BILL ANALYSIS �
AB 925
Page 1
Date of Hearing: April 23, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 925 (Bigelow and Gaines) - As Introduced: February 22, 2013
SUBJECT : STATE OFFICER OR SUPERVISORY EMPLOYEE: PERSONAL
LIABILITY FOR OVERPAYMENT OF COMPENSATION
KEY ISSUE : ARE NOT THE KINDS OF VIOLATIONS OF THE POLITICAL
REFORM ACT WHICH RECENTLY OCCURRED IN THE STATE PARKS DEPARTMENT
INVOLVING THE UNAUTHORIZED OR IMPROPER PAYMENT OF BENEFITS OR
COMPENSATION BY HIGH-LEVEL MANAGERS ALREADY SUBJECT TO POSSIBLE
TREBLE DAMAGES, MAKING THIS BILL UNNECESSARY?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This measure apparently comes in response to the highly
publicized and detrimental recent "vacation buyout" scandal at
the California Department of Parks of Recreation. The
improperly authorized payouts reportedly totaled more than
$271,000, with an improper payout of approximately $29,000 made
personally to a deputy director of the department at a time the
department publicly claimed the need to close 70 parks to absorb
state budget cuts. The former deputy director was thereafter
fined an administrative penalty of $7,000 by the Fair Political
Practices Commission under the Political Reform Act (and faced
other sanctions as well, including the loss of employment). In
response, this measure seeks to hold a state officer or a
supervisory employee who intentionally circumvents statutes or
regulations that result in the overpayment or unauthorized
payment of compensation personally liable for treble damages.
However upon careful review, this measure regrettably appears to
be superfluous and unnecessary, since the high-level public
officials who have the authority to improperly authorize such
improper payouts as those that occurred in the recent Parks
Department scandal - i.e., those designated employees such as
the deputy director of the department of parks and recreation -
are already potentially subject to treble damages penalties
under the Political Reform Act pursuant to the Act's
conflict-of-interest requirements. Furthermore, this bill
appears to be additionally inadvisable because it seeks to take
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away appropriate discretion from civil prosecutors when
determining the appropriate penalty for violations of such
conflicts of interest rules under the Political Reform Act. The
measure is supported by the Howard Jarvis Taxpayers Association.
SUMMARY : Seeks to hold a state officer or a supervisory
employee who intentionally circumvents statutes or regulations,
which result in overpayment or unauthorized payment of
compensation, personally liable for treble damages.
Specifically, this bill :
1)Provides that a state officer or supervisory employee who
knowingly or intentionally circumvents statutory or regulatory
policy, resulting in overpayment or unauthorized payment of
compensation by a state agency to himself or herself, to
another employee, or to a contractor, shall be personally
liable for treble damages upon a finding by a court of
competent jurisdiction that the officer or supervisory
employee intentionally or knowingly committed the acts
resulting in the unauthorized payments.
2)Authorizes the State to bring legal action against the state
officer or supervisory employee to recover damages under this
section.
3)Declares that the damages recovered from the state officer or
supervisory employee shall be deposited into the General Fund.
EXISTING LAW :
1)Prohibits a public official at any level of state or local
government from making, participating in making, or in any way
attempting to use his or her official position to influence a
governmental decision in which the official knows, or has
reason to know, that he or she has a financial interest.
(Government Code Section 87100, also known as the Political
Reform Act of 1974. All further statutory references are to
this section unless otherwise indicated.)
2)Defines a "public official" as every member, officer, employee
or consultant of a state or local government agency. (Section
82048, subd. (a).)
3)Provides that a public official has an economic interest in
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his or her personal finances if they are increased or
decreased by the governmental decision. (Title 2 of
California Code of Regulations, Regulation 18702.1, subd.
(a)(3).)
4)Establishes various administrative, civil and criminal
penalties for violating the requirements of the Political
Reform Act of 1974, including the provisions relating to
conflicts of interest. A violator may be subject to any of
the following:
a) A monetary penalty of $5,000 per violation imposed by
the Fair Political Practices Commission (FPPC). (Section
83116, subd. (c).)
b) Criminal misdemeanor prosecution by the Attorney General
or local prosecutor resulting in a fine of up to greater of
$10,000 per violation, or three times the amount the person
received. (Section 91000, subd. (b), emphasis added.)
c) Any designated employee who realizes an economic benefit
as a result of a conflict of interest violation is liable
in a civil action for an amount up to three times the value
of the benefit. (Section 91005, subd. (b), emphasis
added.)
COMMENTS : According to the authors, the purpose of the measure
is to ensure monies designated for public purposes are not
misappropriated. The authors provided the following rationale
in support of the bill:
As California works to keep our budget in order, it is
critical that every taxpayer dollar is used wisely and
for the benefit of the public. When bad actors in
state government intentionally ignore state laws and
regulations resulting in overpayment or unauthorized
payment of compensation, the taxpayers of this state
deserve to know that their money will be returned and
used for the purposes it was intended for, like
keeping our state parks open.
This measure comes in response to the highly publicized
"vacation buyout" scandal at the California Department of Parks
of Recreation. A former deputy director of administrative
services at the California Department of Parks and Recreation
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was held responsible for initiating a secret vacation buyout, in
which employees were allowed to sell unused vacation time back
to the state before they were entitled to do so. The premature
payouts amounted to more than $271,000, with an improper early
payout of approximately $29,000 made personally to the deputy
director of the department at a time the Parks Department
publicly claimed the need to close 70 parks to absorb state
budget cuts. The former deputy director was fined an
administrative penalty of $7,000 by the Fair Political Practices
Commission for violation of the Political Reform Act. This
high-level parks official also faced other significant
ramifications for his improper actions, including termination
from his employment. (Matt Weiser, Sacramento Bee, 3 California
Parks Official Disciplined in Vacation Buyout Scandal August 14,
2012. Available at: http://www.sacbee.com.)
Overview and Background: Political Reform Act and Conflicts of
Interest . When the Political Reform Act (Act) was enacted, the
people of the State of California found and declared that
previous laws regulating political practices suffered from
inadequate enforcement by state and local authorities. (Section
81001(h).) To that end, Section 81003 of the Act requires that
the Political Reform Act be liberally construed to accomplish
its purpose. One of the purposes of the Act is to provide
adequate enforcement mechanisms so that the Act will be
"vigorously enforced." (Section 81002(f).)
The primary purpose of the conflicts of interest provisions of
the Act is to ensure that a "public official should perform
their duties in an impartial manner, free from bias caused by
their own financial interests or the financial interests of a
person who has supported them." (Section 81001(b).) In
furtherance of this purpose, Section 87100 prohibits a public
official from making, participating in making, or in any way
attempting to use his or her official position to influence a
governmental decision in which the official knows, or has reason
to know, that he or she has a financial interest. Under Section
87103, a public official has a financial interest in a decision
if it is reasonably foreseeable that the decision will have a
material effect on an economic interest of the official.
The Political Reform Act Already Provides for the Penalties
Sought By this Bill. Existing law establishes various
administrative, civil and criminal penalties for violating the
requirements of the Political Reform Act of 1974, including the
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provisions relating to conflicts of interest. As noted above -
and directly pertinent to this proposal -- a violator of the Act
already may be subject to any of the following:
(1) A monetary penalty of $5,000 per violation
imposed by the Fair Political Practices Commission
(FPPC). (Section 83116(c).)
(2) Criminal misdemeanor prosecution by the
Attorney General or local prosecutor resulting in
a fine of up to greater of $10,000 per violation,
or three times the amount the person received .
(Section 91000(b).)
(3) Any designated employee who realizes an
economic benefit as a result of a conflict of
interest violation is liable in a civil action for
an amount up to three times the value of the
benefit. (Section 91005(b).)
Again key to the objective of this legislation, a designated
employee under the Political Reform Act is any officer,
employee, member or consultant of an agency whose position with
the agency is exempt from the state civil service system, is
elective, other than an elective state office, is designated in
a Conflict of Interest Code because the position entails the
making or participation in the making of decisions which may
foreseeably have a material effect on any financial interest, or
is involved as a state employee at other than a clerical or
ministerial level in the functions of negotiating or signing any
contract awarded through competitive bidding. (Section 82019.)
In other words, the state's the Political Reform Act already
covers - and provides the potential penalties called for in this
measure - the very types of public employees (like the deputy
parks director) that would have the kind of power to potentially
inappropriately authorize the misuse of public funds. In
addition, the Political Reform Act already provides that under
Section 91001 of the Act, a civil prosecutor may bring any civil
action they deem appropriate to enforce the conflicts of
interest provisions of the Act.
The Political Reform Act Already Provides That Designated
Employees, Such As The Deputy Director Of Department Of Parks
And Recreation, May Be Civilly Liable For An Amount Up To Three
Times The Value Of The Benefit, Making This Legislative Proposal
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Unnecessary and Superfluous. As discussed above, the deputy
director of the Parks Department reportedly made two
governmental decisions in which he had a direct financial
interest, in violation of Government Code Section 87100. He was
therefore fined an administrative penalty in the amount of
$7,000. Although, as the authors of this measure accurately
point out, the deputy director was fined only a fraction of the
approximately $271,000 the "vacation buyout" cost the State
prematurely, under existing law, as a designated employee, the
deputy director already could have been found liable in a civil
action for an amount up to three times the value of the benefit
(in this instance three times the $271,000, or up to $813,000) -
absent this legislative proposal -- because he realized an
economic benefit as a result of a conflict of interest
violation, already specific violations of the Political Reform
Act, at Section 87100.
In addition, it should also be noted that the Conflicts of
Interest Code adopted and promulgated by the Department of Parks
and Recreation, as mandated by Section 87300 of the Government
Code, includes as a designated employee 'All Career Executive
Assignments.' At the time the deputy parks director made the
two improper governmental decisions in which he had a financial
interest in violation of Section 87100, he was classified as a
Career Executive Assignment III (reflecting that it is only
these types of higher-level public managers who have the
authority to misuse their authority.) Thus, since the deputy
parks director was a designated employee at the time of the
'vacation buyout', already under existing law, he could be found
liable in a civil action for an amount up to three times the
value of the benefit-in this instance three times the $271,000.
Bill Also Seeks to Eliminate Need for Prosecutorial Discretion.
In other language of this measure, the bill provides that "A
state officer or supervisory employee found liable ? shall be
liable for treble damages based on the total amount of the
overpayment or unauthorized payment." Thus, the bill seeks to
eliminate the current discretion appropriately vested in the
prosecutor of such violations to determine what penalty amount
should be sought in a particular case under the specific facts
of that case. As in all such prosecutorial decisions, the type
of penalty sought is appropriately based on the individual facts
and circumstances of each specific case. In determining the
appropriate penalty for a particular violation of the Act, the
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Fair Political Practices Commission appropriately is tasked with
determining the typical treatment of a violation in the overall
statutory scheme of the Act, with an emphasis on serving the
purposes and intent of the Act.
Additionally, the Commission, in its appropriate discretion,
must consider the facts and circumstances of a particular
violation in the context of the following factors set forth in
Regulation 18361.5, subdivision (d)(1) through (6) of the Act:
the seriousness of the violation; the presence or absence of any
intention to conceal, deceive, or mislead; whether the violator
demonstrated good faith by consulting the Commission staff or
any other government agency in a matter not constituting a
complete defense under Government Code Section 83114(b); whether
the violation was isolated or part of a pattern and whether the
violator has a prior record or violations of the Political
Reform Act or similar laws; and whether the violator, upon
learning of a reporting violation, voluntarily filed amendments
to provide full disclosure.
Thus, along with being superfluous, the bill appears to
inappropriately eliminate appropriate and needed prosecutorial
discretion to determine appropriate and balanced penalties in
the context of other types of offences.
ARGUMENTS IN SUPPORT : In support of the measure, Howard Jarvis
Taxpayers Association writes that, "State employees are vested
with a public trust to not break the law and spend taxpayer
dollars as effectively as possible. If they fail to do that,
our legal system should be able to hold them accountable to
provide either restitution or other appropriate remedy. AB 925
ensures this will occur."
REGISTERED SUPPORT/OPPOSITION:
Support
Howard Jarvis Taxpayers Association
Opposition
None on file
Analysis Prepared by : Drew Liebert and Rebecca Kramer / JUD. /
(916) 319-2334
AB 925
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