Bill Text

PDF |Add To My Favorites | print page

AB-161 Public employees’ retirement: pension fund management.(2017-2018)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
Date Published: 08/06/2018 02:00 PM
AB161:v98#DOCUMENT

Amended  IN  Senate  August 06, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill
No. 161


Introduced by Assembly Member Levine

January 13, 2017


An act to add Section 13314 to the Government Code, relating to state government, and making an appropriation therefor. amend Section 7514.2 of the Government Code, relating to public employees’ retirement.


LEGISLATIVE COUNSEL'S DIGEST


AB 161, as amended, Levine. Department of Finance: infrastructure investment. Public employees’ retirement: pension fund management.
Existing law creates the Department of Finance and provides that the department has general powers of supervision over all matters concerning the financial and business policies of the state. establishes the Public Employees’ Retirement System and the State Teachers’ Retirement System. These systems provide defined pension benefits to public employees based on age, service credit, and final compensation. The California Constitution confers upon the retirement boards of public retirement systems plenary authority and fiduciary responsibility for the investment of moneys of those systems. Existing law authorizes these public retirement system boards, consistent with their fiduciary duties and the standard for prudent investment, to prioritize investment in an in-state infrastructure project over a comparable out-of-state infrastructure project.

The Public Employees’ Retirement Law (PERL) creates the Public Employees’ Retirement System (PERS) and provides a defined benefit to its members based on age at retirement, service credit, and final compensation. PERL vests management and control of PERS in the Board of Administration of the Public Employees’ Retirement System, including the exclusive control of the investment of the retirement fund, and requires the board and its officers and employees to discharge their duties with respect to this system solely in the interest of the participants and beneficiaries.

This bill would authorize the Department of Finance to identify infrastructure projects in the state for which the department will guarantee a rate of return on investment for an investment made in that infrastructure project by the Public Employees’ Retirement System. The bill would create the Reinvesting in California Special Fund as a continuously appropriated fund and would require the moneys in the fund to be used to pay the rate of return on investment. The bill would require the rate of return on investment to be subject to the availability of moneys in the fund. The bill would also state the intent of the Legislature to identify special funds to be transferred into the fund for the purposes of these provisions. By creating a new continuously appropriated fund, this bill would make an appropriation. require specified staff of the Public Employees’ Retirement System to work with appropriate state agencies to produce an annual list, that may be provided to each board, of priority infrastructure projects most suitable for funding.
Vote: MAJORITY   Appropriation: YESNO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 7514.2 of the Government Code is amended to read:

7514.2.
 (a) As used in this section, the following definitions shall apply:
(1) “Board” means the Board of Administration of the Public Employees’ Retirement System, the Teachers’ Retirement Board, or the board of retirement or board of investments of a retirement system established pursuant to the County Employees Retirement Law of 1937 (Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of Title 3).
(2) “Infrastructure” includes, but is not limited to, telecommunications, power, transportation, ports, petrochemical, and utilities.
(b) A board may, subject to and consistent with its fiduciary duties and the standard for prudent investment set forth in Section 20190 of this code, Section 22203 of the Education Code, and Section 17 of Article XVI of the California Constitution, prioritize investment in an in-state infrastructure project over a comparable out-of-state project. The Public Employees’ Retirement System infrastructure investment staff shall work with appropriate state agencies to produce an annual list, that may be provided to each board, of priority infrastructure projects most suitable for funding. For purposes of this subdivision, “suitable” means, but is not limited to, projects that are less likely to be impeded by the prohibited transaction and exclusive benefit rules.
(c) The Legislature encourages each board to prioritize investment in in-state infrastructure projects over alternative out-of-state infrastructure projects if the investments in the in-state projects are consistent with the board’s fiduciary duties to minimize the risk of loss and to maximize the rate of return.
(d) Nothing in this section shall require a board to take action that is inconsistent with its plenary authority and fiduciary responsibilities, as described in Section 17 of Article XVI of the California Constitution.

SECTION 1.Section 13314 is added to the Government Code, to read:
13314.

(a)The Department of Finance may, subject to subdivision (c), evaluate and identify infrastructure projects in the state for which the department shall guarantee a rate of return on investment for an investment made in that infrastructure project by the Public Employees’ Retirement System.

(b)There is hereby established in the State Treasury the Reinvesting in California Special Fund. Notwithstanding Section 13340, all moneys in the Reinvesting in California Special Fund shall be continuously appropriated without regard to fiscal years. The moneys in the fund shall be used to pay the rate of return on investment provided for in subdivision (a).

(c)The rate of return on investment in subdivision (a) shall be subject to the availability of moneys in the Reinvesting in California Special Fund.

(d)No General Fund moneys shall be deposited into the fund. It is the intent of the Legislature to, through the Budget Act or other measure, identify and deposit into the fund special fund moneys, including trust fund moneys that are otherwise legally available for these purposes.