Thursday, July 19, 2018
CalPERS fighting divestment review bill
Arleen Jacobius, 7-18-18, Pensions and Investments
CalPERS is opposing a state bill that would establish a separate body to review divestment legislation that would affect itself and CalSTRS.
The bill requests the University of California establish the Pension Divestment Review Program to analyze divestment-related legislation affecting the $354.7 billion California Public Employees' Retirement System, Sacramento, and $224.9 billion California State Teachers' Retirement System, West Sacramento. The analysis would include the financial impact to the pension plans including the effect of divestment on the plans' unfunded liability.
California Controller Betty Yee, who is a CalPERS and CalSTRS board member, opposes the bill. "Spending additional resources to create a (body) that will simply replicate the work of the state's pension board staff is not a productive endeavor," said a statement from Ms. Yee included in materials for CalPERS' July 16 off-site meeting.
"Rather, improved communications with the pension boards should provide the same information (to be sought by this bill), and in a quicker and more cost-effective fashion," the statement said.
One of the CalPERS board's concerns, according to the agenda materials, is that the financial criteria established by the bill do not "address the impact of divestment proposals on the risk and volatility of the investment portfolio, which, in turn, will impact funded status, returns and retirement contribution rates for CalPERS and CalSTRS."
The bill, SB 783, passed the California Senate in January and is now before the Assembly Committee on Appropriations.
The actual bill is at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB783