BILL NUMBER: AB 2745	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Kaloogian

                        FEBRUARY 25, 2000

   An act to add Section 7513.6 to the Government Code, relating to
public retirement fund investments.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2745, as introduced, Kaloogian.  Public retirement fund
investments:  national security.
   Under the California Constitution, the retirement boards of public
pension or retirement systems have plenary authority over the
investment of pension funds, subject to their fiduciary duties to the
members of the system; however, the Legislature may prohibit
specified investments when it is in the public interest to do so and
when specified fiduciary standards are satisfied.
   This bill, the California State Investment Transparency and
Disclosure Act, would state legislative concerns and encourage the
Teachers' Retirement Board and the Board of Administration of the
Public Employees' Retirement System not to invest in foreign
companies that pose a threat to national security, as specified.  The
bill would require the respective boards to require their internal
and external fund managers to perform and disclose due diligence with
respect to potential investments in those companies and to hire an
independent auditor to review and report to the board and the
Legislature regarding present and proposed investments in those
companies, as specified, which reports would be available to the
public.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  This act shall be known, and may be cited as, the
California State Investment Transparency and Disclosure Act.
  SEC. 2.  (a) The Legislature is concerned about foreign companies
that pose threats to national security through terrorism or the
proliferation of weapons of mass destruction, as documented by the
federal Department of State.
   (b) The Teachers' Retirement Board and the Board of Administration
of the Public Employees' Retirement System are encouraged, pursuant
to the fiduciary standards prescribed by Section 17 of Article XVI of
the California Constitution and related statutes, not to invest in
foreign companies that pose those threats.
  SEC. 3.  Section 7513.6 is added to the Government Code, to read:
   7513.6.  (a) The Teachers' Retirement Board and the Board of
Administration of the Public Employees' Retirement System shall
require all internal and external fund managers to perform, and
disclose to the board, due diligence with respect to potential
investments in foreign companies and any threats to national security
that those companies may pose.
   (b) (1) The Teachers' Retirement Board and the Board of
Administration of the Public Employees' Retirement System shall each
hire an independent auditor to study and evaluate present and
proposed investments by the respective systems in foreign companies,
specifically those believed to be involved in terrorism or the
proliferation of weapons of mass destruction.
   (2) Each auditor shall report quarterly to their respective boards
and to the Legislature regarding its findings with respect to
present and proposed investments by the system in foreign companies
and, when warranted, may recommend the divestment of investments in
specific companies that pose a threat to national security.  The
reports shall be made available to the public.