BILL ANALYSIS                                                                                                                                                                                                    



                                                                 
           AB 1666
                                                                 Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1666 (Swanson)
          As Amended  June 9, 2010
          Majority vote
           
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          |ASSEMBLY:  |76-0 |(May 13, 2010)  |SENATE: |32-0 |(June 28,      |
          |           |     |                |        |     |2010)          |
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           Original Committee Reference:    L. & E.  

           SUMMARY  :  Authorizes a city, county, or city and county auditor  
          or controller who is elected to office to maintain a  
          whistleblower hotline to receive calls from persons who have  
          information regarding fraud, waste, or abuse by local government  
          employees.  

           The Senate amendments :  

          1)Delete the language that states that the authorization to  
            maintain a whistleblower hotline shall not prohibit any other  
            city, county, or agency from withholding the identity of a  
            complainant or other information pertaining to the  
            investigation or a complaint pursuant to statutory  
            authorization to withhold that information.

          2)Make other minor, technical changes to the provisions of the  
            bill.

           EXISTING LAW  :

          1)Authorizes a city, county, or city and county auditor or  
            controller who is elected to office to maintain a  
            whistleblower hotline to receive calls from persons who have  
            information regarding possible violations of state, federal,  
            or local statutes, rules, or regulations by local government  
            employees.

          2)Requires a city, county, or city and county auditor who is  
            appointed by, or is an employee 
          of, a legislative body or the government agency that is governed  
            by the city, county, or city and county to obtain approval of  
            that legislative body or government agency prior to  








                                                                 
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            establishing the whistleblower hotline.

          3)Authorizes the auditor or controller to refer calls received  
            on the whistleblower hotline to the appropriate government  
            authority for review and possible investigation.

          4)Requires the auditor or controller or other appropriate  
            governmental agency to hold in confidence during the initial  
            review of a call information disclosed through the  
            whistleblower hotline, including the identity of the caller  
            and the parties identified by the caller.

          5)Requires a call made to the whistleblower hotline or its  
            referral to an appropriate agency to not be the sole basis for  
            a time period under a statute of limitations to commence.

          6)Authorizes a city or county auditor or controller to conduct  
            an investigative audit upon receiving specific information  
            that an employee or local government has engaged in improper  
            government activity.

          7)Requires any investigative audit to be kept confidential  
            except to issue any report of an investigation that has been  
            substantiated or to release any findings resulting from a  
            conducted investigation that is deemed necessary to serve the  
            interests of the public.  In any event, the identity of the  
            individual or individuals involved is required to be kept  
            confidential.

          8)Defines "employee" to mean any individual employed by any  
            county, city, or city and county, including any charter city  
            or county and any school district, community college district,  
            municipal or public corporation, or political subdivision that  
            falls under the auditor's or controller's jurisdiction. 

           AS PASSED BY THE ASSEMBLY  , this bill:

          1)Authorized a city, county, or city and county auditor or  
            controller who is elected to office to maintain a  
            whistleblower hotline to receive calls from persons who have  
            information regarding fraud, waste, or abuse by local  
            government employees.

          2)Prohibited any other city, county, or agency from withholding  








                                                                 
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            the identity of a complainant or other information pertaining  
            to the investigation of a complainant pursuant to a statutory  
            authorization to withhold that information.

          3)Required any investigative audit to be kept confidential  
            except to issue any report of an investigation that has been  
            substantiated or to release any findings resulting from a  
            completed investigation that are deemed necessary to serve the  
            interests of the public.  In any event, the identity of the  
            individual or individuals reporting the improper government  
            activity and the subject employee or employees is required to  
            be kept confidential.

          4)Authorized the auditor or controller to provide a copy of a  
            substantiated audit report that includes the identities of the  
            individuals involved and other pertinent information  
            concerning the investigation to the appropriate appointing  
            authority for disciplinary purposes.  The substantiated audit  
            report, any subsequent investigatory materials or information,  
            and the disposition of any resulting disciplinary proceedings  
            are subject to the confidentiality provisions of applicable  
            local, state, and federal statutes, rules, and regulations.

          5)Defined "fraud, waste, or abuse" to mean any activity by a  
            local agency or employee that is undertaken in the performance  
            of the employee's official duties, including activities deemed  
            to be outside the scope of his or her employment that is in  
            violation of any local, state, or federal law or regulation  
            relating to corruption, malfeasance, bribery, theft of  
            government property, fraudulent claims, fraud, coercion,  
            conversion, malicious prosecution, misuse of government  
            property, or willful omission to perform duty, is economically  
            wasteful, or involves gross misconduct.

           FISCAL EFFECT  :  None

           COMMENTS  :  AB 2001 (Swanson), Chapter 325, Statutes of 2008,  
          which added Government Code Section 53087.6, was enacted to give  
          explicit authority to local governments to guarantee  
          confidentiality to those coming forward with whistleblower tips.  
           The sponsor of AB 2001, the Auditor's Office for the City of  
          Oakland, was anxious to establish a formal whistleblower  
          hotline, but before formalizing or advertising a whistleblower  
          hotline, the auditor wanted to be able to assure a whistleblower  








                                                                 
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          that their identity would be protected.

          Since January 1, 2004, the Attorney General has been required to  
          maintain a statewide whistleblower hotline to receive calls from  
          the public with information regarding possible violations of  
          state or federal statutes, rules, regulations, or violations of  
          fiduciary responsibility by a corporation or limited liability  
          company to the shareholders, investors, or employees.  The  
          Attorney General also is required to refer calls to the  
          appropriate government authority for further investigation.   
          During the initial review, the identity of both the  
          whistleblower and the party being investigated is held in  
          confidence [SB 777 (Escutia), Chapter 484, Statutes of 2003].

          In 1993, the California Whistleblower Protection Act [SB 37  
          (Maddy), Chapter 12, Statutes of 1993] authorized the State  
          Auditor to receive complaints from state employees and members  
          of the public who wish to report an improper governmental  
          activity.  An "improper governmental activity" is defined as any  
          action that violates the law, is economically wasteful, or  
          involves gross misconduct, incompetency, or inefficiency.  The  
          complaints received by the State Auditor are required to be  
          confidential, and the identity of the complainant cannot be  
          revealed without the permission of the complainant, except to an  
          appropriate law enforcement agency conducting a criminal  
          investigation.

          According to the author, existing law has had some unintended  
          consequences and limitations when it took effect in 2009.   
          First, the statute is overly broad, with about 90% of the  
          complaints received through the whistleblower hotline being more  
          appropriate for investigation by the local government's  
          department of human resources.  Second, the requirement the  
          auditor keep confidential the identities of all parties involved  
          has prevented local governments from using the information to  
          substantiate a complaint for disciplinary purposes.  Lastly, the  
          statute conflicts with other city and county programs or  
          hotlines that do not deal with fraud, waste, or abuse by local  
          government employees.

          Support arguments:  Supporters say this bill will strengthen the  
          procedures of whistleblower hotlines related to fraud, waste, or  
          abuse by local government employees.









                                                                 
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          Opposition arguments:  The opposition might say everything about  
          a complaint called in to a whistleblower hotline should remain  
          confidential at all times.

           
          Analysis Prepared by  :    Debbie Michel / L. GOV. / (916)  
          319-3958 


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