Bill Text: CA SB1234 | 2015-2016 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Retirement savings plans.

Spectrum: Partisan Bill (Democrat 12-0)

Status: (Passed) 2016-09-29 - Chaptered by Secretary of State. Chapter 804, Statutes of 2016. [SB1234 Detail]

Download: California-2015-SB1234-Amended.html

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BILL NUMBER: SB 1234	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 5, 2016

INTRODUCED BY   Senator De León

                        FEBRUARY 18, 2016

   An act to amend  Section 100032 of   Sections
100002, 100004, 100008, 100010, 100012, 100014, 100032, and 100036
of, to add Sections 100046, 100048, and 100050 to, and to repeal
Sections 100013, 100040, 100042, and 100043.5 of,  the
Government Code, relating to retirement savings plans, and making an
appropriation therefor.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1234, as amended, De León. Retirement savings plans.
   Existing federal law provides for tax-qualified retirement plans
and individual retirement accounts or individual retirement annuities
by which private citizens may save money for retirement. Existing
law, the California Secure Choice Retirement Savings Trust Act,
establishes the California Secure Choice Savings Program,
administered by the California Secure Choice Retirement Savings
Investment Board, contingent on specified funding and interest
criteria being met.  Existing law prescribes the composition of
the board and its duties and provides that it acts as trustee in
entering contracts and accepting moneys, among other things. Existing
law prohibits the board from permitting enrollment in the program
until enactment of a statute expressing legislative approval of
program implementation.  The program requires specified eligible
employers, as defined, to offer a payroll deposit retirement savings
arrangement and requires eligible employees, as defined, who do not
opt out of the program, to contribute a portion of their salary or
wages to a retirement savings account in the program, as specified.
Existing law requires contributions from the wages of employees
participating in the program to be deposited in the California Secure
Choice Retirement Savings Trust, which is continuously appropriated
and administered by the board. Existing law authorizes the board to
adjust the employee contribution amount between 2% and 4%, inclusive,
of the employee's annual salary or wages, as specified. 
    This bill would express legislative approval of the program and
its implementation on January 1, 2017. The bill would require the
board to design and implement the program and would prescribe certain
parameters that the board is to consider and utilize in establishing
the design. The bill would specify that funding and first year
administrative costs may be appropriated in the annual budget from
the General Fund and would require the board to repay the amount
appropriated, plus interest, as specified. The bill would provide
that investment policy decisions, including asset allocation and
investment options, are entrusted to the board as a fiduciary, and
would revise certain principles that the board is to consider in
connection with investment policy. The bill would make various
changes to existing duties of the broad, including those regarding
dissemination of information and the entities with which the board is
to collaborate and cooperate. The bill would require the Treasurer
to appoint an executive director of the board, to service its
pleasure, and to determine the duties of the office and its
compensation. The bill would eliminate the duty of the board to
ensure that insurance or some other mechanism is in place to protect
the value of individual accounts. The bill would repeal the duty of
the board to conduct an initial market analysis to determine if the
condition for the implementation of the program can be met and
associated provisions. 
   This bill  would require eligible employers that do not offer
specified retirement plans or accounts to have a payroll deposit
retirement savings arrangement so that employees may participate in
the program within specified time periods based on the number of
eligible employees that the employer has, and the bill would
authorize the board to extend these time periods. The bill 
would authorize the board to adjust the employee contribution amount
 described above  up to 5%.  The bill would authorize
the board to make annual, automatic escalations of employee
contributions subject to certain limitations, including that the
employee may opt out, as specified.  By authorizing the board to
increase  the amount of money that is   moneys
that are  deposited into the California Secure Choice Retirement
Savings Trust, which is continuously appropriated, the bill would
make an appropriation.  The bill would authorize the board to
  adopt regulations to implement the program and would
provide   that the adoption, amendment, repeal, or
readoption of a regulation authorized by this section is deemed to
address an emergency. The bill would make various conforming changes.

   Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 100002 of the  
Government Code   is amended to read: 
   100002.  (a) (1) There is hereby created within state government
the California Secure Choice Retirement Savings Investment Board,
which shall consist of nine members, with the Treasurer serving as
chair, as follows:
   (A) The Treasurer.
   (B) The Director of Finance, or his or her designee.
   (C) The Controller.
   (D) An individual with retirement savings and investment expertise
appointed by the Senate Committee on Rules.
   (E) An employee representative appointed by the Speaker of the
Assembly.
   (F) A small business representative appointed by the Governor.
   (G) A public member appointed by the Governor.
   (H) Two additional members appointed by the Governor.
   (2) Members of the board appointed by the Governor, the Senate
Committee on Rules, and the Speaker of the Assembly shall serve at
the pleasure of the appointing authority.
   (b) All members of the board shall serve without compensation.
Members of the board shall be reimbursed for necessary travel
expenses incurred in connection with their board duties.
   (c) A board member, program administrator, and other staff of the
board shall not do any of the following:
   (1) Directly or indirectly have any interest in the making of any
investment made for the program, or in the gains or profits accruing
from any investment made for the program.
   (2) Borrow any funds or deposits of the trust, or use those funds
or deposits in any manner, for himself or herself or as an agent or
partner of others.
   (3) Become an endorser, surety, or obligor on investments by the
board.
   (d) The board and the program administrator and  staff
  staff, including contracted administrators and
consultants,  shall discharge their duties  as fiduciaries
 with respect to the trust solely in the interest of the program
participants as follows:
   (1) For the exclusive purposes of providing benefits to program
participants and defraying reasonable expenses of administering the
program.
   (2) By investing with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with those matters would use in the
conduct of an enterprise of a like character and with like aims.
   (e) (1)  Investment policy decisions, including asset
allocation and investment options, shall be entrusted to the board
subject to its fiduciary duties.  The board shall annually
prepare and adopt a written statement of investment policy that
includes a risk management and oversight program. The board shall
consider the statement of investment policy and any changes in the
investment policy at a public hearing.
   (2) The investment policy shall adhere to the following guiding
principles:
   (A) The primary objective of the investment policy  is to
preserve the safety of principal and provide a stable and low-risk
  is, through pooled investing, to extend investment
horizons, lower risks, and provide participants with a stable and
reasonable  rate of return.
   (B) The investment policy shall mitigate risk by maintaining a
balanced investment portfolio that provides assurance that no single
investment or class of investments will have a disproportionate
impact on the total portfolio. 
   (3) The following list represents the entire range of asset
categories that the board may consider and the only types of
investments which shall be permitted for the investment of funds:
 
   (A) Domestic equities and international equities. 

   (B) Medium-term and long-term debt obligations of domestic
corporations.  
   (C) United States government and government sponsored entity debt
obligations.  
   (D) Real estate commingled funds that invest in publicly traded
real estate securities.  
   (E) Money market instruments, cash, and money market mutual funds
that are registered in the United States and denominated in United
States dollars.  
   (F) Investments in mutual funds, but limited to existing, rated
mutual funds, that are registered in the United States and
denominated in United States dollars.  
   (G) Insurance agreements.  
   (H) FDIC-insured bank products.  
   (4) Equities shall not exceed 50 percent of the overall asset
allocation of the fund.  
   (5) The investment policy shall also adhere to the following
restrictions:  
   (A) Borrowing for investment purposes, or leverage, is prohibited.
 
   (B) Instruments known as variable rate demand notes, floaters,
inverse floaters, leveraged floaters, and equity-linked securities
are not permitted. Investment in any instrument, which is commonly
considered a "derivative" instrument, including, but not limited to,
options, futures, swaps, caps, floors, and collars, is prohibited.
 
   (C) Contracting to sell securities not yet acquired in order to
purchase other securities for purposes of speculating on developments
or trends in the market is prohibited.  
   (6) 
    (3   )  The risk management and oversight
program shall be designed to ensure that an effective risk management
system is in place to monitor the risk levels of the California
Secure Choice Retirement Savings Program investment portfolio and
ensure that the risks taken are prudent and properly managed. The
program shall be managed to provide an integrated process for overall
risk management on both a consolidated and disaggregated basis, and
to monitor investment returns as well as risk to determine if the
risks taken are adequately compensated compared to applicable
performance benchmarks and standards.
   (f) The board shall approve an investment management entity or
entities, the costs of which shall be paid out of funds held in the
trust and shall not be attributed to the administrative costs of the
board in operating the trust. Not later than 30 days after the close
of each month, the board shall place on file for public inspection
during business hours a report with respect to investments made
pursuant to this section and a report of deposits in financial
institutions. The investment manager shall report the following
information to the board within 20 days following the end of the each
month:
   (1) The type of investment, name of the issuer, date of maturity,
and the par and dollar amount invested in each security, investment,
and money within the program fund.
   (2) The weighted average maturity of the investments within the
program fund.
   (3) Any amounts in the program fund that are under the management
of private money managers.
   (4) Any amounts in the program fund that are under the management
of the Board of Administration of the Public Employees' Retirement
System.
   (5) The market value as of the date of the report and the source
of this valuation for each security within the program fund.
   (6) A description of compliance with the statement of investment
policy.
   SEC. 2.    Section 100004 of the  
Government Code   is amended to read: 
   100004.  (a) There is hereby established a retirement savings
trust known as the California Secure Choice Retirement Savings Trust
to be administered by the board for the purpose of promoting greater
retirement savings for California private employees in a convenient,
voluntary, low-cost, and portable manner. After sufficient funds are
made available for this title to be  operative pursuant to
Section 100042,   operative,  the California Secure
Choice Retirement Savings Trust, as a self-sustaining trust, shall
pay all costs of administration only out of moneys on deposit
therein.
   (b) The board shall segregate moneys received by the California
Secure Choice Retirement Savings Trust into two funds, which shall be
identified as the program fund and the administrative fund.
Notwithstanding Section 13340, moneys in the trust are hereby
continuously appropriated, without regard to fiscal years, to the
board for the purposes of this title.
   (c) Moneys in the program fund may be invested or reinvested by
the Treasurer or may be invested in whole or in part under contract
with the Board of Administration of the Public Employees' Retirement
System or private money managers, or both, as determined by the
board.
   (d) Transfers may be made from the program fund to the
administrative fund for the purpose of paying operating costs
associated with administering the trust and as required by this
title. On an annual basis, expenditures from the administrative fund
shall not exceed more than 1 percent of the total program fund. All
costs of administration of the trust shall be paid out of the
administrative fund. Operating costs associated with administering
the trust do not include the procurement of private underwriting for
the retirement savings' return.
   (e) Any contributions paid by employees and employers into the
trust shall be used exclusively for the purpose of paying benefits to
the participants of the California Secure Choice Retirement Savings
Program, for the cost of administration of the program, and for
investments made for the benefit of the program.
   SEC. 3.    Section 100008 of the  
Government Code   is amended to read: 
   100008.   (a)    The California
Secure Choice Retirement Savings Program shall include, as determined
by the board, one or more payroll deposit IRA arrangements. 

   (b) (1) Prior to July 1 of the initial program year, and prior to
the beginning of each program year thereafter, the board shall adopt
a program amendment in coordination with the investment management
entity or entities with respect to the program to declare the stated
rate at which interest shall be allocated to program accounts for the
following program year.  
   (2) Interest shall be allocated to program accounts and shall be
computed at the stated interest rate on the balance of an individual'
s account and shall be compounded daily.  
   (c) An individual's retirement savings benefit under the program
shall be an amount equal to the balance in the individual's program
account on the date the retirement savings benefit becomes payable.

   SEC. 4.    Section 100010 of the  
Government Code   is amended to read: 
   100010.  (a) The board, in the capacity of trustee, shall have the
power and authority to do all of the following:
   (1) Make and enter into contracts necessary for the administration
of the trust.
   (2) Adopt a seal and change and amend it from time to time.
   (3) Cause moneys in the program fund to be held and invested and
reinvested.
   (4) Accept any grants, gifts, legislative appropriation, and other
moneys from the state, any unit of federal, state, or local
government or any other person, firm, partnership, or corporation for
deposit to the administrative fund or the program fund.
   (5) Appoint a program  administrator, the costs of which
shall be paid out of funds held in the trust and shall not be
attributed to the administrative costs of the board in operating the
trust,   administrator  and determine the duties of
the program administrator and other staff as necessary and set their
compensation.    The Treasurer shall, on behalf of the
board, appoint an executive director, who shall not be a member of
the board and who shall serve at the pleasure of the board. The
Treasurer shall determine the duties of the executive director and
other staff as necessary and set his or her compensation. The board
may authorize the executive director to enter into contracts on
behalf of the board or conduct any business necessary for the
efficient operation of the board. 
   (6) Make provisions for the payment of costs of administration and
operation of the trust.  The costs of the program administrator
shall be paid out of funds held in the trust and shall not be
attributed to the administrative costs of the board in operating the
trust. 
   (7) Employ staff.
   (8) Retain and contract with the  Board of Administration
of the Public Employees' Retirement System,    
board of a California public retirement system,  private
financial institutions, other financial and service providers,
consultants, actuaries, counsel, auditors, third-party
administrators, and other professionals as necessary.
   (9) Procure insurance against any loss in connection with the
property, assets, or activities of the trust, and secure private
underwriting and reinsurance to manage risk and insure the retirement
savings rate of return.
   (10) Procure insurance indemnifying each member of the board from
personal loss or liability resulting from a member's action or
inaction as a member of the board.
   (11) Set minimum and maximum investment levels in accordance with
contribution limits set for IRAs by the Internal Revenue Code.
   (12) Collaborate and cooperate with the  Board of
Administration of the Public Employees' Retirement System, 
 board of a California public retirement system,  private
financial institutions, service providers, and business, financial,
trade, membership, and other organizations to the extent necessary or
desirable for the effective and efficient design, implementation,
and administration of the program and to maximize outreach to
eligible employers and eligible employees.
   (13) Cause expenses incurred to initiate, implement, maintain, and
administer the program to be paid from contributions to, or
investment returns or assets of, the program or arrangements
established under the program, to the extent permitted under state
and federal law.
   (14) Facilitate compliance by the retirement savings program or
arrangements established under the program with all applicable
requirements for the program under the Internal Revenue Code of 1986,
including tax qualification requirements or any other applicable law
and accounting requirements, including providing or arranging for
assistance to program sponsors and individuals in complying with
applicable law and tax qualification requirements in a cost-effective
manner.
   (15) Carry out the duties and obligations of the California Secure
Choice Retirement Savings Trust pursuant to this title and exercise
any and all other powers as may be reasonably necessary for the
effectuation of the purposes, objectives, and provisions of this
title pertaining to the trust.
   (b) The board shall adopt regulations it deems necessary to
implement this title consistent with the Internal Revenue Code and
regulations issued pursuant to that code to ensure that the program
meets all criteria for federal tax-deferral or tax-exempt benefits,
or both.
   SEC. 5.    Section 100012 of the  
Government Code   is amended to read: 
   100012.  In addition to the powers and authority granted to the
board pursuant to Section 100010, the board shall have the power and
authority to do the following:
   (a) Cause the retirement savings program or arrangements
established under the program to be designed, established, and
operated, in a manner consistent with all of the following:
   (1) In accordance with best practices for retirement savings
vehicles.
   (2) To maximize participation, saving, and sound investment
practices, and appropriate selection of default investments.
   (3) With simplicity, ease of administration for participating
employers, and portability of benefits.
   (b) Arrange for collective, common, and pooled investment of
assets of the retirement savings program or arrangements, including
investments in conjunction with other funds with which those assets
are permitted to be collectively invested, with a view to saving
costs through efficiencies and economies of scale.
   (c) Explore and establish investment options that offer employees
returns on contributions and the conversion of individual retirement
savings account balances to secure retirement income without
incurring debt or liabilities to the state.
   (d) Disseminate educational information  concerning saving
and planning for retirement.   designed to educate
participants about the benefits of planning and saving for retirement
and information to help them decide the level of California Secure
Choice Retirement Savings Program participation and savings
strategies that may be appropriate for them. 
   (e) Disseminate information concerning the tax credits available
to small business owners for establishing new retirement plans and
the federal Retirement Savings Contribution Credit (Saver's Credit)
available to lower and moderate-income households for qualified
savings contributions.
   (f) Submit progress and status reports to participating employers
and eligible employees.
   (g) If necessary, determine the eligibility of an employer,
employee, or other individual to participate in the program.
   (h) Evaluate and establish the process by which an eligible
employee of an eligible employer is able to contribute a portion of
his or her salary or wages to the program for automatic deposit of
those contributions and the participating employer provides a payroll
deposit retirement savings arrangement to forward the employee
contribution and related information to the program or its agents.
This may include, but is not limited to, financial services companies
and third-party administrators with the capability to receive and
process employee information and contributions for payroll deposit
retirement savings arrangements or other arrangements authorized by
this title.
   (i) Design and establish the process for the enrollment of program
participants.
   (j) Allow participating employers to use the program to remit
employees' contributions to their individual retirement accounts on
their employees' behalf.
   (k) Allow participating employers to make their own contributions
to their employees' individual retirement accounts, provided that the
contributions would be permitted under the Internal Revenue Code and
would not cause the program to be treated as an employee benefit
plan under the federal Employee Retirement Income Security Act.
   (l) Evaluate and establish the process by which an individual or
an employee of a nonparticipating employer may enroll in and make
contributions to the program.
   SEC. 6.    Section 100013 of the  
Government Code   is repealed.  
   100013.  The board shall ensure that an insurance, annuity, or
other funding mechanism is in place at all times that protects the
value of individuals' accounts. The funding mechanism shall protect,
indemnify, and hold the state harmless at all times against any and
all liability in connection with funding retirement benefits pursuant
to this title. The costs of the funding mechanism shall be paid out
of the funds held in the trust and shall not be attributed to the
administrative costs of the board in operating the trust. 
   SEC. 7.    Section 100014 of the  Government
Code   is amended to read: 
   100014.  (a) Prior to opening the California Secure Choice
Retirement Savings Program for enrollment, the board shall design and
disseminate to employers through the Employment Development
Department (EDD) an employee information packet. The packet shall
include background information on the program and appropriate
disclosures for employees.
   (b) The disclosure form shall include, but not be limited to, all
of the following:
   (1) The benefits and risks associated with making contributions to
the program.
   (2) The mechanics of how to make contributions to the program.
   (3) How to opt out of the program.
   (4) The process for withdrawal of retirement savings.
   (5) How to obtain additional information on the program.
   (c) In addition, the disclosure form shall clearly articulate the
following:
   (1) Employees seeking financial advice should contact financial
advisors, that employers are not in a position to provide financial
advice, and that employers are not liable for decisions employees
make pursuant to Section 100034.
   (2) The program is not an employer-sponsored retirement plan.
   (3) The program fund  is privately insured and 
is not guaranteed by the State of California.
   (d) The disclosure form shall include a signature line for the
employee to sign and date acknowledging that the employee has read
all of the disclosures and understands their content.
   (e) The employee information packet shall also include an opt-out
form for an eligible employee to note his or her decision to opt out
of participation in the program. The opt-out notation shall be simple
and concise and drafted in a manner that the board deems necessary
to appropriately evidence the employee's understanding that he or she
is choosing not to automatically deduct earnings to save for
retirement.
   (f) The employee information packet shall be made available to
employers through EDD and supplied to employees at the time of
hiring. All new employees shall review the packet and acknowledge
having read it by signing the signature line accompanied by the date
of the signature.
   (g) The employee information packet shall be supplied to existing
employees when the program is initially launched for that
participating employer pursuant to Section 100032 and employees shall
review and sign the disclosure form at that time.
   SECTION 1.   SEC. 8.   Section 100032 of
the Government Code is amended to read:
   100032.  (a) After the board opens the California Secure Choice
Retirement Savings Program for enrollment, any employer may choose to
have a payroll deposit retirement savings arrangement to allow
employee participation in the program.
   (b)  Beginning three months   Within 12
months  after the board opens the program for enrollment,
eligible employers with more than 100 eligible employees and that do
not offer an employer-sponsored retirement plan or automatic
enrollment payroll deduction IRA shall have a payroll deposit
retirement savings arrangement to allow employee participation in the
program.
   (c)  Beginning six months   Within 24 months
 after the board opens the program for enrollment, eligible
employers with more than 50 eligible employees and that do not offer
an employer-sponsored retirement plan or automatic enrollment payroll
deduction IRA shall have a payroll deposit retirement savings
arrangement to allow employee participation in the program.
   (d)  Beginning nine months   Within 36 
 months  after the board opens the program for enrollment,
all other eligible employers that do not offer an employer-sponsored
retirement plan or automatic enrollment payroll deduction IRA shall
have a payroll deposit retirement savings arrangement to allow
employee participation in the program. 
   (e) The board, in its discretion, may extend the time limits
defined in subdivisions (b) to (d), inclusive.  
   (e) 
    (f)  (1) Each eligible employee shall be enrolled in the
program unless the employee elects not to participate in the
program. An eligible employee may elect to opt out of the program by
making a notation on the opt-out form.
   (2) Following initial implementation of the program pursuant to
this section, at least once every two years, participating employers
shall designate an open enrollment period during which eligible
employees that previously opted out of the program shall be enrolled
in the program unless the employee again elects to opt out as
provided in this subdivision.
   (3) An employee who elects to opt out of the program who
subsequently wants to participate through the employer's payroll
deposit retirement savings arrangement may only enroll during the
employer's designated open enrollment period or if permitted by the
employer at an earlier time. 
   (f) 
    (g) Employers shall retain the option at all times to
set up any type of employer-sponsored retirement plan, such as a
defined benefit plan or a 401(k), Simplified Employee Pension (SEP)
plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, or
to offer an automatic enrollment payroll deduction IRA, instead of
having a payroll deposit retirement savings arrangement to allow
employee participation in the California Secure Choice Retirement
Savings Program. 
   (g) 
    (h)  An eligible employee may also terminate his or her
participation in the program at any time in a manner prescribed by
the board and thereafter by making a notation on the opt-out form.

   (h) 
    (i)  Unless otherwise specified by the employee, a
participating employee shall contribute 3 percent of the employee's
annual salary or wages to the program. 
   (i) 
    (j)  By regulation, the board may adjust the
contribution amount set in subdivision  (h)  
(i)  to no less than 2 percent and no more than 5 percent and
may vary that amount within that 2 percent to 5 percent range for
participating employees according to the length of time the employee
has contributed to the program. 
   (k) The Board may implement annual automatic escalation of
employee contributions.  
   (1) Employee contributions subject to automatic escalation shall
not exceed 8 percent of salary.  
   (2) Automatic escalation shall result in no more than a 1-percent
increase in employee contributions per calendar year.  
   (3) A participating employee may elect to opt out of automatic
escalation and may set his or her contribution percentage rate at a
level determined by the participating employee. 
   SEC. 9.    Section 100036 of the  
Government Code   is amended to read: 
   100036.  The state shall not have any liability for the payment of
the retirement savings benefit earned by program participants
pursuant to this title.  Any financial liability for the
payment of benefits in excess of funds available under the program
shall be borne by the entities with whom the board contracts to
provide an insurance, annuity, or other funding mechanism to protect
the value of individuals' accounts pursuant to Section 100013.
 The state, and any of the funds of the state, shall have no
obligation for payment of the benefits arising from this title.
     SEC. 10.    Section 100040 of the  
Government Code   is repealed.  
   100040.  The board shall initially conduct a market analysis to
determine whether the necessary conditions for implementation of this
title can be met, including, but not limited to, likely
participation rates, participants' comfort with various investment
vehicles and degree of risk, contribution levels, and the rate of
account closures and rollovers. The board shall conduct this analysis
only if sufficient funds to initiate and complete the required
market analysis are made available through a nonprofit or private
entity, or from federal funding. The Secure Choice Retirement Savings
Program Fund is hereby created in the State Treasury. Moneys made
available to conduct the market analysis shall be deposited in this
fund. The board shall forward and offer to present its findings to
the Chair of the Senate Committee on Labor and Industrial Relations,
the Chair of the Assembly Committee on Labor and Employment, the
Chair of the Senate Committee on Public Employment and Retirement,
and the Chair of the Assembly Committee on Public Employees,
Retirement and Social Security. 
   SEC. 11.    Section 100042 of the  
Government Code   is repealed.  
   100042.  With the exceptions of subdivision (a) of Section 100002,
and Sections 100040, 100043, and 100044, the provisions of this
title shall become operative only if the board determines that, based
on the market analysis, the provisions of this title will be
self-sustaining, and funds are made available through a nonprofit or
other private entity, federal funding, or an annual Budget Act
appropriation in amounts sufficient to allow the board to implement
this title until the trust has sufficient funds to be
self-sustaining. 
   SEC. 12.    Section 100043.5 of the  
Government Code   is repealed.  
   100043.5.  The board shall not open the program for enrollment
until a subsequent authorizing statute is enacted that expresses the
approval of the Legislature for the program to be fully implemented.

   SEC. 13.    Section 100046 is added to the  
Government Code   , to read:  
   100046.  (a) Based upon findings and recommendations of the board
pursuant to Section 100040, the California Secure Choice Retirement
Savings Program is approved by the Legislature and implemented as of
January 1, 2017. The board, subject to its authority and fiduciary
duty, shall design and implement the California Secure Choice
Retirement Savings Program. The board shall consider and utilize the
following parameters in designing the program:
   (1) For up to three years, the board may establish managed
accounts invested in United States Treasuries or similarly safe
investments. During this time, the board may develop investment
options that address risk-sharing and smoothing of market losses and
gains. Options may include, but are not limited to, custom pooled,
professionally managed funds that minimize costs and fees, the
creation of a reserve fund, or the establishment of investment
products.
   (2) The board shall seek to minimize participant fees.
   (3) The board shall strive to implement program features that
provide maximum possible income replacement balanced with appropriate
risk in an IRA-based environment.
   (4) The board shall determine the default payout method for
retirees.
   (5) The board shall include quasi-public and quasi-private
employees in the program if the board determines the inclusion to be
legally permissible under federal and state laws and regulations.
   (6) The board shall structure the program so as to ensure the
state is prohibited from incurring liabilities associated with
administering the program and that the state has no liability for the
program or its investments.
   (7) The board shall determine necessary costs associated with
outreach, customer service, enforcement, staffing and consultant
costs, and all other costs necessary to administer the program.
   (8) The board shall partner with employer representatives to
create an administrative structure that ensures employee
participation while addressing employer needs, including, but not
limited to, clearly defining employers' duties and liability
exemption pursuant to Section 100034.
   (b) In order to ensure timely implementation of the California
Secure Choice Retirement Savings Program, the board shall have
flexibility in designing and implementing the California Secure
Choice Retirement Savings Program. The program parameters set forth
in this section shall not be conclusive. The board shall have the
authority to augment these requirements as necessary to fully
implement the program and comply with the board's fiduciary duties.

   SEC. 14.    Section 100048 is added to the  
Government Code   , to read:  
   100048.  The board may adopt regulations to implement this title.
The adoption, amendment, repeal, or readoption of a regulation
authorized by this section is deemed to address an emergency, for
purposes of Sections 11346.1 and 11349.6, and the board is hereby
exempted for this purpose from the requirements of subdivision (b) of
Section 11346.1. 
   SEC. 15.    Section 10050 is added to the  
Government Code   , to read:  
   10050.  Funding for startup and first-year administrative costs
may be appropriated from the General Fund in the annual Budget Act.
The board shall repay the amount appropriated, plus interest
calculated at the rate earned by the Pooled Money Investment Account.
Necessary administrative costs in future years shall be paid out of
the administrative fund.