AMENDED IN ASSEMBLY MARCH 9, 2026
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
98
Introduced by Assembly Member Nguyen
February 20, 2026
An act to amend Sections 100000, 100002, 100004, 100008, 100010, 100012, 100016, 100022, 100026, 100030, 100032, 100033, and 100046 of, and to repeal Sections 100018, 100020, 100024, and 100028 of, the Government 44559.13 and 44559.14 of the Health and Safety Code, relating to retirement, economic development, and making an appropriation therefor.
Vote: 2/3 Appropriation: yes Fiscal committee: yes Local program: no
LEGISLATIVE COUNSEL’S DIGEST
Existing law establishes the California Americans with Disabilities Act Small Business Capital Access Loan Program to assist small businesses in complying with the Americans with Disabilities Act. Existing law requires the Capital Programs and Climate Financing Authority to adopt regulations to establish and regulate new loss reserve accounts for qualified loans made by participating lenders to small businesses for eligible products, as specified, including regulations limiting terms of loans and recaptures from loss reserve accounts to 5 years, as specified. Existing law caps qualified loans under the program at $50,000. Existing law establishes the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund, a continuously appropriated fund to be administered by the authority for the purposes of the program. Existing law prescribes the uses for moneys in the fund, including specified program and administrative expenditures, and limits administrative expenditures to 5% of the initial appropriation plus 5% of all moneys recaptured.
Existing law establishes the California Seismic Safety Capital Access Loan Program, which is similar to the California Americans with Disabilities Act Small Business Capital Access Loan Program, to assist residential property owners with and small business owners seismically retrofitting residences and small businesses, as specified. Existing law establishes the California Seismic Safety Capital Access Loan Program Fund, a continuously appropriated fund to be used for the purposes of the program, as specified.
This bill would increase the cap for qualified loans under the California Americans with Disabilities Act Small Business Capital Access Loan Program to $250,000. The bill would, as of the operative date of the bill, require the authority to transfer the moneys from the California Seismic Safety Capital Access Loan Program Fund to the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund. The bill would provide that moneys in the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund may additionally be used for financial assistance to eligible projects, as specified. The bill would change the limit for administrative expenditures from the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund to 5% of the initial appropriation plus 5% of all interest earned and moneys recaptured. The bill would require the regulations adopted for the California Americans with Disabilities Act Small Business Capital Access Loan Program to increase the 5-year term and recapture limits described above to 15 years. By transferring money into a continuously appropriated fund, expanding the purposes for which moneys in a continuously appropriated fund may be used, and increasing the amount of moneys that may be expended from a continuously appropriated fund, this bill would make an appropriation.
Existing law defines “eligible employer” as a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding, among others, specified federal, state, and local governmental entities, with at least one eligible employee and that satisfies certain requirements to establish or participate in a payroll deposit retirement savings arrangement.
This bill would expand that definition of “eligible employer” to include household employers, defined as those who have hired or contracted someone to work in or around their home for the benefit of their personal household and who provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level. By expanding eligibility under these provisions, the bill would remove a restriction limiting expenditure of funds and authorize the expenditure of continuously appropriated moneys for a new purpose, thereby making an appropriation.
Existing law requires the board, subject to its authority and fiduciary duty, to design and implement the program. Existing law authorizes the board to provide for investment in myRAs. Existing law requires the program to include, as determined by the board, one or more payroll deduction IRA arrangements. Existing law provides the board with the power and authority to, among other things, make and enter into contracts necessary for the administration of the trust and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program and the federal Retirement Savings Contribution Credit (Saver’s Credit).
This bill would eliminate the authority of the board to invest in myRAs and would make related conforming changes. The bill would require the program, with board approval, to establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, as specified, establish a payroll deposit emergency savings account on behalf of participants for the purpose of preserving retirement investments, and notify participants at least 30 days prior to the creation of the accounts.
This bill would additionally authorize the board to assess the feasibility of multi-state or regional agreements to administer the program and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the successor to the Saver’s Credit, known as the Saver’s Match.
Existing law requires the board, prior to opening the program for enrollment, to establish a retirement investments clearinghouse on its internet website and a vendor registration process, if there is sufficient interest by vendors to participate and provide the necessary funding. Existing law requires vendors that would like to participate in the board’s retirement investments clearinghouse and be listed on the board’s internet website as a registered vendor to provide specified information to the board.
This bill would eliminate the above-described requirement for the board to establish a retirement investments clearinghouse on its internet website and a vendor registration process, and would instead require vendors that would like to contract with the board to provide specified information to the board. The bill would make related conforming changes.
Existing law authorizes an employer to choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board. Existing law requires, by December 31, 2025, eligible employers with one or more eligible employees and do not offer a retirement savings program, as provided, to have a payroll deposit retirement savings arrangement to allow employee participation in the program. Existing law provides the board the powers and duties necessary to administer the enforcement of employer compliance, as provided.
This bill would instead, beginning December 31, 2027 and by December 31 of each calendar year, require eligible employers with one or more eligible employees who do not offer a retirement savings program, as specified, to have a payroll deposit retirement savings arrangement to allow employee participation in the program.
Existing law requires the board to issue to each employer who fails to allow its eligible employees to participate in the program, as provided, a notice of penalty application. Existing law requires each eligible employer that, without good cause, fails to allow its employees to participate in the program, as specified, after the board serves a final notice of penalty application, to be subject to a penalty of $250 per eligible employee and an additional penalty of $500 per eligible employee if noncompliance continues, as described. Existing law requires the Franchise Tax Board to issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the board informs the Franchise Tax Board of the eligible employer’s noncompliance. Existing law requires amounts collected by the Franchise Tax Board for these purposes to be transmitted to the board for deposit in the trust.
This bill would additionally subject each eligible employer that fails to allow its eligible employees to participate in the program after the above-described penalties have been assessed to a penalty of $500 per eligible employee. The bill would prohibit the penalties assessed from being imposed more than once every 180 days since the last violation. By depositing additional penalties into the trust, a continuously appropriated fund, the bill would make an appropriation.
The people of the State of California do enact as follows:
SECTION 1.
Section 44559.13 of the Health and Safety Code is amended to read:
44559.13.
(a) It is the intent of the Legislature in this act to create and fund the California Americans with Disabilities Act Small Business Capital Access Loan Program to assist small businesses in complying with the Americans with Disabilities Act. It is not the intent of the Legislature to assist the physical expansion of small businesses that includes modifications that comply with the Americans with Disabilities Act. The program shall be administered by the Capital Programs and Climate Financing Authority and follow the terms and conditions for the Capital Access Loan Program for Small Businesses in this article with the additional program requirements specified under this section.
(b) For purposes of this section, unless the context requires otherwise, the following words and terms shall have the following meanings:
(1) “Americans with Disabilities Act” means the federal Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12101 et seq.) and amendments thereto.
(2) “California Americans with Disabilities Act Small Business Capital Access Loan Program Fund” or “fund” means a fund established and administered by the authority pursuant to Sections 44548 and 44549 to be used for purposes of this program.
(3) (A) “Eligible cost” means and includes all or any part of the price of construction, purchase price of real or personal property, the price of demolishing or removing any buildings or structures, the price of all machinery and equipment, the amount of financing charges and interest before, during, and for a period not to exceed the later of one year or one year following completion of construction, as determined by the authority, the price of insurance during construction, the amount of funding or financing noncapital expenses, the amount of reserves for principal and interest and for extensions, enlargements, additions, replacements, renovations, and improvements, the price of engineering, financial, and legal services and other service contracts, the price of plans, specifications, studies, surveys, estimates, administrative expenses, and any other expenses of funding or financing, that are necessary and allocable to the eligible project.
(B) “Eligible cost” shall not include costs not directly related to physical alterations necessary for compliance with the Americans with Disabilities Act.
(4) “Eligible project” means the physical alterations or retrofits to an existing small business facility of less than 10,000 square feet necessary to ensure that facility is in compliance with the Americans with Disabilities Act, and the financing necessary to pay eligible costs of the project.
(5) “Qualified loan” means a loan or portion of a loan as defined in subdivision (j) of Section 44559.1, where the proceeds of the loan or portion of the loan are limited to the eligible costs for an eligible project under this program, and where the loan or portion of the loan does not exceed two hundred fifty thousand dollars ($50,000). ($250,000).
(6) “Small business” or “qualified business” means a business that is independently owned and operated and not dominant in its field that meets both of the following additional criteria:
(A) It has 30 or fewer full-time equivalent employees, or it has less than five million dollars ($5,000,000) in total gross annual income from all sources.
(B) It does not provide overnight accommodations.
(c) (1) (A) The California Americans with Disabilities Act Small Business Capital Access Loan Program Fund is established in the State Treasury for, and shall be administered by the authority pursuant to Sections 44548 and 44549 for, this program. Notwithstanding Section 13340 of the Government Code, all money in the fund is continuously appropriated to the authority for carrying out the purposes of this section. The authority may divide the fund into separate accounts. All moneys accruing to the authority pursuant to this section from any source shall be deposited into the fund.
(B) Notwithstanding Section 13340 of the Government Code, all money in the fund is continuously appropriated to the authority for carrying out the purposes of this section.
(C) The authority may divide the fund into separate accounts.
(D) All moneys accruing to the authority pursuant to this section from any source shall be deposited into the fund.
(E) Moneys in the fund include the moneys transferred from the California Seismic Safety Capital Access Loan Program Fund pursuant to paragraph (4) of subdivision (c) of Section 44559.14.
(2) All moneys in the fund derived from any source shall be held in trust for the life of this program, subject to the program expenditures and costs of administering this section, as follows:
(A) Program expenditures shall include all of the following:
(i) Contributions paid by the authority in support of qualified loans.
(ii) Payments made to borrowers enrolling loans to participate in the program, to the extent that moneys other than the initial appropriation are deposited into the fund by the authority and are authorized for that use pursuant to paragraph (3) of subdivision (d).
(iii) Reasonable costs to educate the small business community and participating lenders about the program, including travel within the state.
(iv) Financial assistance to eligible projects, including, but not limited to, loans, loan loss reserves, interest rate reductions, contributions of money, or a combination thereof, as determined and approved by resolution of the authority.
(B) Administrative expenditures shall be limited to 5 percent of the initial appropriation plus 5 percent of all interest earned and moneys recaptured, and shall include all of the following:
(i) Personnel costs.
(ii) Service and vending contracts necessary to carry out the program.
(iii) Other reasonable direct and indirect administrative costs.
(3) The authority may direct the Treasurer to invest moneys in the fund that are not required for its current needs in the eligible securities specified in Section 16430 of the Government Code as the authority shall designate. The authority may direct the Treasurer to deposit moneys in interest-bearing accounts in state or national banks or other financial institutions having principal offices located in the state. The authority may alternatively require the transfer of moneys in the fund to the Surplus Money Investment Fund for investment pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code. All interest or other increment resulting from an investment or deposit shall be deposited into the fund, notwithstanding Section 16305.7 of the Government Code. Moneys in the fund shall not be subject to transfer to any other fund pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, excepting the Surplus Money Investment Fund.
(d) The authority shall adopt regulations pursuant to subdivision (c) of Section 44520 to implement the program, including provisions specific to this program as described in this section and further including provisions to:
(1) Establish a new loss reserve account for each participating lender enrolling loans in this program.
(2) Obtain a certification from each participating lender and small business upon enrollment of a qualified loan that the proceeds of the loan will be used for the eligible costs of an eligible project.
(3) Contribute an additional incentive from the fund for each loan enrolled for a qualified business located in a severely affected community, or make nonreimbursable payments from other moneys to participating borrowers to offset all or a portion of the reasonable costs of architectural inspections obtained from a person who is certified as an access specialist pursuant to the program described in Section 4459.5 of the Government Code.
(4) Restrict the enrollment of a qualified loan in any other Capital Access Loan Program for small business offered by the authority as long as funds are available for this program.
(5) Limit the term of loss coverage for each qualified loan to no more than five 15 years.
(6) Recapture from the loss reserve account the authority’s contribution for each enrolled loan upon the maturation of such loan or after five 15 years from the date of enrollment, whichever happens first, to be deposited in the fund and applied to future program and administrative expenditures.
SEC. 2.
Section 44559.14 of the Health and Safety Code is amended to read:
44559.14.
(a) (1) It is the intent of the Legislature in enacting the act adding this section to create and fund a program to assist residential property owners and small business owners in seismically retrofitting residences and small businesses with a priority on soft-story buildings and unreinforced brick and concrete buildings. It is not the intent of the Legislature to assist the physical expansion of small businesses and residences.
(2) The Legislature hereby establishes the California Seismic Safety Capital Access Loan Program. The program shall cover losses on qualified loans by participating lenders to qualified residential property owners or qualified small businesses for eligible projects, as specified under this section. The program shall be administered by the Capital Programs and Climate Financing Authority and follow the terms and conditions for the Capital Access Loan Program in this article with the additional program requirements specified under this section.
(b) For purposes of this section, unless the context requires otherwise, the following words and terms shall have the following meanings:
(1) “Seismic retrofit construction” means alteration performed on or after January 1, 2017, of a qualified building or its components to substantially mitigate seismic damage. “Seismic retrofit construction” includes, but is not limited to, all of the following:
(A) Anchoring the structure to the foundation.
(B) Bracing cripple walls.
(C) Bracing hot water heaters.
(D) Installing automatic gas shutoff valves.
(E) Repairing or reinforcing the foundation to improve the integrity of the foundation against seismic damage.
(F) Anchoring fuel storage.
(G) Installing an earthquake-resistant bracing system for mobilehomes that are registered with the Department of Housing and Community Development.
(H) Strengthening a building’s lateral load resisting system.
(2) “Eligible costs” means the costs paid or incurred on or after January 1, 2017, for an eligible project, including any engineering or architectural design work necessary to permit or complete the eligible project less the amount of any grant provided by a public entity for the eligible project. “Eligible costs” do not include costs paid or incurred for any of the following:
(A) Maintenance, including abatement of deferred or inadequate maintenance, and correction of violations unrelated to the seismic retrofit construction.
(B) Repair, including repair of earthquake damage.
(C) Seismic retrofit construction required by local building codes as a result of addition, repair, building relocation, or change of use or occupancy.
(D) Other work or improvement required by local building or planning codes as a result of the intended seismic retrofit construction.
(E) Rent reductions or other associated compensation, compliance actions, or other related coordination involving the qualified residential property owner or qualified small business and any other party, including a tenant, insurer, or lender.
(F) Replacement of existing building components, including equipment, except as needed to complete the seismic retrofit construction.
(G) Bracing or securing nonpermanent building contents.
(H) The offset of costs, reimbursements, or other costs transferred from the qualified residential property owner or qualified small business to others.
(3) “Eligible project” means seismic retrofit construction that is necessary to ensure that the qualified building is capable of substantially mitigating seismic damage, and the financing necessary to pay eligible costs of the project.
(4) “Qualified building” means a residential or commercial building that is identified by the local building code official for the jurisdiction in which the building is located as a building in need of seismic retrofitting and is either a building of a type that is potentially vulnerable in the event of a catastrophic earthquake or a building constructed before 1981.
(5) “Qualified loan” means a loan or portion of a loan as defined in subdivision (j) of Section 44559.1, where the proceeds of the loan or portion of the loan are limited to the eligible costs for an eligible project under this program, and where the loan or portion of the loan does not exceed two hundred fifty thousand dollars ($250,000).
(6) “Qualified small business” means a business referred to in subdivisions (i) and (m) of Section 44559.1 that owns a qualified building regardless of owner occupancy, notwithstanding the restriction on passive real estate ownership in subparagraph (B) of paragraph (2) of subdivision (j) of Section 44559.1.
(7) “Qualified residential property owner” means either an owner of a residential building that is a qualified building or a qualified small business that owns one or more residential buildings, including a multiunit housing building, that is a qualified building, notwithstanding the restriction on passive real estate ownership in subparagraph (B) of paragraph (2) of subdivision (j) of Section 44559.1.
(c) (1) The California Seismic Safety Capital Access Loan Program Fund is established in the State Treasury and shall be administered by the authority pursuant to Sections 44548 and 44549 for this program. For purposes of this section, the references in Sections 44548 and 44549 to “small business” shall include “qualified residential property owner,” as defined in this section. Notwithstanding Section 13340 of the Government Code, all moneys in the fund are continuously appropriated to the authority for carrying out this section. The authority may divide the fund into separate accounts. All moneys accruing to the authority pursuant to this section from any source shall be deposited into the fund.
(2) All Subject to paragraph (4), all moneys in the fund derived from any source shall be held in trust for the life of this program, for program expenditures and costs of administering this section, as follows:
(A) Program expenditures shall include both of the following:
(i) Contributions paid by the authority in support of qualified loans.
(ii) Costs for a qualified expert to validate that the proceeds of the loans are eligible costs, as defined under this section.
(iii) Reasonable costs to educate the small business community, residential property owners, and participating lenders about the program, including travel within the state.
(B) Administrative expenditures shall be limited to 5 percent of the initial appropriation plus 5 percent of all moneys recaptured, and shall include all of the following:
(i) Personnel costs.
(ii) Service and vending contracts, other than program expenditures described in subparagraph (A), that are necessary to carry out the program.
(iii) Other reasonable direct and indirect administrative costs.
(3) The authority may direct the Treasurer to invest moneys in the fund that are not required for its current needs in the eligible securities specified in Section 16430 of the Government Code as the authority shall designate. The authority may direct the Treasurer to deposit moneys in interest-bearing accounts in state or national banks or other financial institutions having principal offices located in the state. The authority may alternatively require the transfer of moneys in the fund to the Surplus Money Investment Fund for investment pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code. All interest or other increment resulting from an investment or deposit shall be deposited into the fund, notwithstanding Section 16305.7 of the Government Code. Moneys in the fund shall not be subject to transfer to any other fund pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, excepting the Surplus Money Investment Fund.
(4) Notwithstanding any other law, on the operative date of the act adding this paragraph, the authority shall transfer the moneys in the fund to the California Americans with Disabilities Act Small Business Capital Access Loan Program Fund established pursuant to Section 44559.13.
(d) The authority shall adopt regulations pursuant to Section 44520 to implement the program, including, but not limited to, provisions to:
(1) Establish a new loss reserve account for each participating lender enrolling loans in this program.
(2) Obtain a certification from each participating lender and qualified small business or qualified residential property owner upon enrollment of a qualified loan that the proceeds of the loan will be used for the eligible costs of an eligible project.
(3) Contribute an additional incentive from the fund for each loan enrolled for a qualified small business or qualified residential property owner located in a severely affected community.
(4) Restrict the enrollment of a qualified loan in any other Capital Access Loan Program for a qualified small business or qualified residential property owner offered by the authority as long as funds are available for this program.
(5) Limit the term of loss coverage for each qualified loan to no more than 10 years.
(6) Recapture from the loss reserve account the authority’s contribution for each enrolled loan upon the maturation of that loan or after 10 years from the date of enrollment, whichever happens first, to be deposited in the fund and applied to future program and administrative expenditures.
(e) The authority may adopt regulations relating to residential property owner or small business financing as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. For purposes of that Chapter 3.5, including Section 11349.6 of the Government Code, the adoption of the regulations shall be considered by the Office of Administrative Law to be necessary for the immediate preservation of the public peace, health and safety, and general welfare. The regulations shall be repealed 180 days after their effective date, unless the adopting authority or agency complies with that Chapter 3.5.
Section 100000 of the Government Code is amended to read:
100000.
For purposes of this title, the following definitions apply:
(a) “Board” means the CalSavers Retirement Savings Board.
(b) “CalSavers Retirement Savings Program” or “program” means a retirement savings program offered pursuant to the CalSavers Retirement Savings Trust Act.
(c) (1) “Eligible employee” means a person who is employed by an eligible employer.
(2) “Eligible employee” does not include:
(A) Any employee covered under the federal Railway Labor Act (45 U.S.C. Sec. 151), or any employee engaged in interstate commerce so as not to be subject to the legislative powers of the state, except insofar as application of this title is authorized under the United States Constitution or laws of the United States.
(B) Any employee on whose behalf an employer makes contributions to a Taft-Hartley pension trust fund.
(d) (1) (A) “Eligible employer” means a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business, the federal government, the state, any county, any municipal corporation, or any of the state’s units or instrumentalities, that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement.
(B) (i) “Eligible employer” also includes household employers.
(ii) “Household employers” includes those who have hired or contracted someone to work in or around their home for the benefit of their personal household and provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level.
(2) Upon a positive determination pursuant to subdivision (a) of Section 100046, eligible employer means an employer of a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code.
(3) “Eligible employer” does not include an employer that provides a retirement savings arrangement as described in Section 100032.
(e) “IRA” means an individual retirement account or individual retirement annuity under Section 408(a), 408(b), or 408A of Title 26 of the United States Code.
(f) “Participating employer” means an eligible employer that provides a payroll deposit retirement savings arrangement provided for by this title for eligible employees.
(g) “Payroll deposit retirement savings arrangement” means an arrangement by which an employer allows employees to remit payroll deduction contributions to a retirement savings program, which may include an IRA, and in the case of a payroll deduction IRA arrangement, to remit specifically to an IRA.
(h) “Trust” means the CalSavers Retirement Savings Trust established by this title.
(i) “Vendor” means a registered investment company or admitted life insurance company qualified to do business in California that provides retirement investment products. “Vendor” also includes a company that is registered to do business in California that provides payroll services or recordkeeping services and offers retirement plans or payroll deduction IRA arrangements using products of regulated investment companies and insurance companies qualified to do business in California. “Vendor” does not include individual registered representatives, brokers, financial planners, or agents.
SEC. 2.
Section 100002 of the Government Code is amended to read:
100002.
(a) (1) There is hereby created within state government the CalSavers Retirement Savings Board, which shall consist of nine members, with the Treasurer serving as chair, as follows:
(A) The Treasurer.
(B) The Director of Finance, or the director’s designee.
(C) The Controller.
(D) An individual with retirement savings and investment expertise appointed by the Senate Committee on Rules.
(E) An employee representative appointed by the Speaker of the Assembly.
(F) A small business representative appointed by the Governor.
(G) A public member appointed by the Governor.
(H) Two additional members appointed by the Governor.
(2) Members of the board appointed by the Governor, the Senate Committee on Rules, and the Speaker of the Assembly shall serve at the pleasure of the appointing authority.
(b) All members of the board shall serve without compensation. Members of the board shall be reimbursed for necessary travel expenses incurred in connection with their board duties.
(c) A board member, program administrator, and other staff of the board shall not do any of the following:
(1) Directly or indirectly have any interest in the making of any investment made for the program, or in the gains or profits accruing from any investment made for the program.
(2) Borrow any funds or deposits of the trust, or use those funds or deposits in any manner, for themselves or as an agent or partner of others.
(3) Become an endorser, surety, or obligor on investments by the board.
(d) The board and the program administrator and staff, including contracted administrators and consultants, shall discharge their duties as fiduciaries with respect to the trust solely in the interest of the program participants as follows:
(1) For the exclusive purposes of providing benefits to program participants and defraying reasonable expenses of administering the program.
(2) By investing 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.
(e) The board, subject to its authority and fiduciary duty, shall design and implement the CalSavers Retirement Savings Program.
(1) The board shall maintain an investment policy statement that defines the program’s investment objectives and articulates policies and procedures enabling investment objectives to be met in a prudent manner. The board shall seek to minimize participant fees and strive to implement program features that provide maximum possible income replacement balanced with appropriate risk in an IRA-based environment. The investment policy statement shall describe the investment options available to holders of individual savings accounts established as part of the program. The investment policy statement shall include a risk management and oversight program. Investment options may encompass a range of risk and return opportunities and allow for a rate of return commensurate with an appropriate level of risk to meet the investment objectives stated in the policy.
(2) The board shall annually review the investment policy statement. The board shall review the investment policy statement and any changes in the investment policy statement at a public hearing.
(3) The risk management and oversight program shall include an effective risk management system to monitor the risk levels of the CalSavers Retirement Savings Program investment portfolio and ensure that the risks taken are prudent and properly managed. The program shall be managed to provide an integrated process for overall risk management on both a consolidated and disaggregated basis, and to monitor investment returns as well as risk to determine if the risks taken are adequately compensated compared to applicable performance benchmarks and standards.
(f) The board shall approve an investment management entity or entities, the costs of which shall be paid out of funds held in the trust and shall not be attributed to the administrative costs of the board in operating the trust. Not later than 30 days after the close of each month, the board shall place on file for public inspection during business hours a report with respect to investments made pursuant to this section and a report of deposits in financial institutions.
SEC. 3.
Section 100004 of the Government Code is amended to read:
100004.
(a) There is hereby established a retirement savings trust known as the CalSavers Retirement Savings Trust to be administered by the board for the purpose of promoting greater retirement savings for California private employees in a convenient, voluntary, low-cost, and portable manner. After sufficient funds are made available for this title to be operative, the trust, as a self-sustaining trust, shall pay all costs of administration only out of moneys on deposit therein.
(b) The board shall segregate moneys received by the trust into two funds, which shall be identified as the program fund and the administrative fund. Notwithstanding Section 13340, moneys in the trust are hereby continuously appropriated, without regard to fiscal years, to the board for the purposes of this title.
(c) Moneys in the program fund may be invested or reinvested by the Treasurer or may be invested in whole or in part under contract with the board of a California public retirement system, with private money managers, or a combination thereof, as determined by the board.
(d) Transfers may be made from the program fund to the administrative fund for the purpose of paying operating costs associated with administering the trust and as required by this title, including, but not limited to, board operations, program administrator and investment expenses, and enforcement and compliance costs. On and after six years from the date the program is implemented, on an annual basis, expenditures from the administrative fund shall not exceed more than 1 percent of the total program fund. All costs of administration of the trust shall be paid out of the administrative fund.
(e) Any contributions paid by employees and employers into the trust shall be used exclusively for the purpose of paying benefits to the participants of the CalSavers Retirement Savings Program, for the cost of administration of the program, and for investments made for the benefit of the program.
(f) The trust is an instrumentality of the state. Any security issued, managed, or invested by the board within the trust on behalf of an individual participating within the CalSavers Retirement Savings Program shall be exempt from Sections 25110, 25120, and 25130 of the Corporations Code.
SEC. 4.
Section 100008 of the Government Code is amended to read:
100008.
(a) The CalSavers Retirement Savings Program shall include, as determined by the board, one or more payroll deduction IRA arrangements.
(b) (1) The program shall, with board approval, establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, such as tax credits or deposits from any unit of federal or state government, that require monetary deposits into specified IRA accounts.
(2) (A) The program shall notify participants at least 30 days prior to the creation of the accounts described in paragraph (1).
(B) The notification shall include, at a minimum, all of the following:
(i) The benefits and risks associated with the existence and operation of the IRA.
(ii) How to opt out of the IRA.
(iii) The mechanics for how to operate the IRA alongside other CalSavers accounts.
(iv) The process for withdrawal of retirement savings and any penalties or tax implications for early withdrawal.
(v) How to obtain additional information on the account.
(c) (1) (A) The program shall, with board approval, establish a payroll deposit emergency savings account on behalf of participants for the purpose of preserving retirement investments.
(B) The accounts shall not exceed a contribution of one thousand dollars ($1,000) at any given time or a lesser amount as determined by the board, and shall not have minimum balance requirements.
(2) (A) Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employee’s annual salary or wages to the payroll deposit emergency savings account described in this subdivision.
(B) By regulation, the board may adjust the contribution amount to no less than 0.5 percent and no more than 3 percent and may vary that amount within that 0.5 percent to 3 percent range.
(3) Participating employers may make contributions to their participating employees’ emergency savings accounts provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the federal Employee Retirement Income Security Act.
(4) (A) The program shall notify participants at least 30 days prior to the creation of the payroll deposit emergency savings accounts described in this subdivision.
(B) The notification shall include, at a minimum, all of the following:
(i) The benefits and risks associated with the existence and operation of the account.
(ii) How to opt out of the account.
(iii) The mechanics for how to operate the account alongside other CalSavers accounts.
(iv) The process for withdrawal of savings from the account.
(v) The purpose of the account.
(vi) How to obtain additional information on the account, including the current annual percentage yield.
SEC. 5.
Section 100010 of the Government Code is amended to read:
100010.
(a) The board shall have the power and authority to do all of the following:
(1) Make and enter into contracts necessary for the administration of the trust.
(2) Adopt a seal and change and amend it from time to time.
(3) Cause moneys in the program fund to be held and invested and reinvested.
(4) Accept any grants, gifts, legislative appropriation, and other moneys from the state, any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the administrative fund or the program fund.
(5) Contract with a program administrator and determine the duties of the program administrator. The Treasurer shall, on behalf of the board, appoint an executive director, who shall not be a member of the board and who shall serve at the pleasure of the board. The Treasurer shall determine the duties of the executive director and other staff as appropriate and set their compensation. The board may authorize the executive director to enter into contracts on behalf of the board or conduct any business necessary for the efficient operation of the board.
(6) Make provisions for the payment of costs of administration and operation of the trust.
(7) Employ staff.
(8) Retain and contract with the board of a California public retirement system, private financial institutions, other financial and service providers, consultants, actuaries, counsel, auditors, third-party administrators, and other professionals as necessary.
(9) Procure insurance against any loss in connection with the property, assets, or activities of the trust.
(10) Procure insurance indemnifying each member of the board from personal loss or liability resulting from a member’s action or inaction as a member of the board.
(11) Set minimum and maximum investment levels in accordance with contribution limits set for IRAs by the Internal Revenue Code.
(12) Collaborate and cooperate with the board of a California public retirement system, private financial institutions, service providers, and business, financial, trade, membership, and other organizations to the extent necessary or desirable for the effective and efficient design, implementation, and administration of the program and to maximize outreach to eligible employers and eligible employees.
(13) Collaborate with, and evaluate the role of, licensed insurance agents and financial advisors in assisting and providing guidance for eligible employees.
(14) Cause expenses incurred to initiate, implement, maintain, and administer the program to be paid from contributions to, or investment returns or assets of, the program or arrangements established under the program, to the extent permitted under state and federal law.
(15) Facilitate compliance by the retirement savings program or arrangements established under the program with all applicable requirements for the program under the Internal Revenue Code of 1986, including tax qualification requirements or any other applicable law and accounting requirements, including providing or arranging for assistance to program sponsors and individuals in complying with applicable law and tax qualification requirements in a cost-effective manner.
(16) Carry out the duties and obligations of the trust pursuant to this title and exercise any and all other powers as appropriate for the effectuation of the purposes, objectives, and provisions of this title pertaining to the trust.
(17) Assess the feasibility of multistate or regional agreements to administer the program through shared administrative resources and enter into those agreements if determined beneficial.
(b) The board shall adopt regulations it deems necessary to implement this title consistent with the Internal Revenue Code and regulations issued pursuant to that code to ensure that the program meets all criteria for federal tax-deferral or tax-exempt benefits, or both. The board may delegate this rulemaking authority to the executive director by resolution.
SEC. 6.
Section 100012 of the Government Code is amended to read:
100012.
In addition to the powers and authority granted to the board pursuant to Section 100010, the board shall have the power and authority to do the following:
(a) Cause the retirement savings program or arrangements established under the program to be designed, established, and operated, in a manner consistent with all of the following:
(1) In accordance with best practices for retirement savings vehicles.
(2) To encourage participation, saving, and sound investment practices, and appropriate selection of default investments.
(3) With simplicity, ease of administration for participating employers, and portability of benefits.
(b) Arrange for collective, common, and pooled investment of assets of the retirement savings program or arrangements, including investments in conjunction with other funds with which those assets are permitted to be collectively invested, with a view to saving costs through efficiencies and economies of scale.
(c) Disseminate educational information designed to educate participants about the benefits of planning and saving for retirement and information to help them decide the level of CalSavers Retirement Savings Program participation and savings strategies that may be appropriate for them.
(d) Disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program, and the federal Retirement Savings Contribution Credit (Saver’s Credit) and its successor the federal retirement savings incentive, known as the Saver’s Match, available to lower and moderate-income households for qualified savings contributions.
(e) Submit progress and status reports to participating employers and eligible employees.
(f) If necessary, determine the eligibility of an employer, employee, or other individual to participate in the program.
(g) Evaluate and establish the process by which an eligible employee of an eligible employer is able to contribute a portion of their salary or wages to the program for automatic deposit of those contributions and the participating employer provides a payroll deposit retirement savings arrangement to forward the employee contribution and related information to the program or its agents. This may include, but is not limited to, financial services companies and third-party administrators with the capability to receive and process employee information and contributions for payroll deposit retirement savings arrangements or other arrangements authorized by this title.
(h) Design and establish the process for the enrollment of program participants.
(i) Allow participating employers to use the program to remit employees’ contributions to their IRAs on their employees’ behalf.
(j) Allow participating employers to make their own contributions to their employees’ IRAs, provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the federal Employee Retirement Income Security Act.
(k) Evaluate and establish the process by which an individual or an employee of a nonparticipating employer may enroll in and make contributions to the program.
SEC. 7.
Section 100016 of the Government Code is amended to read:
100016.
(a) Vendors that would like to contract with the board shall provide to the board, at a minimum, all of the following information:
(1) A statement of experience in California and in other states in providing employer-sponsored retirement plans, and payroll deduction IRAs.
(2) A description by the vendor of the types of retirement investment products offered.
(3) A disclosure of all expenses paid directly or indirectly by retirement plan participants, including, but not limited to, penalties for early withdrawals, declining or fixed withdrawal charges, surrender or deposit charges, management fees, and annual fees, supported by documentation as required for prospectus disclosure by the National Association of Securities Dealers and the Securities and Exchange Commission. Vendors shall be required to provide information regarding the impact of product fees upon a hypothetical investment, as described in Section 100022.
(4) The types of products, product features, services offered to participants, and information about how to access product prospectuses or other relevant product information.
(5) A discussion of the ability, experience, and commitment of the vendor to provide retirement counseling and education services, including, but not limited to, access to group meetings and individual counseling by various means, including telephone and telecommunications devices for the deaf (TDD), Internet, language access services, and face-to-face consultations by registered representatives.
(6) A statement of the financial strength of the vendor by identifying its ratings assigned by nationally recognized rating services that evaluate the financial strength of similar companies.
(7) The location of offices and counselors, individual registered representatives, brokers, financial planners, agents, or other methods of distribution, of the vendor that would serve employers and their employees in California.
(8) A description of the ability of the vendor to comply with all applicable provisions of federal and state law governing retirement plans, including minimum distribution requirements and contribution limits.
(9) To the extent applicable, the demonstrated ability of the vendor to offer an appropriate array of accumulation funding options, including, but not limited to, investment options that offer guaranteed returns on contributions and the conversion of retirement savings account balances to secure retirement income, a diversified mix of value, growth, growth and income, hybrid, and index funds or accounts across large, medium, and small capitalization asset classes, both domestic and international.
(10) A discussion of the range of administrative and customer services provided, including asset allocation, accounting and administration of benefits for individual participants, recordkeeping for individual participants, asset purchase, control, and safekeeping, execution of a participant’s instructions as to asset and contribution allocation, calculation of daily net asset values, direct access for participants to their account information, periodic reporting that is not less than quarterly to active participants on their account balances and transactions, and compliance with the standard of care consistent with federal law and applicable to the provision of investment services.
(11) Certification by the vendor that the information provided to the board accurately reflects the provisions of the retirement investment products it registers.
(b) Vendors shall supply information and data in the format prescribed by the board.
SEC. 8.
Section 100018 of the Government Code is repealed.
SEC. 9.
Section 100020 of the Government Code is repealed.
SEC. 10.
Section 100022 of the Government Code is amended to read:
100022.
(a) The board shall maintain on its internet website the information required in Section 100016 about the retirement investment products offered by each contracted vendor and objective comparisons between the types of products.
(b) The board shall include on its internet website information on investment performance based upon the investment’s average annual total return as measured by a nationally recognized rating service selected by the board for standard periods of time of not less than one year.
(c) The board’s internet website shall include a table showing, for each registered fund, the total fee cost in dollars incurred by a shareholder who initially invested five thousand dollars ($5,000), earned a 5 percent rate of return for one-, five-, 10-, 15-, and 20-year time periods. This table shall be accompanied by a disclaimer that the rate of return is for purposes of illustrating the respective impacts of different fee amounts on each investment, and is not to predict future investment returns.
SEC. 11.
Section 100024 of the Government Code is repealed.
SEC. 12.
Section 100026 of the Government Code is amended to read:
100026.
A contracted vendor may not charge a fee associated with a registered product that is not disclosed.
SEC. 13.
Section 100028 of the Government Code is repealed.
SEC. 14.
Section 100030 of the Government Code is amended to read:
100030.
(a) The board and the program, and its officers and employees, are not responsible for, and shall not be held liable for, the adequacy of the information provided by contracted vendors and contained in the program’s internet website.
(b) The board and the program shall not be held liable for the actions of contracted vendors.
SEC. 15.
Section 100032 of the Government Code is amended to read:
100032.
(a) Any employer may choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board.
(b) (1) Beginning December 31, 2027, and by December 31 of each calendar year thereafter, eligible employers with one or more eligible employees that do not offer a retirement savings program pursuant to paragraph (1) of subdivision (d) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(2) The board, in its discretion, may extend the dates in paragraph (1).
(c) (1) Each eligible employee shall be enrolled in the program unless the employee elects not to participate in the program. An eligible employee may elect to opt out of the program by making a notation on the opt-out form or by contacting the program by telephone.
(2) Following initial implementation of the program pursuant to this section, at least once every two years, the board may designate an open enrollment period during which eligible employees that previously opted out of the program shall be given the employee information packet with the disclosure and opt-out forms, for the employee to enroll in the program or opt out of the program by making a notation on the opt-out form.
(3) An employee who elects to opt out of the program who subsequently wants to participate through the employer’s payroll deposit retirement savings arrangement may enroll during the board’s designated open enrollment period or at any other time.
(d) (1) An employer that provides an employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, or that offers an automatic enrollment payroll deduction IRA, shall be exempt from the requirements of the CalSavers Retirement Savings Program, if the plan or IRA qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.
(2) An employer shall retain the option at all times to set up and offer a tax-qualified retirement plan, as described in paragraph (1), instead of having a payroll deposit retirement savings arrangement to allow employee participation in the CalSavers Retirement Savings Program.
(e) An eligible employee may also terminate their participation in the program at any time in a manner prescribed by the board and thereafter by making a notation on the opt-out form or by telephone.
(f) Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employee’s annual salary or wages to the program.
(g) By regulation, the board may adjust the contribution amount set in subdivision (f) to no less than 2 percent and no more than 5 percent and may vary that amount within that 2 percent to 5 percent range.
(h) The board may implement annual automatic escalation of employee contributions.
(1) Employee contributions subject to automatic escalation shall not exceed 8 percent of salary.
(2) Automatic escalation shall result in no more than a 1-percent-of-salary increase in employee contributions per calendar year.
(3) A participating employee may elect to opt out of automatic escalation and may set their contribution percentage rate at a level determined by the participating employee.
SEC. 16.
Section 100033 of the Government Code is amended to read:
100033.
(a) The CalSavers Retirement Savings Board shall have the power and duties necessary to administer the enforcement of employer compliance with this title.
(b) (1) The CalSavers Retirement Savings Board shall issue to each employer who fails to allow its eligible employees to participate in the CalSavers Retirement Program pursuant to this title a notice of penalty application.
(2) Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the CalSavers Retirement Savings Program pursuant to Sections 100014 and 100032, after the CalSavers Retirement Savings Board serves a final notice of penalty application, shall be subject to a penalty of two hundred fifty dollars ($250) per eligible employee and an additional penalty of five hundred dollars ($500) per eligible employee if noncompliance continues as described in Section 19287 of the Revenue and Taxation Code.
(3) (A) Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the program after the penalties described in paragraph (2) have been assessed shall be subject to a penalty of five hundred dollars ($500) per eligible employee.
(B) Penalties assessed under this subdivision shall not be imposed more than once every 180 days since the last violation.
(c) The CalSavers Retirement Savings Board shall issue a final notice of penalty application to an eligible employer that fails to comply with this title. Pursuant to Section 19287 of the Revenue and Taxation Code, the Franchise Tax Board shall issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the CalSavers Retirement Savings Board informs the Franchise Tax Board of the eligible employer’s noncompliance.
(d) (1) An eligible employer may appeal any penalty imposed under this section in writing to the Franchise Tax Board pursuant to Section 19288 of the Revenue and Taxation Code.
(2) The CalSavers Retirement Savings Board shall reimburse the Franchise Tax Board for the costs incurred by the Franchise Tax Board in administering the program authorized by this article.
SEC. 17.
Section 100046 of the Government Code is amended to read:
100046.
The CalSavers Retirement Savings Program is approved by the Legislature and implemented as of January 1, 2017. The board shall consider and utilize the following parameters in designing the program:
(a) The board shall include a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code in the program if the board determines, and the Director of the State Department of Social Services and the Director of the Department of Finance certify, in writing, all of the following:
(1) The inclusion meets all state and federal legal requirements.
(2) The appropriate employer of record has been identified for the purpose of satisfying all the program’s employer requirements.
(3) The payroll deduction, described in Section 12302.2 of the Welfare and Institutions Code, can be implemented at reasonable costs.
(4) The inclusion does not create a financial liability for the state or employer of record.
(b) The board shall structure the program so as to ensure the state is prohibited from incurring liabilities associated with administering the program and that the state has no liability for the program or its investments.
(c) The board shall determine necessary costs associated with outreach, customer service, enforcement, staffing and consultant costs, and all other costs necessary to administer the program.
(d) The board shall consult with employer representatives to create an administrative structure that facilitates employee participation while addressing employer needs, including, but not limited to, clearly defining employers’ duties and liability exemption pursuant to Section 100034.
(e) The board shall include comprehensive worker education and outreach in the program, and the board may collaborate with state and local government agencies, community-based and nonprofit organizations, foundations, vendors, and other entities deemed appropriate to develop and secure ongoing resources for education and outreach that reflect the cultures and languages of the state’s diverse workforce population.
(f) The board shall include comprehensive employer education and outreach in the program, with an emphasis on employers with fewer than 100 employees, developed in consultation with employer representatives, with the integration of the following components:
(1) A program internet website to assist the employers of participating employees.
(2) A toll-free help line for employers with live and automated assistance.
(3) Online internet web training.
(4) Presentations to business associations.
(5) Targeted outreach to small businesses with 10 or less employees.