BILL ANALYSIS Ó AB 363 Page 1 Date of Hearing: April 24, 2013 ASSEMBLY COMMITTEE ON INSURANCE Henry T. Perea, Chair AB 363 (Grove) - As Introduced: April 18, 2013 SUBJECT : California Unemployment Insurance Appeals Board SUMMARY : Prohibits a former legislator from being appointed to the California Unemployment Insurance Appeals Board (board) for two years after leaving office. EXISTING LAW 1)Establishes the board to hear appeals of administrative decisions made by the Employment Development Department (EDD), including decisions regarding unemployment insurance eligibility and benefits. 2)Specifies that there are five board members, including the chair, to be appointed as follows: three by the Governor, one by the Speaker of the Assembly, and one by the Senate Rules Committee. 3)Specifies that board members serve 4 year terms. 4)Requires that board members be licensed attorneys with at least one year of experience conducting hearings or five years of legal practice. FISCAL EFFECT : Unknown COMMENTS : 1)Purpose . According to the author, changes to the board made last year were a good start, but further action must follow in order to restore public trust in the board. A two-year period after leaving the legislature before serving on the board is a modest and sensible measure to assure the public that this board is not merely a place for politically-favored ex-lawmakers. The legislature should demonstrate to the people of California that it is a good steward of their tax dollars and is willing to do what it takes to restore some of their faith in state government. AB 363 Page 2 2)Board Background . The board was created in 1943 as an independent administrative court system for workers and employers seeking to challenge decisions made by the EDD. Appeals are the first opportunity for all parties to present evidence and tell their side of the story before an administrative law judge (ALJ) and have that ALJ decide the case. The ALJ's decision may be appealed to the board whose decision is final, unless overturned by a Superior Court judge. The board's services are free to the participants, and do not require an attorney. The proceedings are funded almost completely by federal dollars (93%), with state special funds paying for costs related to disability and paid family leave cases (6.6%), and the state General Fund paying for less than one-half of one percent (0.4%) of the costs. In addition to reviewing ALJs' decisions, the Board issues precedent decisions and oversees board operations and its hearing facilities in twelve field offices and 43 satellite facilities around the state. In 2011 alone, CUIAB ALJs rendered decisions in about 467,000 cases for over 250,000 employees and employers. 3)Recent Reforms . The Governor's 2012 -13 budget proposed to eliminate the board and consolidate its functions under EDD. In response to this proposal, the Legislature passed SB 1038 (Statutes of 2012, Chapter 46) which reduced the size of the board from 7 members to 5 and requires board members to be licensed attorneys with practice experience. In addition, the 2012-13 budget consolidated board administrative functions with EDD to achieve $2 million in special fund savings and eliminated 17.4 positions. 4)Workload . Board members, like the ALJs, consider appeals. In fact, board members rendered over 32,000 decisions in 2012, but that number understates the workload. Each decision rendered by the board is the result of at least two board members considering the appeal which has the effect of doubling the workload to 64,000 board member decisions. To continue to produce that many decisions, the now five member board must average over 5,000 decisions per month (assuming all five board member positions are continuously filled). In addition to the workload associated with considering appeals, board members are responsible for the overall functioning of the board and its 875 employees. AB 363 Page 3 5)Legislative History . The qualification and salary for members of the board has been the subject of many bills in recent years. The following bills addressed these issues: 2011-2012 Session -- SB 153 (Strickland) would have prohibited members appointed to the Agricultural Labor Relations Board (ALRB), the California Unemployment Insurance Appeals Board (UIAB), the Public Employment Relations Board (PERB), and the State Water Resources Control Board (SWRCB) from receiving a salary and authorizes a member of these boards to receive a specified per diem payment ($100 per day). (Died in Senate Governmental Organization Committee) 2009-2010 Session -- SB 685 (Strickland) would have suspended the salaries for members of 12 specified state boards and commissions for three fiscal years except that they would have been allowed to receive a per diem payment. (Died in Senate Governmental Organization Committee) 2007-2008 Session -- AB 2539 (Strickland) would have eliminated the salary of any member of a state board or commission that received a salary in excess of $100,000 in 2007 if a state law or regulation required the board to meet two or less times per month. (Died in Assembly Business and Professions Committee) AB 309 (Tran) would have suspended the salaries for members of 10 specified state boards and commissions for three fiscal years, except that they would have been allowed to receive a per diem payment. (Died in Assembly Business and Professions Committee) 2005-2006 Session -- AB 38 (Tran) This bill would have suspended the salaries for members of 12 specified state boards and commissions for three fiscal years, except that they would have been allowed to receive a per diem payment. (Died in Assembly Business and Professions Committee) 2003-2004 Session -- AB 556 (Strickland) would have suspended the salaries for members of 14 specified state boards and commissions for three fiscal years, except that they would have been allowed to receive a per diem payment. (Died in Assembly Business and Professions Committee) AB 363 Page 4 REGISTERED SUPPORT / OPPOSITION : Support None received Opposition None received Analysis Prepared by : Paul Riches / INS. / (916) 319-2086