State teachers’ retirement: investment managers and investment advisers: contracts.
The enactment of AB 539 specifically impacts the operational framework of the STRS by enabling the Board to engage external expertise in investment management, thereby potentially improving investment returns and retirement security for teachers. The ability to establish competitive bidding processes for these contracts aims to promote transparency and accountability within the investment management of the STRS. This adjustment aligns the STRS with the practices of other large public pension systems which often rely on external investment advice due to the complexities involved in managing diverse portfolios.
Assembly Bill 539, introduced by Assemblymember Cooley, amends Section 22352 of the Education Code, which relates to the State Teachers Retirement System (STRS) in California. The bill expands the authority of the Teachers Retirement Board to contract with qualified investment advisers in addition to investment managers. This change is predicated on the finding that necessary investment expertise is not available among existing state civil service classifications, requiring approval from the State Personnel Board to move forward with such contracts. The goal is to enhance the efficiency and effectiveness of retirement fund management for educators.
The overall sentiment surrounding AB 539 appears to be supportive, particularly from stakeholders within the education sector who recognize the need for specialized investment knowledge to manage retirement funds effectively. As state budget constraints and funding challenges continue to impact retirement systems, the enhanced flexibility granted through this bill is viewed positively as a means to secure financial sustainability for California's retired educators. However, some skepticism may arise regarding oversight and the potential for increased costs associated with external advisers.
While AB 539 primarily enjoys support, some points of contention could revolve around concerns over dependency on private investment advisers, including fears of reduced control over, and transparency in, the retirement fund’s management. Ensuring that the competitive bidding process is fair and that the contracts are managed effectively will be crucial in addressing these concerns. Additionally, the balancing act between civil service qualifications and specialized investing expertise may continue to be debated as the board moves to implement the provisions of the bill.