BILL ANALYSIS SB 1046 Page 1 Date of Hearing: June 22, 2010 ASSEMBLY COMMITTEE ON HIGHER EDUCATION Marty Block, Chair SB 1046 (Cogdill) - As Amended: April 7, 2010 SUBJECT : Government tort claims: California State University SUMMARY : Removes the California State University (CSU) from the jurisdiction of the Victims Compensation and Government Claims Board (VCGCB). Specifically, this bill : 1)Designates CSU as a "public entity" for the purposes of the Tort Claims Act. 2)Provides that all claims against CSU for money or damages based upon an express contract or for an injury for which CSU is liable must be presented in accordance with the Tort Claims Act. 3)Requires the CSU Board of Trustees (Trustees) to act on a claim against CSU in accordance with the procedure that the Trustees provide by rule, provides that CSU may not adopt any rule inconsistent with the Tort Claims Act, and provides that if a claim for money or damages against CSU is mistakenly presented to the VCGCB, the VCGCB shall immediately notify the claimant of the error and include information on proper filing of the claim. 4)Specifies that claims and actions shall be presented by delivering or mailing the claim to, or serving the action on, the Office of Risk Management at the CSU Chancellor's Office. 5)Provides that the CSU Trustees may adjust and pay any claim arising out of the activities of CSU and that the CSU Trustees may, by rule, authorize the Office of Risk Management at the CSU Chancellor's Office to perform the functions of the CSU Trustees under this section. EXISTING LAW lays out the Torts Claim Act, which establishes the procedures for filing a claim against a state public agency. The Act specifies that a claim against the state must be filed with the VCGCB, unless the claim is against a judicial branch or a judge, in which case the claim is filed with the Judicial Council. The University of California (UC) is exempt from the SB 1046 Page 2 Tort Claims Act. The VCGCB is authorized to charge a fee equal to 15% of the total for any claim it approves for settlement. FISCAL EFFECT : According to the Senate Appropriations Committee, allowing CSU to fully process its own tort claims would allow CSU to avoid the 15% surcharge it currently pays to the VCGCB on each approved claim. To the extent that CSU could fully process its own claims within existing staff resources, this would be a direct savings to CSU. The total amount of savings to CSU, and revenue loss to VCGCB, would be minor, likely less than $10,000 annually. COMMENTS : Double-referral : This bill has been referred to the Committees on Higher Education and Judiciary. Background : The VCGCB, formerly known as the Board of Control, has been authorized to act on tort claims filed against a state agency since 1963. Despite statutory intent supporting CSU's governing independence, CSU was defined as a state agency until 2006, and thus fell within the jurisdiction of the VCGCB. Responding to concerns that legislation applying to state agencies often limited CSU's ability to meet its educational mission, AB 3132 (Firestone), Chapter 938, Statutes of 1996, was enacted to exclude CSU from the definition of "state agency". The bill, however, applied prospectively, not retrospectively, thus if CSU wishes to be removed from the qualification of "state agency" in previous law, legislation is necessary to make that amendment. Purpose of this bill : The CSU Trustees, the sponsor of this bill, under the procedure outlined in current law the VCGCB performs only an administrative function of collecting fees and assigning claim numbers for tort claims filed against CSU but does not perform any investigation. While CSU performs the legal work, the CSU system still incurs the cost of the 15% surcharge fee to the VCGCB on top of any settlement paid to the plaintiff. CSU is seeking independence from VCGCB to allow tort claims to be filed directly with the CSU's Office of Risk Management in a process similar to that already underway at UC, the community colleges, and other public entities with claim-filing independence. CSU believes that this change will allow the system to be more cost-efficient and productive in operations. Claims against CSU : In fiscal year 2007-08, 118 claims were SB 1046 Page 3 filed against CSU, and 19 claims were approved for a total of $89,893 paid to claimants. The surcharge on these claims was $9,176. In fiscal year 2008-09, 70 claims were filed against CSU, and 16 claims were approved for a total of $36,048 paid to claimants. The surcharge on these claims was $3,988. Prior legislation: AB 3132 (Firestone), Chapter 938, Statutes of 1996, was enacted to exclude CSU from the definition of "state agency". AB 2321 (Hertzberg), Chapter 1007, Statutes of 2002, established the Judicial Council, rather than VCGCB, as the governing body authorized to at on claims against a judicial branch. SB 1102 (Committee on Budget and Fiscal Review), Chapter 227, Statutes of 2004, required a filing fee be charged to claimants for the VCGCB program and a surcharge of up to 15% be implemented to support the expense of administering the VCGCB program. SB 1724 (Runner) Chapter 453, Statutes of 2005, originally included various changes requested by the CSU including similar changes as provided in SB 1046. However, prior to final passage of SB 1724, the provisions related to the torts claims were amended out of the measure. REGISTERED SUPPORT / OPPOSITION : Support California State University, Office of the Chancellor Opposition None on File Analysis Prepared by : Laura Metune / HIGHER ED. / (916) 319-3960