Code Section Group

Public Utilities Code - PUC


  ( Division 6 enacted by Stats. 1951, Ch. 764. )

CHAPTER 5. Retirement System [12301 - 12392]

  ( Chapter 5 enacted by Stats. 1951, Ch. 764. )

ARTICLE 3. Retirement Board [12361 - 12368]
  ( Article 3 enacted by Stats. 1951, Ch. 764. )


The board shall create a retirement board of not more than five members, at least two members of which shall be the elected representatives of the employees, to administer the retirement system, and shall define its powers and duties and the tenure of the members.

(Enacted by Stats. 1951, Ch. 764.)


All members of the retirement board shall serve without pay.

(Enacted by Stats. 1951, Ch. 764.)


The retirement board shall determine the eligibility of officers, employees, and their dependents to participation in the system and shall be the sole authority and judge under such ordinances as may be adopted by the board as to the conditions under which persons may be admitted to and continue to receive benefits of any sort under the retirement system, and may modify allowances for service and disability. The determination of the retirement board shall be final and conclusive and shall not be modified or set aside except for fraud or abuse of discretion.

(Enacted by Stats. 1951, Ch. 764.)


If the district maintains its own retirement fund, the retirement board shall have exclusive control of the administration, investment, and disbursement of the retirement fund. The retirement fund is a trust fund held for the exclusive purposes of providing benefits to members of the retirement system and their survivors and beneficiaries. Investment of the fund shall be subject to the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

(Amended by Stats. 1984, Ch. 1738, Sec. 33. Effective September 30, 1984.)


In addition to such other investments that are authorized by this article, the retirement board may, in its discretion, invest the assets of the retirement fund in deeds of trust and mortgages. Investments made under this section shall not exceed, in the aggregate, an amount equal to 25 percent of the assets of the system.

(Added by Stats. 1981, Ch. 484, Sec. 1.)


(a) Notwithstanding any other provision of this chapter, the retirement board, or the district’s treasurer with the approval of the retirement board, may enter into security loan agreements with broker-dealers and with California or national banks for the purpose of prudently supplementing the income normally received from investments.

(b) “Security loan agreement” means a written contract whereby a legal owner, the lender, agrees to lend specific marketable corporate or government securities for a period not to exceed one year. The lender retains the right to collect from the borrower all dividends, interest, premiums, rights, and any other distributions to which the lender would otherwise have been entitled. The lender waives the right to vote the securities during the term of the loan. The lender may terminate the contract upon not more than five business days’ notice as agreed, and the borrower may terminate the contract upon not less than two business days’ notice as agreed. The borrower shall provide collateral to the lender in the form of cash or bonds or other interest-bearing notes and obligations of the United States or federal instrumentalities eligible for investment by a lending retirement fund.

The collateral shall be in an amount equal to at least 102 percent of the market value of the loaned securities as agreed. The lender shall monitor the market value of the loaned securities daily. The loan agreement shall provide for payment of additional collateral on a daily basis, or at the time the value of the loaned securities increases, to agreed-upon ratios. In no event shall the amount of the collateral be less than the market value of the loaned securities.

(c) “Marketable securities” means securities that are freely traded on recognized exchanges or marketplaces.

(d) The retirement board or district treasurer entering into security loan agreements shall do all of the following:

(1) Maintain detailed records of all security loans.

(2) Develop controls and reports to monitor the conduct of the transactions.

(3) Publicize the net results of the security loan transaction separate from the results of other investment activities.

(Added by Stats. 1981, Ch. 484, Sec. 2.)


Notwithstanding any other provision of this article, the retirement system may invest in any and all investments authorized by Section 1372 of the Financial Code and Section 12871 of this code.

(Added by Stats. 1981, Ch. 484, Sec. 3.)


Notwithstanding Section 12364, the retirement board may contract with one or more qualified investment managers in connection with the investment program of the retirement board.

(Amended by Stats. 1984, Ch. 1738, Sec. 37. Effective September 30, 1984.)


The retirement board may authorize a trust company or a trust department of any state or national bank authorized to conduct the business of a trust company in this state or the Federal Reserve Bank of San Francisco or any branch thereof within this state, to act as custodian of any securities invested in by the retirement board. Any such bank or trust company may be authorized to collect the income from such securities or the proceeds of the sale thereof for the retirement board, and deposit said income or funds in the account of the retirement system. The compensation of such bank or trust company for such custodial services shall be fixed by agreement and shall be paid in the same manner and from the same funds as are other costs of administration of the retirement system. Securities of the retirement fund held by the custodian bank or trust company may be registered in the nominee name of the custodian or of the retirement system. The custodian bank or trust company shall make such disposition of the securities as the retirement board shall authorize. All such securities are at all times subject to the order of the retirement board.

(Added by Stats. 1969, Ch. 328.)


Funds held by a district pursuant to a written agreement between the district and the employees of the district to defer a portion of the compensation otherwise receivable by the district’s employees and pursuant to a plan for such deferral as adopted by the board, may be invested in the types of investments set forth in Section 53609 of the Government Code.

(Added by Stats. 1976, Ch. 820.)

PUCPublic Utilities Code - PUC3