BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2024| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2024 Author: Bonilla (D) Amended: As introduced Vote: 21 SENATE BUSINESS, PROF. & ECON. DEV. COMM. : 8-0, 6/16/14 AYES: Lieu, Wyland, Berryhill, Block, Corbett, Galgiani, Hill, Torres NO VOTE RECORDED: Hernandez SENATE APPROPRIATIONS COMMITTEE : 6-0, 6/30/14 AYES: De León, Walters, Hill, Lara, Padilla, Steinberg NO VOTE RECORDED: Gaines ASSEMBLY FLOOR : 73-0, 5/8/14 (Consent) - See last page for vote SUBJECT : Professional fiduciaries SOURCE : Author DIGEST : This bill authorizes the Professional Fiduciaries Bureau (Bureau) to establish a retired status license; prohibits a professional fiduciary from practicing with a retired or cancelled license; provides that an expired professional fiduciary license, that is not renewed within three years, shall not be renewed, restored, or reinstated; clarifies the Bureau's authority to investigate any professional fiduciary with a retired, inactive, canceled, or suspended license; and makes technical, updating and conforming changes. CONTINUED AB 2024 Page 2 ANALYSIS : Existing law: 1. Licenses and regulates professional fiduciaries under the Professional Fiduciaries Act (Act) by the Bureau within the Department of Consumer Affairs (DCA), and makes the Bureau inoperative and repealed on January 1, 2015. 2. Establishes a Professional Fiduciaries Advisory Committee (Committee) composed of seven members: three members who are licensed as professional fiduciaries, and four public members. The three licensees and two of the public members are appointed by the Governor and the Senate Rules Committee and the Assembly Speaker each appoint a public member of the Committee. 3. Provides that if the Bureau is repealed, the responsibilities and jurisdiction of the Bureau shall be transferred to the Committee, and that Committee shall be established as a board within DCA. 4. Authorizes the Bureau to investigate the actions of any professional fiduciary for any breach of the law, and authorizes the Bureau to impose disciplinary action, including license denial, suspension, probation, or revocation, and requires the Bureau to provide, on the Internet, information regarding any enforcement action(s). 5. Provides that no person shall act or hold himself/herself out as a professional fiduciary unless that person is licensed as a professional fiduciary in accordance with the Act, or is exempt from the Act. Those exempt from the Act include attorneys, certified public accountants acting within their scope of practice, and enrolled agents acting within their scope of practice. 6. Prohibits a professional fiduciary from practicing with an expired, suspended, or revoked license. 7. Requires that in order to renew a license, a professional fiduciary must complete 15 hours of approved continuing CONTINUED AB 2024 Page 3 education courses each year. 8. Requires the Bureau to set licensing and renewal fees by regulation at an amount necessary to recover the costs to the Bureau in carrying out the provisions of the Act. This bill: 1. Authorizes the Bureau to establish, by regulation, a system for the placement of a license into retired status, as specified. 2. Requires the Bureau to deny an application to place a license in retired status if the license is subject to an outstanding order of the Bureau, suspended, placed on probation, revoked, or otherwise punitively restricted by the Bureau, or subject to disciplinary action. 3. Provides that a retired license shall not be required to be renewed. 4. Requires the Bureau to establish minimum qualifications to place a license in retired status, and to restore a license from retired status to active status. The minimum qualifications shall include, but are not limited to, completion of continuing education hours, submission of a statement, and payment of a fee, as specified. 5. Prohibits a professional fiduciary from practicing with a retired or cancelled license. 6. Provides that a professional fiduciary license that is not renewed within three years following its expiration shall not be renewed, restored, or reinstated, and the license shall be canceled immediately upon expiration of the three-year period. 7. Requires that, in order to restore a retired status license to active status, a professional fiduciary must complete 15 hours of approved continuing education courses. 8. Requires the Bureau to set fees by regulation for a retired and inactive license, and to restore a license to active from a retired or inactive status. The fees shall be set at the CONTINUED AB 2024 Page 4 amount necessary to cover the reasonable costs to carry out the functions of the Act. 9. Clarifies that the Bureau's authority to investigate any professional fiduciary, with a restricted license, including, but not limited to, a license that is retired, inactive, canceled, or suspended. 10.Makes technical, updating and conforming changes. Background A professional fiduciary is a person who acts as a conservator of the person or estate, or guardian of the estate or person, for two or more individuals at the same time who are not related to the professional fiduciary or to each other. A professional fiduciary is also someone who acts as a trustee, agent under a durable power of attorney for health care, or agent under a durable power of attorney for finances, for more than three individuals, at the same time. Retired licenses . This bill allows the Bureau to adopt regulations establishing a retired license. This license status would be for individuals not actively engaged in the practice of a professional fiduciary. A number of other DCA boards and bureaus permit a similar license status, such as the Board of Accountancy, California Architects Board, and the Dental Board of California. Sunset review of the Bureau . On March 17, 2014, the Senate Business, Professions, and Economic Development Committee and the Assembly Business, Professions and Consumer Protection (BPCP) Committee held a joint sunset review hearing to hear testimony from the Bureau as to its performance and the necessity for continuing its existence by extending its sunset date. The Sunset review report drafted by the Assembly BPCP Committee recommended that the Bureau continue operations until the next review in 2019, and in the meantime: The Bureau should consider reducing fees sufficient to avoid accumulating a 24-month reserve if the Bureau cannot get budget authority to hire additional staff; CONTINUED AB 2024 Page 5 Brief the Legislature on the potential pool of new professional fiduciaries and provide reasonable yearly targets for attracting new licensees; and Discuss with the Legislature and the DCA whether to maintain the Bureau independently if its current staffing and licensing levels do not change. Comments According to the author's office, this bill revises the Professional Fiduciaries Act to provide for a retired license status. It also requires cancellation of a license that is not renewed within three years, and makes other conforming and clarifying changes. This bill further clarifies the ability of the Bureau to investigate the actions of any professional fiduciary, even if that person has a retired, inactive, canceled, or suspended license. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee, one-time Bureau costs, likely in the range of $50,000 to $100,000 to develop and adopt regulations (Professional Fiduciaries Fund). DCA estimates that any costs to update regulations, add license status designations, and update applications is absorbable. The Professional Fiduciaries Fund is projected to have a reserve balance of $481,000 at the end of 2014-15, which is sufficient to support this bill's efforts. This bill is likely to result in some minor increased fee revenue related to the new licensing designation, potentially offset by lost fee revenues currently paid by non-practicing fiduciaries who would rather pay an annual renewal fee to keep their license active than allow it to go into a delinquent status. SUPPORT : (Verified 7/1/14) Professional Fiduciary Association of California ARGUMENTS IN SUPPORT : The Professional Fiduciary Association of California (PFAC) supports the bill's provisions that update CONTINUED AB 2024 Page 6 the Act to permit the Bureau to establish a "retired" and "inactive" status for licensees, provided that licenses may not be renewed, restored or reinstated after three years' expiration. PFAC states that the Bureau does not currently have the statutory authority to designate a license as "retired" or "inactive" or to cancel a license for inactivity. "Under current practice, a professional fiduciary who retires may either allow his or her license to become delinquent, or continue to pay the renewal fee and complete the required continuing education to keep the license active. License status is public information, and 'delinquent' has a negative connotation that some retired licensees would like to avoid," according to PFAC. The Board of Behavioral Sciences, the Board for Professional Engineers, Land Surveyors and Geologists, the Dental Board, and the Medical Board of California all have "retired" and "inactive" license statuses. PFAC also supports the clarification of the Bureau's ability to investigate the actions of any professional fiduciary, even if that person has a retired, inactive, canceled, or suspended license. ASSEMBLY FLOOR : 73-0, 5/8/14 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Grove, Hagman, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Eggman, Gorell, Gray, Hall, Mansoor, V. Manuel Pérez, Vacancy MW:k 7/1/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED AB 2024 Page 7 CONTINUED