BILL ANALYSIS Ó
AB 1263
Page 1
ASSEMBLY THIRD READING
AB 1263 (Williams)
As Amended April 7, 2011
Majority vote
INSURANCE 12-0
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|Ayes:|Solorio, Hagman, Charles | | |
| |Calderon, Carter, Feuer, | | |
| |Grove, Hayashi, Miller, | | |
| |Olsen, Skinner, Torres, | | |
| |Wieckowski | | |
| | | | |
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SUMMARY : Restricts State Compensation Insurance Fund (SCIF)
officers and directors post-separation lobbying and contracting
activities. Specifically, this bill :
1)Provides that members of the board of directors of SCIF, and
officers appointed by the board, including the president,
chief financial officer, chief investment officer, chief
operating officer, chief risk officer, chief information
technology officer, and general counsel, are prohibited from
lobbying SCIF for a period of two years after terminating
employment with SCIF.
2)Provides that any consulting contracts with former board
members or former officers appointed by the board, including
the president, chief financial officer, chief investment
officer, chief operating officer, chief risk officer, chief
information technology officer, and general counsel, must be
approved by the board.
EXISTING LAW :
1)Establishes SCIF as a quasi-governmental agency to operate in
the workers' compensation insurance market in competition with
private insurers, and as the carrier of last resort for
employers that cannot obtain coverage from the private
insurance market.
2)Provides that SCIF is governed by an 11-member board of
directors, nine of whom are appointed by the Governor, one by
AB 1263
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the Speaker of the Assembly, and one by the Senate Rules
Committee.
3)Authorizes the SCIF board to appoint seven exempt officers,
including the president, chief financial officer, chief
operating officer, a chief information technology officer,
chief investment officer, chief risk officer, and general
counsel.
4)Provides that, aside from the seven employees appointed by the
board, SCIF employees are subject to the civil service laws
otherwise applicable to state employees.
5)Provides that SCIF is funded entirely from premiums received,
and earnings on these premiums and its reserves, and shall not
be funded with any public funds.
6)Provides that members of the board of directors of SCIF, and
the seven officers appointed by the board, are prohibited from
lobbying SCIF for a period of one year after terminating
employment with SCIF.
FISCAL EFFECT : No fiscal impact expected.
COMMENTS :
Purpose . According to the author, over the past few years, SCIF
management has come under increased scrutiny, and increasing the
restrictions on insider activities will help stem the loss of
public confidence.
Background . In the mid-to-late 2000's, SCIF experienced what
can only be described as a scandal involving board members and
its senior officers. Among many other management issues that
resulted in over 100 recommendations by a special auditor
retained by the Department of Insurance to evaluate SCIF,
concerns were expressed that certain officers and board members
were obtaining personal benefit through so-called "safety
groups" that had contractual relationships with SCIF. Board
members and officers were relieved of their duties, and criminal
investigations were initiated. However, after several years of
reviewing the evidence, it was announced earlier this year that
those investigations were being terminated without any charges
being filed.
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In the meantime, the Legislature, after reviewing the auditor's
recommendations, passed two pieces of legislation designed to
put SCIF on a sound footing to move forward. SB 1145 (Machado),
Chapter 344, Statutes of 2008 and AB 1874 (Coto), Chapter 322,
Statutes of 2008 adopted numerous changes to the laws that
establish how SCIF is governed. The key features involved
expanding and professionalizing the board, authorizing
additional exempt employees to obtain necessary expertise to run
a company the size of SCIF, applying the Bagley-Keene Open
Meetings law to SCIF board meetings, and applying the Milton
Marks Post-Government Employment Restrictions law to officers
and board members.
Support . Service Employees International Union (SEIU) 1000, the
labor organization that represents most SCIF employees, argues
that anyone who solicits or does business with the SCIF staff or
with the board should not expect favors. In light of the
scandals of the recent past, SEIU believes that the public
perception that quid pro quo may exist at SCIF must be changed.
It argues that SCIF must be willing to set the highest standards
of ethics and integrity, particularly in light of the recent
national financial industry scandals.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0000289