BILL ANALYSIS                                                                                                                                                                                                    






          SENATE PUBLIC EMPLOYMENT & RETIREMENT    BILL NO: SB 1217
          Lou Correa, Chair           Hearing date: April 12, 2010 
          SB 1217 (Senate PE&R Comm)    as introduced  2/18/10      
          FISCAL:   YES

           ALLOWS MULTIPLE DESIGNEES TO BE IDENTIFIED FOR RECEIPT OF  
          FINAL PAY WARRANTS UPON DEATH OF A STATE EMPLOYEE
           
           HISTORY  :            

              Sponsor:  Office of the State Controller

              Prior legislation:  none

           
          SUMMARY  : 

            This bill would allow an employee of the State to designate  
            a primary person and up to three contingent persons for  
            receipt of final pay warrants upon the employee's death.   
            In addition, it clarifies that the employee could also  
            designate a corporation, trust, or the employee's estate as  
            a recipient of those warrants.


           BACKGROUND AND ANALYSIS  : 
          
           Existing law  authorizes an employee of the State to file with  
          his or her employer a designation naming the person who will  
          receive the employee's final pay warrants in the event of the  
          employee's death.  The employee may change the designation  
          from time to time and may name anyone as his or her designee.

          In addition, the law gives the designee the right to claim  
          the final warrants, upon proof of identity, and to negotiate  
          the warrants as if he or she were the original payee.

           This bill  would allow an employee to designate a primary  
          recipient and up to three additional recipients, in order, to  
          receive the final warrants in situations in which the primary  
          designee predeceases the employee.  Additionally, this bill  
          also specifies that the employee could name a corporation,  
          trust or the employee's estate as the designee.
          Michael Bolden
          Date:  4/6/10                                          Page 1  












           COMMENTS  :

          1)  Sometimes Employees Die Without Having Updated Their  
          Designations
           
                    Upon entering employment, an employee designates a  
              recipient for his or her final warrant.  In some cases,  
              many years go by between that initial designation and the  
              employee's death.  After a number of years have passed,  
              an employee may not think to change a designation or even  
              remember having made a designation in the first place.

                     For example, an employee who is young and single  
              upon entering employment may designate a parent or  
              sibling as recipient.  If the parent or sibling  
              predeceases the employee, or if the employee dies without  
              having changed the designation and the designee cannot be  
              found within a specified time, the State Controller's  
              Office (SCO) then has no legally designated recipient to  
              release the warrant to.

                     According to the SCO, this becomes a problem  
              because the final pay warrants of the decedent must then  
              be released under provisions of the Probate Code if the  
              sole designee is not eligible or cannot be located within  
              60 days of the employee's death.
           
           2)   Frequency of Incidents  

                    According to the SCO, 42.6 death transactions  
              occurred in the last six months.  Although incidences of  
              a beneficiary predeceasing the employee are rare, they do  
              occur from time to time.  Amending this section would  
              enable the SCO to release a deceased employee's final pay  
              warrants to a contingent designee if the primary designee  
              is deceased minimizing financial hardship to the deceased  
              employee's family.


          3)   SUPPORT  :

          Michael Bolden
          Date:  4/6/10                                          Page 2  










               Office of the State Controller (Sponsor)
               California State Employees Association (CSEA)


          4)   OPPOSITION  :

               None to date




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          Michael Bolden
          Date:  4/6/10                                          Page 3