Bill Text: CA AB1949 | 2011-2012 | Regular Session | Amended
Bill Title: Public employees: annuities and mutual fund custodial
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-05-02 - In committee: Set first hearing. Failed passage. Reconsideration granted. [AB1949 Detail]
Download: California-2011-AB1949-Amended.html
BILL NUMBER: AB 1949 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 25, 2012
INTRODUCED BY Assembly Member Cedillo
FEBRUARY 23, 2012
An act to add Section 770.4 to the Insurance Code, relating to
public employees.
LEGISLATIVE COUNSEL'S DIGEST
AB 1949, as amended, Cedillo. Public employees: annuities and
mutual fund custodial accounts.
Existing law prohibits state and local agencies from negotiating
life and disability insurance or requiring the placing of that
insurance through particular agents, brokers, or companies, except to
the extent that the state has a direct financial interest in the
subject of the insurance, as specified. Existing law excepts from
these provisions a tax-sheltered annuity under an annuity plan that
meets the requirements of Section 403(b) of the Internal Revenue Code
to be placed or purchased for an employee, as specified. Existing
law requires an annuity contract and custodial account as described
in Section 403(b) of the Internal Revenue Code to be offered to all
employees of any state agency who are members of the State Teachers'
Retirement Plan, any employee of a local public agency or political
subdivision of the state that employs persons to perform creditable
service subject to coverage by the plan, and eligible state employees
of a state employer under the uniform state payroll system,
excluding the California State University System. The Teachers'
Retirement Law provides a registration process for information
relating to tax-deferred retirement investment products.
This bill would authorize a school district, a community
college district, a county office of education, or a charter
school to select specific 403(b) products offered by 4 or
more vendors of tax-deferred retirement investment products described
in Section 403(b) of the Internal Revenue Code, including
fixed annuities, variable annuities, and mutual fund custodial
accounts, through salary reduction agreements and,
if elected by the school district, county office of education, or
charter school, through additional employer or employee contributions
a due diligence and competitive review
process , as specified. The bill would make a related
statement of legislative intent.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature to
allow, on a permissive basis, a school district, a community college
district, a county office of education, or a charter school the
ability to competitively bid their 403(b) programs and structure
these programs to do the following:
(a) Fully comply with 403(b) regulations and other applicable
regulatory guidelines.
(b) Enhance retirement savings opportunities for plan
participants.
(c) Include coordinated communication and education programs
designed to support education of employees regarding the benefits of
participation in 403(b) plans.
(d) Emphasize transparency and disclosure of any potential
conflicts of interest in 403(b) plan design and operation to
participants and plan sponsors.
(e) Offer high-quality investment options with the lowest costs to
participants, school districts, community college districts, county
offices of education, and charter schools.
SECTION 1. SEC. 2 .
Section 770.4 is added to the Insurance Code, to read:
770.4. (a) For the purposes of this section, "403(b) product or
403(b) products" means payroll-deducted, tax-deferred
retirement investment products as described in Section 403(b) of the
Internal Revenue Code, and complying that
comply with applicable California insurance laws, and federal
and California securities laws and rules as applied by appropriate
regulatory entities.
(b) (1) Notwithstanding Section 770.3 and
any other law, a school district, a community college district,
a county office of education, or a charter school may select
specific 403(b) products offered by four or more vendors
of 403(b) products through salary reduction agreements and,
if elected by the school district, county office of education, or
charter school, through additional employer or employee
contributions. The selected vendors shall offer access to both of the
following: (1) the three broad classifications of 403(b) products,
including fixed annuities, variable annuities, and mutual fund
custodial accounts, and (2) a range of bundled service models,
including, but not limited to, direct purchase and services of local
representatives. The school district, county office of education, or
charter school may designate one of the selected vendors or a third
party to provide or facilitate plan compliance coordination
consistent with the requirements of Section 403(b) of the Internal
Revenue Code. If a vendor is designated to provide that service, the
vendor shall agree not to use information obtained in the course of
providing the service for any other purpose, except as expressly
authorized by the school district, county office of education, or
charter school and communicated to each of the other 403(b) product
vendors a due diligence and competitive review
process, either individually or as part of a joint bidding and
procurement process .
(2) The competitive review process shall include the following
requirements:
(A) That prospective vendors not communicate with any member of
the governing body of the school district, community college
district, county office of education, or charter school, or the
committee specified in paragraph (1) of subdivision (c) except in an
official meeting of the governing body or the committee with respect
to the competitive review process being undertaken pursuant to this
section. A violation of this subparagraph shall result in
disqualification of the prospective vendor from selection.
(B) That prospective vendors not provide any financial payment to
any member of the governing body of the school district, community
college district, county office of education, or charter school, or
the committee specified in paragraph (1) of subdivision (c) for the
period of time beginning with the start of the competitive review
process and ending when the contract expires. A violation of this
subparagraph shall result in disqualification of the prospective
vendor from selection.
(C) That vendors adhere to any policy adopted by the school
district, community college district, county office of education, or
charter school or the committee specified in paragraph (1) of
subdivision (c) regarding communications and marketing of financial
products to employees of the school district, community college
district, county office of education, or charter school. A violation
of this subparagraph by a vendor shall result in termination of the
contract with the school district, community college district, county
office of education, or charter school.
(3) Notwithstanding paragraph (1), an employer of a school
district, a community college district, a county office of education,
or a charter school may continue to make contributions to a 403(b)
product not selected pursuant to paragraph (1) if the employee
purchased or entered into the product before the effective date of
the first contract entered into by his or her employer pursuant to
paragraph (1) and the employee has been continuously employed by that
same employer since the employee purchased or entered into that
product.
(c) (1) A school district, a community college district, a county
office of education, or a charter school that has represented
employees shall appoint a committee to make a recommendation to the
governing body regarding the vendors and the products to be selected
pursuant to this section. At least 50 percent of the committee shall
consist of represented employees, as designated by the exclusive
representatives of the employees.
(2) A school district, a community college district, a county
office of education, or a charter school with 2,500 or fewer prior
year average daily attendance may adopt the vendor selections of
another school district, community college district, county office of
education, or charter school if that selection was made pursuant to
the requirements of this section.
(c) (1) A school district, a county office of education, or a
charter school electing to limit the number of 403(b) product vendors
available to its employees pursuant to subdivision (b) may do so by
either of the following processes:
(A) Utilizing an objective and competitive bidding and procurement
process for the school district, county office of education, or
charter school, or as part of a joint bidding and procurement
process, consistent with the public procurement guidelines applicable
to each school district, county office of education, or charter
school participating in the process.
(B) Adopting the vendor selection of another school district,
county office of education, or charter school, if that selection was
subject to, or otherwise met, the requirements of subparagraph (A)
and occurred within the current or preceding three calendar years.
(2)
(3) The school district, community college
district, county office of education, or charter school may
equitably apportion the costs associated with the
procurement due diligence and competitive review
process to each vendor selected pursuant to the requirements of this
section.
(3) A school district, a county office of education, or a charter
school that includes represented employees shall include those
employees in the vendor selection process.
