Article 3. Retirement Board of California Public Utilities Code >> Division 6. >> Chapter 5. >> Article 3.
The board shall create a retirement board of not more than
five members, at least two members of which shall be the elected
representatives of the employees, to administer the retirement
system, and shall define its powers and duties and the tenure of the
All members of the retirement board shall serve without pay.
The retirement board shall determine the eligibility of
officers, employees, and their dependents to participation in the
system and shall be the sole authority and judge under such
ordinances as may be adopted by the board as to the conditions under
which persons may be admitted to and continue to receive benefits of
any sort under the retirement system, and may modify allowances for
service and disability. The determination of the retirement board
shall be final and conclusive and shall not be modified or set aside
except for fraud or abuse of discretion.
If the district maintains its own retirement fund, the
retirement board shall have exclusive control of the administration,
investment, and disbursement of the retirement fund. The retirement
fund is a trust fund held for the exclusive purposes of providing
benefits to members of the retirement system and their survivors and
beneficiaries. Investment of the fund shall be subject to the care,
skill, prudence, and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims.
In addition to such other investments that are authorized
by this article, the retirement board may, in its discretion, invest
the assets of the retirement fund in deeds of trust and mortgages.
Investments made under this section shall not exceed, in the
aggregate, an amount equal to 25 percent of the assets of the system.
(a) Notwithstanding any other provision of this chapter,
the retirement board, or the district's treasurer with the approval
of the retirement board, may enter into security loan agreements with
broker-dealers and with California or national banks for the purpose
of prudently supplementing the income normally received from
(b) "Security loan agreement" means a written contract whereby a
legal owner, the lender, agrees to lend specific marketable corporate
or government securities for a period not to exceed one year. The
lender retains the right to collect from the borrower all dividends,
interest, premiums, rights, and any other distributions to which the
lender would otherwise have been entitled. The lender waives the
right to vote the securities during the term of the loan. The lender
may terminate the contract upon not more than five business days'
notice as agreed, and the borrower may terminate the contract upon
not less than two business days' notice as agreed. The borrower shall
provide collateral to the lender in the form of cash or bonds or
other interest-bearing notes and obligations of the United States or
federal instrumentalities eligible for investment by a lending
The collateral shall be in an amount equal to at least 102 percent
of the market value of the loaned securities as agreed. The lender
shall monitor the market value of the loaned securities daily. The
loan agreement shall provide for payment of additional collateral on
a daily basis, or at the time the value of the loaned securities
increases, to agreed-upon ratios. In no event shall the amount of the
collateral be less than the market value of the loaned securities.
(c) "Marketable securities" means securities that are freely
traded on recognized exchanges or marketplaces.
(d) The retirement board or district treasurer entering into
security loan agreements shall do all of the following:
(1) Maintain detailed records of all security loans.
(2) Develop controls and reports to monitor the conduct of the
(3) Publicize the net results of the security loan transaction
separate from the results of other investment activities.
Notwithstanding any other provision of this article, the
retirement system may invest in any and all investments authorized by
Section 1372 of the Financial Code and Section 12871 of this code.
Notwithstanding Section 12364, the retirement board may
contract with one or more qualified investment managers in connection
with the investment program of the retirement board.
The retirement board may authorize a trust company or a
trust department of any state or national bank authorized to conduct
the business of a trust company in this state or the Federal Reserve
Bank of San Francisco or any branch thereof within this state, to act
as custodian of any securities invested in by the retirement board.
Any such bank or trust company may be authorized to collect the
income from such securities or the proceeds of the sale thereof for
the retirement board, and deposit said income or funds in the account
of the retirement system. The compensation of such bank or trust
company for such custodial services shall be fixed by agreement and
shall be paid in the same manner and from the same funds as are other
costs of administration of the retirement system. Securities of the
retirement fund held by the custodian bank or trust company may be
registered in the nominee name of the custodian or of the retirement
system. The custodian bank or trust company shall make such
disposition of the securities as the retirement board shall
authorize. All such securities are at all times subject to the order
of the retirement board.
Funds held by a district pursuant to a written agreement
between the district and the employees of the district to defer a
portion of the compensation otherwise receivable by the district's
employees and pursuant to a plan for such deferral as adopted by the
board, may be invested in the types of investments set forth in
Section 53609 of the Government Code.