Bill Text: CA SB1029 | 2015-2016 | Regular Session | Chaptered
Bill Title: California Debt and Investment Advisory Commission: accountability reports.
Spectrum: Moderate Partisan Bill (Democrat 4-1)
Status: (Passed) 2016-09-12 - Chaptered by Secretary of State. Chapter 307, Statutes of 2016. [SB1029 Detail]
Download: California-2015-SB1029-Chaptered.html
BILL NUMBER: SB 1029 CHAPTERED
BILL TEXT
CHAPTER 307
FILED WITH SECRETARY OF STATE SEPTEMBER 12, 2016
APPROVED BY GOVERNOR SEPTEMBER 12, 2016
PASSED THE SENATE AUGUST 24, 2016
PASSED THE ASSEMBLY AUGUST 18, 2016
AMENDED IN ASSEMBLY AUGUST 15, 2016
AMENDED IN ASSEMBLY JUNE 15, 2016
AMENDED IN SENATE MAY 31, 2016
AMENDED IN SENATE APRIL 27, 2016
AMENDED IN SENATE MARCH 17, 2016
INTRODUCED BY Senator Hertzberg
(Coauthor: Senator Wieckowski)
(Coauthors: Assembly Members Dodd, Gallagher, and Gatto)
FEBRUARY 12, 2016
An act to amend Section 8855 of the Government Code, relating to
state government.
LEGISLATIVE COUNSEL'S DIGEST
SB 1029, Hertzberg. California Debt and Investment Advisory
Commission: accountability reports.
Existing law establishes the California Debt and Investment
Advisory Commission to, among other things, maintain contact with
state and municipal bond issuers, underwriters, investors, and credit
rating agencies to improve the market for state and local government
debt issues and to assist state and local governments to prepare,
market, and sell their debt issues. Existing law requires the
commission to collect, maintain, and provide comprehensive
information on all state and all local debt authorization and
issuance and to serve as a statistical clearinghouse for all state
and local debt issuance.
This bill would additionally require the commission to track and
report on all state and local outstanding debt until fully repaid or
redeemed.
Existing law requires the issuer of debt of state or local
government to submit reports to the commission, within specified
timeframes, of the proposed issuance of debt and of final sale, as
provided.
This bill would require that the report of proposed debt include a
certification by the issuer that it has adopted local debt policies,
which include specified provisions concerning the use of debt and
that the contemplated debt issuance is consistent with those local
debt policies.
This bill would also require a state or local public agency to
submit an annual report for any issue of debt for which it has
submitted a report of final sale on or after January 21, 2017. The
bill would require the annual report to cover a reporting period of
July 1 to June 30, inclusive, and to include specified information
about debt issued and outstanding and the use of proceeds from debt
during the reporting period. The bill would require that the report
be submitted within 7 months after the end of the reporting period by
any method approved by the commission. The bill would require the
commission to consult with appropriate state and local debt issuers
and organizations representing debt issuers prior to approving any
annual method of reporting pursuant to these provisions, as provided.
This bill would make various findings and declarations regarding
its provisions.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature hereby finds and declares all of the
following:
(a) California's 4,200 units of local government have issued $1.5
trillion in debt since 1984. The California Debt and Investment
Advisory Commission (CDIAC) was created in 1982 to provide
information, education, and technical assistance on debt issuance and
investments to local public agencies and other public finance
professionals. Over the past three decades, CDIAC has emerged as a
national thought leader in public finance.
(b) Nationally, there is approximately $3.7 trillion of state and
local government debt outstanding. Of all outstanding state and local
government debt, approximately 75 percent is held by households and
mutual funds owned predominantly by households. State governments,
local governments, and their stakeholders benefit from better data
about public debt. Transparency on public debt promotes better
government and market integrity. It is in the interest of the people
that state and local agencies utilize technological opportunities to
provide transparency to the public.
(c) State and local agencies should adopt comprehensive written
debt management policies pursuant to the recommendation of the
Government Finance Officers Association, a professional organization
of over 18,000 public officials united to enhance and promote the
professional management of governmental financial resources. These
policies should reflect local, state, and federal laws and
regulations.
(d) It is the intent of the Legislature that all debt issuance of
state and of local governments be published in a single, transparent
online database that allows the citizens of California to analyze,
interpret, and understand how debt authorized by the public is
utilized to finance facilities and services at the state and local
level.
SEC. 2. Section 8855 of the Government Code is amended to read:
8855. (a) There is created the California Debt and Investment
Advisory Commission, consisting of nine members, selected as follows:
(1) The Treasurer, or his or her designee.
(2) The Governor or the Director of Finance.
(3) The Controller, or his or her designee.
(4) Two local government finance officers appointed by the
Treasurer, one each from among persons employed by a county and by a
city or a city and county of this state, experienced in the issuance
and sale of municipal bonds and nominated by associations affiliated
with these agencies.
(5) Two Members of the Assembly appointed by the Speaker of the
Assembly.
(6) Two Members of the Senate appointed by the Senate Committee on
Rules.
(b) (1) The term of office of an appointed member is four years,
but appointed members serve at the pleasure of the appointing power.
In case of a vacancy for any cause, the appointing power shall make
an appointment to become effective immediately for the unexpired
term.
(2) Any legislators appointed to the commission shall meet with
and participate in the activities of the commission to the extent
that the participation is not incompatible with their respective
positions as Members of the Legislature. For purposes of this
chapter, the Members of the Legislature shall constitute a joint
interim legislative committee on the subject of this chapter.
(c) The Treasurer shall serve as chairperson of the commission and
shall preside at meetings of the commission.
(d) Appointed members of the commission 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
commission not to exceed three hundred dollars ($300) in any month,
and reimbursement for expenses incurred in the performance of their
duties under this chapter, including travel and other necessary
expenses.
(e) The commission may adopt bylaws for the regulation of its
affairs and the conduct of its business.
(f) The commission shall meet on the call of the chairperson, at
the request of a majority of the members, or at the request of the
Governor. A majority of all nonlegislative members of the commission
constitutes a quorum for the transaction of business.
(g) The office of the Treasurer shall furnish all administrative
assistance required by the commission.
(h) The commission shall do all of the following:
(1) Assist all state financing authorities and commissions in
carrying out their responsibilities as prescribed by law, including
assistance with respect to federal legislation pending in Congress.
(2) Upon request of any state or local government units, to assist
them in the planning, preparation, marketing, and sale of debt
issues to reduce cost and to assist in protecting the issuer's
credit.
(3) Collect, maintain, and provide comprehensive information on
all state and all local debt authorization and issuance, track and
report on all state and local outstanding debt until fully repaid or
redeemed, and serve as a statistical clearinghouse for all state and
local debt. This information shall be available to the public.
(4) Maintain contact with state and municipal bond issuers,
underwriters, credit rating agencies, investors, and others to
improve the market for state and local government debt issues.
(5) Undertake or commission studies on methods to reduce the costs
and improve credit ratings of state and local issues.
(6) Recommend changes in state laws and local practices to improve
the sale and servicing of state and local debts.
(7) Establish a continuing education program for local officials
having direct or supervisory responsibility over municipal
investments and debt issuance. The commission shall undertake these
and any other activities necessary to disclose investment and debt
issuance practices and strategies that may be conducive for oversight
purposes.
(8) Collect, maintain, and provide information on local agency
investments of public funds for local agency investment.
(9) Publish a monthly newsletter describing and evaluating the
operations of the commission during the preceding month.
(i) (1) The issuer of any proposed debt issue of state or local
government shall, no later than 30 days prior to the sale of any debt
issue, submit a report of the proposed issuance to the commission by
any method approved by the commission. This subdivision shall also
apply to any nonprofit public benefit corporation incorporated for
the purpose of acquiring student loans. The commission may require
information to be submitted in the report of proposed debt issuance
that it considers appropriate. Failure to submit the report shall not
affect the validity of the sale. The report of proposed debt
issuance shall include a certification by the issuer that it has
adopted local debt policies concerning the use of debt and that the
contemplated debt issuance is consistent with those local debt
policies. A local debt policy shall include all of the following:
(A) The purposes for which the debt proceeds may be used.
(B) The types of debt that may be issued.
(C) The relationship of the debt to, and integration with, the
issuer's capital improvement program or budget, if applicable.
(D) Policy goals related to the issuer's planning goals and
objectives.
(E) The internal control procedures that the issuer has
implemented, or will implement, to ensure that the proceeds of the
proposed debt issuance will be directed to the intended use.
(2) In the case of an issue of bonds the proceeds of which will be
used by a governmental entity other than the issuer, the issuer may
rely upon a certification by that other governmental entity that it
has adopted the policies described in subparagraphs (C), (D), and (E)
of paragraph (1), and references to the "issuer" in those
subparagraphs shall be deemed to refer instead to the other
governmental entity.
(j) The issuer of any debt issue of state or local government, not
later than 21 days after the sale of the debt, shall submit a report
of final sale to the commission by any method approved by the
commission. A copy of the final official statement for the issue
shall accompany the report of final sale. If there is no official
statement, the issuer shall provide each of the following documents,
if they exist, along with the report of final sale:
(1) Other disclosure document.
(2) Indenture.
(3) Installment sales agreement.
(4) Loan agreement.
(5) Promissory note.
(6) Bond purchase contract.
(7) Resolution authorizing the issue.
(8) Bond specimen.
The commission may require information to be submitted in the
report of final sale that it considers appropriate. The issuer may
redact confidential information contained in the documents if the
redacted information is not information that is otherwise required to
be reported to the commission.
(k) (1) A public agency, whether state or local, shall submit an
annual report for any issue of debt for which it has submitted a
report of final sale pursuant to subdivision (j) on or after January
21, 2017. The annual report shall cover a reporting period from July
1 to June 30, inclusive, and shall be submitted no later than seven
months after the end of the reporting period by any method approved
by the commission. Before approving any annual method of reporting
pursuant to this subdivision, the commission shall consult with
appropriate state and local debt issuers and organizations
representing debt issuers for purposes that shall include, but not be
limited to, making a proposed reporting method more efficient and
less burdensome for issuers. The annual report shall consist of the
following information:
(A) Debt authorized during the reporting period, which shall
include the following:
(i) Debt authorized at the beginning of the reporting period.
(ii) Debt authorized and issued during the reporting period.
(iii) Debt authorized but not issued at the end of the reporting
period.
(iv) Debt authority that has lapsed during the reporting period.
(B) Debt outstanding during the reporting period, which shall
include the following:
(i) Principal balance at the beginning of the reporting period.
(ii) Principal paid during the reporting period.
(iii) Principal outstanding at the end of the reporting period.
(C) The use of proceeds of issued debt during the reporting
period, which shall include the following:
(i) Debt proceeds available at the beginning of the reporting
period.
(ii) Proceeds spent during the reporting period and the purposes
for which it was spent.
(iii) Debt proceeds remaining at the end of the reporting period.
(2) Compliance with this subdivision shall be required for each
issue of debt with outstanding debt, debt that has been authorized
but not issued, or both, during the reporting period.
(3) The commission may, if technology permits, develop an
alternate reporting method, provided that any alternate reporting
method is in furtherance of the purpose of collecting the data
required by this subdivision. Before approving any alternate annual
method of reporting pursuant to this subdivision, the commission
shall consult with appropriate state and local debt issuers and
organizations representing debt issuers for purposes that shall
include, but not be limited to, making a proposed reporting method
more efficient and less burdensome for issuers.
