BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 1659|
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                                 THIRD READING


          Bill No:  AB 1659
          Author:   Huber (D), et al
          Amended:  7/15/10 in Senate
          Vote:     21

           
           SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE  :  6-0,  
            6/21/10
          AYES:  Negrete McLeod, Aanestad, Calderon, Correa, Florez,  
            Yee
          NO VOTE RECORDED:  Wyland, Oropeza, Walters

           SENATE APPROPRIATIONS COMMITTEE  :  11-0, 8/12/10
          AYES:  Kehoe, Ashburn, Alquist, Corbett, Emmerson, Leno,  
            Price, Walters, Wolk, Wyland, Yee
           
          ASSEMBLY FLOOR  :  73-3, 6/3/10 - See last page for vote


           SUBJECT  :    State government:  agency repeals

           SOURCE  :     Author


           DIGEST  :    This bill recasts existing law governing the  
          periodic review (Sunset Review) of departments,  
          administrative or regulatory boards, commissions,  
          committees, councils, associations, authorities, or other  
          offices of state government, however denominated, by  
          creating a new Joint Sunset Review Committee with the  
          responsibility to review and evaluate these state agencies  
          based on specific criteria and information provided by  
          these agencies.
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           ANALYSIS  :    Existing law establishes the Joint Committee  
          on Boards, Commissions, and Consumer Protection and, until  
          January 1, 2012, requires the Committee to hold public  
          hearings at specified times and to evaluate whether a board  
          or regulatory program has demonstrated a need for its  
          continued existence. 

          Existing law states the intent of the Legislature that all  
          existing and proposed state boards be subject to review  
          every four years to evaluate and determine whether each has  
          demonstrated a public need for its continued existence, as  
          specified.

          This bill:

          1. Creates a new Joint Sunset Review Committee (JSRC), to  
             identify and eliminate waste, duplication, and  
             inefficiency in government agencies and to conduct a  
             comprehensive analysis over 15 years, and on a periodic  
             basis thereafter, of every "eligible agency," as  
             defined, to determine if the agency is still necessary  
             and cost effective.

          2. Requires each eligible agency scheduled for repeal, on  
             or before December 1 prior to the year it is set to be  
             repealed, to submit to JSRC a complete agency report  
             covering the entire period since it was last reviewed,  
             to include, but not be limited to:

             A.    The purpose and necessity of the agency.

             B.    A description of the agency budget, priorities,  
                and job descriptions of employees of the agency.

             C.    Any programs and projects under the direction of  
                the agency.

             D.    Measures of the success or failures of the agency  
                and justifications for the metrics used to evaluate  
                successes and failures.

             E.    Any recommendations of the agency for changes or  
                reorganization in order to better fulfill its  







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                purpose.

          3. Requires JSRC to take public testimony and evaluate the  
             eligible agency prior to the date the agency is  
             scheduled to be repealed.

          4. Requires the elimination of any eligible agency unless  
             the Legislature enacts a law to extend, consolidate, or  
             reorganize the eligible agency.

          5. Prohibits an eligible agency from extending in  
             perpetuity unless specifically exempted from the  
             provisions of this bill.

          6. Allows JSRC to recommend that the Legislature extend the  
             statutory sunset date for no more than one year to allow  
             JSRC more time to evaluate the eligible agency.

          7. Specifies that JSRC shall be comprised of 10 members of  
             the Legislature as follows:

             A.    Five Senators appointed by the Senate Rules  
                Committee, not more than three of whom shall be  
                members of the same political party.

             B.    Five Assembly Members appointed by the Speaker of  
                the Assembly, not more than three of whom shall be  
                members of the same political party.

          8. Requires JSRC to meet no later than 30 days after the  
             first day of the Regular Session to choose a chairperson  
             and to establish the schedule for eligible agency review  
             provided for in the statutes governing the eligible  
             agencies, for which a date for repeal has been  
             established by statute on or after January 1, 2011.

          9. States that this bill should not be construed to change  
             the existing jurisdiction of the budget or policy  
             committees of the Legislature.

          10.Defines "eligible agency" to mean any agency, authority,  
             board, bureau, commission, conservancy, council,  
             department, division, or office of state government,  
             however denominated, excluding an agency that is  







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             constitutionally created or an agency related to  
             postsecondary education. 

           Background  

           The "Sunrise" of Sunset Review in California  .  The concept  
          of sunset review law first began back in the 1970s.  There  
          are now approximately 35 states which have some sort of  
          sunset review law on the books.  Basically, the genesis  
          behind all sunset laws is to place a termination date on a  
          particular program or agency, and in the meantime, review  
          it to determine if it is still operating in an effective  
          and efficient manner, and whether it should continue.

          When one talks about sunset or sunrise laws, they are  
          usually referring to a review of regulatory licensing  
          agencies.  There are certainly other specific programs  
          which may be subject to sunset, but the idea of subjecting  
          an agency to a more formalized review process, before  
          allowing it to continue, or be established in the first  
          place, is unique to this type of law.

          California was sort of a "Johnny-come-lately" to this  
          process.  There had been prior attempts by the Legislature  
          to pass a sunset law, but in those instances the  
          legislation would have sunset both the board and the  
          licensing program of the particular profession.  The law  
          which was passed in 1994, only sunsets the board - not the  
          licensing of the occupation.  There are basically two  
          reasons for this, the first is obvious - in most instances  
          there is a continued need to license those professions  
          currently regulated by boards under the Department of  
          Consumer Affairs (DCA).  To automatically terminate the  
          licensing requirements would have provided no benefit to  
          the review of these boards under the sunset law.  The  
          second reason, however, is more important.  Throughout 1993  
          and 1994, both the Senate Business and Professions  
          Committee and the Assembly Consumer Protection Committee  
          began a review of some of the 32 regulatory boards under  
          DCA.  There was more concern with the boards' operation and  
          activities (or lack thereof) than whether there was a need  
          to continue the licensing of a particular profession.  A  
          number of problems with these boards were identified and a  
          report was issued by the Senate Business and Professions  







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          Committee's Subcommittee on Efficiency and Effectiveness in  
          State Boards and Commissions titled, "Reforming and  
          Restructuring California's Regulatory Agencies" which  
          detailed a number of changes and recommendations regarding  
          these boards and also strongly recommended the  
          establishment of a Joint Legislative Sunset Review  
          Committee to provide specific review criteria and minimum  
          standards of evaluation for legislative and state agency  
          use, and subject all licensing agencies and regulatory  
          programs of DCA to periodic review and sunset.

          For all these reasons and more, both the Legislature and  
          the Administration believed the more immediate task at hand  
          was to review these consumer boards at regular intervals.  

          If it was determined the board should sunset, then there  
          would be adequate time to determine if the entire licensing  
          program should be eliminated as well.  (It should be noted  
          that the Hoover Commission and the Legislative Analyst's  
          Office (LAO) at that time both recommended establishing a  
          sunset review process for all regulatory consumer boards.)   


          In 1994, SB 2036 was signed into law which established the  
          Joint Legislative Sunset Review Committee.  The Joint  
          Committee reviewed all boards and other programs under DCA  
          for a period of 10 years on an ongoing basis, until its  
          final review in 2005.

           Brief Description of the Sunset Review Process  .  The law,  
          which went into effect on January 1, 1995, set in place a  
          schedule for review of all of the 32 independent boards and  
          programs under DCA.  It allowed for an initial review of  
          all boards beginning in 1995 and ending in 1998.  A  
          re-review of these boards was required after four or more  
          years from the initial review, and began in 1999 and ended  
          in 2005.  All 32 boards and certain other programs and  
          bureaus of the Department were reviewed and re-reviewed  
          during the 10-year period.

          The sunset date for each board allowed enough time for the  
          board to be reviewed by the Joint Committee, and for  
          legislation to be passed to extend the sunset date of the  
          board and make appropriate changes.  The actual review  







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          process for the Joint Committee began with sending boards a  
          detailed questionnaire and a request for information which  
          covered every aspect of the board's operation for four  
          years.  The boards were required to respond to this request  
          by October 1 of the year they were scheduled for review.

          During this time, staff of the Joint Committee, Senate  
          Business and Professions Committee, Assembly Consumer  
          Protection Committee, and LAO worked together to prepare an  
          analysis and report on each board.  (Staff also met with  
          boards to review documents and information provided, and  
          seek input from various consumer groups, and the Health and  
          Budget committees of the Legislature.)  The report provided  
          a brief overview of the board's functions and programs,  
          identified issues or problem areas concerning each board,  
          and included preliminary recommendations for members of the  
          Joint Committee to consider.  This included whether each  
          board scheduled for review should be terminated, continued,  
          or reestablished, and whether its programs or functions  
          should be restructured or revised.

          The Joint Committee then conducted public hearings to  
          review the issues and preliminary recommendations.  The  
          boards were provided an opportunity to respond, along with  
          the regulated industry, consumer groups and the public.   
          DCA participated in these hearings as well.  After the  
          hearings, the Joint Committee provided DCA with copies of  
          all testimony and analyses prepared by staff.  DCA then had  
          60 days to provide its own recommendations to the Joint  
          Committee.  Once received, the Joint Committee then met to  
          review the recommendations of DCA and make final  
          recommendations to the Legislature.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee:

                          Fiscal Impact (in thousands)

             Major Provisions                2010-11     2011-12     
            2012-13               Fund  

            New JSRC            Up to $150          Up to $300Up to  







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            $300                General*

            * Senate and Assembly Contingent Funds

           SUPPORT  :   (Verified  8/16/10)

          National Federation of Independent Business
          Physical Therapy Board of California


           ARGUMENTS IN SUPPORT  :    According to the author's office,  
          there is no current process in place to review state  
          entities on a regular basis with the exception of boards  
          and commissions that fall under the Business and  
          Professions Code.  Even the Committee that is charged with  
          doing that has not had members appointed to it since 2006.   


          As indicated by the author's office, the Legislature  
          creates new boards, commissions, agencies and departments  
          to solve a problem, but far too often there is no ongoing  
          oversight of the newly created bureaucracy to ensure it  
          actually solved the problem it was created to solve.  The  
          author's office believes that this systematic dysfunction  
          can be fixed by conducting comprehensive, regular review of  
          state government to ensure taxpayer dollars are being used  
          wisely.

          The author's office points out that in 1989, the Little  
          Hoover Commission issued a report, entitled "Boards and  
          Commissions:  California's Hidden Government," which found  
          that, "California's multi-level, complex governmental  
          structure today includes more than 400 boards, commissions,  
          authorities, associations, councils and committees.  These  
          plural bodies operate to a large degree autonomously and  
          outside of the normal checks and balances of representative  
          government."  The Commission concluded that "the state's  
          boards, commissions and similar bodies are proliferating  
          without adequate evaluation of need, effectiveness and  
          efficiency."

          The author's office further states that since the Little  
          Hoover report many more boards, commissions and other  
          entities have been added to the California government  







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          structure.  Some estimate that there are about 1,000  
          government entities.  Recently, the California Performance  
          Review commented on 339 state boards and commissions and  
          they also found, as Little Hoover did 20 years ago, that a  
          comprehensive listing of the entities that make up state  
          government does not exist.  Despite several studies  
          suggesting reform is necessary, the Legislature has failed  
          to act.  Current law, the author's office argues, needs an  
          enforcement mechanism to ensure that oversight work is part  
          of the annual legislative action.

          The author's office also indicates that numerous other  
          states have a sunset review function.  Texas, for example,  
          created its Sunset Advisory Commission in 1978.  Since the  
          Commission's inception 58 agencies have been abolished and  
          another 12 agencies have been consolidated saving $27 for  
          each dollar spent on the Commission.  Total savings  
          achieved by the Commission equals roughly five percent of  
          the state budget.


           ASSEMBLY FLOOR  : 
          AYES:  Adams, Ammiano, Bass, Beall, Bill Berryhill,  
            Blakeslee, Block, Blumenfield, Bradford, Brownley,  
            Buchanan, Caballero, Charles Calderon, Carter, Chesbro,  
            Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,  
            Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,  
            Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,  
            Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,  
            Huffman, Jeffries, Jones, Lieu, Logue, Bonnie Lowenthal,  
            Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello,  
            Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,  
            Saldana, Silva, Skinner, Smyth, Solorio, Swanson,  
            Torlakson, Torres, Torrico, Tran, Villines, Yamada, John  
            A. Perez
          NOES:  Anderson, Arambula, Knight
          NO VOTE RECORDED:  Tom Berryhill, Norby, Audra Strickland,  
            Vacancy


          JJA:mw  8/16/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE








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