SECTIONS 22250-22261 - California Statutes

EDUCATION CODE

SECTION 22250-22261

22250. The board and its officers and employees of the system shall
discharge their duties with respect to the system and the plan
solely in the interest of the members and beneficiaries of the
Defined Benefit Program as well as the participants and beneficiaries
of the Cash Balance Benefit Program as follows:
(a) For the exclusive purpose of the following:
(1) Providing benefits to members and beneficiaries of the Defined
Benefit Program as well as the participants and beneficiaries of the
Cash Balance Benefit Program.
(2) Defraying reasonable expenses of administering the plan.
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in a like
capacity and familiar with those matters would use in the conduct of
an enterprise of a like character and with like aims.
(c) By diversifying the investments of the plan so as to minimize
the risk of large losses, unless under the circumstances it is
clearly prudent not to do so.
(d) In accordance with the documents and instruments governing the
plan and the system insofar as those documents and instruments are
consistent with this part and Part 14 (commencing with Section
26000).

22251. (a) Except as provided in subdivision (b), the assets of the
plan shall never inure to the benefit of an employer and shall be
held for the exclusive purposes of providing benefits to members and
beneficiaries of the Defined Benefit Program as well as the
participants and beneficiaries of the Cash Balance Benefit Program
and defraying reasonable expenses of administering the plan and the
system.
(b) In the case of a contribution that is made by an employer by a
mistake of fact, subdivision (a) shall not prohibit the return of
that contribution within one year after the system knows, or should
know in the ordinary course of business, that the contribution was
made by a mistake of fact.

22252. Except as otherwise provided by law, the board and its
officers and employees of the system shall not cause the system to
engage in a transaction if they know or should know that the
transaction constitutes a direct or indirect:
(a) Sale or exchange, or leasing, of any property from the system
to a member or beneficiary of the Defined Benefit Program, as well as
a participant or beneficiary of the Cash Balance Benefit Program,
for less than adequate consideration, or from a member or beneficiary
of the Defined Benefit Program, as well as a participant or
beneficiary of the Cash Balance Benefit Program, to the system for
more than adequate consideration.
(b) Lending of money or other extension of credit from the system
to a member or beneficiary of the Defined Benefit Program, as well as
a participant or beneficiary of the Cash Balance Benefit Program,
without the receipt of adequate security and a reasonable rate of
interest, or from a member or beneficiary of the Defined Benefit
Program, as well as a participant or beneficiary of the Cash Balance
Benefit Program, with the provision of excessive security or an
unreasonably high rate of interest.
(c) Furnishing of goods, services, or facilities from the system
to a member or beneficiary of the Defined Benefit Program, as well as
a participant or beneficiary of the Cash Balance Benefit Program,
for less than adequate consideration, or from a member, or
beneficiary of the Defined Benefit Program, as well as a participant
or beneficiary of the Cash Balance Benefit Program, to the system for
more than adequate consideration.
(d) Transfer to, or use by or for the benefit of, a member or
beneficiary of the Defined Benefit Program, as well as a participant
or beneficiary of the Cash Balance Benefit Program, of any assets of
the plan for less than adequate consideration.
(e) Acquisition, on behalf of the system, of any employer
security, real property, or loan.

22253. The board and its officers and employees of the system shall
not do any of the following:
(a) Deal with the assets of the plan and the system in their own
interest or for their own account.
(b) In their individual or in any other capacity, act in any
transaction involving the system on behalf of a party, or represent a
party, whose interests are adverse to the interests of the plan or
the interests of the members and beneficiaries of the Defined Benefit
Program, as well as participants and beneficiaries of the Cash
Balance Benefit Program.
(c) Receive any consideration for their personal account from any
party conducting business with the system in connection with a
transaction involving the assets of the plan.

22254. (a) Any board member or officer who breaches any of the
responsibilities, obligations, or duties imposed upon them by Section
22251, 22252, or 22253 shall be personally liable to make
restitution to the retirement fund for any losses to it resulting
from each breach, and to restore any profits that have been made
through use of assets of the fund and shall be subject to any other
equitable or remedial relief the court may deem appropriate,
including removal from the board.
(b) No board member or officer shall be liable with respect to a
breach of fiduciary duty under this part if the breach was committed
before the board member or officer became one, or ceased to be one.

22255. (a) No board member or officer shall be personally liable
for the breach of a fiduciary duty except as set forth in Section
22254 or 22256. This subdivision shall apply only to causes of
actions arising on or after January 1, 1990.
(b) Nothing in this section shall be interpreted to lessen the
scope of liability of board members or employees of the system for
gross negligence or fraud in the investment of the retirement fund
assets, nor to lessen the scope of liability of the board or system
for breach of fiduciary duty pertaining to the administration of the
plan.

22256. A board member or officer shall be liable for a breach of
fiduciary responsibility of another board member or officer with
respect to the system in the following circumstances:
(a) If the board member or officer knowingly participates in, or
knowingly undertakes to conceal an act or omission of the other board
member or officer knowing that the act or omission is a breach.
(b) If the board member's or officer's failure to comply with his
or her responsibilities as set forth in Section 22251, 22252, or
22253 has enabled another board member or officer to commit a breach.
(c) If the board member or officer has knowledge of a breach
unless the board member or officer makes reasonable efforts under the
circumstances to remedy the breach.

22257. (a) Notwithstanding Section 22203, the board may contract
with or appoint one or more investment managers to manage the assets
of the retirement fund. If the board has acted with care, skill,
prudence, and diligence in meeting the requirements of Sections 22252
and 22253 in selecting and monitoring the investment managers, then,
notwithstanding Sections 22250, 22252, 22253, 22254, and 22256, no
board member shall be liable for the acts or omissions of the
investment managers or be under any obligation to invest or otherwise
manage any assets of the retirement fund that are subject to the
management of the investment managers.
(b) Incorporation of the fiduciary duty set forth in Section 22250
into the terms of a contract between the system and an investment
manager shall be admissible as evidence that the board has acted with
care, skill, prudence, and diligence in the selection of the
investment manager.

22258. Notwithstanding Section 13340 of the Government Code, there
is hereby continuously appropriated, without regard to fiscal years,
from the retirement fund to the board, the amount necessary to pay
for any insurance obtained pursuant to Section 7511 of the Government
Code. These payments shall be made upon warrants drawn by the
Controller upon demands made by the board.

22259. (a) All board members and officers and employees of the
system shall execute a fidelity bond, in an amount determined by the
board to be prudent, conditioned upon the faithful performance of the
duties of the board member or employee.
(b) All board members and officers and all staff of the investment
division who are authorized to invest funds shall be covered with
fiduciary liability insurance in an amount determined by the board to
be prudent.

22260. Notwithstanding any other provision of law, the system may
provide credit enhancement for bonds, notes, certificates of
participation, or other evidences of indebtedness of an employer,
provided that any credit enhancement transaction satisfies the
requirement of Section 22250 and does not constitute a prohibited
transaction for purposes of Section 503 of the United States Internal
Revenue Code.

22261. Notwithstanding any other provision of law, the board may
make investments related to the planning, development, or acquisition
of surplus real property owned by an employer, if the investment
satisfies the requirements of Section 22250 and does not constitute a
prohibited transaction for purposes of Section 503 of the Internal
Revenue Code.