California Assembly Bill AB17 Amended / Bill

 BILL NUMBER: AB 17AMENDED BILL TEXT AMENDED IN SENATE JUNE 15, 2012 AMENDED IN ASSEMBLY JANUARY 13, 2012 AMENDED IN ASSEMBLY MAY 11, 2011 INTRODUCED BY Assembly Member Davis DECEMBER 6, 2010 An act to add and repeal Section 22204.5 of the Education Code, relating to retirement. LEGISLATIVE COUNSEL'S DIGEST AB 17, as amended, Davis. Retirement: pension fund management. The Teachers' Retirement Law establishes the State Teachers' Retirement System in order to provide a financially sound plan for the retirement, with adequate retirement allowances, for teachers in public schools of the state, teachers in schools supported by the state, and other persons employed in connection with the schools. The plan and the system are administered by the Teachers' Retirement Board. This bill would require the Teachers' Retirement Board  to submit a report to the Legislature  , on or before August 1, 2013, and annually each August 1 thereafter,  on the ethnicity and gender of   to   aggressively participate in a legislative hearing on ethnic and gender diversity in regards to  the investment managers with whom it has contracted in the immediately preceding fiscal year, and who participate in managing its portfolios of external fund management contracts, as specified. The bill would also require the board  to report to the Legislature  , on or before August 1, 2013, and annually each August 1 thereafter,  to participate in a legislative hearing  on the ethnicity and gender of the brokerage firms with which it has contracted in the immediately preceding fiscal year, and that provide brokerage services to the fund's internally and externally managed investment management firms, as specified. The bill would also require the board  to develop and report to the Legislature  , on or before August 1, 2013, and annually each August 1 thereafter,  to participate in a legislative hearing for the purpose of developing a plan and strategy for participation of emerging investment managers and emerging brokerage firms. The bill would provide for the repeal of these provisions on January 1, 2018. The bill would also make related findings and declarations. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) The California State Teachers' Retirement System has approximately $130 billion in assets under its management. (b) As the nation's leader in attracting private equity capital and advancing innovation, California should also be the leader in encouraging equal opportunity in our state pension fund utilization of emerging investment managers and emerging brokerage firms. SEC. 2. Section 22204.5 is added to the Education Code, to read: 22204.5. (a) (1)  Notwithstanding Section 10231.5 of the Government Code, on   On  or before August 1, 2013, and annually  on or before  each August 1 thereafter, the board shall  report to the Legislature, comprehensively and aggregately, on the ethnicity and gender of   aggressively participate in a legislative hearing on ethnic and gender diversity in regards to  the investment managers with whom it has contracted in the immediately preceding fiscal year, and who participate in managing its portfolio of external fund management contracts, including all asset classes in which the fund has assets allocated. The  report shall identify   board shall testify in the legislative hearing on  the ownership composition of any privately owned investment firm, including ethnic and gender breakdowns as well as the portfolio value amount and asset class managed, in addition to fees paid to each investment manager. The  report   board shall  separately include a   discuss in the legislative hearing the  percentage breakdown by ethnicity and gender of investment officer composition of contracted portfolio management firms. The board shall  report and   further  testify  before the Legislature  regarding strategic plans of promoting existing underlying emerging managers from manager of manager structures to direct mandates. (2)  Notwithstanding Section 10231.5 of the Government Code, on   On    or before August 1, 2013, and annually  on or before  each August 1 thereafter, the board shall also  report, comprehensively and aggregately,   aggressively participate in a legislative hearing  on the ethnicity and gender of the brokerage firms with which it has contracted in the immediately preceding fiscal year, and which provide brokerage services to the fund's internally and externally managed investment management firms in addition to the commissions paid for trading equity securities and par value traded for fixed income by product to each brokerage firm utilized by the fund.  Annually, the board shall testify at hearings before the Legislature to discuss the reports required to be submitted by this section.  (b)  Notwithstanding Section 10231.5 of the Government Code, on   On  or before August 1, 2013, and annually  on or before  each August 1 thereafter, the board shall  develop and report to the Legislature a   also aggressively participate in a legislative hearing for the purpose of developing a  plan and strategy for participation of emerging investment managers who manage internally and externally managed assets in each asset class, and emerging brokerage firms that execute securities on organized exchanges as selected agents. Any percentages provided by the board shall be used as a reporting threshold only, and not as a basis upon which to contract with any given emerging investment manager or emerging brokerage firm. (c) The board shall define the terms "emerging investment manager" and "emerging brokerage firm"  by regulation   through an administrative process  for purposes of this section.  (d) Nothing in this section shall require the board to take action as described in this section unless the board determines, in good faith, that the action described in this section is consistent with the fiduciary responsibilities of the board as described in Section 17 of Article XVI of the California Constitution.   (e) The reports required to be submitted by this section shall be submitted in compliance with Section 9795 of the Government Code.   (f)   (d)  This section shall remain in effect only until January 1, 2018, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2018, deletes or extends that date.