2005 California Government Code Sections 31580-31607 Article 5. Financial Provisions

31580.  The board of supervisors shall appropriate annually from the
proper county funds the amount necessary to defray the entire
expense of administration of the retirement system based upon budget
estimates prepared by the treasurer.
31580.1.  The board may include each year in the contribution
required of a district a reasonable amount, which may differ from
district to district, to cover the costs of administering its
retirement system as such costs affect the active and retired
employees of that district.  The board may also assess a district a
reasonable amount to cover costs incurred because of the district's
failure to submit reports and forward contributions on a timely
basis.
31580.2.  In counties in which the board of retirement, or the board
of retirement and the board of investment, have appointed personnel
pursuant to Section 31522.1 or 31522.5, or both, the respective board
or boards shall annually adopt a budget covering the entire expense
of administration of the retirement system which expense shall be
charged against the earnings of the retirement fund.  The expense
incurred in any year may not exceed eighteen-hundredths of 1 percent
of the total assets of the retirement system.
31580.3.  (a) If Section 31580.2 is applicable, in a fiscal year in
which the net asset value of the retirement system is reduced from a
previous fiscal year due to a general investment market downturn, the
board of retirement or the board of retirement and the board of
investment may fix the expense of administration pursuant to Section
31580.2 based on the value of the total assets of the retirement
system as of an asset valuation date within a previous fiscal year,
as determined by the board or boards, in which a positive rate of
return for the retirement fund was generated.
   (b) At no time may the expense of administration, as determined
pursuant to paragraph (a), exceed 0.23 percent of net asset value.
   (c) This section shall remain in effect only until January 1,
2007, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2007, deletes or extends
that date.
31581.  After the date a system becomes operative the board of
supervisors shall, in the preparation and adoption of the county
budget, add to the appropriation for salaries and wages and include
therein an appropriation determined pursuant to Sections 31453,
31453.5 and 31454.  Until such determination the additional
appropriations shall equal 23.77 percent of the total compensation
provided for all safety members covered by Article 7.5 (commencing
with Section 31662) and 8.85 percent of the total compensation
provided for all other employees who are members of the retirement
association.
31581.1.  The board of supervisors may elect to pay up to one-half
of the contributions normally required of members for any period of
time designated in the resolution providing for such payment.  The
payments shall not become part of the accumulated contributions of
the member.  Such payments may be made with respect to employees in
one or more bargaining units irrespective of whether they are made
with respect to other employees.
31581.2.  The board of supervisors or the governing body of the
district may agree to pay any portion of the contributions required
to be paid by a member.  All payments shall be in lieu of wages and
shall be reported simply as normal contributions and shall be
credited to member accounts.
   The enactment of a resolution pursuant to this section shall not
create vested rights in any member.  The board of supervisors or the
governing body of the district may amend or repeal the resolution at
any time, subject to the provisions of Sections 3504 and 3505, or any
similar rule or regulation of the county or district.
31582.  (a) The county auditor shall certify to the board at the end
of each month or at the end of each pay period the compensation
earnable, as defined in Section 31461, paid to all safety members of
the retirement association covered by Article 7.5 (commencing with
Section 31662) and the compensation earnable, as defined in Section
31461, paid to all other members of the retirement association, and
the auditor shall thereupon transfer from the appropriation to the
retirement fund the percentage of this amount determined pursuant to
Sections 31453, 31453.5 and 31454.  Until that determination, the
amount of the transfer shall be 23.77 percent of the compensation
earnable, as defined in Section 31461, paid to all safety members
covered by Article 7.5 (commencing with Section 31662) and 8.85
percent of the compensation earnable, as defined in Section 31461,
paid to all other members.
   (b) The board of supervisors may authorize the county auditor to
make an advance payment of all or part of the county's estimated
annual contribution to the retirement fund, provided that the payment
is made within 30 days after the commencement of the county's fiscal
year.  If the advance is only a partial payment of the county's
estimated annual contribution, transfers from the appropriation to
the retirement fund shall be made at the end of each month or at the
end of each pay period until the total amount estimated for the year
is contributed.  This amount shall be adjusted at the end of the
fiscal year to reflect the actual contribution required for that
year.
31582.1.  In any county in which the board of retirement so
provides, the county auditor shall not be required to make the
certifications required by Section 31582.
31584.  The board of supervisors shall make the appropriations, and
if it fails or neglects to make the appropriations, the county
auditor shall transfer from any money available in any fund in the
county treasury the sums specified by this chapter and this transfer
shall have the same force and effect as it would have had if the
required appropriation had been made by the board of supervisors.
31585.  When any district becomes a part of the retirement system,
the same appropriations and transfers of funds shall be made as those
required of the county in this article, and such charges are legal
charges against the funds of the district.
31585.1.  When an employee paid from the county school service fund
elects to remain a member of this retirement system as authorized by
Education Code Section 873.1, the same appropriations, transfers and
disposition of funds shall be made as those required of the county by
this article, and such charges are legal charges against the funds
of the county school service fund.
31585.2.  On and after the date a district, as defined in
subdivision (l) of Section 31468, is included in the retirement
system, the district's appropriations and transfers of funds made
pursuant to Section 31585 shall be legal charges against the funds of
the district and shall be part of the expense of administration of
the retirement system pursuant to Section 31580.2.
31586.  All payments of the county or of any district into the
retirement fund, whether made pursuant to this article or made
pursuant to law, are obligations of the county or district.
31587.  The board shall apply the contributions of the county or
district to its obligations under the system in the order and amounts
as follows:
   First, in an amount equal during each fiscal year to the liability
accruing to the county or district because of service rendered
during such year and on account of service and disability pensions,
in an amount determined by the actuarial valuation as interpreted by
the actuary.
   Second, in an amount equal during each fiscal year to the payments
made from contributions by the county or district during the year
for death benefits.
   Third, the balance of such contributions on the liabilities
accrued on account of prior service benefits.
31588.  A trust fund account to be designated as "employees
retirement fund" shall be opened upon the books of the retirement
board, or treasurer and auditor if authorized by the board, of any
county adopting this retirement system.
   The "employees retirement fund" shall be a trust fund created or
continued and administered in accordance with this chapter, solely
for the benefit of the members and retired members of the system and
their survivors and beneficiaries.
   Nothing in this section shall be construed to prohibit the
retirement board paying administrative costs, already authorized or
to be authorized, or to prohibit the transfer of surplus funds to
county advance reserves.
31588.1.  There is hereby established in the County Employees'
Retirement System a deferred yield adjustment account which shall be
increased by the sale or disposition of any debt securities at less
than book value and shall be decreased by the sale or disposition of
debt securities at more than book value.  At the end of each year, a
portion of the balance of this account shall be offset against the
investment income for that year.  The annual portion of the balance
to be offset shall be proportional to the reciprocal of the average
remaining life of the bonds sold.  The amount of this account shall
be included in any accounting or actuarial computations or listing of
assets.  In any year in which the gains on the sales of debt
securities exceed the discounts realized on the sales of such
securities, the excess shall be used to reduce the balance of the
account.
   This section shall not be operative in any county until such time
as the board shall, by resolution adopted by majority vote, make the
provisions of this section applicable in such county.
31588.2.  Notwithstanding any other provision of law, no funds in
the retirement fund shall be expended for any purpose other than the
expense of administration of the system, investments for the benefit
of the system, and the provision of benefits to the members and
retired members of the system and their survivors and beneficiaries.
31589.  All transfers or payments to the retirement system and all
withdrawals and other cash transactions, shall be accounted upon the
books of the retirement board, or treasurer and auditor, if
authorized by the board, in and out of the retirement fund, in the
same manner as county transactions.
31589.1.  There is hereby established for accounting purposes in the
County Employees Retirement Law of 1937 the following procedure for
treating a trade of bonds for similar bonds.  Any loss or gain
attributable to a trade of a like bond in the portfolio of any
retirement system adopted pursuant to this chapter may be amortized
over the life of the bond traded out by adding to or subtracting from
the discount or premium attributable to the bond traded in.  Like
bonds for purposes of this section are considered to be bonds which
will mature within seven years of the life of the bond traded out.
Bonds to be traded must be of the first four grades.  The fact that
one bond may be a debenture and another a mortgage bond, or that the
bonds may have different rates of return, shall not keep them from
being like bonds.
   This section shall not be operative in any county until such time
as the board shall, by resolution adopted by majority vote, make the
provisions of this section applicable in such county.
31590.  (a) All warrants, checks, and electronic fund transfers
drawn on the retirement fund shall be signed or authorized by at
least two board officers or employees, designated by the board or by
the treasurer if designated by the board.  If the treasurer is
designated by the board, the board shall also designate the auditor
to sign or authorize warrants, checks, and electronic fund transfers.
  The authorization may be by blanket authorization of all warrants,
checks, or electronic fund transfers appearing on a list or register,
or may be by a standing order to draw warrants, checks, or
electronic fund transfers, which shall be good until revoked.  If the
treasurer and auditor are designated by the board, a warrant, check,
or electronic fund transfer is not valid until it is signed or
authorized, numbered, and recorded by the county auditor, except as
provided in subdivision (c).
   (b) Any person entitled to the receipt of benefits may authorize
the payment of the benefits to be directly deposited by electronic
fund transfer into the person's account at the financial institution
of the person's choice under a program for direct deposit by
electronic transfer established by the board or treasurer if
authorized by the board.  The direct deposit shall discharge the
system's obligation in respect to that payment.
   (c) The board may, or, if authorized by the board, the treasurer
shall, authorize a trust company or 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 process and issue payments by
check or electronic fund transfer.
31591.  (a) Regular interest shall be credited semiannually on June
30th and December 31st to all contributions in the retirement fund
which have been on deposit for six months immediately prior to that
date.  Interest at the rate of 21/2 percent per annum, until
otherwise determined by the board, compounded semiannually, shall be
used in the calculation of benefits under any mortality table adopted
by the board of supervisors.
   (b) No interest shall be credited to a member's account after the
membership of the member in the retirement association has ceased,
except under any of the following circumstances:
   (1) The former member has left his or her accumulated
contributions in the retirement fund and has either elected, in
writing, a deferred retirement allowance, or is eligible to so elect
under Section 31700 but has failed to do so.
   (2) The surviving spouse of a deceased member or the legally
appointed guardian of the member's unmarried children under age 18
has elected to leave a death benefit on deposit as provided for in
Section 31781.2.
   (3) The former member, regardless of service, has left his or her
accumulated contributions in the retirement fund and has not
terminated employment.
31592.  Earnings of the retirement fund during any year in excess of
the total interest credited to contributions and reserves during
such year shall remain in the fund as a reserve against deficiencies
in interest earnings in other years, losses on investments and other
contingencies, except as provided in Sections 31529.5 and 31592.2.
31592.2.  In any county, earnings of the retirement fund during any
year in excess of the total interest credited to contributions and
reserves during such year shall remain in the fund as a reserve
against deficiencies in interest earnings in other years, losses on
investments, and other contingencies, except that, when such surplus
exceeds 1 percent of the total assets of the retirement system, the
board may transfer all, or any part, of such surplus in excess of 1
percent of the said total assets into county advance reserves for the
sole purpose of payment of the cost of the benefits described in
this chapter.
   Where the board of supervisors has provided for the payment of
all, or a portion, of the premiums, dues, or other charges for health
benefits, Medicare, or the payment of accrued sick leave at
retirement to or for all, or a portion, of officers, employees, and
retired employees and their dependents, from the county general fund
or other sources, the board of retirement may authorize the payment
of all, or a portion, of payments of the benefits described in this
paragraph from the county advance reserves.
31592.3.  In any county, earnings of the retirement fund, in excess
of the total interest credited to contributions and reserves shall
remain in the fund as a reserve against deficiencies in interest
earnings in other years, losses on investments, and other
contingencies, except that when the total amount in the reserve
exceeds 1 percent of the total assets of the retirement system, the
board may transfer all or any part of such reserve in excess of 1
percent of the total assets into a special fund which shall be used
for the sole purpose of providing an increase in monthly retirement
allowance pursuant to Section 31681.7 or Section 31739.4.  In the
event the amount credited to the special fund is not sufficient to
pay the entire amount of the increase provided for by Section 31681.7
or Section 31739.4 then the amount of the increase shall be reduced
in proportion to the amount of the balance on hand in the special
fund at the close of the fiscal year preceding the fiscal year during
which such increase is operative.
   This section shall not be operative in any county until such time
as the board of supervisors shall, by ordinance, make the provisions
of this section applicable in such county.  The board of supervisors
may in such ordinance provide that the increase in monthly retirement
allowance provided for by Section 31681.7 or 31739.4 shall be
effective only subject to the provisions of this section.
31592.4.  (a) Notwithstanding Article 5.5 (commencing with Section
31610) and Article 8.6 (commencing with Section 31694), the amount of
excess earnings available at the end of a fiscal year of the
retirement fund, shall, subject to the limitations in this section,
be treated in the immediately succeeding fiscal year, for all
purposes under this chapter, as appropriations, transfers, and
contributions made to the retirement fund by the county and
districts.  That treatment shall be solely for the purposes of
meeting the applicable requirements of Section 401 of the Internal
Revenue Code of the United States.  That treatment shall also occur
only to the extent that, in the immediately succeeding fiscal year,
the county and districts pay for, or otherwise make reimbursement of,
health benefits for members heretofore or hereafter retired and
their dependents.  For purposes of this section, "excess earnings"
means earnings of the retirement fund at the end of any fiscal year
that exceed the total interest credited to contributions and reserves
plus 1 percent of the total assets of the retirement fund.  The
board of supervisors and the board of retirement may take any actions
otherwise authorized by law, necessary to ensure that the program
provided by this section complies with all applicable federal and
state income tax laws.
   (b) This section shall not be operative in any county until the
board of supervisors and the board of retirement of the county, by
resolution adopted by a majority vote of each board, make this
section operative in the county.
   (c) Nothing in this section is intended to, or should be construed
to, affect the validity of any agreement entered into by a county
and a retirement association whereby a county has agreed to provide
and fund a health insurance program for retired employees and their
dependents for hospital services, medical services, dental services,
and optical services, prior to the effective date of this section.
   (d) In any county in which this section becomes operative, the
payments provided pursuant to this section shall be in lieu of any
similar payments which could be made pursuant to Section 31592.2 and
no payments shall be made pursuant to Section 31592.2 for all, or a
portion, of the premiums, dues, or other charges for health benefits
for retired employees and their dependents.
31592.5.  The board shall provide to any organization that is
recognized by the board as representing the retired employees of the
county or district reasonable advance notice of any proposed changes
to the retirement benefits offered by the system or the use or uses
of excess funds of the retirement system.  The organization shall
have a reasonable opportunity to comment prior to any formal action
by the board on the proposed changes.
31593.  The retirement board shall conduct an audit of the
retirement system at least once every 12 months and report upon its
financial condition.  The retirement board may retain the services of
a certified public accountant to perform the annual audit.  That
audit shall be performed in accordance with  generally accepted
auditing standards.  The cost of the audit shall be considered a cost
of the administration of the retirement system.  The audit report
shall address the financial condition of the retirement system,
internal accounting controls, and compliance with applicable laws and
regulations.  A copy of the audit report shall he filed with the
board of supervisors.
   Nothing in this section shall preclude the retirement board from
selecting the county auditor to perform the annual audit, and if so
done, the cost of that audit shall he considered a cost of the
administration of the retirement system.
   At the request of the county board of supervisors, the county
auditor may audit the accounts of the retirement system.  The expense
of that audit shall not be a cost chargeable by the county to the
retirement system.
31594.  It is the intent of the Legislature, consistent with the
mandate of the voters in passing Proposition 21 at the June 5, 1984,
Primary Election, to allow the board of any retirement system
governed by this chapter to invest in any form or type of investment
deemed prudent by the board pursuant to the requirements of Section
31595.  It is also the intent of the Legislature to repeal, or amend
as appropriate, certain statutory provisions, whether substantive or
procedural in nature, that restrict the form, type, or amount of
investments that would otherwise be considered prudent under the
terms of that section.  This will increase the flexibility and range
of investment choice available to these retirement systems, while
ensuring protection of the interests of their beneficiaries.
31595.  The board has exclusive control of the investment of the
employees retirement fund.  The assets of a public pension or
retirement system are trust funds and shall be held for the exclusive
purposes of providing benefits to participants in the pension or
retirement system and their beneficiaries and defraying reasonable
expenses of administering the system.  Except as otherwise expressly
restricted by the California Constitution and by law, the board may,
in its discretion, invest, or delegate the authority to invest, the
assets of the fund through the purchase, holding, or sale of any form
or type of investment, financial instrument, or financial
transaction when prudent in the informed opinion of the board.
   The board and its officers and employees shall discharge their
duties with respect to the system:
   (a) Solely in the interest of, and for the exclusive purposes of
providing benefits to, participants and their beneficiaries,
minimizing employer contributions thereto, and defraying reasonable
expenses of administering the system.
   (b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in a like
capacity and familiar with these matters would use in the conduct of
an enterprise of a like character and with like aims.
   (c) Shall diversify the investments of the system so as to
minimize the risk of loss and to maximize the rate of return, unless
under the circumstances it is clearly prudent not to do so.
31595.1.  (a) The board may authorize the treasurer to control and
safely keep some or all of the moneys of the retirement system.  If
authorized, the treasurer may invest and reinvest the moneys, and may
from time to time sell any securities belonging to the system and
may invest and reinvest the proceeds therefrom.  An investment in or
sale of securities shall not be made except upon the authorization of
the board.
   (b) The board, in lieu of acting pursuant to subdivision (a), may
delegate to another entity some or all of the powers prescribed in
that subdivision.
31595.41.  All acts made or done by the board or its officers and
employees, on or after January 1, 1983, and until the effective date
of this section, with respect to exchange-traded call options and
related matters, which would have been valid if Section 31595.4, as
amended by Section 1 of the act which enacts this section, had been
in effect at the time the acts were made or done are hereby ratified,
confirmed, and validated.
31595.5.  The board may also invest in any stocks or shares of a
diversified management investment company registered under the
"Investment Company Act of 1940" which has total assets of at least
fifty million dollars ($50,000,000); except that the total investment
in such stocks and shares, together with stocks and shares of all
other corporations, may not exceed 25 percent of the assets of such
fund determined on the basis of the cost of the stocks or shares.
31595.6.  In addition to such other investments as are authorized by
this article, the board may invest in real estate and leases thereof
and improvements thereon for business or residential purposes as an
investment for the production of income.  The phrase "business or
residential purposes" shall not include real estate or leases
primarily intended for use or valued as agricultural, horticultural,
farm, ranch, or mineral property.  Real estate and leases acquired
and improvements made thereon for business and residential purposes
under this section shall not in the aggregate exceed an amount equal
to 25 percent of the assets of the system and real estate and leases
acquired and improvements made thereon for residential purposes under
this section shall not in the aggregate exceed an amount equal to 10
percent of the assets of the system.
31595.9.  Notwithstanding the provisions of Section 31595, in
addition to other investments authorized by this article, funds
received by the county treasurer not required for current
disbursements may be invested in repurchase agreements or reverse
repurchase agreements of any securities authorized by this article.
   For purposes of this section, "repurchase agreement" means a
purchase of securities by the board pursuant to an agreement by which
the seller will repurchase the securities on or before a specified
date and for a specified amount.
   For purposes of this section, "reverse repurchase agreement" means
a sale of securities by the board pursuant to an agreement by which
the board will repurchase the securities on or before a specified
date and for a specified amount.
31596.  (a) When securities belonging to or held for the retirement
association are sold, the county treasurer shall deliver the
securities to the purchaser upon receiving the proceeds, and may
execute any and all documents necessary to transfer title.  The
duties imposed upon the county treasurer by this article are a part
of his or her official duties, for the faithful performance of which
he or she is liable on his or her official bond.
   (b) The board may, or if authorized by the board, the treasurer
shall authorize a state or federally chartered depository
institution, the deposits of which are insured by the Federal Deposit
Insurance Corporation, or any trust company licensed under state or
federal law to conduct the business of a trust company or any Federal
Reserve Bank, to act as custodian of any securities owned by the
retirement association.  In that case, the duties imposed by
subdivision (a) upon the county treasurer shall instead be performed
by the board and shall be included in any agreement for custodial
services.  Any of these banks or trust companies may be authorized to
collect the income from the securities and deposit the proceeds in
an account established by the board for the retirement association.
31596.1.  The expenses of investing its moneys shall be borne solely
by the system.  The following types of expenses shall not be
considered a cost of administration of the retirement system, but
shall be considered as a reduction in earnings from those investments
or a charge against the assets of the retirement system as
determined by the board:
   (a) The costs, as approved by the board, of actuarial valuations
and services rendered pursuant to Section 31453.
   (b) The compensation of any bank or trust company performing
custodial services.
   (c) When an investment is made in deeds of trust and mortgages,
the fees stipulated in any agreement entered into with a bank or
mortgage service company to service such deeds of trust and
mortgages.
   (d) Any fees stipulated in an agreement entered into with
investment counsel for consulting or management services in
connection with the administration of the board's investment program,
including the system's participation in any form of investment pools
managed by a third party or parties.
   (e) The compensation to an attorney for services rendered pursuant
to Section 31607 or legal representation rendered pursuant to
Section 31529.1.
31597.  Before June 30th of each year the retirement board shall
file in the office of the county auditor and with the board of
supervisors a sworn statement that shall exhibit the financial
condition of the retirement system at the close of the preceding
December 31st and its financial transactions for the year ending on
that day.
31597.1.  Before December 31 of each year, the retirement board
shall file in the office of the county auditor and with the board of
supervisors a sworn statement that shall exhibit the financial
condition of the retirement system at the close of the preceding June
30th and its financial transactions for the fiscal year ending that
day.
   This section is not operative in any county until the board of
supervisors, by resolution adopted by a majority vote, makes the
provisions of this section applicable in the county.  After the
filing of the first fiscal year accounting under this section, the
provisions of Section 31597 do not apply in the county.
31597.2.  In those counties in which the retirement board has
authorized the treasurer to control and hold the assets of the
retirement system pursuant to subdivision (a) of Section 31595.1, the
treasurer shall be responsible for filing the statement required by
Section 31597 or Section 31597.1, as applicable.
31598.  The annual statement shall be prepared in accordance with
generally accepted accounting principles on the basis of
pronouncements of the Government Accounting Standards Board or its
successor organization.
31599.  In addition to other records and accounts, the retirement
board, or the treasurer if authorized by the board, shall keep
records and accounts as are necessary to show at any time:
   (a) The total accumulated contributions of members.
   (b) The total accumulated contributions of retired members less
the annuity payments made to the members.
   (c) The accumulated contributions of the county or district held
for the benefit of members on account of service rendered as members
of the retirement system.
   (d) All other accumulated contributions of the county or district,
including the amounts available to meet the obligation of the county
or district on account of benefits granted to retired employees and
on account of prior service of members.
31600.  A pension, annuity, or retirement allowance is payable in
equal monthly installments, but a smaller pro rata amount may be paid
for part of a month when the pension, annuity, or retirement
allowance begins after the first day of the month or ends before the
last day of the month.
31601.1.  In counties having a board of investments pursuant to
Section 31520.2, no investment shall be made in real property unless
it is approved by six votes of the board or, where a county board of
supervisors or a county board of education has a material interest in
the property unless it is approved by nine votes of the board.
31602.  Notwithstanding any other provision of law, the board of
retirement, or, in counties that have established a board of
investments, the board of investments, may establish a program
utilizing the retirement fund to assist system members and
annuitants, through financing, to obtain homes in this state.
   The board shall adopt regulations governing the program which
shall, among other things, provide:
   (a) That home loans be made available to currently employed
members and annuitants for the purchase of single-family dwellings,
two-family dwellings, three-family dwellings, four-family dwellings,
single-family cooperative apartments, and single-family condominiums.
   (b) That private lending institutions in this state shall
originate and service its home loans pursuant to agreements entered
into between those institutions and the board.
   (c) That the recipients of the loans occupy the homes as their
permanent residences in accordance with the rules and regulations
established by the board.
   (d) That its home loans shall be available only for the purchase
or refinancing of homes in this state and that under no condition
shall a member or annuitant have more than one outstanding loan.
   (e) That the amount and length of the loans shall be pursuant to a
schedule periodically established by the board which shall provide a
loan to value ratio of:  (1) for the first loan, except for
three-family dwellings and four-family dwellings, a maximum of 95
percent of the first loan; (2) for the first loan on three-family
dwellings and four-family dwellings, a maximum of 90 percent of the
first loan; and (3) for each additional loan, a maximum of 80 percent
of each additional loan.  The portion of any loan exceeding 80
percent of value shall be insured by an admitted mortgage guaranty
insurer conforming to Chapter 2A (commencing with Section 12640.01)
of Part 6 of Division 2 of the Insurance Code in an amount so that
the unguaranteed portion of the loan does not exceed 75 percent of
the market value of the property together with improvements thereon.
   (f) That there may be prepayment penalties assessed on its loan in
accordance with the rules and regulations established by the board.
   (g) That the criteria and terms for its loans shall provide the
greatest benefit to members and annuitants consistent with the
financial integrity of the program and the sound investment of the
retirement fund.
   (h) Any other terms and conditions as the board shall deem
appropriate.
31603.  The board of retirement or the board of investments, as
applicable, may obtain a loan and pledge a portion of the assets of
the retirement fund as security for the repayment of the loan if the
board finds all of the following:
   (a) An emergency exists affecting the national banking system or
financial markets.
   (b) The emergency prevents the association from readily accessing
its funds.
   (c) The loan is necessary to promptly deliver benefits when due.
   The assets of the retirement fund pledged as security for the loan
shall be subject to execution and other processes of the court only
in connection with a proceeding to enforce the loan.  The costs
associated with securing and repaying the loan, including interest,
shall be a charge against investment earnings of the fund.
31607.  To assist in carrying out its investment powers and duties
the board may employ an attorney in private practice.