BILL ANALYSIS �
AB 1735
Page 1
Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1735 (Wieckowski) - As Amended: March 19, 2012
Policy Committee: PERSSVote:5-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill expands the list of positions for which the Teachers'
Retirement Board has the authority to set the compensation and
terms and conditions of employment to include the chief
operating officer (COO) and chief financial officer (CFO) and
prohibits the salary for the COO and CFO from exceeding 150% of
the Governor's salary, currently $173,987 per annum.
FISCAL EFFECT
Increased special fund costs to CalSTRS of approximately
$200,000, when the salaries are adjusted using the flexibility
in this bill. Given the new ceiling of $260,000 per annum, this
bill allows CalSTRS to double the existing salaries. The actual
costs will depend on the compensation packages developed by the
Teachers' Retirement Board. Any increase in CalSTRS costs could
create General Fund pressure either directly through state
support or state payments to school districts.
COMMENTS
1)Rationale . According to the author, current law requires that
the hiring of the COO and CFO be limited to the state civil
service pool. The author argues this limitation constrains
the California State Teachers' Retirement System's (CalSTRS)
ability to recruit highly qualified candidates that possess
essential specialized knowledge, skills, abilities and
competencies that are required for positions that are
associated with investment financial management in a large
public pension fund. The author notes that the type of
experience needed to manage the risks associated with a large
pension fund is not likely to be found within the state civil
AB 1735
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service but from other pension funds or private sector
financial institutions.
2)CalSTRS . The sponsor of the bill is CalSTRS, which states
that the bill enhances their ability to preemptively plan for
the succession of vulnerable top level executive positions,
particularly those responsible for managing the increasingly
complex financial and operation components of the largest
teacher pension fund in the nation. This bill also improves
CalSTRS' ability to attract and retain employees for key
executive positions that require specialized and critical
expertise and competencies and allows the board to recruit
from broader sources. They also argue that the bill will
result in unknown savings based on an improved ability to
avoid future financial and operational risk due to the board's
increased ability to recruit and retain the most highly
qualified employees.
3)Previous legislation . SB 269 (Soto), Chapter 856, Statutes of
2003, allowed the CalPERS Board of Administration and the
Teachers' Retirement Board to set compensation and terms and
conditions of employment of certain key positions. AB 1317
(Mullin), Chapter 333, Statutes of 2007, expanded the list of
key positions to include the general counsel.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081