SB 1145 Senate Bill - INTRODUCED

BILL NUMBER: SB 1145	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Machado

                        FEBRUARY 4, 2008

   An act to amend Section 11121.1 of the Government Code, and to
amend Sections 11770 and 11785 of, and to repeal Section 11770.5 of,
the Insurance Code, relating to workers' compensation insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1145, as introduced, Machado. State Compensation Insurance
Fund.
   Existing law provides for the existence of the State Compensation
Insurance Fund to be administered by its board of directors for the
purpose of transacting workers' compensation insurance, and insurance
against the expense of defending any suit for serious and willful
misconduct, against an employer or his or her agent, and insurance to
employees and other persons of the compensation fixed by the workers'
compensation laws for employees and their dependents. Existing law
provides that the board of directors of the State Compensation
Insurance Fund is composed of 5 members, one of whom shall be from
organized labor, appointed by the Governor. Existing law provides
that the Governor shall appoint the chairperson who shall serve at
the pleasure of the Governor, and makes the Director of Industrial
Relations, the Speaker of the Assembly, and the President pro Tempore
of the Senate, or their designees, ex officio, nonvoting members of
the board. Existing law provides only for travel and per diem
expenses for board members, as specified, and requires each board
member to have been a policyholder or an employee or member of a
policyholder in the fund, as specified, and to remain in that status
during board membership.
   This bill would provide that the board of directors of the State
Compensation Insurance Fund is composed of 9 members, 7 of whom shall
be appointed by the Governor, and subject to Senate confirmation. At
least one of the Governor's appointments would be from organized
labor. The Governor would appoint the chairperson who would serve at
the Governor's pleasure. The Senate Committee on Rules would appoint
one member, and the Speaker of the Assembly would appoint one member.
This bill would provide for the terms of office of board members, as
specified. This bill would provide that voting members of the board
would receive $35,000 for each year of service on the board, and
would provide that members must have relevant experience in specified
areas, and that 2 board members must have each been a policyholder
or an employee or member of a policyholder in the fund for one year
immediately preceding their service on the board, as specified.
   Existing law provides that the board of directors of the fund are
not subject to the Bagley-Keene Open Meeting Act, which generally
provides for open meetings of state bodies, or the California Public
Records Act, which generally requires that governmental records be
available for inspection by the public, with specified exceptions.
   This bill would repeal that provision, specify that the
Bagley-Keene Open Meeting Act applies to meetings of the board, and
make conforming changes.
   Existing law provides that the board of directors shall appoint a
president of the fund and fix his or her salary. The president shall
manage and conduct the business and affairs of the fund under the
general direction and subject to the approval of the board of
directors, and shall perform other duties as the board of directors
prescribes.
   This bill would provide that the board of directors shall appoint
a president, and may contract for the services of a chief financial
officer, a chief operating officer, a chief information officer, a
chief investment officer, and a general counsel. It would provide
that the board of directors shall set the salary for each position.
The contracts would not be subject to otherwise applicable provisions
of the Government Code and the Public Contract Code, and for those
purposes, the fund would not be considered a state agency or other
public entity. The bill would further provide that the president
shall manage and conduct the business and affairs of the fund under
the general direction and subject to the approval of the board of
directors, and shall perform other duties as the board of directors
prescribes. The bill would provide that appointing authorities for
the board shall avoid appointing persons with conflicts of interest,
as provided in the Milton Marks Postgovernment Restriction Act of
1990, and would prohibit board members and designated officers, upon
leaving office, from soliciting or doing business with the fund, as
specified. A person who violates these prohibitions would be subject
to civil and criminal liability, as specified.
   Because violation of this provision would be a crime, this bill
would create a state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 11121.1 of the Government Code is amended to
read:
   11121.1.  As used in this article, "state body" does not include
any of the following:
   (a) State agencies provided for in Article VI of the California
Constitution.
   (b) Districts or other local agencies whose meetings are required
to be open to the public pursuant to the Ralph M. Brown Act (Chapter
9 (commencing with Section 54950) of Part 1 of Division 2 of Title
5).
   (c) State agencies provided for in Article IV of the California
Constitution whose meetings are required to be open to the public
pursuant to the Grunsky-Burton Open Meeting Act (Article 2.2
(commencing with Section 9027) of Chapter 1.5 of Part 1 of Division 2
of Title 2).
   (d) State agencies when they are conducting proceedings pursuant
to Section 3596.
   (e) State agencies provided for in Section 109260 of the Health
and Safety Code, except as provided in Section 109390 of the Health
and Safety Code. 
   (f) State agencies provided for in Section 11770.5 of the
Insurance Code.  
   (g) 
    (f)    The Credit Union Advisory Committee
established pursuant to Section 14380 of the Financial Code.
  SEC. 2.  Section 11770 of the Insurance Code is amended to read:
   11770.   (a)    The State Compensation Insurance
Fund is continued in existence, to be administered by its board of
directors for the purpose of transacting workers' compensation
insurance, and insurance against the expense of defending any suit
for serious and willful misconduct, against an employer or his or her
agent, and insurance to employees and other persons of the
compensation fixed by the workers' compensation laws for employees
and their dependents. Any appropriation made therefrom or thereto
before the effective date of this code shall continue to be available
for the purposes for which it was made. 
   The 
    (b)     The  board of directors of the
State Compensation Insurance Fund is composed of  five
  nine  members,  one of whom 
 seven of whom shall be appointed by the Governor and subject to
Senate confirmation.   At least one of the Governor's
appointments  shall be from organized labor  , appointed
by the Governor  . The Governor shall appoint the
chairperson who shall serve at the pleasure of the Governor.  The
Senate Committee on Rules shall appoint one member and the Speaker
of the Assembly   shall appoint   one member. 
The Director of Industrial Relations, the Speaker of the Assembly,
and the President pro Tempore of the Senate, or their designees,
shall be ex officio, nonvoting members of the board, and shall not be
counted as members of the board for quorum purposes or any other
purpose. 
   The 
    (c)     The  term of office of the
members of the board, other than that of the director, the Speaker of
the Assembly, and the President pro Tempore of the Senate, shall be
five years and they shall hold office until the appointment and
qualification of their  successors. The term of office of the
first additional member appointed pursuant to amendment of this
section effective January 1, 1990, shall expire on January 15, 1995.
Commencing January 15, 1991, the terms of office of other members
shall be extended to five years as each four-year term expires, so
that one member's term of office expires January 15 of each year.
Each member   successors, except for the following:

    (1)     The term of office of the first two
members of the board appointed by the Governor pursuant to the
amendment of this section effective January 1, 2009, shall expire on
January 15, 2014. 
    (2)     The term of office of the first
members of the board appointed by the Senate Committee on Rules and
the Speaker of the Assembly pursuant to the amendment of this section
effective January 1, 2009, shall expire on January 15, 2013. 
    (3)     Other than the first  
appointment cycle pursuant to the amendment this section effective
January 1, 2009, a board member's term of office is five years and
expires January 15 of each year. 
    (d)     Each member of the board 
shall receive his or her actual and necessary traveling expenses
incurred in the performance of his or her duty as a member 
and, with   . With  the exception of the ex officio
members,  one hundred dollars ($100) for each day of his or
her actual attendance at meetings of the board   each
board member shall be paid an annual com   pensation of
thirty-five thousand dollars ($35,000) for each year of service on
the board  .  In order to qualify for membership on the
board, each member   Members of the board,  other
than the ex officio members shall have  been a policyholder
or the employee or member of a policyholder in the State Compensation
Insurance Fund for one year immediately preceding the appointment,
and must continue in this status during the period of his or her
membership.   qualifications as follows: 
    (1)     Diverse and relevant experience in
at least one of the following areas: corporate governance,
accounting, auditing, labor, law, investments, or insurance
management. 
    (2)     At least two board members shall
each have been a policyholder or the employee of a member
policyholder in the State Compensation Insurance Fund for one year
immediately preceding the appointment. 
  SEC. 3.  Section 11770.5 of the Insurance Code is repealed.

   11770.5.  The provisions of Article 9 (commencing with Section
11120) of Chapter 1 of Part 1 of Division 3 of Title 2 or Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code shall not apply to the Board of Directors of the
State Compensation Insurance Fund. 
  SEC. 4.  Section 11785 of the Insurance Code is amended to read:
   11785.   (a)    The board of directors shall
appoint a president  of the fund and fix his or her salary
  , and may contract for the services of a chief
financial officer, a chief operating officer, a chief information
officer, a chief investment officer, and a general counsel. These
board of directors shall set the salary for each position. These
contracts shall not be subject to otherwise applicable provisions of
the Government Code and the Public Contract Code, and for those
purposes the fund shall not be considered a state agency  
or other public entity  . The president shall manage and conduct
the business and affairs of the fund under the general direction and
subject to the approval of the board of directors, and shall perform
other duties as the board of directors prescribes. 
   (b) The appointing authorities for members of the board shall,
when making appointments, avoid appointing persons with conflicts of
interest. Section 87406 of the Government Code, the Milton Marks
Postgovernment Employment Restrictions Act of 1990, shall apply to
the fund. Members of the board, the president, the chief financial
officer, the chief operations manager, the general counsel, and any
other person designated by the fund shall be deemed to be designated
employees for the purpose of that act. In addition, no member of the
board, nor the president, the chief financial officer, the chief
operations manager, or the general counsel, shall, upon leaving the
employment of the fund, seek, accept, or enter into employment or a
consulting or other contractual arrangement for the period of one
year with any employer or entity that has a substantial contractual
relationship with the fund, or a reinsurance, bonding, a letter of
credit, or private capital markets contract with the fund during the
time the employee was employed by the fund, which that member or
employee had negotiated or approved, or participated in negotiating.
A violation of these provisions shall be subject to enforcement
pursuant to Chapter 11 (commencing with Section 91000) of Title 9 of
the Government Code.  
   (c) The board shall be subject to the Bagley-Keene Open Meeting
Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1
of Division 3 of Title 2 of the Government Code). 
  SEC. 5.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII  B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII  B of the California
Constitution.