
internally for analysis and reporting at about $90,000.
SB 1632 will require CalPERS, and CalSTRS, to request the
following information from corporations, to the extent
feasible, whose capital stock is held within the internal
equity index fund of the pension fund's investment
portfolio:
1) the corporation's compliance with international human
right standards, including the International Labor
Organization's Core Labor Principles,
2) whether the corporation has been cited or penalized for
public health or human rights, environmental, employment,
consumer protection or corruption-related violations abroad
or domestically, and if so, the cumulative value of the
penalties, and,
3) whether the corporation has adopted an environmental
management system or is a member of the Coalition for
Environmentally Responsible Economies (CERES) or the Global
Reporting Initiative.
According to CalPERS, there are approximately 2,000
corporations that they would have to request the
information from incurring costs of about $270,000 per
year. It is unclear whether the use of the PERF Fund is
appropriate for this purpose since the data collection may
not offer any direct benefit to the members of CalPERS.
The 5/11/04 amendments provide that the public pension
systems shall request the information on at least a
biyearly basis, and allows for a gradual 3-year phase-in
for the initial reporting. SB 1632 will not limit the
pension fund's ability to execute its fiduciary duty or to
require any system to make investment decisions or impose
different criteria on existing or potential investments.