State Codes and Statutes

Statutes > California > Edc > 22350-22364

EDUCATION CODE
SECTION 22350-22364



22350.  The Legislature finds and declares that changing economic
conditions and increasing complexity in the investment market make it
necessary and desirable that the system obtain the best possible
investment expertise.


22351.  It is the intent of the Legislature that the board secure
investment advisors with the composite expertise necessary for the
investment of the retirement fund portfolio.



22352.  (a) Upon a finding by the board that necessary investment
expertise is not available within existing civil service
classifications, and with the approval of the State Personnel Board,
the board may contract with qualified investment managers having
demonstrated expertise in the management of large and diverse
investment portfolios to render service in connection with the
investment program of the board.
   (b) The board shall report to the Governor, the Legislature, and
the Joint Legislative Budget Committee on the nature, duration, and
cost of investment contract services used. The report shall first be
submitted in April 1987, and annually in April of every year
thereafter.


22353.  (a) Notwithstanding any other provision of law, the board
shall by contract retain not less than two separate individual
investment advisers.
   (b) Notwithstanding Section 13340 of the Government Code, there is
hereby continuously appropriated without regard to fiscal years,
from the retirement fund, an amount sufficient to pay all costs
arising from this section.
   (c) No costs arising from this section shall be paid from the
General Fund.


22354.  (a) The board shall, pursuant to the state civil service
statutes, either contract with, or establish and fill full-time
positions for, investment managers who are experienced and
knowledgeable in corporate management issues to monitor each
corporation any of whose shares are owned by the plan and to advise
the board on the voting of the shares owned by the plan and on the
responses of the system to merger proposals and tender offers and all
other matters pertaining to corporate governance.
   (b) Notwithstanding Section 13340 of the Government Code, there is
hereby continuously appropriated, without regard to fiscal years,
from the retirement fund, an amount sufficient to pay all costs
arising from this section.



22355.  In no event shall the board employ through interagency
agreement any investment personnel who would also serve during the
term of the agreement as investment staff to the Board of
Administration of the Public Employees' Retirement System.




22356.  The board may apply to reduce the book value of securities
purchased, all or part of the excess of the proceeds of the sale or
redemption prior to maturity of securities over the book value of the
securities sold or redeemed provided the purchase of securities is
made with those proceeds and provided that the terms of both
securities from the date of sale, redemption, or purchase, as the
case may be, to the respective dates of maturity, do not differ by
more than five years. All applications of excess of sales or
redemption proceeds, even with greater difference in terms, made by
the board before October 1, 1949, are hereby validated and confirmed.




22359.  Notwithstanding any other provision of law, the board may
retain a bank or trust company to serve as custodian for safekeeping,
delivery, securities valuation, investment performance reporting,
and other services in connection with investment of the retirement
fund.



22360.  (a) Notwithstanding any other provision of law, the board
may pursuant to Section 22203 and in conformance with its fiduciary
duty set forth in Section 22250, enter into correspondent agreements
with private lending institutions in this state to utilize the
retirement fund to invest in residential mortgages, including
assisting borrowers, through financing, to obtain homes in this
state.
   (b) The program shall, among other things, provide:
   (1) That home loans be made available to borrowers for the
purchase of single-family dwellings, two-family dwellings,
three-family dwellings, four-family dwellings, single-family
cooperative apartments, and single-family condominiums.
   (2) That the recipients of the loans occupy the homes as their
principal residences in accordance with policies established by the
board.
   (3) That the home loans shall be available only for the purchase
or refinance of homes in this state.
   (4) That the amount and length of the loans shall be pursuant to a
schedule periodically established by the board that shall provide a
loan of up to 100 percent of the appraised value. In no event shall
the loan amount exceed 200 percent of the conforming loan limit set
by the Federal National Mortgage Association (FNMA) or 200 percent of
the conforming loan limit set by the Federal Home Loan Mortgage
Corporation (FHLMC), whichever is greater. The portion of any loan
exceeding 80 percent of value shall be insured by an admitted
mortgage guaranty insurer conforming to Chapter 2A (commencing with
Section 12640.01) of Part 6 of Division 2 of the Insurance Code, in
an amount so that the unguaranteed portion of the loan does not
exceed 75 percent of the market value of the property together with
improvements thereon.
   (5) That there may be prepayment penalties assessed on the loans
in accordance with policies established by the board.
   (6) That the criteria and terms for its loans shall be consistent
with the financial integrity of the program and the sound investment
of the retirement fund.
   (7) Any other terms and conditions as the board shall deem
appropriate.
   (c) It is the intent of the Legislature that the provisions of
this section be used to establish an investment program for
residential mortgages, including assisting borrowers in purchasing
homes in this state, or refinancing a mortgage loan. The Legislature
intends that home loans made pursuant to this section shall be
secured primarily by the property purchased or refinanced and shall
not exceed the appraised value of that property.
   (d) Appropriate administrative costs of implementing this section
and Section 22360.5 shall be paid by the participating borrowers.
Those costs may be included in the loan amount.
   (e) Appropriate interest rates shall be periodically reviewed and
adjusted to provide loans to borrowers consistent with the financial
integrity of the home loan program and the sound and prudent
investment of the retirement fund. Under no circumstances, however,
shall the interest rates offered to borrowers be below current market
rate.
   (f) The board shall administer this section and Section 22360.5
under other terms and conditions it deems appropriate and in keeping
with the investment standard. The board may adopt policies as
necessary for its administration of this section and Section 22360.5
and to assure compliance with applicable state and federal laws.
   (g) This section and Section 22360.5 shall be known as, and may be
cited as, the Dave Elder State Teachers' Retirement System Home Loan
Program Act.


22360.5.  (a) The board may include in any investment program
established pursuant to Section 22360 a procedure whereby a member
may obtain 100 percent financing for the purchase for a single-family
dwelling unit in accordance with the following criteria:
   (1) The member shall obtain one loan secured by the purchased
home, pursuant to Section 22360, and a second personal loan secured
by a portion of the accumulated retirement contributions in the
member's individual account. The personal loan shall only be used for
the purchase of the member's principal residence and not for a loan
to refinance the member's existing mortgage.
   (2) The loan secured by the purchased home shall be consistent
with the requirements imposed by Section 22360.
   (3) In no event may the personal loan secured by the accumulated
retirement contributions in the member's individual account exceed
the lesser of 50 percent of the current value amount of the
accumulated retirement contributions or fifty thousand dollars
($50,000).
   (4) If two members are married, the personal loan secured by the
sum total of accumulated retirement contributions in both members'
accounts shall not exceed 5 percent of the loan.
   (5) The pledge of security under this section shall remain in
effect until the personal loan is paid in full.
   (b) The pledge of security under this section shall take binding
effect. In the event of a default on the personal loan secured by the
member's retirement contributions as authorized by this section, the
board shall deduct an amount from the member's accumulated
retirement contributions on deposit and adjust the member's
accumulated retirement contributions as necessary to recover any
outstanding loan balance prior to making any disbursement of a refund
or a lump-sum distribution.
   (c) In the event of a default on the personal loan by a member,
the board shall deduct the monthly principal plus appropriate
interest from the member's benefit, when the member begins receiving
a benefit, until the loan is paid in full.
   (d) In the event of a default on the personal loan by a member
receiving a benefit, the board shall deduct the monthly principal and
interest from the member's benefit until the personal loan is paid
in full.
   (e) The secured personal loan permitted under this section shall
be made available only to members who meet eligibility criteria as
determined by the board.
   (f) In the event of a refund or lump-sum distribution of the
accumulated retirement contributions, the member's account shall be
adjusted as necessary to recover any outstanding loan balance.
   (g) If the member is married at the time the home is purchased
with a personal loan secured by the member's accumulated retirement
contributions as authorized by this section, then the member's spouse
shall agree in writing to the pledge of security, as to his or her
community interest in the amount pledged, regardless of whether title
to the home is held in joint tenancy.
   (h) For purposes of the section only, "member" means any person
who is entitled to receive an allowance funded by the system pursuant
to this part or Part 14, notwithstanding any vesting requirement and
without regard to present eligibility to retire, and who is not
retired or disabled.



22361.  (a) The board may, subject to and consistent with its
fiduciary duty, establish a program utilizing the retirement fund to
assist currently employed members and retired members who are victims
of a natural disaster to obtain loans from the retirement fund for
the sole purpose of repairing or rebuilding their homes that have
been damaged by a natural disaster. In order to qualify for such a
loan, the home of the currently employed member or retired member
shall have been damaged by a natural disaster and the home shall have
been in an area that has been declared a disaster area in a
proclamation of the Governor of a state of emergency affecting the
area in which the currently employed member or retired member
resides.
   (b) The board may loan any amount of money, up to and including
100 percent of the current appraised value of a home of a currently
employed member or retired member. However, 5 percent of the loan
may, at the discretion of the board, be secured by the contributions
of the member who requests the loan.
   (c) The board may, under such conditions as it may deem prudent,
require that a currently employed member or retired member pledge
other assets as collateral for a loan.
   (d) The board shall establish terms for the termination of loans
made pursuant to this section upon the separation of members from
service, to ensure, in the case of any default, that the fund shall
not suffer any loss and to provide, as a condition of retirement, for
alternative security. The board may impose any other terms and
conditions the board may determine appropriate.
   (e) The Legislature hereby reserves full power and authority to
change, revise, limit, expand, or repeal the loan program authorized
by this section.


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.




22363.  No matter involving any vendor or contractor, in their
individual or any other capacity, shall be considered during a closed
session on any transaction involving the system unless, prior to the
closed session, a written disclosure has been submitted by the
vendor or contractor of any campaign contributions aggregating two
hundred fifty dollars ($250) or more and any gifts aggregating fifty
dollars ($50) or more in value that the vendor or contractor has made
during the preceding calendar year to any member of the board or any
officer or employee of the system. Failure to disclose the campaign
contributions and gifts shall provide the basis for disqualification
of the contractor or the vendor.


22364.  (a) During the process leading to an award of any contract
by the system, no member of the board or its staff shall knowingly
communicate concerning any matter relating to the contract or
selection process with any party financially interested in the
contract, or an officer or employee of that party, unless the
communication is (1) part of the process expressly described in the
request for proposal or other solicitation invitation, or (2) part of
a noticed board meeting, or (3) as provided in subdivision (c). Any
applicant or bidder who knowingly participates in a communication
that is prohibited by this paragraph shall be disqualified from the
contract award.
   (b) During the evaluation of any prospective investment
transaction, no party who is financially interested in the
transaction, or an officer or employee of that party, may knowingly
communicate with any board member concerning any matter relating to
the transaction or its evaluation, unless the financially interested
party discloses the content of the communication in a writing
addressed and submitted to the executive officer and the board prior
to the board's action on the prospective transaction. This
subdivision shall not apply to communications that are part of a
noticed board meeting, or as provided in subdivision (c).
   (1) The writing shall disclose the date and location of the
communication, and the substance of the matters discussed. The board
shall prescribe other procedures concerning this disclosure.
   (2) Any board member who participates in a communication subject
to this subdivision shall also have the obligation to disclose the
communication to the executive officer and board, prior to the board'
s action on the prospective transaction. The board shall prescribe
procedures for this disclosure, including procedures to apply to
board members who fail to disclose communications as required by this
subdivision.
   (3) Consistent with its fiduciary duties, the board shall
determine the appropriate remedy for any knowing failure of a
financially interested party to comply with this subdivision
including, but not limited to, outright rejection of the prospective
investment transaction, reduction in fee income, or any other
sanction.
   (4) The communications disclosed under this subdivision shall be
made public, either at the open meeting of the board in which the
transaction is considered, or if in closed session, upon public
disclosure of any closed session votes concerning the investment
transaction.
   (c) The procedures and prohibitions prescribed by this section
shall not apply to:
   (1) Communications that are incidental, exclusively social, and do
not involve the system or its business, or the board or staff member'
s role as a system official.
   (2) Communications that do not involve the system or its business
and that are within the scope of the board or staff member's private
business or public office wholly unrelated to the system.


State Codes and Statutes

Statutes > California > Edc > 22350-22364

EDUCATION CODE
SECTION 22350-22364



22350.  The Legislature finds and declares that changing economic
conditions and increasing complexity in the investment market make it
necessary and desirable that the system obtain the best possible
investment expertise.


22351.  It is the intent of the Legislature that the board secure
investment advisors with the composite expertise necessary for the
investment of the retirement fund portfolio.



22352.  (a) Upon a finding by the board that necessary investment
expertise is not available within existing civil service
classifications, and with the approval of the State Personnel Board,
the board may contract with qualified investment managers having
demonstrated expertise in the management of large and diverse
investment portfolios to render service in connection with the
investment program of the board.
   (b) The board shall report to the Governor, the Legislature, and
the Joint Legislative Budget Committee on the nature, duration, and
cost of investment contract services used. The report shall first be
submitted in April 1987, and annually in April of every year
thereafter.


22353.  (a) Notwithstanding any other provision of law, the board
shall by contract retain not less than two separate individual
investment advisers.
   (b) Notwithstanding Section 13340 of the Government Code, there is
hereby continuously appropriated without regard to fiscal years,
from the retirement fund, an amount sufficient to pay all costs
arising from this section.
   (c) No costs arising from this section shall be paid from the
General Fund.


22354.  (a) The board shall, pursuant to the state civil service
statutes, either contract with, or establish and fill full-time
positions for, investment managers who are experienced and
knowledgeable in corporate management issues to monitor each
corporation any of whose shares are owned by the plan and to advise
the board on the voting of the shares owned by the plan and on the
responses of the system to merger proposals and tender offers and all
other matters pertaining to corporate governance.
   (b) Notwithstanding Section 13340 of the Government Code, there is
hereby continuously appropriated, without regard to fiscal years,
from the retirement fund, an amount sufficient to pay all costs
arising from this section.



22355.  In no event shall the board employ through interagency
agreement any investment personnel who would also serve during the
term of the agreement as investment staff to the Board of
Administration of the Public Employees' Retirement System.




22356.  The board may apply to reduce the book value of securities
purchased, all or part of the excess of the proceeds of the sale or
redemption prior to maturity of securities over the book value of the
securities sold or redeemed provided the purchase of securities is
made with those proceeds and provided that the terms of both
securities from the date of sale, redemption, or purchase, as the
case may be, to the respective dates of maturity, do not differ by
more than five years. All applications of excess of sales or
redemption proceeds, even with greater difference in terms, made by
the board before October 1, 1949, are hereby validated and confirmed.




22359.  Notwithstanding any other provision of law, the board may
retain a bank or trust company to serve as custodian for safekeeping,
delivery, securities valuation, investment performance reporting,
and other services in connection with investment of the retirement
fund.



22360.  (a) Notwithstanding any other provision of law, the board
may pursuant to Section 22203 and in conformance with its fiduciary
duty set forth in Section 22250, enter into correspondent agreements
with private lending institutions in this state to utilize the
retirement fund to invest in residential mortgages, including
assisting borrowers, through financing, to obtain homes in this
state.
   (b) The program shall, among other things, provide:
   (1) That home loans be made available to borrowers for the
purchase of single-family dwellings, two-family dwellings,
three-family dwellings, four-family dwellings, single-family
cooperative apartments, and single-family condominiums.
   (2) That the recipients of the loans occupy the homes as their
principal residences in accordance with policies established by the
board.
   (3) That the home loans shall be available only for the purchase
or refinance of homes in this state.
   (4) That the amount and length of the loans shall be pursuant to a
schedule periodically established by the board that shall provide a
loan of up to 100 percent of the appraised value. In no event shall
the loan amount exceed 200 percent of the conforming loan limit set
by the Federal National Mortgage Association (FNMA) or 200 percent of
the conforming loan limit set by the Federal Home Loan Mortgage
Corporation (FHLMC), whichever is greater. The portion of any loan
exceeding 80 percent of value shall be insured by an admitted
mortgage guaranty insurer conforming to Chapter 2A (commencing with
Section 12640.01) of Part 6 of Division 2 of the Insurance Code, in
an amount so that the unguaranteed portion of the loan does not
exceed 75 percent of the market value of the property together with
improvements thereon.
   (5) That there may be prepayment penalties assessed on the loans
in accordance with policies established by the board.
   (6) That the criteria and terms for its loans shall be consistent
with the financial integrity of the program and the sound investment
of the retirement fund.
   (7) Any other terms and conditions as the board shall deem
appropriate.
   (c) It is the intent of the Legislature that the provisions of
this section be used to establish an investment program for
residential mortgages, including assisting borrowers in purchasing
homes in this state, or refinancing a mortgage loan. The Legislature
intends that home loans made pursuant to this section shall be
secured primarily by the property purchased or refinanced and shall
not exceed the appraised value of that property.
   (d) Appropriate administrative costs of implementing this section
and Section 22360.5 shall be paid by the participating borrowers.
Those costs may be included in the loan amount.
   (e) Appropriate interest rates shall be periodically reviewed and
adjusted to provide loans to borrowers consistent with the financial
integrity of the home loan program and the sound and prudent
investment of the retirement fund. Under no circumstances, however,
shall the interest rates offered to borrowers be below current market
rate.
   (f) The board shall administer this section and Section 22360.5
under other terms and conditions it deems appropriate and in keeping
with the investment standard. The board may adopt policies as
necessary for its administration of this section and Section 22360.5
and to assure compliance with applicable state and federal laws.
   (g) This section and Section 22360.5 shall be known as, and may be
cited as, the Dave Elder State Teachers' Retirement System Home Loan
Program Act.


22360.5.  (a) The board may include in any investment program
established pursuant to Section 22360 a procedure whereby a member
may obtain 100 percent financing for the purchase for a single-family
dwelling unit in accordance with the following criteria:
   (1) The member shall obtain one loan secured by the purchased
home, pursuant to Section 22360, and a second personal loan secured
by a portion of the accumulated retirement contributions in the
member's individual account. The personal loan shall only be used for
the purchase of the member's principal residence and not for a loan
to refinance the member's existing mortgage.
   (2) The loan secured by the purchased home shall be consistent
with the requirements imposed by Section 22360.
   (3) In no event may the personal loan secured by the accumulated
retirement contributions in the member's individual account exceed
the lesser of 50 percent of the current value amount of the
accumulated retirement contributions or fifty thousand dollars
($50,000).
   (4) If two members are married, the personal loan secured by the
sum total of accumulated retirement contributions in both members'
accounts shall not exceed 5 percent of the loan.
   (5) The pledge of security under this section shall remain in
effect until the personal loan is paid in full.
   (b) The pledge of security under this section shall take binding
effect. In the event of a default on the personal loan secured by the
member's retirement contributions as authorized by this section, the
board shall deduct an amount from the member's accumulated
retirement contributions on deposit and adjust the member's
accumulated retirement contributions as necessary to recover any
outstanding loan balance prior to making any disbursement of a refund
or a lump-sum distribution.
   (c) In the event of a default on the personal loan by a member,
the board shall deduct the monthly principal plus appropriate
interest from the member's benefit, when the member begins receiving
a benefit, until the loan is paid in full.
   (d) In the event of a default on the personal loan by a member
receiving a benefit, the board shall deduct the monthly principal and
interest from the member's benefit until the personal loan is paid
in full.
   (e) The secured personal loan permitted under this section shall
be made available only to members who meet eligibility criteria as
determined by the board.
   (f) In the event of a refund or lump-sum distribution of the
accumulated retirement contributions, the member's account shall be
adjusted as necessary to recover any outstanding loan balance.
   (g) If the member is married at the time the home is purchased
with a personal loan secured by the member's accumulated retirement
contributions as authorized by this section, then the member's spouse
shall agree in writing to the pledge of security, as to his or her
community interest in the amount pledged, regardless of whether title
to the home is held in joint tenancy.
   (h) For purposes of the section only, "member" means any person
who is entitled to receive an allowance funded by the system pursuant
to this part or Part 14, notwithstanding any vesting requirement and
without regard to present eligibility to retire, and who is not
retired or disabled.



22361.  (a) The board may, subject to and consistent with its
fiduciary duty, establish a program utilizing the retirement fund to
assist currently employed members and retired members who are victims
of a natural disaster to obtain loans from the retirement fund for
the sole purpose of repairing or rebuilding their homes that have
been damaged by a natural disaster. In order to qualify for such a
loan, the home of the currently employed member or retired member
shall have been damaged by a natural disaster and the home shall have
been in an area that has been declared a disaster area in a
proclamation of the Governor of a state of emergency affecting the
area in which the currently employed member or retired member
resides.
   (b) The board may loan any amount of money, up to and including
100 percent of the current appraised value of a home of a currently
employed member or retired member. However, 5 percent of the loan
may, at the discretion of the board, be secured by the contributions
of the member who requests the loan.
   (c) The board may, under such conditions as it may deem prudent,
require that a currently employed member or retired member pledge
other assets as collateral for a loan.
   (d) The board shall establish terms for the termination of loans
made pursuant to this section upon the separation of members from
service, to ensure, in the case of any default, that the fund shall
not suffer any loss and to provide, as a condition of retirement, for
alternative security. The board may impose any other terms and
conditions the board may determine appropriate.
   (e) The Legislature hereby reserves full power and authority to
change, revise, limit, expand, or repeal the loan program authorized
by this section.


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.




22363.  No matter involving any vendor or contractor, in their
individual or any other capacity, shall be considered during a closed
session on any transaction involving the system unless, prior to the
closed session, a written disclosure has been submitted by the
vendor or contractor of any campaign contributions aggregating two
hundred fifty dollars ($250) or more and any gifts aggregating fifty
dollars ($50) or more in value that the vendor or contractor has made
during the preceding calendar year to any member of the board or any
officer or employee of the system. Failure to disclose the campaign
contributions and gifts shall provide the basis for disqualification
of the contractor or the vendor.


22364.  (a) During the process leading to an award of any contract
by the system, no member of the board or its staff shall knowingly
communicate concerning any matter relating to the contract or
selection process with any party financially interested in the
contract, or an officer or employee of that party, unless the
communication is (1) part of the process expressly described in the
request for proposal or other solicitation invitation, or (2) part of
a noticed board meeting, or (3) as provided in subdivision (c). Any
applicant or bidder who knowingly participates in a communication
that is prohibited by this paragraph shall be disqualified from the
contract award.
   (b) During the evaluation of any prospective investment
transaction, no party who is financially interested in the
transaction, or an officer or employee of that party, may knowingly
communicate with any board member concerning any matter relating to
the transaction or its evaluation, unless the financially interested
party discloses the content of the communication in a writing
addressed and submitted to the executive officer and the board prior
to the board's action on the prospective transaction. This
subdivision shall not apply to communications that are part of a
noticed board meeting, or as provided in subdivision (c).
   (1) The writing shall disclose the date and location of the
communication, and the substance of the matters discussed. The board
shall prescribe other procedures concerning this disclosure.
   (2) Any board member who participates in a communication subject
to this subdivision shall also have the obligation to disclose the
communication to the executive officer and board, prior to the board'
s action on the prospective transaction. The board shall prescribe
procedures for this disclosure, including procedures to apply to
board members who fail to disclose communications as required by this
subdivision.
   (3) Consistent with its fiduciary duties, the board shall
determine the appropriate remedy for any knowing failure of a
financially interested party to comply with this subdivision
including, but not limited to, outright rejection of the prospective
investment transaction, reduction in fee income, or any other
sanction.
   (4) The communications disclosed under this subdivision shall be
made public, either at the open meeting of the board in which the
transaction is considered, or if in closed session, upon public
disclosure of any closed session votes concerning the investment
transaction.
   (c) The procedures and prohibitions prescribed by this section
shall not apply to:
   (1) Communications that are incidental, exclusively social, and do
not involve the system or its business, or the board or staff member'
s role as a system official.
   (2) Communications that do not involve the system or its business
and that are within the scope of the board or staff member's private
business or public office wholly unrelated to the system.



State Codes and Statutes

State Codes and Statutes

Statutes > California > Edc > 22350-22364

EDUCATION CODE
SECTION 22350-22364



22350.  The Legislature finds and declares that changing economic
conditions and increasing complexity in the investment market make it
necessary and desirable that the system obtain the best possible
investment expertise.


22351.  It is the intent of the Legislature that the board secure
investment advisors with the composite expertise necessary for the
investment of the retirement fund portfolio.



22352.  (a) Upon a finding by the board that necessary investment
expertise is not available within existing civil service
classifications, and with the approval of the State Personnel Board,
the board may contract with qualified investment managers having
demonstrated expertise in the management of large and diverse
investment portfolios to render service in connection with the
investment program of the board.
   (b) The board shall report to the Governor, the Legislature, and
the Joint Legislative Budget Committee on the nature, duration, and
cost of investment contract services used. The report shall first be
submitted in April 1987, and annually in April of every year
thereafter.


22353.  (a) Notwithstanding any other provision of law, the board
shall by contract retain not less than two separate individual
investment advisers.
   (b) Notwithstanding Section 13340 of the Government Code, there is
hereby continuously appropriated without regard to fiscal years,
from the retirement fund, an amount sufficient to pay all costs
arising from this section.
   (c) No costs arising from this section shall be paid from the
General Fund.


22354.  (a) The board shall, pursuant to the state civil service
statutes, either contract with, or establish and fill full-time
positions for, investment managers who are experienced and
knowledgeable in corporate management issues to monitor each
corporation any of whose shares are owned by the plan and to advise
the board on the voting of the shares owned by the plan and on the
responses of the system to merger proposals and tender offers and all
other matters pertaining to corporate governance.
   (b) Notwithstanding Section 13340 of the Government Code, there is
hereby continuously appropriated, without regard to fiscal years,
from the retirement fund, an amount sufficient to pay all costs
arising from this section.



22355.  In no event shall the board employ through interagency
agreement any investment personnel who would also serve during the
term of the agreement as investment staff to the Board of
Administration of the Public Employees' Retirement System.




22356.  The board may apply to reduce the book value of securities
purchased, all or part of the excess of the proceeds of the sale or
redemption prior to maturity of securities over the book value of the
securities sold or redeemed provided the purchase of securities is
made with those proceeds and provided that the terms of both
securities from the date of sale, redemption, or purchase, as the
case may be, to the respective dates of maturity, do not differ by
more than five years. All applications of excess of sales or
redemption proceeds, even with greater difference in terms, made by
the board before October 1, 1949, are hereby validated and confirmed.




22359.  Notwithstanding any other provision of law, the board may
retain a bank or trust company to serve as custodian for safekeeping,
delivery, securities valuation, investment performance reporting,
and other services in connection with investment of the retirement
fund.



22360.  (a) Notwithstanding any other provision of law, the board
may pursuant to Section 22203 and in conformance with its fiduciary
duty set forth in Section 22250, enter into correspondent agreements
with private lending institutions in this state to utilize the
retirement fund to invest in residential mortgages, including
assisting borrowers, through financing, to obtain homes in this
state.
   (b) The program shall, among other things, provide:
   (1) That home loans be made available to borrowers for the
purchase of single-family dwellings, two-family dwellings,
three-family dwellings, four-family dwellings, single-family
cooperative apartments, and single-family condominiums.
   (2) That the recipients of the loans occupy the homes as their
principal residences in accordance with policies established by the
board.
   (3) That the home loans shall be available only for the purchase
or refinance of homes in this state.
   (4) That the amount and length of the loans shall be pursuant to a
schedule periodically established by the board that shall provide a
loan of up to 100 percent of the appraised value. In no event shall
the loan amount exceed 200 percent of the conforming loan limit set
by the Federal National Mortgage Association (FNMA) or 200 percent of
the conforming loan limit set by the Federal Home Loan Mortgage
Corporation (FHLMC), whichever is greater. The portion of any loan
exceeding 80 percent of value shall be insured by an admitted
mortgage guaranty insurer conforming to Chapter 2A (commencing with
Section 12640.01) of Part 6 of Division 2 of the Insurance Code, in
an amount so that the unguaranteed portion of the loan does not
exceed 75 percent of the market value of the property together with
improvements thereon.
   (5) That there may be prepayment penalties assessed on the loans
in accordance with policies established by the board.
   (6) That the criteria and terms for its loans shall be consistent
with the financial integrity of the program and the sound investment
of the retirement fund.
   (7) Any other terms and conditions as the board shall deem
appropriate.
   (c) It is the intent of the Legislature that the provisions of
this section be used to establish an investment program for
residential mortgages, including assisting borrowers in purchasing
homes in this state, or refinancing a mortgage loan. The Legislature
intends that home loans made pursuant to this section shall be
secured primarily by the property purchased or refinanced and shall
not exceed the appraised value of that property.
   (d) Appropriate administrative costs of implementing this section
and Section 22360.5 shall be paid by the participating borrowers.
Those costs may be included in the loan amount.
   (e) Appropriate interest rates shall be periodically reviewed and
adjusted to provide loans to borrowers consistent with the financial
integrity of the home loan program and the sound and prudent
investment of the retirement fund. Under no circumstances, however,
shall the interest rates offered to borrowers be below current market
rate.
   (f) The board shall administer this section and Section 22360.5
under other terms and conditions it deems appropriate and in keeping
with the investment standard. The board may adopt policies as
necessary for its administration of this section and Section 22360.5
and to assure compliance with applicable state and federal laws.
   (g) This section and Section 22360.5 shall be known as, and may be
cited as, the Dave Elder State Teachers' Retirement System Home Loan
Program Act.


22360.5.  (a) The board may include in any investment program
established pursuant to Section 22360 a procedure whereby a member
may obtain 100 percent financing for the purchase for a single-family
dwelling unit in accordance with the following criteria:
   (1) The member shall obtain one loan secured by the purchased
home, pursuant to Section 22360, and a second personal loan secured
by a portion of the accumulated retirement contributions in the
member's individual account. The personal loan shall only be used for
the purchase of the member's principal residence and not for a loan
to refinance the member's existing mortgage.
   (2) The loan secured by the purchased home shall be consistent
with the requirements imposed by Section 22360.
   (3) In no event may the personal loan secured by the accumulated
retirement contributions in the member's individual account exceed
the lesser of 50 percent of the current value amount of the
accumulated retirement contributions or fifty thousand dollars
($50,000).
   (4) If two members are married, the personal loan secured by the
sum total of accumulated retirement contributions in both members'
accounts shall not exceed 5 percent of the loan.
   (5) The pledge of security under this section shall remain in
effect until the personal loan is paid in full.
   (b) The pledge of security under this section shall take binding
effect. In the event of a default on the personal loan secured by the
member's retirement contributions as authorized by this section, the
board shall deduct an amount from the member's accumulated
retirement contributions on deposit and adjust the member's
accumulated retirement contributions as necessary to recover any
outstanding loan balance prior to making any disbursement of a refund
or a lump-sum distribution.
   (c) In the event of a default on the personal loan by a member,
the board shall deduct the monthly principal plus appropriate
interest from the member's benefit, when the member begins receiving
a benefit, until the loan is paid in full.
   (d) In the event of a default on the personal loan by a member
receiving a benefit, the board shall deduct the monthly principal and
interest from the member's benefit until the personal loan is paid
in full.
   (e) The secured personal loan permitted under this section shall
be made available only to members who meet eligibility criteria as
determined by the board.
   (f) In the event of a refund or lump-sum distribution of the
accumulated retirement contributions, the member's account shall be
adjusted as necessary to recover any outstanding loan balance.
   (g) If the member is married at the time the home is purchased
with a personal loan secured by the member's accumulated retirement
contributions as authorized by this section, then the member's spouse
shall agree in writing to the pledge of security, as to his or her
community interest in the amount pledged, regardless of whether title
to the home is held in joint tenancy.
   (h) For purposes of the section only, "member" means any person
who is entitled to receive an allowance funded by the system pursuant
to this part or Part 14, notwithstanding any vesting requirement and
without regard to present eligibility to retire, and who is not
retired or disabled.



22361.  (a) The board may, subject to and consistent with its
fiduciary duty, establish a program utilizing the retirement fund to
assist currently employed members and retired members who are victims
of a natural disaster to obtain loans from the retirement fund for
the sole purpose of repairing or rebuilding their homes that have
been damaged by a natural disaster. In order to qualify for such a
loan, the home of the currently employed member or retired member
shall have been damaged by a natural disaster and the home shall have
been in an area that has been declared a disaster area in a
proclamation of the Governor of a state of emergency affecting the
area in which the currently employed member or retired member
resides.
   (b) The board may loan any amount of money, up to and including
100 percent of the current appraised value of a home of a currently
employed member or retired member. However, 5 percent of the loan
may, at the discretion of the board, be secured by the contributions
of the member who requests the loan.
   (c) The board may, under such conditions as it may deem prudent,
require that a currently employed member or retired member pledge
other assets as collateral for a loan.
   (d) The board shall establish terms for the termination of loans
made pursuant to this section upon the separation of members from
service, to ensure, in the case of any default, that the fund shall
not suffer any loss and to provide, as a condition of retirement, for
alternative security. The board may impose any other terms and
conditions the board may determine appropriate.
   (e) The Legislature hereby reserves full power and authority to
change, revise, limit, expand, or repeal the loan program authorized
by this section.


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.




22363.  No matter involving any vendor or contractor, in their
individual or any other capacity, shall be considered during a closed
session on any transaction involving the system unless, prior to the
closed session, a written disclosure has been submitted by the
vendor or contractor of any campaign contributions aggregating two
hundred fifty dollars ($250) or more and any gifts aggregating fifty
dollars ($50) or more in value that the vendor or contractor has made
during the preceding calendar year to any member of the board or any
officer or employee of the system. Failure to disclose the campaign
contributions and gifts shall provide the basis for disqualification
of the contractor or the vendor.


22364.  (a) During the process leading to an award of any contract
by the system, no member of the board or its staff shall knowingly
communicate concerning any matter relating to the contract or
selection process with any party financially interested in the
contract, or an officer or employee of that party, unless the
communication is (1) part of the process expressly described in the
request for proposal or other solicitation invitation, or (2) part of
a noticed board meeting, or (3) as provided in subdivision (c). Any
applicant or bidder who knowingly participates in a communication
that is prohibited by this paragraph shall be disqualified from the
contract award.
   (b) During the evaluation of any prospective investment
transaction, no party who is financially interested in the
transaction, or an officer or employee of that party, may knowingly
communicate with any board member concerning any matter relating to
the transaction or its evaluation, unless the financially interested
party discloses the content of the communication in a writing
addressed and submitted to the executive officer and the board prior
to the board's action on the prospective transaction. This
subdivision shall not apply to communications that are part of a
noticed board meeting, or as provided in subdivision (c).
   (1) The writing shall disclose the date and location of the
communication, and the substance of the matters discussed. The board
shall prescribe other procedures concerning this disclosure.
   (2) Any board member who participates in a communication subject
to this subdivision shall also have the obligation to disclose the
communication to the executive officer and board, prior to the board'
s action on the prospective transaction. The board shall prescribe
procedures for this disclosure, including procedures to apply to
board members who fail to disclose communications as required by this
subdivision.
   (3) Consistent with its fiduciary duties, the board shall
determine the appropriate remedy for any knowing failure of a
financially interested party to comply with this subdivision
including, but not limited to, outright rejection of the prospective
investment transaction, reduction in fee income, or any other
sanction.
   (4) The communications disclosed under this subdivision shall be
made public, either at the open meeting of the board in which the
transaction is considered, or if in closed session, upon public
disclosure of any closed session votes concerning the investment
transaction.
   (c) The procedures and prohibitions prescribed by this section
shall not apply to:
   (1) Communications that are incidental, exclusively social, and do
not involve the system or its business, or the board or staff member'
s role as a system official.
   (2) Communications that do not involve the system or its business
and that are within the scope of the board or staff member's private
business or public office wholly unrelated to the system.