SECTION 1.
(a) The Legislature finds and declares the following:(1) Public pension fund investments represent billions of dollars of financing for California communities, and the state could adopt and implement more effective economic development policies with better information on fund investments in California and in its emerging markets.
(2) Historically, economic growth in California has outpaced the economic growth rate of the nation as a whole, and the state has led the nation in export-related jobs, business startups, and innovation. However, since the subprime home mortgage crisis in 2007, California communities have struggled. With the increasing rates of home foreclosure and the tightening of the credit markets, many businesses have found their existing lines of credit inaccessible. Significant drops in consumer spending have led to workforce reductions and business bankruptcies.
(3) For much of 2009, the number of unemployed workers rose by 40,000 to 60,000 per month, and the year ended with 2.25 million unemployed California workers. While California may be emerging from the recession, unemployment is expected to remain high through 2011. Without specific intervention to support job creation and business expansion, many regions of California will be very slow to recover.
(4) As California moves forward from this recession, it is important that the state support the recovery and expansion of industries that provide quality jobs, enhance regional and global supply chains, and strengthen the state’s competitiveness.
(5) Modern investment theory includes a set of concepts aimed at building a most efficient portfolio of different types of assets that yields the highest return for a given level of investor risk. Diversification is one of the key elements in building a portfolio, including diversification by asset class and by geography. Given that the United States is the largest economy in the world and that California is the largest economy in the United States, a certain portion of any fully diversified investment portfolio includes investments in California. Therefore, there is a clear alignment of interest between medium to large institutional investors and the economic recovery of California.
(6) Increasing investments in minority-owned businesses and within minority communities is vital to the future economic health of the nation and its business community. Investment in historically disadvantaged communities by public pension systems adds value for the members of those systems and increases access to financial capital for historically underserved markets and groups of people.
(7) Investments in emerging domestic markets can provide appropriate risk-adjusted returns to institutional investors including public pension funds. In 2000, the boards of administration for the Public Employees’ Retirement System and the State Teachers’ Retirement System each adopted a 2-percent goal for economically targeted investments. These investments are intended to create value for the members of those retirement systems while facilitating improved access to financial capital in historically underserved markets.
(b) It is the intent of the Legislature, consistent with the plenary authority and fiduciary responsibilities of the retirement boards of public pension or retirement systems under Section 17 of Article XVI of the California Constitution, that those retirement boards that have sufficiently diversified portfolios adopt California emerging market investment policies that meet their own unique investment objectives.