The California Senate passed AB 1379 by Assembly Member Steven Bradford (D-Gardena) with a 52-27 vote. The bill encourages state and local retirement funds to invest in emerging markets, historically underserved capital markets many of which are located in urban and rural communities. Additionally, the bill seeks to increase investment in ethnic- and women-owned firms, in companies which serve low-to-moderate income populations, and other small- and medium-sized businesses.
AB 1379 requires state and local pension systems to report on their investments in California's emerging markets to the Controller. The bill also permits the report to include an estimate of the number of jobs created and retained as a result of the investment activity.
"These underserved communities and businesses have struggled to access capital investment. I am pleased that the Legislature sees the value of investing in emerging markets that represent a huge untapped resource of economic growth for our state," explained Assembly Member Bradford.
A joint study by the U.S. Department of Commerce and the Milken Institute released in 2000 found that minority-owned firms are growing six times faster than all other firms, while their sales growth is twice the rate of others.
"The changing demographics in California call for a renewed focus on these investment opportunities to secure a stronger economic future for all Californians. By shining light to those retirement systems that currently invest in emerging markets, other retirement systems throughout the state will become aware and interested to invest too," Bradford concluded.
It is the policy of CalPERS and CalSTRS to invest 2% of their total portfolio in emerging markets because they recognize the importance of the multi-billion dollar investment opportunity. Main investments are in credit enhancement, private equity, home loans, real estate, securitized products, and others. According to the CalSTRS semi-annual report, "CalSTRS has invested $5.0 billion in California underserved markets. This represents 3.97 percent of the total portfolio, which almost doubled the original goal of 2%."
The CalPERS for California Annual Report 2010, states that "CalPERS through its California Initiative which invests in private equity in traditionally underserved markets, has invested about $925 million and employed more than 68,000 Californian workers who come from economically disadvantaged areas. Furthermore, 33% of investment dollars are committed to 40 companies where there is at least one female officer, and 49% are committed to 45 companies with at least one minority officer. As company officers, these women and minorities have substantial input into the management and growth of these companies."
AB 1379 complements another economic development bill Assembly Member Bradford has authored in the current session. AB 38 encourages mainstream banking institutions to locate in communities which need more affordable financial services options.
The bill now heads to the Governor's desk for his signature.
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Assemblymember Steven C. Bradford represents the 51st Assembly District, comprised of the cities of Gardena, Hawthorne, Lawndale, and Inglewood, and the communities of Athens, Lennox, South Central LA, Westchester, Willowbrook, Playa Vista, and parts of Ladera Heights and West Compton.
CONTACT: Matt Stauffer, 310-412-6400
