BILL NUMBER: SB 1029 INTRODUCED BILL TEXT INTRODUCED BY Senator Hertzberg FEBRUARY 12, 2016 An act to amend Section 8855 of the Government Code, relating to state government. LEGISLATIVE COUNSEL'S DIGEST SB 1029, as introduced, 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 assist state and local governments to prepare, market, and sell its 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 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 time frames, 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 the issuer of any debt issue of state or local government that has either outstanding debt or debt that has been authorized by voter approval or by action of the issuer but not yet issued as of the end of the prior fiscal year to, no later than January 1 of each year, provide a debt accountability report to the commission that includes specified information with respect to each authorized debt issue as of the end of the prior fiscal year. By adding to the duties of local officials with respect to reports to the commission, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. 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 localdebt issues.debt. This information shall bereadilyavailableupon request by any public official or any member ofto 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) 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: (1) The purposes for which the debt proceeds may be used or are prohibited. (2) The types of debt that may be issued or prohibited. (3) The relationship of the debt to, and integration with, the issuer's capital improvement program or budget. (4) Policy goals related to the issuer's planning goals and objectives. (5) 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 upon completion of the issuance. (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) The issuer of any debt issue of state or local government that has either outstanding debt or debt that has been authorized by voter approval or by action of the issuer but not yet issued as of the end of the prior fiscal year shall, no later than January 1 of each year, provide a debt accountability report to the commission that includes the following information with respect to each authorized debt issue as of the end of the prior fiscal year: (A) The principal amount of the issue then outstanding. (B) The amount of proceeds of the issue that remain unspent. (C) The amount of debt authorized by the bond act or other appropriate authorization relevant to the issue that remains authorized but not issued. (D) A list of the purposes for which the debt has been issued and the amounts expended for each purpose in the prior fiscal year from the proceeds of the issue. (E) Any additional information the commission deems appropriate to fulfill its statutory duties, to be provided in a format prescribed by the commission. (2) The requirements of subparagraphs (A) to (C), inclusive, of paragraph (1) may be satisfied by submitting to the commission a certified copy of the issuer's annual report of financial transactions for the immediately preceding fiscal year submitted to the Controller, as required by Section 12463, in the form and manner prescribed by the commission. SEC. 2. If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.