BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 867
                                                                  Page  1


          SENATE THIRD READING
          SB 867 (Hollingsworth)
          As Amended  October 7, 2010
          2/3 vote.  Urgency 

           SENATE VOTE  :Vote not relevant  
           
           SUMMARY  :  This bill makes various changes to implement the 2010  
          Pension Reform transparency provisions agreed to as part of the  
          2010-11 budget package.  Specifically,  this bill  :

          1)Contains "Transparency" language that requires the California  
            Public Employees Retirement System (CalPERS) to report its  
            investment returns, amortization period, and discount rates  
            using specific analytical guidelines every time in adopts  
            contribution rates.  The Treasurer is required to report to  
            both houses of the Legislature during a publicly noticed floor  
            session on the contents of this CalPERS report.

          2)Urgency Clause.  Declares this bill take effect immediately as  
            an urgency statute.

           FISCAL EFFECT  :  Possible increased costs associated with  
          transparency reporting requirement. 

           COMMENTS  :  This bill stipulates that CalPERS create a report any  
          time contribution rates are adopted.  The bill prescribes  
          specific actuarial assumptions to be made in the report which  
          have the effect of framing the system's fund condition in an  
          unrealistically negative manner.  The bill further requires that  
          the Treasurer present this report in publicly noticed floor  
          session of both houses within 30 days of receiving the report  
          from CalPERS.

          According to CalPERS, the language that triggers the report is  
          written in such a manner that it would require a report for even  
          small technical adjustments to contribution rates by any of the  
          3,000 employers that are part of CalPERS.  If CalPERS chose to  
          comply with this bill, it could result in the hundreds of  
          reports being required each year, with some estimates that over  
          2,000 separate reports could be required.  However, Proposition  
          162 of 1992 grants the CalPERS Board sole and exclusive power to  
          provide actuarial services to the fund, thus any compliance with  
          the reports stipulated in this bill would be at CalPERS  








                                                                  SB 867
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          discretion.


           Analysis Prepared by     Christian Griffith / BUDGET / (916)  
          319-2099



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