BILL ANALYSIS �
AB 1379
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1379 (Bradford) - As Amended: March 14, 2011
Policy Committee: PERS Vote:4-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes public retirement systems with assets over
$4 billion to report annually to the Controller on investments
in California and emerging domestic markets, as specified.
Specifically, this bill:
1)Permits a state or local public retirement system with assets
over $4 billion to report to the Controller on investments in
California and emerging domestic markets, as specified, that
it adds to its portfolio on and after July 1, 2012.
2)Requires the Controller, by June 1, 2012, to develop
streamlined and cost-effective methods of identifying
investments within the retirement system's portfolios that
meet the definitions of California investment and emerging
domestic market investment. These methods are to be updated
at least every five years and be made available through the
Controller's Internet Web site.
FISCAL EFFECT
1)Costs to the Controller's office of approximately $500,000 to
establish the methods for pension systems to identify
investments that meet the criteria within the bill and for the
Controller to process the information and make it available on
their web site. Costs will vary depending on the number of
pension systems that elect to participate. Costs likely to
decline after initial reports and rise again when the
mandatory five-year updates are prepared.
2)The California Public Employees' Retirement System (CalPERS)
estimates that if they chose to participate, the costs to
AB 1379
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comply with the requirements of the bill would be
approximately $350,000.
3)Costs could be incurred by the California State Teachers
Retirement System to the extent that either choose to
participate and depending on how easily their current data
collection and reporting can be modified to meet the
Controller's criteria
COMMENTS
1)Purpose. According to the author, California communities
represent a potentially significant investment opportunity for
institutional investors generating appropriate risk-adjusted
returns. The state, however, does not track investments made
by public pension funds and does not engage private investors
on how to make the state a more attractive place in which to
invest. More private investment, in turn, could result in
increased financial opportunities for the state's historically
underserved capital markets, also known as emerging domestic
markets, which include ethnic- and women-owned firms, urban
and rural communities, companies which serve
low-to-moderate-income populations, and other small- and
medium sized businesses.
2)CalPERS and CalSTRS . Both entities have special initiatives
on California investments and investments in emerging domestic
managers. According to information provided by CalPERS, the
capital that CalPERS invests in California is usually not
explicitly directed to the state but is the consequence of a
process weighing the financial merits of particular companies,
properties and projects, regardless of location.
3)Applicable retirement systems. According to the most recent
data on public pension systems (fiscal year 2007-2008) that
are compiled by the Controller's Office, 15 public pension
funds in the state have assets over $4 billion. In addition
to CalPERS and STRS, there are two University of California
systems, and two in Los Angeles County. Also included in the
bill's criteria would be three pension systems within the City
of Los Angeles, the City and County of San Francisco, and the
Counties of Los Angeles, San Diego, Orange, San Bernardino,
Sacramento, Alameda, and Contra Costa. There are four or five
other systems that could be affected, as their assets may have
grown since the 2007-2008 fiscal year.
AB 1379
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4)Previous legislation . AB 2570(Arambula) of 2006 was vetoed by
Governor Schwarzenegger on the basis of administrative costs,
and contained, among its other provisions, language similar to
AB 1379.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081