BILL ANALYSIS Ó AB 508 Page 1 Date of Hearing: April 2, 2013 ASSEMBLY COMMITTEE ON JUDICIARY Bob Wieckowski, Chair AB 508 (Calderon) - As Introduced: February 20, 2013 As Proposed to Be Amended SUBJECT : DEBT COLLECTION: HOMELESS VETERANS KEY ISSUE : WHEN, IN THE COURSE OF ITS ROUTINE EFFORTS TO COLLECT FINES, THE COURT OBTAINS INFORMATION INDICATING THAT A PERSON WHO HAS AN OUTSTANDING UNPAID CITATION FOR LOITERING, CURFEW VIOLATIONS OR ILLEGAL LODGING IS A HOMELESS VETERAN, SHOULD THE COURT BE PROHIBITED FROM GARNISHING THE WAGES OR LEVYING AGAINST A BANK ACCOUNT OF THAT PERSON FOR A PERIOD OF FIVE YEARS? FISCAL EFFECT : As currently in print this bill is keyed fiscal. SYNOPSIS According to the author, homeless veterans are often caught in a catch-22 situation where their homelessness inevitably results in citations for offenses like truancy or illegal lodging, but wage garnishment to collect any unpaid fines makes it much harder for these veterans to escape the cycle of homelessness--virtually ensuring that further citations for the same type of offenses will continue to occur. Proponents of the bill contend that temporarily freezing the authority of courts to garnish the wages of homeless veterans is needed to give these veterans a better chance to establish stable housing to escape the cycle of homelessness. To address this problem cycle, this bill seeks to prohibit courts from wage garnishment of a homeless veteran for outstanding unpaid citations related to loitering, curfew violations, or illegal lodging, for a period of five years from the date that the court, in the course of its routine efforts to collect fines, obtains information indicating the veteran is homeless. The bill does not exculpate veterans from any offenses for which they have committed, nor does it relieve them of the legal obligation to pay any associated fines or prohibit any ticket from being issued. In addition, the bill does not require the courts to expend additional resources to obtain AB 508 Page 2 information about the homeless status of veterans-it merely requires court collectors to note information indicative of homelessness in the course of their routine collection efforts. Finally, the author contends that temporarily limiting these methods of debt collection in this context makes good financial sense in light of a recent Judicial Council study that suggests collection of delinquent court-ordered debt is not a cost-effective use of court resources in cases where no reliable address information exists for the debtor--as is true of many homeless veterans. This bill is closely modeled after last year's AB 1111, a bipartisan bill signed into law that enacted similar provisions benefitting homeless youth under age 25, and enjoys support from veterans groups and social workers. SUMMARY : Prohibits courts from garnishing the wages or levying a bank account of a homeless veteran for outstanding unpaid citations related to loitering, curfew violations, or illegal lodging for a period of up to five years, as provided. Specifically, this bill : 1)Makes Legislative findings about homeless veterans, the garnishment of their wages and savings for offenses inevitably associated with being homeless; and the negative effect these debt collection practices have on the ability of homeless veterans to escape the cycle of homelessness. 2)Provides that, notwithstanding any other provision of law, if a court, during the course of its routine efforts to collect delinquent court-ordered debt, obtains information indicating that a person who has been issued a citation for loitering, curfew violations, or illegal lodging that is outstanding or unpaid, served in the military within the last eight years and is homeless or has no permanent address, the court shall not garnish the wages or levy against bank accounts of that person for five years from the date the court obtained the information. 3)Provides, for the purposes of this act, that a person is considered to be "homeless" or as having "no permanent address" if that person does not have a fixed, regular, adequate nighttime residence, or has a primary nighttime residence that is one of the following: AB 508 Page 3 a) A supervised publicly or privately operated shelter designed to provide temporary living accommodations, including, but not limited to, welfare hotels, congregate shelters and transitional housing for the mentally ill. b) An institution that provides a temporary residence for individuals intended to be institutionalized. c) A public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings. 4)Provides that nothing in this act shall be construed to: a) Prevent a court from engaging in any other lawful debt collection activities; b) Require a court to perform any further investigation or financial screening into any matter beyond the scope of its regular duties; c) Prevent the Judicial Council from altering any best practices or recommendations for collection programs pursuant to Section 1463.010; d) Prevent a court from garnishing a person's wages or levying against a person's bank accounts if the court subsequently obtains evidence that the person is no longer homeless, or that the court had on a previous occasion suspended garnishment of that person's wages or levying against that person's bank accounts pursuant to these provisions. EXISTING LAW : 1)Authorizes a county or court to establish a comprehensive collections program to enhance the collection of delinquent court-ordered debt and improve recovery efforts, and requires the comprehensive collection program to include at least 10 of a possible 16 characteristics, as specified. Among the characteristics provided are: AB 508 Page 4 a) Monthly bill or account statements to all debtors; b) Telephone contact with delinquent debtors to apprise them of their failure to meet payment obligations; c) Issuance of warning letters to advise delinquent debtors of an outstanding obligation; d) Requests for credit reports to assist in locating delinquent debtors; e) Access to Employment Development Department employment and wage information; f) The generation of monthly delinquent reports; g) Participation in the Franchise Tax Board's Interagency Intercept Collections Program; h) The use of Department of Motor Vehicle information to locate delinquent debtors; i) The use of wage and bank account garnishments. (Penal Code Section 1463.007.) 2)Provides that if a court, during the course of its routine process to collect fees, fines, forfeitures, or other penalties imposed by a court due to a citation issued for the violation of a state or local law, obtains information indicating that a person under 25 years of age, who has been issued a citation for truancy, loitering, curfew violations, or illegal lodging that is outstanding or unpaid, is homeless or has no permanent address, the court shall not garnish the wages or levy against bank accounts of that person until that person is 25 years of age or older. (Penal Code Section 1463.011.) 3)Defines a "homeless person" as any person who lacks a fixed, regular, and adequate nighttime residence, or has a primary nighttime residence in one of the following: a) A supervised publicly or privately operated shelter designed to provide temporary living accommodations, including, but not limited to, welfare hotels, congregate shelters and transitional housing for the mentally ill; b) An institution that provides a temporary residence for individuals intended to be institutionalized; c) A public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings. (Health and Safety Code Section 50582(b).) COMMENTS : According to the author, homeless veterans are often caught in a catch-22 situation where their homelessness AB 508 Page 5 inevitably results in citations for offenses like loitering or illegal lodging, but wage garnishment to collect unpaid fines makes it more difficult for these veterans to escape the cycle of homelessness--virtually ensuring that further citations for the same type of offenses will continue to occur. To address this problem cycle, this bill seeks to prohibit courts from wage garnishment of homeless veterans for outstanding unpaid citations related to loitering, curfew violations, or illegal lodging for a period of five years from the date the court obtains information indicating the veteran is homeless in the course of its routine efforts to collect fines. Author's statement. The author contends that wage garnishment of homeless veterans to collect unpaid citations for infractions associated with living on the street perpetuates the cycle of homelessness, making escape more difficult for veterans trying to legitimately work and establish stable housing. The author states: The homeless are frequently ticketed for offenses synonymous with their homelessness, such as loitering, illegal lodging, and curfew violations. The inability of homeless veterans to pay for tickets and subsequent fines for offenses related to their homeless status may lead to the garnishment of their wages and bank accounts, damage to their credit history, and create other barriers to their establishing financial stability and independence. By making it harder for homeless veterans to save money to end their homelessness, such garnishments paradoxically also increase the likelihood that the public safety offenses the tickets are meant to dissuade will in fact occur. The purpose to this bill is to temporarily prohibit courts from garnishing the wages or levying against bank accounts of a veteran (as specified.) Unfortunate facts about the homeless veteran population . Sadly, the problem of homelessness among veterans who have proudly served our country is not a minor one. According to the U.S. Department of Housing and Urban Development's most recent annual survey for point-in-time estimates of homelessness, there were 16,461 homeless veterans in California in January 2012, of whom 11,949 were considered unsheltered and living on the streets. (Located at: AB 508 Page 6 http://www.hudhre.info/CoC_Reports/2012_ca_pops_sub.pdf ) A recent national survey of over 23,000 homeless Americans conducted by the 100,000 Homes Campaign found that homeless veterans reported having been homeless for an average of 5.77 years as compared to 3.92 years for homeless non-veterans. In addition, the study found that veterans were 11 percent more likely than non-veterans to suffer from at least one health condition linked to increased risk of death among the homeless population. ("National Survey of Homeless Veterans in 100,000 Homes Campaign Communities" by The 100,000 Homes Campaign.) Author's amendments. In order to incorporate recently released federal data on homeless veterans, the author proposes to make the following amendments: On page 2, between lines 8 and 9, insert: "(2) According to the U.S. Department of Housing and Urban Development's most recent annual survey for point-in-time estimates of homelessness, there were 16,461 homeless veterans in California in January 2012, of whom 11,949 were considered unsheltered and living on the streets." On page 2, line 9, strike "(2)" and insert "(3)" On page 2, line 12, strike "(3) The California Research Bureau has documented that if" and insert "If" In order to clarify when the suspension of the court's authority to collect begins, the author proposes the following amendment: On page 3, line 2, strike "the ticket issues" and insert "the court obtained that information" In order to clarify that suspension of court collection efforts under this bill is intended to be a benefit that is administrated only one time, the author proposes the following amendment On page 3, line 29, after "homeless" insert ", or that the court had on a previous occasion suspended garnishment of that person's wages or levying against that person's bank accounts pursuant to subdivision (b)." Although this bill suspends collection methods for unpaid fines arising from certain offenses, it does not absolve the veteran AB 508 Page 7 of any offense or discharge any fine. This bill seeks to prohibit courts from wage garnishment of a homeless veteran for outstanding unpaid citations related to loitering, curfew violations, or illegal lodging for a period of five years-a temporary suspension of the court's authority to garnish the wages or levy the bank account of the veteran. If the court subsequently obtains evidence that the veteran is no longer homeless before five years have elapsed, then the court may resume wage garnishment or bank levy upon the veteran once again. The author notes that the bill does nothing to absolve the veteran of the offense, relieve the legal obligation to pay any associated fine, or prohibit any ticket from being issued. As such, it does not appear this bill dismisses accountability for so-called "quality of life" offenses committed by homeless veterans as much as it represents an effort to give them a better chance of working to escape homelessness before wage garnishment can resume. This bill is intended to minimize any new workload upon the courts and possibly conserve judicial resources. Under this bill, a court is prohibited from garnishing the wages of a person when "during the course of its routine process to collect" unpaid fees or fines, the court "obtains information" indicating that the person meets the criteria for an eligible homeless veteran. Section 1463.007 of the Penal Code describes the types of actions that courts already take to enhance the collection of delinquent court-ordered debt where the court runs a comprehensive collections program. In these debt collection cases, the court will typically attempt to mail an account statement and/or a warning notice to the debtor's address, if known, and also contact the debtor by telephone. Among other things, the court may request a credit report of the debtor or initiate the use of wage or bank account garnishments. Under this bill, however, if the court in the process of its ordinary collection efforts (emphasis added) obtains information indicating the person is (a) a military veteran who has served within the last eight years; (b) has unpaid citations for offenses associated with homelessness, like loitering, curfew violations, or illegal lodging; and (c) is homeless or has no valid permanent address, only then would the court be prohibited from garnishing the wages of the debtor because such indicators, in all likelihood, demonstrate that the debtor is a homeless veteran covered under the bill. AB 508 Page 8 The author also contends that the bill may actually help conserve judicial resources by reducing debt collection efforts that are empirically cost-ineffective, because of the difficulty and expense involved in garnishing the wages of veterans who are homeless and lack any permanent address. In a study commissioned by the Judicial Council and published in December 2009, researchers from Gartner, Inc., examined the relationship between the "inherent collectability of debt" and factors such as the size of the debt, age at referral, and validity of address information. They found, generally, that the rate of study cases where collection efforts resulted in the debt being paid-in-full was 13 percentage points below the average, and 19 percentage points lower than cases where there was a valid initial address. (Judicial Council, Report to Legislature on Statewide Collection of Court-Ordered Debt (January 2010) p.10.) As a result, this bill may reduce court debt collection efforts that, according to the Gartner study, would likely prove cost-ineffective for courts because homeless persons by definition lack reliable address information. Based on Section 1463.007 and the findings of the Gartner study, it appears likely that every court collector, in the course of current practices, will already obtain information as to whether a debtor meets the applicable definition of homeless. In addition, the bill specifically provides that nothing in its provisions shall be construed to require a court to perform any further investigation or financial screening into any matter beyond the scope of its regular duties, nor prevent a court from engaging in any other lawful debt collection activities. As proposed to be amended, suspension of court collection efforts would apply once, at most, to an individual veteran, even if that individual unfortunately becomes homeless again more than five years later. Prior Legislation. This bill is closely modeled after AB 1111 (Fletcher and Mitchell), Ch. 466, Stats. 2011, which prohibits a court from garnishing the wages or levying the bank account of a homeless youth under age 25 for outstanding unpaid citations related to truancy, loitering curfew violations, or illegal lodging until the youth is at least 25 years old. REGISTERED SUPPORT / OPPOSITION : Support AB 508 Page 9 National Association of Social Workers- CA Chapter AMVETS- Department of California VFW- Department of California Vietnam Veterans of America, California State Council Opposition None on file Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334