Section 22362 Of Chapter 6. Investments From California Education Code >> Division 1. >> Title 1. >> Part 13. >> Chapter 6.
22362
. (a) Notwithstanding any other provision of law, the board
shall give first priority to investing not less than 25 percent of
all funds of the plan that become available in a fiscal year for new
investments, in any of the following:
(1) Obligations secured by a lien or charge solely on residential
realty, including rental housing, located in the state and on the
security of which, commercial banks are permitted to make loans
pursuant to Article 2 (commencing with Section 1220) of Chapter 10 of
Division 1 of the Financial Code.
(2) Securities representing a beneficial interest in a pool of
obligations secured by a lien or charge solely on residential realty
located in the state.
(3) Certificates of deposit issued by savings and loan
associations, if the savings and loan associations agree to make
loans, or to fund tax-exempt notes or bonds issued by housing
authorities, cities, or counties, on residential realty located in
the state, including rental housing, in an amount equal to the amount
of the deposit.
(b) Funds subject to investment pursuant to this section include
all moneys received as employer and member contributions, investment
income, and the proceeds from all net gains and losses from
securities, reduced by the amount of benefit payments and withdrawals
occurring during the fiscal year. In computing the amount of
investment pursuant to this section, a dollar-for-dollar credit shall
be given for residential realty investments described in this
section that are contractually agreed to be made by a financial
institution from which the board, in consideration thereof, purchases
other such investments. In computing the amount of investment
pursuant to this section, the board may elect to include the dollar
amount of commitments to purchase mortgages from public revenue bond
programs in the year the commitment is given. However, that election
may not exceed one-fifth of the total guideline amount.
(c) Nothing in this section shall be construed to require the
acquisition of any instrument or security at less than the market
rate.
(d) If the board determines during any fiscal year that compliance
with this section will result in lower overall earnings for the
retirement fund than obtainable from alternative investment
opportunities that would provide equal or superior security,
including guarantee of yield, the board may substitute those higher
yielding investments, to the extent actually available for
acquisition, for the investments otherwise specified by this section.
Additionally, if, and to the extent that, adherence to the
diversification guideline specified in this section would conflict
with its fiduciary obligations in violation of Section 9 of Article I
of the California Constitution or Section 10 of Article I of the
United States Constitution, or would conflict with the standard for
prudent investment of the fund as set forth in Section 17 of Article
XVI of the California Constitution, the board may substitute
alternative investments.
(e) The board, upon determining the final amount of funds
available for investment in substitute alternative investments and
the estimated amount of funds invested pursuant to subdivision (a),
shall submit that information to the Governor and the Joint
Legislative Audit Committee. Thereafter, the Joint Legislative Audit
Committee shall transmit the report of the State Auditor to the
Speaker of the Assembly and the Senate Committee on Rules for
transmittal to the affected policy committees.