A board that is working toward offering a state-administered retirement plan met for the first time Wednesday and discussed its aspirations for the future, and its funding challenges.
The Retirement Security Board was commissioned to conduct a “Market Feasibility Study” to investigate the financial and legal challenges of setting up a public retirement program, in addition to recommending how it should be implemented.
State Treasurer Denise Nappier, who co-chairs the board, said that she was excited for its future, but still had some looming concerns.
“One of the concerns I do have is a need to make sure that this board has adequate resources to fully carry out its mandate,” Nappier said.
No definitive decisions were made during Wednesday’s meeting and the discussion continually returned to the subject of funding. Asked by a member how the board was expected to accumulate more funds, Josh Wojcik, policy director for the comptroller, said it was expected to solicit businesses.
However, in conferring with Grant Boyken, the acting executive director of California’s Secure Choice Retirement Savings Investment Board, board members discovered that the $400,000 the legislature allocated for the market study may not be enough to cover the cost of legal fees.
Grant, whose board is currently undertaking a similar study, said that his board has received proposals for legal services ranging between $200,000 and $600,000.
“The biggest hurdle is definitely fundraising. If you have a chance to receive funding, don’t turn it down,” Boyken said.
Boyken added that his board has raised about $311,000 from private sector sources.
Aside from investigating funding options, the requirements for the market study include gauging likely participation rates and contribution levels, predicting the rate of account closures and rollovers, and determining the legal compliance necessary to ensure the individual retirement accounts qualify for the favorable federal income tax treatment.
The group is expected to submit a first draft of the report to the governor and the legislature’s Labor Committee by May 1, 2015. A comprehensive proposal is expected by April 1, 2016, and will be submitted to the General Assembly and governor.
Editor’s Note: This story was updated on Aug. 14, 2014 because it was mistakenly reported that the California Secure Choice Retirement Savings Investment Board had spent $400,000 to $600,000 on legal services, when it has only received proposals for those services ranging between $200,000 and $600,000.