California Proposition 6, Rules Governing Pension Fund Investments (1982)
Proposition 6, if it had been approved, would have allowed the California State Legislature to change the investment authority of the state's public pension and retirement funds. It would have permitted the state legislature to:
- Increase the limit on investments in common stocks from 25% of a public pension or retirement fund's total assets to 60% of the fund's total assets.
- Allow investment of up to 5% of a public pension or retirement fund's assets in common stock or shares of publicly traded corporations.
- Authorize investment of 0.5% of a public pension or retirement fund's assets in limited partnerships or corporations where the majority of the assets are securities which are not traded publicly.
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VII • VIII • IX • X • XA
XB • XI • XII • XIII • XIII A
XIII B • XIII C • XIII D • XIV • XV • XVI • XVIII • XIX • XIX A • XIX B • XIX C
XX • XXI • XXII
XXXIV • XXXV
If Proposition 6 had been approved, it would have amended Section 17 of Article XVI of the California Constitution by adding two new subsection paragraphs to Section 17. Those new additions would have said:
- Notwithstanding provisions to the contrary in this section and Section 6 of Article XVI, the Legislature may authorize the investment of moneys of any public pension or retirement fund, not to exceed 5 percent of the assets of such fund determined on the basis of cost, in the common stock or shares of any publicly traded corporations which do not meet some or all of the provisions of subdivisions (a) through (d) of the second paragraph of this section provided, however, that the total investment in the common stocks and shares, together with the total investment made pursuant to the second paragraph of this section in common stocks and shares of all other corporations, may not exceed 60 percent of the assets of the fund determined on the basis of the cost of the stocks or shares.
- The assets of public pension or retirement funds are trust funds and shall be held for the exclusive purpose of providing benefits to participants in the pension or retirement plan and their beneficiaries and defraying reasonable expenses of administering the plan, and shall be invested, whether pursuant to this section or pursuant to other authority.
Proposition 6's official ballot summary said:
- "Constitution presently permits Legislature to authorize public pension and retirement funds to invest up to 25 percent in common stock of corporations meeting prescribed standards. This measure permits authorizing public pension and retirement systems to instead invest up to 60 percent in such common stock and, within the 60 percent, 5 percent in stock of corporations not meeting certain present standards. Permits Legislature, within both limitations, to authorize 0.5 percent investment in corporations whose assets are in nonpublicly traded equity instruments. Provides assets of public pension or retirement funds are trust funds. Prescribes fiduciary standards for their investment. Summary of Legislative Analyst's estimate of net state and local government fiscal impact: If implemented, could result in opportunities for increased earnings through higher dividends and capital gains, accompanied by greater risk to the participating public pension or retirement funds, which could entail capital losses to the funds."
The fiscal estimate provided by the California Legislative Analyst's Office said:
- "The proposed expansion of investment authority in stocks, if implemented by the Legislature, could result in opportunities for increased earnings through higher dividends and capital gains, accompanied by greater risk to the participating public pension or retirement funds, which could entail capital losses to the funds.
- The gain or loss in investment earnings resulting from any expansion in investment authority would depend on how public pension or retirement funds utilize the expanded authority."
Path to the ballot
- See also: Amending the California Constitution
The California State Legislature voted to put Proposition 6 on the ballot via Senate Constitutional Amendment 21 (Statutes of 1982, Resolution Chapter 38).
|Votes in legislature to refer to ballot|
- PDF of the mailed November 2, 1982 voter guide for Proposition 6
- Hastings California I&R database
- California Law Library, November 2, 1982 ballot propositions