Bill Text: CA AB2638 | 2015-2016 | Regular Session | Amended
Bill Title: Government finance: investment.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2016-11-30 - From Senate committee without further action. [AB2638 Detail]
Download: California-2015-AB2638-Amended.html
BILL NUMBER: AB 2638 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 21, 2016
AMENDED IN ASSEMBLY APRIL 25, 2016
INTRODUCED BY Assembly Member Gatto
FEBRUARY 19, 2016
An act to amend Section 16429.2 of of, and
to add Article 12 (commencing with Section 16429.50) to Chapter 2 of
Part 2 of Division 4 of Title 2 of, the Government Code,
relating to local government finance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2638, as amended, Gatto. Local Investment Advisory
Board: members. Government finance: investment.
Existing
(1) Existing law creates the
Local Agency Investment Fund, a trust fund in the custody of the
Treasurer, in which local governments and other specified
governmental entities may deposit, for investment, moneys that are
not required for immediate needs. Existing law authorizes the
Treasurer, with the advice of the Local Investment Advisory Board, to
invest the moneys in the fund. Existing law requires the board to be
made up of 5 members, including the Treasurer or his or her
representative, 2 members appointed by the Treasurer who are
experienced in the field of investment, and 2 members appointed by
the Treasurer who are treasurers, finance or fiscal officers, or
business managers employed by a county, city or local district, or
municipal corporation of this state. Existing law establishes that
the term of office of each appointed member of the board is 2 years.
This bill would extend the term of each of the appointed members
of the board to 3 years. The bill would also make several
nonsubstantive changes.
(2) Existing law creates the Pooled Money Investment Board and
authorizes it to determine whether any money on deposit in the State
Treasury, with specified exceptions, is not necessary for immediate
use and to designate that money as "surplus money." Existing law
requires transfer of this surplus money to the Surplus Money
Investment Fund and requires that the moneys be invested by the
Treasurer in specified eligible investment vehicles.
Existing law creates the Local Agency Investment Fund, a trust
fund in the custody of the Treasurer, in which local governments and
other specified governmental entities may deposit, for investment,
moneys that are not required for immediate needs. Existing law
authorizes the Treasurer, with the advice of the Local Investment
Advisory Board, to invest the moneys in the fund in specified
securities that are eligible for the investment of surplus state
funds.
This bill would create the Intermediate and Long Term Investment
Fund to receive voluntary deposit of funds by a governmental entity
so that those funds may benefit from the intermediate or long-term
investments authorized by this bill. The bill would, in addition,
authorize investment of moneys that are deposited in the Intermediate
and Long Term Investment Fund in long-term corporate and government
bonds, in gold, and in convertible securities.
This bill would establish the Long Term Investment Board. The
board would consist of 5 members with the Treasurer as the chair. The
Treasurer would select the remaining 4 members, based upon specified
criteria, for 2-year terms. The board's primary purpose would be to
advise and assist the Treasurer in formulating the investment and
reinvestment of moneys in the fund and the acquisition, retention,
management, and disposition of investments of the fund. The bill
would require the board to submit quarterly and annual reports
regarding the performance of the investments in the fund to the
Legislature and to the Department of Finance.
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. Section 16429.2 of the Government Code is amended to
read:
16429.2. There is created the Local Investment Advisory Board
consisting of five members. The chair shall be the Treasurer or his
or her designated representative. Two members who are qualified by
training and experience in the field of investment or finance, shall
be appointed by the Treasurer. Two members who are treasurers,
finance or fiscal officers, or business managers employed by any
county, city or local district, or municipal corporation of the
state, shall be appointed by the Treasurer.
The term of office of each appointed member of the board is three
years, but each appointed member serves at the pleasure of the
appointing authority. A vacancy in the appointed membership,
occurring other than by expiration of term, shall be filled in the
same manner as the original appointment, but for the unexpired term
only.
Members of the board who are not state officers or employees shall
not receive a salary, but shall be entitled to a per diem allowance
of fifty dollars ($50) for each day's attendance at a meeting of the
board, not to exceed three hundred dollars ($300) in any month. All
members shall be entitled to reimbursement for expenses incurred in
the performance of their duties under this part, including travel and
other necessary expenses.
The board's primary purpose shall be to advise and assist the
Treasurer in formulating the investment and reinvestment of moneys in
the Local Agency Investment Fund, and the acquisition, retention,
management, and disposition of investments of the fund. The board,
from time to time, shall review those policies and advise therein as
it considers necessary or desirable. The board shall advise the
Treasurer in the management of the fund and consult the Treasurer on
any matter relating to the investment and reinvestment of moneys in
the fund.
SEC. 2. Article 12 (commencing with Section
16429.50) is added to Chapter 2 of Part 2 of Division 4 of Title 2 of
the Government Code , to read:
Article 12. Intermediate and Long Term Investment Fund
16429.50. (a) The Intermediate and Long Term Investment Fund is
hereby created. The Treasurer shall administer the fund and shall
maintain a separate account within the fund for each governmental
unit having deposits in this fund.
(b) The purpose of the fund is to permit voluntary deposit of
funds by a governmental entity where those funds may benefit from the
intermediate or long-term investments authorized by this article.
(c) The moneys deposited into the Intermediate and Long Term
Investment Fund shall be subject to the requirements of Section
16430, except that the moneys may also be invested in corporate bonds
with a maturity of up to three years, in government bonds with a
maturity of up to 30 years, in physical gold, and in convertible
securities.
(d) The Intermediate and Long Term Investment Advisory Board
shall recommend to the Treasurer the moneys in the Surplus Money
Investment Fund or the Local Agency Investment Fund which qualify to
participate in the Intermediate and Long Term Investment Fund.
(e) The Treasurer may refuse to accept deposits into the fund if,
in the judgment of the Treasurer, the deposit would adversely affect
the state's portfolio.
(f) Money in the fund shall be invested to achieve the objective
of the fund, which is to realize the maximum return consistent with
safe and prudent management.
(g) All instruments of title of all investments of the fund shall
remain in the Treasurer's vault or be held in safekeeping under
control of the Treasurer in any federal reserve bank, or any branch
thereof, or the Federal Home Loan Bank of San Francisco, with any
trust company, or the trust department of any state or national bank.
(h) Immediately at the conclusion of each calendar quarter, all
interest earned and other increment derived from investments shall be
distributed by the Controller to the contributing governmental units
or trustees or fiscal agents, nonprofit corporations, and
quasi-governmental agencies in amounts directly proportionate to the
respective amounts deposited in the Intermediate and Long Term
Investment Fund and the length of time the amounts remained therein.
An amount equal to the reasonable costs incurred in carrying out the
provisions of this section, not to exceed a maximum of 5 percent of
the earnings of this fund and not to exceed the amount appropriated
in the annual Budget Act for this function, shall be deducted from
the earnings prior to distribution. However, if the 13-week Daily
Treasury Bill Rate, as published by the United States Department of
the Treasury, on the last day of the state's fiscal year is below 1
percent, then the above-noted reasonable costs shall not exceed a
maximum of 8 percent of the earnings of this fund for the subsequent
fiscal year, shall not exceed the amount appropriated in the annual
Budget Act for this function, and shall be deducted from the earnings
prior to distribution. The amount of the deduction shall be credited
as reimbursements to the state agencies, including the Treasurer,
the Controller, and the Department of Finance, having incurred costs
in carrying out the provisions of this article.
16429.52. (a) Moneys placed with the Treasurer for deposit in the
Intermediate and Long Term Investment Fund from the Local Agency
Investment Fund shall be held in trust. Those funds shall not be
subject to either of the following:
(1) Transfer or loan pursuant to Section 16310, 16312, or 16313.
(2) Impoundment or seizure by any state official or state agency.
(b) (1) The right of a city, county, city and county, special
district, nonprofit corporation, or qualified quasi-governmental
agency to withdraw its deposited moneys from the Intermediate and
Long Term Investment Fund, upon demand, shall not be altered,
impaired, or denied, in any way, by any state official or state
agency based upon the state's failure to adopt a State Budget by July
1, of each new fiscal year.
(2) Notwithstanding paragraph (1), if an agency prematurely
withdraws moneys deposited in a medium- or long-term investment, the
agency shall pay its fair share of any penalty imposed, as determined
by the Treasurer.
16429.54. (a) The Intermediate and Long Term Investment Advisory
Board is hereby established, consisting of five members. The
chairperson shall be the Treasurer or his or her designated
representative. Two members who are qualified by training and
experience in the field of investing and finance shall be appointed
by the Treasurer. Two members who are treasurers, finance or fiscal
officers, or business managers, employed by any county, city, or
local district or municipal corporation of this state, shall be
appointed by the Treasurer. No member of either the Local Investment
Advisory Board or the Pooled Money Investment Board is eligible to be
selected by the Treasurer for the Intermediate and Long Term
Investment Board.
(b) The term of office of each appointed member of the board is
two years, but each appointed member serves at the pleasure of the
appointing authority. A vacancy in the appointed membership,
occurring other than by expiration of term, shall be filled in the
same manner as the original appointment, but for the unexpired term
only.
(c) Members of the board who are not state officers or employees
shall not receive a salary, but shall be entitled to a per diem
allowance of fifty dollars ($50) for each day's attendance at a
meeting of the board, not to exceed three hundred dollars ($300) in
any month. All members shall be entitled to reimbursement for
expenses incurred in the performance of their duties under this part,
including travel and other necessary expenses.
(d) The board's primary purpose shall be to advise and assist the
Treasurer in formulating the investment and reinvestment of moneys in
the Intermediate and Long Term Investment Fund and the acquisition,
retention, management, and disposition of investments of the fund.
The board, from time to time, shall review those policies and advise
therein as it considers necessary or desirable.
(e) The board shall distribute investment performance reports
quarterly and distribute an annual report to the Legislature, in
compliance with Section 9795 of the Government Code, and to the
Department of Finance. The investment performance reports shall
include investment returns, comparisons to benchmarks, holdings,
market values, and fees.
