BILL ANALYSIS �
SB 439
Page 1
Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 439 (Negrete McLeod) - As Amended: June 27, 2011
Policy Committee: PER&SSVote:6-0
Elections and Reapportionment 7-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill prohibits California Public Employees' Retirement
System (CalPERS) and California State Teachers' Retirement
System (CalSTRS) board members and specified employees from
accepting gifts of more than $50 from a single person who has
secured a contract with or submitted a contract proposal to, the
retirement system within the previous five years.
This bill also:
1)Allows a gift recipient to return the gift or its equivalent
dollar value to the donor within 30 days of receipt in order
to comply with this limit.
2)Disqualifies any vendor or contractor found to be violating
this gift policy on at least two separate occasions in a
five-year period from bidding on, and being awarded, any
contract for a period of two years from the date of the second
penalty assessment made by the Fair Political Practices
Commission for commission of the violation.
FISCAL EFFECT
There is no significant fiscal impact from this bill.
COMMENTS
1)Purpose. According to the sponsor, State Controller John
Chiang, "SB 439 is designed to restore public confidence in
CalPERS and CalSTRS' decision-making process by limiting
opportunities for influence-peddling or to gain an unfair
advantage in consideration for investments. If enacted, this
SB 439
Page 2
measure will assure CalPERS/CalSTRS members and taxpayers'
that investment decisions are being made in the best interest
of the funds, and set an enduring ethical precedent for other
states, localities and private investors to follow."
2)Background . In 2010, following charges of unethical conduct
against former CalPERS staff and board members and their
relationship to placement agents, CalPERS commissioned a study
by a Washington, D.C. law firm, Steptoe and Johnson, to review
CalPERS' investment decision making practices and to identify
ethical vulnerabilities. The initial findings of that report
were released in November 2010 and included a recommendation
to prohibit gifts to CalPERS board members and staff.
3)CalPERS and CalSTRS Policies. Existing state law already
prohibits a board member or designated employee at CalPERS or
CalSTRS from accepting gifts from a single source in a
calendar year with a total value of more than $420 if the
member or employee would be required to report the receipt of
income or gifts from that source on his or her statement of
economic interests. A violation of this gift limit can
subject a person to criminal, civil or administrative
penalties. This gift limit is a part of the Political Reform
Act (PRA), and applies broadly to most high-ranking state and
local government officials.
There is nothing in existing law, however, that explicitly
prevents an agency from adopting a gift policy for agency
employees that is more restrictive than the gift limit
established in the PRA. Both CalPERS and CalSTRS have adopted
policies that, in at least some instances, are more
restrictive than the gift limit established in the PRA.
4)Political Reform Act of 1974. This act was an initiative
statute, Proposition 9, which was passed by the California
voters and created the FPPC and codified significant
restrictions and prohibitions on candidates, officeholders and
lobbyists. Amendments to the PRA that are not submitted to
the voters, such as those contained in this bill, must further
the purposes of the initiative and require a two-thirds vote
of both houses of the Legislature.
SB 439
Page 3
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081