BILL NUMBER: SCA 16 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Burton
MARCH 6, 2000
Senate Constitutional Amendment No. 16--A resolution to propose to
the people of the State of California an amendment to the
Constitution of the State, by amending Section 17 of Article XVI
thereof, relating to public pension or retirement funds.
LEGISLATIVE COUNSEL'S DIGEST
SCA 16, as introduced, Burton. Public retirement systems.
The California Constitution provides that a retirement board of a
public pension or retirement system shall have sole and exclusive
responsibility to administer the system, as specified, and to provide
for actuarial services, as specified.
This measure would provide that expenditures for administration
and personnel of any retirement system that receives regularly
scheduled contributions from the state shall be subject to
appropriation therefor in the annual Budget Act, and would authorize
the Governor or the Rules Committees of both houses of the
Legislature, once every 5 years beginning in January 2005, to cause
an independent actuarial review to be conducted of such a public
pension or retirement system, as specified.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
Resolved by the Senate, the Assembly concurring, That the
Legislature of the State of California at its 1999-2000 Regular
Session commencing on the seventh day of December 1998, two-thirds of
the membership of each house concurring, hereby proposes to the
people of the State of California that the Constitution of the State
be amended by amending Section 17 of Article XVI thereof, to read:
SEC. 17. The State shall not in any manner loan its credit,
nor shall it subscribe to, or be interested in the stock of any
company, association, or corporation, except that the State and each
political subdivision, district, municipality, and public agency
thereof is hereby authorized to acquire and hold shares of the
capital stock of any mutual water company or corporation when the
stock is so acquired or held for the purpose of furnishing a supply
of water for public, municipal or governmental purposes; and the
holding of the stock shall entitle the holder thereof to all of the
rights, powers and privileges, and shall subject the holder to the
obligations and liabilities conferred or imposed by law upon other
holders of stock in the mutual water company or corporation in which
the stock is so held.
Notwithstanding any other provisions of law or this Constitution
to the contrary, the retirement board of a public pension or
retirement system shall have plenary authority and fiduciary
responsibility for investment of moneys and administration of the
system, subject to all of the following:
(a) The retirement board of a public pension or retirement system
shall have the sole and exclusive fiduciary responsibility over the
assets of the public pension or retirement system. The retirement
board shall also have sole and exclusive responsibility to administer
the system in a manner that will assure prompt delivery of benefits
and related services to the participants and their beneficiaries.
Notwithstanding the foregoing, the proposed budget for personnel
and administration for each fiscal year of any public pension or
retirement system that receives regularly scheduled contributions
from the state shall be submitted to and reviewed by the Legislature
pursuant to Section 12 of Article IV. No expenditure by the system
for administration or personnel shall be made unless an appropriation
has been made for those purposes, for that fiscal year, in the
annual Budget Act. The assets of a public pension or
retirement system are trust funds and shall be held for the exclusive
purposes of providing benefits to participants in the pension or
retirement system and their beneficiaries and defraying reasonable
expenses of administering the system.
(b) The members of the retirement board of a public pension or
retirement system shall discharge their duties with respect to the
system solely in the interest of, and for the exclusive purposes of
providing benefits to, participants and their beneficiaries,
minimizing employer contributions thereto, and defraying reasonable
expenses of administering the system. A retirement board's duty to
its participants and their beneficiaries shall take precedence over
any other duty.
(c) The members of the retirement board of a public pension or
retirement system shall discharge their duties with respect to the
system with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in a like
capacity and familiar with these matters would use in the conduct of
an enterprise of a like character and with like aims.
(d) The members of the retirement board of a public pension or
retirement system shall diversify the investments of the system so as
to minimize the risk of loss and to maximize the rate of return,
unless under the circumstances it is clearly not prudent to do so.
(e) The retirement board of a public pension or retirement system,
consistent with the exclusive fiduciary responsibilities vested in
it, shall have the sole and exclusive power to provide for actuarial
services in order to assure the competency of the assets of the
public pension or retirement system. Once every five years,
commencing in January, 2005, the Governor or the Rules Committees of
both houses of the Legislature may choose an independent actuary to
review the financial data and actuarial determinations of any public
pension or retirement system that receives regularly scheduled
contributions from the state. The retirement board of the public
pension or retirement system shall fully cooperate with the review
process and shall provide a written explanation of any discrepancies
noted by the reviewing actuary.
(f) With regard to the retirement board of a public pension or
retirement system which includes in its composition elected employee
members, the number, terms, and method of selection or removal of
members of the retirement board which were required by law or
otherwise in effect on July 1, 1991, shall not be changed, amended,
or modified by the Legislature unless the change, amendment, or
modification enacted by the Legislature is ratified by a majority
vote of the electors of the jurisdiction in which the participants of
the system are or were, prior to retirement, employed.
(g) The Legislature may by statute continue to prohibit certain
investments by a retirement board where it is in the public interest
to do so, and provided that the prohibition satisfies the standards
of fiduciary care and loyalty required of a retirement board pursuant
to this section.
(h) As used in this section, the term "retirement board" shall
mean the board of administration, board of trustees, board of
directors, or other governing body or board of a public employees'
pension or retirement system; provided, however, that the term
"retirement board" shall not be interpreted to mean or include a
governing body or board created after July 1, 1991 which does not
administer pension or retirement benefits, or the elected legislative
body of a jurisdiction which employs participants in a public
employees' pension or retirement system.