SB 783: Public employee pension funds: divestment proposals: review.

The California Constitution grants the retirement board of a public employee retirement system plenary authority and fiduciary responsibility for investment of moneys and administration of the retirement fund and system. The California Constitution qualifies this grant of powers by reserving to the Legislature the authority to prohibit investments if it is in the public interest and the prohibition satisfies standards of fiduciary care and loyalty required of a retirement board. Existing law prohibits the boards of administration of the Public Employees Retirement System and State Teachers Retirement System from making investments in certain countries and in thermal coal companies, as specified, subject to the boards plenary authority and fiduciary responsibility for investment of moneys and administration of their respective systems.

This bill would create the Commission on Pension Investment, Divestment, and Engagement in the Controllers office and prescribe its composition. request the University of California to establish the Pension Divestment Review Program to assess divestment proposals. The bill would require the commission program to assess, upon the request of specified parties, a divestment proposal and to prepare a written analysis with relevant data on the effects of the proposal on employee pension funds and public policy, as prescribed. The bill would define a divestment proposal as a bill or constitutional amendment, introduced or amended in the Legislature, that would require the Public Employees Retirement Fund or the Teachers Retirement Fund to divest assets or restrict the fund from investing based on specific criteria or by reference to an external benchmark. The bill would require the commission program to use the services of a certified actuary or other person with relevant knowledge and expertise to determine the financial impact of a proposal proposal, as specified, and would authorize the commission to collaborate with the University of California in this process, as specified. experts in the public pension fund investment profession.

The bill would authorize the chairperson Chairperson of the Assembly Committee on Public Employees, Retirement, and Social Security, the chairperson Chairperson of the Senate Committee on Public Employment and Retirement, the Speaker of the Assembly, or the President pro Tempore of the Senate to request assessment of a divestment proposal and would require the requesting party to forward the proposal to the commission. program. Not later than 60 days after receiving a request, the bill would require the commission program to provide its analysis to the appropriate policy and fiscal committees of the Legislature. The bill would require the commissions programs analysis to be made publicly available. The bill would create the Divestment Proposal Research Fund, Pension Divestment Review Program the moneys in which, upon appropriation by the Legislature, would be available to support the work of the commission. program. The bill would appropriate $2,000,000 from the General Fund for support of the commission program for the 201819 fiscal year. The bill would require the commission program to submit a report to the Governor and the Legislature on or before January 1, 2020, regarding the implementation of these provisions.