BILL ANALYSIS
SENATE COMMITTEE ON ELECTIONS, REAPPORTIONMENT AND
CONSTITUTIONAL AMENDMENTS
Senator Loni Hancock, Chair
BILL NO: SB 1007 HEARING DATE:
4/6/10
AUTHOR: HANCOCK ANALYSIS BY:
Darren Chesin
AMENDED: 3/25/2010
FISCAL: YES
SUBJECT
Political Reform Act: CalPERS and CalSTRS boards
DESCRIPTION
Existing law , pursuant to the Political Reform Act (PRA),
requires candidates for elective state and local office and
committees formed or existing primarily to support or
oppose those candidates to file periodic reports disclosing
contributions and expenditures made in connection with
those campaigns. These reports are required to be filed on
a semi-annual basis and more frequently as the date of an
election nears. Furthermore, contributions of $5,000 or
more must be reported within 10 business days on an ongoing
basis and contributions of $1,000 or more must be reported
within 24 hours during the period immediately prior to an
election but following the last regular reporting date.
Candidates and committees must also file initial statements
of organization. Upon termination of a candidate or other
type of committee an additional report must be filed
disclosing, among other things, the disposition of any
surplus funds. State candidates and committees who raise
or expend funds in excess of specified thresholds must also
file their reports online.
Existing law places specified limits on the amount of
individual contributions that candidates for state office
and certain committees may accept.
Existing law specifies the composition of the Board of
Administration of the Public Employees' Retirement System
which administers the Public Employees' Retirement System
(CalPERS) and the Teachers' Retirement Board which
administers the State Teachers' Retirement System
(CalSTRS).
Existing law requires that designated seats on the CalPERS
and CalSTRS boards be filled by election. Candidates for
election to the CalPERS board are currently required to
file campaign reports only during the period preceding the
campaign and once more afterwards. Candidates for election
to the CalSTRS board do not currently have any campaign
reporting obligations.
This bill would require candidates for election to the
CalPERS and CalSTRS boards to file campaign reports in
generally the same manner and frequency as other candidates
for state office and extend existing campaign contribution
limits to them as well. Committees formed or existing
primarily to support or oppose those candidates would also
be similarly affected. This bill would also give the Fair
Political Practices Commission (FPPC) the authority to
adopt regulations to tailor these reporting requirements
for those candidates and committees consistent with the
purposes and provisions of the PRA.
BACKGROUND
CalPERS provides retirement and health benefits to more
than 1.6 million public employees, retirees, and their
families and more than 3,000 employers. Membership is
divided approximately in thirds among current and retired
employees of the state, schools, and participating public
agencies. As of January 31, 2010, the market value of
their investment portfolio was approximately $200 billion.
CalPERS is administered by a 13-member Board of
Administration. Members are either elected by members of
the system, appointed, or are designated by law to be on
the Board. The Board's responsibilities include, but are
not limited to, setting employer contribution rates,
determining investment asset allocations, and providing
actuarial valuations. The Board does not have the
authority to add, change, or delete benefits without the
concurrence of the Legislature.
Six members are elected as follows:
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Two elected by and from all CalPERS members.
One elected by and from all active State members.
One elected by and from all active CalPERS school members.
One elected by and from all active CalPERS public agency
members.
One elected by and from the retired members of CalPERS.
Three members are appointed as follows:
Two appointed by the Governor - an elected official of a
local government and an official of a life insurer
One public representative appointed jointly by the
Speaker of the Assembly and the Senate Rules Committee.
The four designated members are:
The State Treasurer
The State Controller
The Director of the Department of Personnel Administration
A designee of the State Personnel Board.
CalSTRS provides retirement related benefits and services
to teachers in public schools and community colleges. It
has approximately 833,000 members and assets of $132.6
billion as of February 28, 2010.
CalSTRS is administered by a 12-member board which sets the
policies and makes rules for the system and is responsible
for ensuring benefits are paid by the system in accordance
with the law. The board includes:
Three member-elected positions representing current
educators.
A retired CalSTRS member appointed by the Governor and
confirmed by the Senate.
Three public representatives appointed by the Governor
and confirmed by the Senate.
A school board representative appointed by the Governor
and confirmed by the Senate.
Four board members who serve in an ex-officio capacity by
virtue of their office: Director of Finance, State
Controller, State Superintendent of Public Instruction,
and State Treasurer.
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Candidate and Campaign Committee Finances . According to
campaign reports, candidates for election to the CalPERS
board and committees formed to support them raised a total
of $480,710 in 2009 and $318,977 in 2007. Candidates for
election to the CalSTRS board and affiliated committees are
not required to file campaign reports but according to
CalSTRS staff, none of the current elected board members
have ever received any campaign contributions.
COMMENTS
1.According to the sponsor , the decline of the PERS and
STRS portfolios and recent scrutiny of placement agents
have raised serious questions about the vulnerability of
PERS and STRS board members to undue influence over the
investment of public funds. Press reports highlight the
fact that campaign report filings for one former PERS
board member were last made in 2006 and there is no
public record of the disposition of those funds.
State law requires candidates for the PERS board to file
campaign reports during a campaign and once shortly
afterwards. After that last filing, no public report is
required unless the candidate reactivates the account for
another campaign. If a candidate does not run again, the
final disposition of funds remaining after a campaign is
not publicly accounted for. With STRS, there is no
campaign report requirement at all.
The reason state pension board members are not subjected to
the strict reporting requirements for all other
California candidates is because at the time the campaign
filing law was last amended, it was believed that PERS
and STRS campaigns were so materially insignificant that
no oversight was needed. Given the cost of current
campaigns and greater fiscal responsibilities of board
members, that is no longer the case. This bill will
improve public scrutiny and confidence in the investment
of hundreds of billions of dollars in public funds.
POSITIONS
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Sponsor: State Controller
Support: American Federation of State, County and Municipal
Employees
California Taxpayers' Association
California Teachers Association
CalPERS Board of Administration
Fair Political Practices Commission
Secretary of State
State Treasurer
Oppose: None received
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