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Proposed Retirement-Related State Legislation

Following are updates of proposed retirement-related State legislation. Each of these
bills has been “enrolled” meaning that they have passed both houses of legislature and
have been delivered to the Governor.

Bill Number: AB 194
Summary: This bill would specify that, not withstanding any other law, for the purposes
of determining a retirement benefit paid to a person who first becomes a member of a
public retirement system on or after January 1, 2011, the maximum salary or payrate
upon which retirement benefits shall be based shall not exceed 125% of the salary
recommended by the California Citizens Compensation Commission to be paid to the
Governor of the State of California effective December 7, 2009 ($173,987). The bill
would require that this amount be adjusted annually based on changes in the All Urban
California Consumer Price Index. As an urgency statute, this bill would take effect
immediately.


Bill Number: AB 1743
Author: Hernandez
Summary: This bill would amend the existing definition of “placement agent” to mean a
person, as defined, hired, engaged, or retained by, or serving for the benefit of or on
behalf of, an external manager, as defined, to act as a finder, solicitor, marketer,
consultant, broker, or other intermediary in connection with the offer or sale of the
securities, assets, or services of an external manager to a public retirement system in
California for compensation, and would exclude from that definition an employee,
officer, director, equityholder, partner, member, or trustee of an external manager who
spends 1/3 or more of his or her time, during a calendar year, managing securities or
assets owned, controlled, invested, or held by the external manager. The bill would
define “placement agent” in a similar way for purposes of the Political Reform Act of
1974, except that the definition would be limited to an individual acting in connection
with the offer or sale of the securities, assets, or services of an external manager to a
state public retirement system in California and would not include employees, officers,
or directors of specified external managers or of affiliates of those external managers. In addition, the bill would prohibit a person from acting as a placement agent in
connection with any potential system investment made by a state public retirement
system unless that person is registered as a lobbyist and is in full compliance with the
Political Reform Act of 1974 as that act applies to lobbyists. The bill would also require
a person acting as a placement agent in connection with any potential system
investment made by a local public retirement system to file any applicable reports with
the local government agency that requires lobbyists to register and file reports and to
comply with any applicable requirements imposed by a local government agency. The
bill would provide that an individual acting as a placement agent is a lobbyist for the
purposes of the Political Reform Act of 1974 and is thereby required to comply with all
regulations and restrictions imposed on lobbyists by the act, and the bill would further
expand the definition of “administrative action” for purposes of the act to include, with
regard only to placement agents, the decision by any state agency to enter into a
contract to invest state public retirement system assets on behalf of a state public
retirement system. The bill would specify that a placement agent who is registered with
the Securities and Exchange Commission and regulated by the Financial Industry
Regulatory Authority is permitted to receive a payment of fees for contractual services
provided to an investment manager, except to the extent that payment of fees is
prohibited by the proscription on contingency payments to placement agents.


Bill Number: AB 1987
Summary: This bill would generally provide, effective July 1, 2011, that any change in
salary, compensation, or remuneration principally for the purpose of enhancing a
member's benefits would not be included in the calculation of a member's final
compensation for purposes of determining that member's defined benefit. This bill would
limit the calculation of a member's final compensation to an amount not to exceed the
average increase in compensation received within the final compensation period and
the 2 preceding years by employees in the same or a related group as that member.
This bill would also provide that a person who retires on or after January 1, 2012 may
not perform services for any employer covered by a state or local retirement system
until that person has been separated from service for a period of at least 180 days.


Bill Number: SB 1271

Summary:
This bill would require the board, commission, or agency of a public pension or
retirement system to attach to its conflict of interest code an appendix that lists each
position for which an individual occupying that position is required to file a statement of
economic interests as a public official who manages public investments, defined as
Section 87200 filers. The bill would further require the board, commission, or agency to
post the appendix on its Internet Web site.

UPDATE: NEW

"Article II filers (Political Reform Act § 87200) are individuals who satisfy any of the following criteria:
1.  They hold any of the following positions:  Mayor, City Council member, City Attorney, Chief Administrative Officer, City Treasurer, City Planning Commissioner.
2.  They are a board member/commissioner who exercises the responsibility for the management of public investments.
3.  They are an employee who exercises primary responsibility for the management of public investments, i.e. chief or principal investment officer or chief financial manager.
4.  They, pursuant to a contract with LACERS, perform the same functions as an employee who exercises primary responsibility for the management of public investments.

LACERS' 87200 filers are as follows:  Board Members, General Manager and Chief Investment Officer.

In addition, although the following LACERS positions are not considered 87200 filers, per LACERS adopted Conflict of Interest Code, they file as Category 1 filers, which requires complete disclosure similar to 87200 filers:  Assistant General Manager, Investment Officer II, Investment Officer I, Investment/Money Managers, Internal Auditor IV, Chief Benefits Analyst (Administrative Division)."

Click here to learn more.


Bill Number: SB 1425
Summary: (Same provisions as AB 1987 above)
The following proposed legislation were reported on previous State Legislative Updates,
but were not passed by the State Legislature:


Bill Number: AB 155

Subject: Local government bankruptcy proceedings


Bill Number: AB 1913

Subject: Emerging investment managers


Bill Number: SB 919

Subject: Various changes to public employee defined benefit plans