2007 California Government Code Chapter 21. Public Pension And Retirement Plans

CA Codes (gov:7500-7514.5)

GOVERNMENT CODE
SECTION 7500-7514.5



7500.  Any city with a population of 1,000,000 or more, and any
agency thereof, which has established any pension and retirement plan
which requires officers and employees of one sex to pay greater
contributions than those of another sex who are the same age shall
revise the plan so that the contributions are the same commencing
with contributions for service on and after January 1, 1975.  This
section shall not be construed as requiring or authorizing an
increase in the contributions of any members of a pension and
retirement plan.
   This section shall not be applicable to the Public Employees'
Retirement System.


7501.  It is the intent and purpose of the Legislature, in enacting
this chapter, to safeguard the solvency of all public retirement
systems and funds. The Legislature finds and declares that public
agencies maintaining retirement systems can benefit from periodic and
independent analysis of their financial condition.  It is the
purpose of Sections 7502, 7503, and 7504 to enable the State
Controller to gather information to compare and evaluate the
financial condition of such systems and to make such comparisons and
evaluations.


7502.  The State Controller shall review the annual financial report
of each state and local public retirement system submitted pursuant
to Section 7504 giving particular consideration to the adequacy of
funding of each system.  The State Controller shall also review the
triennial valuation of each public retirement system submitted
pursuant to Section 7504 and shall give particular consideration to
the assumption concerning the inflation element in salary and wage
increases, mortality, service retirement rates, withdrawal rates,
disability retirement rates, and rate of return on total assets.
   The State Controller shall establish an advisory committee which
shall include enrolled actuaries, as defined in Section 7504, and
state and local public retirement system administrators, to assist in
carrying out the duties imposed by this section.



7503.  All state and local public retirement systems shall prepare
an annual report in accordance with generally accepted accounting
principles.


7504.  (a) All state and local public retirement systems shall, not
less than triennially, secure the services of an enrolled actuary.
An enrolled actuary, for the purposes of this section, means an
actuary enrolled under subtitle C of Title III of the federal
Employee Retirement Income Security Act of 1974 (Public Law 93-406)
and who has demonstrated experience in public retirement systems.
The actuary shall perform a valuation of the system utilizing
actuarial assumptions and techniques established by the agency that
are, in the aggregate, reasonably related to the experience and the
actuary's best estimate of anticipated experience under the system.
Any differences between the actuarial assumptions and techniques used
by the actuary that differ significantly from those established by
the agency shall be disclosed in the actuary's report and the effect
of the differences on the actuary's statement of costs and
obligations shall be shown.
   (b) All state and local public retirement systems shall secure the
services of a qualified person to perform an attest audit of the
system's financial statements.  A qualified person means any of the
following:
   (1) A person who is licensed to practice as a certified public
accountant in this state by the California Board of Accountancy.
   (2) A person who is registered and entitled to practice as a
public accountant in this state by the California Board of
Accountancy.
   (3) A county auditor in any county subject to the County Employees
Retirement Law of 1937 (Chapter 3 (commencing with Section 31450) of
Part 3 of Division 4 of Title 3).
   (4) A county auditor in any county having a pension trust and
retirement plan established pursuant to Section 53216.
   (c) All state and local public retirement systems shall submit
audited financial statements to the State Controller at the earliest
practicable opportunity within six months of the close of each fiscal
year.  However, the State Controller may delay the filing date for
reports due in the first year until the time as report forms have
been developed that, in his or her judgment, will satisfy the
requirements of this section.  The financial statements shall be
prepared in accordance with generally accepted accounting principles
in the form and manner prescribed by the State Controller.  The
penalty prescribed in Section 53895 shall be invoked for failure to
comply with this section.  Upon a satisfactory showing of good cause,
the State Controller may waive the penalty for late filing provided
by this subdivision.
   (d) The State Controller shall compile and publish a report
annually on the financial condition of all state and local public
retirement systems containing, but not limited to, the data required
in Section 7502.


7505.  Every state and local public retirement system shall permit
any person entitled to the receipt of benefits to designate that
payment of such benefits shall be transmitted to a bank, savings and
loan association, or credit union for deposit in the person's
account, and the transmittal of such payment pursuant to this section
shall discharge the public agency's obligations in respect to such
payment.



7506.  Notwithstanding any other provision of law, any person
entitled to the receipt of benefits from any state retirement system
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 his or her choice under a program for direct deposit
by electronic transfer established by the Controller pursuant to
Section 7506.5.  The direct deposit shall discharge the state agency'
s obligation in respect to that payment.



7506.5.  The Controller shall make an agreement with one or more
financial institutions participating in the Automated Clearing House
pursuant to the local rules, and shall establish a program, for the
direct deposit by electronic fund transfer of the benefits, after any
withholding required by law and authorized deductions, of any person
entitled to the receipt of benefits from any state retirement system
who authorizes the direct deposit thereof by electronic fund
transfer into the person's account at the financial institution of
his or her choice.


7507.  The Legislature and local legislative bodies shall secure the
services of an enrolled actuary to provide a statement of the
actuarial impact upon future annual costs before authorizing
increases in public retirement plan benefits.  An "enrolled actuary"
means an actuary enrolled under subtitle C of Title III of the
federal Employee Retirement Income Security Act of 1974 and "future
annual costs" shall include, but not be limited to, annual dollar
increases or the total dollar increases involved when available.
   The future annual costs as determined by the actuary shall be made
public at a public meeting at least two weeks prior to the adoption
of any increases in public retirement plan benefits.



7507.5.  It is the intent of the Legislature that the Regents of the
University of California provide written notice to the Legislature
of any proposed changes to retirement plan benefits, employer or
employee contribution rates, or actuarial assumptions affecting the
University of California Retirement System, at least 60 days prior to
the effective date thereof.  The written notice shall be provided to
the Joint Legislative Budget Committee and the fiscal subcommittees
and shall consist of:
   (a) A description and explanation of each specific proposed change
to the benefit structure, contribution rates, or actuarial
assumptions.
   (b) The actuarial impact upon future annual costs of each proposed
change.



7508.  A retired member of a state retirement system, other than the
University of California Retirement System, the Judges' Retirement
System, the Judges' Retirement System II, and the State Teachers'
Retirement System, may, notwithstanding Section 9359.12, serve on a
public board or commission and be entitled to receive for that
service, per diem compensation for every day or portion thereof of
actual attendance at meetings of the board or commission or any
committee thereof, and necessary traveling expenses incurred in
connection with the performance of his or her official duties,
without loss or interruption of benefits provided by the system, so
long as the service does not exceed a total of 50 meeting days.
   This section shall not apply to service as a member of a board or
commission the annual salary for which is prescribed by Chapter 6
(commencing with Section 11550) of Division 3 of Title 2.



7509.  (a) The restrictions upon rates of interest contained in
Section 1 of Article XV of the California Constitution shall not
apply to any loans made by, or forbearances of, any state or local
public retirement system, including, but not limited to, any public
retirement system authorized and regulated by the State Teachers'
Retirement Law, the Public Employees' Retirement Law, the County
Employees Retirement Law of 1937, any public retirement system
administered by the Teachers Retirement Board or Board of
Administration of the Public Employees' Retirement System, or any
public retirement system acting pursuant to the laws of this state or
the laws of any local agency.
   (b) For the purposes of this section, "local agency" means county,
city, city and county, district, school district, or any public or
municipal corporation, political subdivision, or other public agency
of the state, or any instrumentality of one or more of these
agencies.
   (c) This section creates and authorizes any state or local
retirement system as an exempt class of persons pursuant to Section 1
of Article XV of the California Constitution.



7510.  (a) (1) Except as provided in subdivision (b), a public
retirement system, which has invested assets in real property and
improvements thereon for business or residential purposes for the
production of income, shall pay annually to the city or county, in
whose jurisdiction the real property is located and has been removed
from the secured roll, a fee for general governmental services equal
to the difference between the amount that would have accrued as real
property secured taxes and the amount of possessory interest
unsecured taxes paid for that property.  The governing bodies of
local entities may adopt ordinances and regulations authorizing
retirement systems to invest assets in real property subject to the
foregoing requirements.
   (2) This subdivision shall not apply to any retirement system
which is established by a local governmental entity if that entity is
presently authorized by statute or ordinance to invest retirement
assets in real property.
   (3) This subdivision shall not apply to property owned by any
state public retirement system.
   (b) (1) Whenever a state public retirement system, which has
invested assets in real property and improvements thereon for
business or residential purposes for the production of income, leases
the property, the lease shall provide, pursuant to Section 107.6 of
the Revenue and Taxation Code, that the lessee's possessory interest
may be subject to property taxation and that the party in whom the
possessory interest is vested may be subject to the payment of
property taxes levied on that interest.  The lease shall also provide
that the full cash value, as defined in Sections 110 and 110.1 of
the Revenue and Taxation Code, of the possessory interest upon which
property taxes will be based shall equal the greater of (A) the full
cash value of the possessory interest, or (B), if the lessee has
leased less than all of the property, the lessee's allocable share of
the full cash value of the property that would have been enrolled if
the property had been subject to property tax upon acquisition by
the state public retirement system.  The full cash value as provided
for pursuant to either (A) or (B) of the preceding sentence shall
reflect the anticipated term of possession if, on the lien date
described in Section 2192 of the Revenue and Taxation Code, that term
is expected to terminate prior to the end of the next succeeding
fiscal year.  The lessee's allocable share shall, subject to the
preceding sentence, be the lessee's leasable square feet divided by
the total leasable square feet of the property.
   (2) Except as provided in this subdivision, the property shall be
assessed and its taxes computed and collected in the same manner as
privately owned property.  The lessee's possessory interest shall be
placed on the unsecured roll and the tax on the possessory interest
shall be subject to the collection procedures for unsecured property
taxes.
   (3) An investment by a state public retirement system in a legal
entity that invests assets in real property and improvements thereon
shall not constitute an investment by the state public retirement
system of assets in real property and improvements thereon.  For
purposes of this paragraph, "legal entity" includes, but is not
limited to, partnership, joint venture, corporation, trust, or
association.  When a state public retirement system invests in a
legal entity, the state public retirement system shall be deemed to
be a person for the purpose of determining a change in ownership
under Section 64 of the Revenue and Taxation Code.
   (4) Notwithstanding any other provision of law, fees charged
pursuant to this section and collected prior to July 1, 1992, shall
be deemed valid and not refundable under any circumstance.
Notwithstanding any other provision of law, fees, interest and
penalties, if any, asserted to be due pursuant to this section that
were not charged or collected prior to July 1, 1992, shall be deemed
invalid and not collectable under any circumstance.
   (5) This subdivision shall apply to the assessment, computation,
and collection of taxes for the fiscal year beginning on July 1,
1992, and each fiscal year thereafter.  For the 1992-93  and 1993-94
fiscal years, in the case where a lessee's possessory interest
existed for less than the full fiscal year for which the tax was
levied, the amount of tax shall be prorated in accordance with the
number of months for which the lessee's interest existed.



7511.  Notwithstanding any other provision to the contrary:
   (a) A public retirement system may purchase insurance for its
fiduciaries or for itself to cover liability or losses occurring by
reason of the act or omission of a fiduciary, if the insurance
permits recourse by the insurer against the fiduciary in the case of
a breach of a fiduciary obligation by the fiduciary.
   (b) A fiduciary may purchase insurance to cover liability under
this section from and for his or her own account.
   (c) An employer or an employee organization may purchase insurance
to cover potential liability of one or more persons who serve in a
fiduciary capacity with regard to an employee benefit plan.



7512.  Each state and local public pension or retirement system
shall, on and after the 90th day following the completion of the
annual audit of the system, mail or otherwise provide to any member
who makes a request therefor and pays, if required, a fee, a concise
annual report on the investments and earnings of the system and other
related matters.  The report shall be published in a low-cost
format.
   Each local public pension or retirement system may impose a fee
for each copy of the report in an amount sufficient to pay all costs
incurred in the preparation and dissemination of the report.



7513.  (a) In the case of a state or local retirement system or plan
that is subject to Section 401(a)(31) of the Internal Revenue Code,
if, under the terms of the system or plan, a person becomes entitled
to a distribution that constitutes an "eligible rollover distribution"
within the meaning of Section 401(a)(31)(C) of the Internal Revenue
Code, the person may elect, under terms and conditions to be
established by the administrator of the system or plan, to have the
distribution or a portion thereof paid directly to a plan that
constitutes an "eligible retirement plan" within the meaning of
Section 401(a)(31)(D) of the Internal Revenue Code, as specified by
the person.  Upon the exercise of the election by a person with
respect to a distribution or portion thereof, the distribution by the
system or plan of the amount so designated, once distributable under
the terms of the system or plan, shall be made in the form of a
direct rollover to the eligible retirement plan so specified.
   (b) The purpose and intent of this section is to enable the state
and local retirement systems and plans that are subject to Section
401(a)(31) of the Internal Revenue Code of 1986, as amended, to
comply with the requirements of that section regarding the provision
of an election for direct rollover of certain plan distributions.



7513.5.  (a) On or before the first day of March of each year, the
Teachers' Retirement Board and the Board of Administration of the
Public Employees' Retirement System, respectively, shall investigate
and report to the Legislature on the extent to which United States
and international corporations operating in Northern Ireland, in
which the assets of the State Teachers' Retirement System and the
Public Employees' Retirement System are invested, adhere, in
compliance with the law applicable in Northern Ireland, to the
principles of nondiscrimination in employment and freedom of
workplace opportunity.
   (b) The Teachers' Retirement Board and the Board of Administration
of the Public Employees' Retirement System, respectively, shall
compile a list of domestic and international corporations that,
directly or through a subsidiary, do business in Northern Ireland,
and in whose stocks or obligations it has invested, and determine
whether each corporation on the list has, during the preceding year,
taken substantial action, in compliance with the law applicable in
Northern Ireland, designed to lead toward the achievement of the
following goals:
   (1) Increased representation of individuals from underrepresented
religious groups in the work force, including managerial,
supervisory, administrative, clerical, and technical jobs.
   (2) Adequate security for the protection of minority employees
both at the workplace and while traveling to and from work.
   (3) Banning of provocative religious or political emblems from the
workplace.
   (4) Public advertisement of all job openings and the use of
special recruitment efforts to attract applicants from
underrepresented religious groups.
   (5) Establishment of layoff, recall, and termination procedures
which do not, in practice, favor particular religious groupings.
   (6) Abolition of job reservations, apprenticeship restrictions,
and differential employment criteria, which discriminate on the basis
of religion or ethnic origin.
   (7) The development of training programs that will prepare
substantial numbers of current minority employees for skilled jobs,
including the expansion of existing programs and the creation of new
programs to train, upgrade, and improve the skills of minority
employees.
   (8) The establishment of procedures to assess, identify, and
actively recruit minority employees with potential for further
advancement.
   (9) The appointment of senior management staff members to oversee
affirmative action efforts and the setting up of timetables to carry
out affirmative action principles.
   (c) Whenever feasible and consistent with their fiduciary
responsibility, the Teachers' Retirement Board and the Board of
Administration of the Public Employees' Retirement System,
respectively, shall support shareholder resolutions designed to
encourage domestic and international corporations in which the
Teachers' Retirement Board and the Board of Administration of the
Public Employees' Retirement System, respectively, has invested to
pursue, in compliance with the law applicable in Northern Ireland, a
policy of affirmative action in Northern Ireland in accordance with
the goals listed in subdivision (b).



7513.6.  (a) As used in this section, the following definitions
shall apply:
   (1) "Active business operations" means a company engaged in
business operations that provide revenue to the government of Sudan
or a company engaged in oil-related activities.
   (2) "Board" means the Board of Administration of the Public
Employees' Retirement System or the Teachers' Retirement Board of the
State Teachers' Retirement System, as applicable.
   (3) "Business operations" means maintaining, selling, or leasing
equipment, facilities, personnel, or any other apparatus of business
or commerce in Sudan, including the ownership or possession of real
or personal property located in Sudan.
   (4) "Company" means a sole proprietorship, organization,
association, corporation, partnership, venture, or other entity, its
subsidiary or affiliate that exists for profitmaking purposes or to
otherwise secure economic advantage. "Company" also means a company
owned or controlled, either directly or indirectly, by the government
of Sudan, that is established or organized under the laws of or has
its principal place of business in the Republic of the Sudan.
   (5) "Government of Sudan" means the government of Sudan or its
instrumentalities.
   (6) "Invest" or "investment" means the purchase, ownership, or
control of stock of a company, association, or corporation, the
capital stock of a mutual water company or corporation, bonds issued
by the government or a political subdivision of Sudan, corporate
bonds or other debt instruments issued by a company, or the
commitment of funds or other assets to a company, including a loan or
extension of credit to that company.
   (7) "Military equipment" means weapons, arms, or military defense
supplies.
   (8) "Oil-related activities" means, but is not limited to, the
export of oil, extracting or producing oil, exploration for oil, or
the construction or maintenance of a pipeline, refinery, or other oil
field infrastructure.
   (9) "Public employee retirement funds" means the Public Employees'
Retirement Fund described in Section 20062 of this code, and the
Teachers' Retirement Fund described in Section 22167 of the Education
Code.
   (10) "Research firm" means a reputable, neutral third-party
research firm.
   (11) "Substantial action" means a boycott of the government of
Sudan, curtailing business in Sudan until that time described in
subdivision (m), selling company assets, equipment, or real and
personal property located in Sudan, or undertaking significant
humanitarian efforts in the eastern, southern, or western regions of
Sudan.
   (12) "Sudan" means the Republic of the Sudan, a territory under
the administration or control of the Sudan, including but not limited
to, the Darfur region, or an individual, company, or public agency
located in Khartoum, northern Sudan, or the Nile River Valley that
supports the Republic of the Sudan.
   (b) The board shall not invest public employee retirement funds in
a company with business operations in Sudan that meets all of the
following criteria:
   (1) The company is engaged in active business operations in Sudan.
If that company is not engaged in oil-related activities, that
company also lacks significant business operations in the eastern,
southern, and western regions of Sudan.
   (2) Either of the following apply:
   (A) The company is engaged in oil-related activities or energy or
power-related operations, or contracts with another company with
business operations in the oil, energy, and power sectors of Sudan,
and the company failed to take substantial action related to the
government of Sudan because of the Darfur genocide.
   (B) The company has demonstrated complicity in the Darfur
genocide.
   (c) Notwithstanding subdivision (b), the board shall not invest
public employee retirement funds in a company that supplies military
equipment within the borders of Sudan. If a company provides
equipment within the borders of Sudan that may be readily used for
military purposes, including, but not limited to, radar systems and
military-grade transport vehicles, there shall also be a strong
presumption against investing in that company unless that company
implements safeguards to prevent the use of that equipment for
military purposes.
   (d) (1) The board shall, without regard to the provisions
regarding competitive bidding, contract with a research firm or firms
to determine those companies that have business operations in Sudan.
Those research firms shall, in the aggregate, obtain data on a
majority of companies with business operations in Sudan. On or before
March 30, 2007, those research firms shall report any findings to
the board and those research firms shall submit further findings to
the board if there is a change of circumstances in Sudan.
   (2) In addition to the reports described in paragraph (1), the
board shall take all of the following actions no later than March 30,
2007:
   (A) Review publicly available information regarding companies with
business operations in Sudan.
   (B) Contact other institutional investors that invest in companies
with business operations in Sudan.
   (C) Send written notice to a company with business operations in
Sudan that the company may be subject to this section.
   (e) (1) The board shall determine, by the next applicable board
meeting and based on the information and reports described in
subdivision (d), if a company meets the criteria described in
subdivision (b) or (c). If the board plans to invest or has
investments in a company that meets the criteria described in
subdivision (b) or (c), that planned or existing investment shall be
subject to subdivisions (g) and (h).
   (2) Investments of the board in a company that does not meet the
criteria described in subdivision (b) or (c) or does not have active
business operations in Sudan are not subject to subdivision (h),
provided that the company does not subsequently meet the criteria
described in subdivision (b) or (c) or engage in active business
operations. The board shall identify the reasons why that company
does not satisfy the criteria described in subdivision (b) or (c) or
does not engage in active business operations in the report to the
Legislature described in subdivision (i).
   (f) (1) Notwithstanding subdivision (e), if the board's investment
in a company described in subdivision (b) or (c) is limited to
investment via an externally and actively managed commingled fund,
the board shall contact that fund manager in writing and request that
the fund manager remove that company from the fund as described in
subdivision (h). On or before June 30, 2007, if the fund or account
manager creates a fund or account devoid of companies described in
subdivision (b) or (c), the transfer of board investments from the
prior fund or account to the fund or account devoid of companies with
business operations in Sudan shall be deemed to satisfy subdivision
(h).
   (2) If the board's investment in a company described in
subdivision (b) or (c) is limited to an alternative fund or account,
the alternative fund or account manager creates an actively managed
commingled fund that excludes companies described in subdivision (b)
or (c), and the new fund or account is deemed to be financially
equivalent to the existing fund or account, the transfer of board
investments from the existing fund or account to the new fund or
account shall be deemed to satisfy subdivision (h). If the board
determines that the new fund or account is not financially equivalent
to the existing fund, the board shall include the reasons for that
determination in the report described in subdivision (i).
   (3) The board shall make a good faith effort to identify any
private equity investments that involve companies described in
subdivision (b) or (c) or are linked to the government of Sudan. If
the board determines that a private equity investment clearly
involves a company described in subdivision (b) or (c) or is linked
to the government of Sudan, the board shall consider, at its
discretion, if those private equity investments shall be subject to
subdivision (h). If the board determines that a private equity
investment clearly involves a company described in subdivision (b) or
(c) or is linked to the government of Sudan and the board does not
take action as described in subdivision (h), the board shall include
the reasons for its decision in the report described in subdivision
(i).
   (g) Except as described in subdivision (f) or paragraph (2) of
subdivision (e), the board, in the board's capacity of shareholder or
investor, shall notify any company described in paragraph (1) of
subdivision (e) that the company is subject to subdivision (h) and
permit that company to respond to the information and reports
described in subdivision (d). The board shall request that the
company take substantial action no later than 90 days from the date
the board notified the company under this subdivision. If the board
determines that a company has taken substantial action or has made
sufficient progress towards substantial action before the expiration
of that 90-day period, that company shall not be subject to
subdivision (h). The board shall, at intervals not to exceed 90 days,
continue to monitor and review the progress of the company until
that company has taken substantial action in Sudan. A company that
fails to complete substantial action or continue to make sufficient
progress towards substantial action by the next time interval shall
be subject to subdivision (h).
   (h) If a company described in paragraph (1) of subdivision (e)
fails to complete substantial action by the time described in
subdivision (g), the board shall take the following actions:
   (1) The board shall not make additional or new investments or
renew existing investments in that company.
   (2) The board shall liquidate the investments of the board in that
company no later than 18 months after this subdivision applies to
that company. The board shall liquidate those investments in a manner
to address the need for companies to take substantial action in
Sudan and consistent with the board's fiduciary responsibilities as
described in Section 17 of Article XVI of the California
Constitution.
   (i) On or before January 1, 2008, and every year thereafter, the
board shall file a report with the Legislature.  The report shall
describe the following:
   (1) A list of investments the board has in companies with business
operations in Sudan, including, but not limited to, the issuer, by
name, of the stock, bonds, securities, and other evidence of
indebtedness.
   (2) A detailed summary of the business operations a company
described in paragraph (1) has in Sudan and whether that company
satisfies all of the criteria in subdivision (b) or (c).
   (3) Whether the board has reduced its investments in a company
that satisfies the criteria in subdivision (b) or (c).
   (4) If the board has not completely reduced its investments in a
company that satisfies the criteria in subdivision (b) or (c), when
the board anticipates that the board will reduce all investments in
that company or the reasons why a sale or transfer of investments is
inconsistent with the fiduciary responsibilities of the board as
described in Section 17 of Article XVI of the California
Constitution.
   (5) Any information described in subdivision (e).
   (6) A detailed summary of investments that were transferred to
funds or accounts devoid of companies with business operations in
Sudan as described in subdivision (f).
   (j) If the board voluntarily sells or transfers all of its
investments in a company with business operations in Sudan, this
section shall not apply except that the board shall file a report
with the Legislature related to that company as described in
subdivision (i).
   (k) 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.
   (l) Subdivision (h) shall not apply to any of the following:
   (1) Investments in a company that is primarily engaged in
supplying goods or services intended to relieve human suffering in
Sudan.
   (2) Investments in a company that promotes health, education,
journalistic, or religious activities in or welfare in the western,
eastern, or southern regions of Sudan.
   (3) Investments in a United States company that is authorized by
the federal government to have business operations in Sudan.
   (m) This section shall remain in effect only until one of the
following occurs, and as of the date of that action, is repealed:
   (1) The government of Sudan halts the genocide in Darfur for 12
months as determined by both the Department of State and the Congress
of the United States.
   (2) The United States revokes its current sanctions against Sudan.



7513.7.  (a) As used in this section, the following definitions
shall apply:
   (1) "Board" means the Board of Administration of the Public
Employees' Retirement System or the Teachers' Retirement Board of the
State Teachers' Retirement System, as applicable.
   (2) "Business operations" means maintaining, selling, or leasing
equipment, facilities, personnel, or any other apparatus of business
or commerce in Iran, including the ownership or possession of real or
personal property located in Iran.
   (3) "Company" means a sole proprietorship, organization,
association, corporation, partnership, venture, or other entity, its
subsidiary or affiliate that exists for profitmaking purposes or to
otherwise secure economic advantage. "Company" also means a company
owned or controlled, either directly or indirectly, by the government
of Iran, that is established or organized under the laws of or has
its principal place of business in the Islamic Republic of Iran.
   (4) "Government of Iran" means the government of Iran or its
instrumentalities or political subdivisions. "Government of Iran"
also means an individual, company, or public agency located in Iran
that provides material or financial support to the Islamic Republic
of Iran.
   (5) "Invest" or "investment" means the purchase, ownership, or
control of stock of a company, association, or corporation, the
capital stock of a mutual water company or corporation, bonds issued
by the government or a political subdivision of Iran, corporate bonds
or other debt instruments issued by a company, or the commitment of
funds or other assets to a company, including a loan or extension of
credit to that company.
   (6) "Iran" means the Islamic Republic of Iran or a territory under
the administration or control of Iran.
   (7) "Military equipment" means weapons, arms, or military defense
supplies.
   (8) "Public employee retirement funds" means the Public Employees'
Retirement Fund described in Section 20062 of this code, and the
Teachers' Retirement Fund described in Section 22167 of the Education
Code.
   (9) "Substantial action" means a boycott of the government of
Iran, curtailing business in Iran until that time described in
subdivision (m), or selling company assets, equipment, or real and
personal property located in Iran.
   (b) The board shall not invest public employee retirement funds in
a company which has business operations in Iran as identified by the
board through, as the board deems appropriate, publicly available
information including, but not limited to, information provided by
nonprofit and other organizations and government entities, that meets
either of the following criteria:
   (1) The company (A) is invested in or engaged in business
operations with entities in the defense or nuclear sectors of Iran or
(B) is invested in or engaged in business operations with entities
involved in the development of petroleum or natural gas resources of
Iran, and that company is subject to sanctions under Public Law
104-172, as renewed and amended in 2001 and 2006.
   (2) The company has demonstrated complicity with an Iranian
organization that has been labeled as a terrorist organization by the
United States government.
   (c) On or before June 30, 2008, the board shall determine which
companies are subject to divestment.
   (d) After the determination described in subdivision (c), the
board shall determine, by the next applicable board meeting, if a
company meets the criteria described in subdivision (b). If the board
plans to invest or has investments in a company that meets the
criteria described in subdivision (b), that planned or existing
investment shall be subject to subdivisions (g) and (h).
   (e) Investments of the board in a company that does not meet the
criteria described in subdivision (b) are not subject to subdivision
(h) if the company does not subsequently meet the criteria described
in subdivision (b). The board shall identify the reasons why that
company does not satisfy the criteria described in subdivision (b) in
the report to the Legislature described in subdivision (i).
   (f) (1) Notwithstanding subdivisions (d) and (e), if the board's
investment in a company described in subdivision (b) is limited to
investment via an externally and actively managed commingled fund,
the board shall contact that fund manager in writing and request that
the fund manager remove that company from the fund as described in
subdivision (h).  On or before June 30, 2008, if the fund or account
manager creates a fund or account devoid of companies described in
subdivision (b), the transfer of board investments from the prior
fund or account to the fund or account devoid of companies with
business operations in Iran shall be deemed to satisfy subdivision
(h).
   (2) If the board's investment in a company described in
subdivision (b) is limited to an alternative fund or account, the
alternative fund or account manager creates an actively managed
commingled fund that excludes companies described in subdivision (b),
and the new fund or account is deemed to be financially equivalent
to the existing fund or account, the transfer of board investments
from the existing fund or account to the new fund or account shall be
deemed to satisfy subdivision (h). If the board determines that the
new fund or account is not financially equivalent to the existing
fund, the board shall include the reasons for that determination in
the report described in subdivision (i).
   (3) The board shall make a good faith effort to identify any
private equity investments that involve companies described in
subdivision (b), or are linked to the government of Iran. If the
board determines that a private equity investment clearly involves a
company described in subdivision (b), or is linked to the government
of Iran, the board shall consider, at its discretion, if those
private equity investments shall be subject to subdivision (h). If
the board determines that a private equity investment clearly
involves a company described in subdivision (b), or is linked to the
government of Iran and the board does not take action as described in
subdivision (h), the board shall include the reasons for its
decision in the report described in subdivision (i).
   (g) Except as described in subdivisions (e) and (f), the board, in
the board's capacity of shareholder or investor, shall notify any
company described in subdivision (d) that the company is subject to
subdivision (h) and permit that company to respond to the board. The
board shall request that the company take substantial action no later
than 90 days from the date the board notified the company under this
subdivision. If the board determines that a company has taken
substantial action or has made sufficient progress towards
substantial action before the expiration of that 90-day period, that
company shall not be subject to subdivision (h). The board shall, at
intervals not to exceed 90 days, continue to monitor and review the
progress of the company until that company has taken substantial
action in Iran. A company that fails to complete substantial action
within one year from the date of the initial notice by the board
shall be subject to subdivision (h).
   (h) If a company described in subdivision (d) fails to complete
substantial action by the time described in subdivision (g), the
board shall take the following actions:
   (1) The board shall not make additional or new investments or
renew existing investments in that company.
   (2) The board shall liquidate the investments of the board in that
company no later than 18 months after this subdivision applies to
that company. The board shall liquidate those investments in a manner
to address the need for companies to take substantial action in Iran
and consistent with the board's fiduciary responsibilities as
described in Section 17 of Article XVI of the California
Constitution.
   (i) On or before January 1, 2009, and every year thereafter, the
board shall file a report with the Legislature. The report shall
describe the following:
   (1) A list of investments the board has in companies with business
operations that satisfy the criteria in subdivision (b), including,
but not limited to, the issuer, by name, of the stock, bonds,
securities, and other evidence of indebtedness.
   (2) A detailed summary of the business operations a company
described in paragraph (1) has in Iran.
   (3) Whether the board has reduced its investments in a company
that satisfies the criteria in subdivision (b).
   (4) If the board has not completely reduced its investments in a
company that satisfies the criteria in subdivision (b), when the
board anticipates that the board will reduce all investments in that
company or the reasons why a sale or transfer of investments is
inconsistent with the fiduciary responsibilities of the board as
described in Section 17 of Article XVI of the California
Constitution.
   (5) Any information described in subdivisions (d) and (e).
   (6) A detailed summary of investments that were transferred to
funds or accounts devoid of companies with business operations in
Iran as described in subdivision (f).
   (7) An annual calculation of any costs or investment losses or
other financial results incurred in compliance with the provisions of
this section.
   (j) If the board voluntarily sells or transfers all of its
investments in a company with business operations in Iran, this
section shall not apply except that the board shall file a report
with the Legislature related to that company as described in
subdivision (i).
   (k) 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.
   (l) Subdivision (h) shall not apply to any of the following:
   (1) Investments in a company that is primarily engaged in
supplying goods or services intended to relieve human suffering in
Iran.
   (2) Investments in a company that promotes health, education, or
journalistic, religious, or welfare activities in Iran.
   (3) Investments in a United States company that is authorized by
the federal government to have business operations in Iran.
   (m) This section shall cease to be operative if both of the
following apply:
   (1) Iran is removed from the United States Department of State's
list of countries that have been determined to repeatedly provide
support for acts of international terrorism.
   (2) Pursuant to Public Law 104-172, as amended, the President of
the United States determines and certifies to the appropriate
committee of the Congress of the United States that Iran has ceased
its efforts to design, develop, manufacture, or acquire a nuclear
explosive device or related materials and technology.
   (n) This section shall be known and may be cited as the California
Public Divest from Iran Act.



7514.  As used in Section 11 of Article VII of the Constitution, the
following terms have the following meanings:
   (a) "Actuarial equivalent" means a benefit of equal value when
computed upon the basis of the mortality tables adopted and the
actuarial interest rate fixed by the Board of Administration of the
Public Employees' Retirement System.
   (b) "Beneficiary" means any person or corporation designated by a
member, a retired member, or statute, or the estate of a member or
retired member designated by the member or retired member, to receive
a benefit under the retirement system, on account of the death of
the member or retired member.
   (c) "Salary" means the actual wages paid but shall not include any
other benefits, such as, but not limited to, health and dental
benefits, retirement benefits, vacation pay, and per diem.
   (d) "Unmodified pension or retirement allowance" means the maximum
pension or retirement allowance receivable, prior to any selection
of an optional settlement and includes any cost-of-living adjustment
and any other increase granted subsequent to retirement.



7514.  (a) Notwithstanding any other provision of law except Chapter
7 (commencing with Section 16649.80) of Part 2 of Division 4 of
Title 2, any state or local public retirement system may invest,
subject to and consistent with the standard for prudent investment
set forth in Section 17 of Article XVI of the California
Constitution, its assets in the bonds or other evidences of
indebtedness unconditionally guaranteed by any foreign government
that has met the payments of similar bonds or other evidences of
indebtedness when due.
   (b) A portion of the assets invested pursuant to this section may
be used to purchase rated or unrated bonds, notes, or other
instruments unconditionally guaranteed by Canada, Israel, Mexico, or
South Africa.



7514.1.  Notwithstanding any other provision of law except Chapter 7
(commencing with Section 16649.80) of Part 2 of Division 4 of Title
2, any state or local public retirement system may invest, subject to
and consistent with the standard for prudent investment set forth in
Section 17 of Article XVI of the California Constitution, and the
state and any political subdivision of the state may, invest its
assets in rated bonds, notes, or other obligations issued, assumed,
or unconditionally guaranteed by the African Development Bank, the
Asian Development Bank, the Caribbean Development Bank, the
Inter-American Development Bank, the International Finance
Corporation, the International Bank for Reconstruction and
Development, the European Bank for Reconstruction and Development,
and any other international financial institution that has met the
payments of similar bonds, notes, or other obligations when due and
in which the United States is a member.



7514.3.  Notwithstanding any other provision of law,  state pension
systems may, subject to and consistent with their fiduciary duties
and the standard for prudent investment set forth in Section 20190 of
this code and Section 17 of Article XVI of the California
Constitution, establish credit enhancement programs to assist
entities of state and local government and other issuers of municipal
and public finance debt to secure more favorable financing terms
through a variety of types of credit enhancement including, but not
limited to, enhancement of the credit of bonds, notes, and other
indebtedness.  Any credit enhancement program shall comply with the
requirements of Section 503 of the Internal Revenue Code.



7514.5.  Notwithstanding any other provision of law, whenever the
rights of a member of the Public Employees' Retirement System, the
State Teachers' Retirement System, or a retirement system established
under the County Employees Retirement Law of 1937, because of
membership in another retirement system, are conditional upon
employment within a specified period of time after termination of
service in another retirement system, that specified period shall be
the period of service in full-time elective office on and after
November 6, 1990, if the member was a full-time elective officer on
or after that date and becomes a member of any of those retirement
systems within 120 days after termination of the full-time elective
office.

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