BILL ANALYSIS Ó
AB 2546
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CONCURRENCE IN SENATE AMENDMENTS
AB 2546 (Salas)
As Amended August 11, 2014
Majority vote
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|ASSEMBLY: |76-0 |(May 19, 2014) |SENATE: |34-0 |(August 14, |
| | | | | |2014) |
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Original Committee Reference: L. GOV.
SUMMARY : Authorizes the Kern County Board of Supervisors (Board
of Supervisors) to establish the Kern County Hospital Authority
(Authority), and specifies the Authority's governance, powers,
and procedures.
The Senate amendments :
1)Delete the requirement that the Board of Supervisors must
reach an agreement to affiliate or consolidate the Kern
Medical Center (KMC) with at least one other health care
facility in order to establish the Authority, and instead
authorize the Board of Supervisors to establish, by ordinance,
the Authority, a public agency that is a local unit of
government separate and apart from Kern County (County) and
any other public entity for all purposes.
2)Delete the definition of "other health care facility" and any
references to "other health care facility" in this bill.
3)Add the following to the list of defined powers for the
Authority:
a) To incur indebtedness and to borrow money and issue
tax-free bonds, including revenue bonds, (and specify,
pursuant to state law, any indebtedness, notes, bonds, or
other securities require voter approval than the approval
of the Board of Supervisors is required);
b) To request that the Board of Supervisors levy a tax on
behalf of the Authority, with the approval of the Board of
Supervisors to place the measure on the ballot and subject
to voter approval;
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c) Maintain financial and accounting records;
d) Be subject to the jurisdiction of the Public Employment
Relations Board; and,
e) Allow the Authority to enter into a joint powers
agreement as described in existing law as though that
section applied to hospitals and other health care
facilities in the County.
4)Prohibit the Authority from being governed by or subject to
other policies or operational rules of the County, medical
center, or any other public entity, including, but not limited
to those relating to personnel and procurement.
5)Revise the purpose of the Authority to include:
a) Operation of additional programs, clinics and other
facilities, care organizations, health care service and
physician practice plans, and delivery systems that may be
affiliated or consolidated with KMC; and,
b) Management, administration, and other controls
consistent to negotiate and enter into contracts to provide
health care services, as specified.
6)Require the Board of Supervisors in the enabling ordinance to
establish the terms and conditions of the transfer to the
Authority from the County, including but not limited to the
following:
a) Any transfer of real and personal property, assets and
liabilities, including, medical center liabilities related
to County funds previously advanced but not repaid or
otherwise recovered;
b) Transfer of employees, including any necessary personnel
transition plan, as specified, and assignment of title to
funded pension assets and responsibility for any unfunded
pension liabilities under the Kern County Employees'
Retirement Association or other retirement plans, and
funding of the accrued benefits for employees of the
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Authority in the event of withdrawal from the plan or
dissolution of the Authority, as specified;
c) Maintenance, operation, and management or ownership of
KMC;
d) Transfer of licenses; and,
e) Any other matters the Board of Supervisors deems
necessary, appropriate, or convenient for the conduct of
the Authority's activities.
7)Authorize, notwithstanding any other law, a transfer of
maintenance, operation, and management or ownership or lease
of KMC to the Authority to be made with or without the payment
of a purchase price by the Authority, and upon the terms and
conditions found necessary by the Board of Supervisors
specified in the enabling ordinance.
8)Prohibit a transfer of the maintenance, operation, and
management or ownership or lease of KMC to the Authority from
being construed as empowering the Authority to transfer any
ownership interest of the County in any portion of KMC except
as otherwise approved by the Board of Supervisors.
9)Prohibit the Authority from transferring the maintenance,
operation, and management or ownership or lease of KMC to any
other person or entity without the prior written approval from
the Board of Supervisors.
10)Allow the County to retain control of KMC's physical plant
and facilities except as otherwise specifically provided for
in the enabling ordinance, and that any lease agreement or
other agreement between the County and the Authority may
provide that the county premises shall not be sublet without
the County's approval.
11)Make changes to the governing body of the Authority and
require the Authority to be governed by a Board of Governors
appointed both initially and continually by the Board of
Supervisors. Delete all prior language relating to a board of
trustees.
12)Require the Board of Supervisors to specify in the enabling
ordinance the number of members and the composition of
membership, the qualifications for individual members, the
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manner of appointment, selection, or removal of members, their
terms of office, and all other matters the Board of
Supervisors deems necessary.
13)Allow, at the discretion of the Board of Supervisors, the
Board of Governors to consist entirely of members of the Board
of Supervisors, or may include any number of members of the
Board of Supervisors or county officers or employees appointed
to represent the interest of the County.
14)Authorize the Board of Supervisors, during or after formation
of the Authority, to modify the number, length of terms,
qualification, method of appointment, and provision for all
other matters pertaining to the Board of Governors by
subsequent ordinance.
15)Require the Board of Supervisors to adopt bylaws for the
Authority that specifies the offices of the Board of
Governors, time, place, and conduct of meetings. Require a
majority vote of Board of Supervisors for the bylaws to become
operative.
16)Specify requirements for the Board of Governors to comply
with state conflict of interest laws related to contracts.
17)Require the Board of Governors, in the event of a change of
license ownership, to comply with specified obligations of
governing bodies of general acute care hospitals as well as
the terms and conditions of the license.
18)Provide that the Board of Governors is a duly constituted
governing body as the term is used specified sections of the
California Code of Regulations.
19)Require the Board of Governors to adopt written rules,
regulations and procedures for basic human resource functions
not inconsistent with the Memorandum of Understanding (MoU)
covering employees represented by employee organization or the
provisions of this bill.
20)Allow the Board of Governors to hold meetings in closed
sessions for discussions of trade secrets, and exempt records
that reveal the Authority's trade secrets, or rates of
payment, from disclosure. Allow the Authority to form peer
review bodies, and exempt the activities of these peer review
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bodies from disclosure, and extend other confidentiality
protections in existing law to the activities of these peer
review bodies.
21)Define "District" in the County Employees Retirement Law of
1937, which governs 20 independent county retirement
associations, to include the Authority.
22)Prohibit employees and officers of the Authority from
automatically becoming members of the Kern County Employees'
Retirement Association and requires their eligibility for
membership to be established pursuant to the Kern County
Hospital Authority Act, established by this bill. Prescribe
the participation of employees in the Kern County Employees'
Retirement Association, as specified.
23)Require the State Department of Health Care Services to take
all necessary steps to ensure the following:
a) The Authority is permitted to operate KMC;
b) KMC continues its status as a designated public hospital
to at least the same extent as it would be designated in
the absence of its transfer to the Authority pursuant to
this bill;
c) The Authority may participate as a contributing public
agency to the extent permitted by federal law, as
specified.
24)Revise language relating to indigent care services and the
continued responsibility of the County.
25)Clarify that the Authority's obligations are solely their
obligations and are not obligations of the state, County, or
any other entity.
26)Authorize the Board of Supervisors to dissolve the Authority
and provide for the disposition of assets, obligations, and
liabilities.
27)Define the following terms:
a) "Authority" to mean "the Kern Hospital System
Authority";
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b) "Board of governors" to mean "the governing body of the
Authority";
c) "Enabling ordinance" to mean "the county ordinance
enacted by the board of supervisors to establish the
Authority, as it may be amended from time to time."
d) "Medical center" to mean the "assets and liabilities
comprising the KMC, without limitation a licensed acute
care hospital and related public health care programs,
facilities, care organizations, physician practice plans
and delivery systems as specified by the Board of
Supervisors or the Authority now or in the future depending
on which entity controls the medical center."
28)Add double-jointing language to avoid chaptering conflicts
with SB 673 (DeSaulnier) of the current legislative session.
29)Make findings and declarations, and other technical and
conforming changes.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required an agreement for the maintenance, operation, and
management or ownership of the medical center to conform with
the following requirements:
a) To comply with existing law which authorizes county
hospitals to integrate services with other hospitals into a
system of community service which offers free choice of
hospitals;
b) Allows the board of supervisors and governing board to
mutually agree on terms and conditions; and,
c) To comply with public notice requirements in existing
law which establish requirements for medical facilities
prior to closing or eliminating for reducing medical
services.
2)Stated that upon an agreement between the Authority and each
affected employee bargaining unit:
a) Requires permanent employees of the medical center on
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the effective date of affiliation to be deemed qualified
for employment or retention and prohibits any other
qualifications from being required. Requires that
probationary employees on the effective date of affiliation
to retain their probationary status and rights and
prohibits probationary employees from having to serve a new
probationary period;
b) Requires employment seniority of an employee of the
medical center upon affiliation to be counted toward
seniority in the Authority, as specified. Requires the
Authority to provide for the maintenance of benefits that
accompany seniority, including, but not limited to,
preference in vacations and scheduling, when applicable;
c) Prohibits the implementation of this Act from being a
cause for the modification of the level of employment
benefits. Requires employees, as specified, upon
consolidation or affiliation, to retain the existing or
equivalent classification, job descriptions, comparable
pension benefits, at least their existing salaries, and
other benefits, including, but not limited to, accrued and
unused vacation, sick leave, personal leave, health and
pension benefits, retiree health benefits, and deferred
compensation plans;
d) Allows the Authority to contract with the California
Public Employees' Retirement System, to the extent
permitted by federal law, to provide membership for
Authority employees, as specified;
e) Requires the transfer of function from county employee
classifications to Authority employees established to
result in the recognition by the Authority of the exclusive
representative of the classifications performing those
functions at the time of transfer; and,
f) Requires the Authority, notwithstanding any other law,
to do both of the following for 24 months after the term
end date of a KMC MoU in existence when the County
establishes the Authority:
i) Continue to recognize each exclusive representative
of each bargaining unit; and,
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ii) Roll over and continue to be bound by any existing
KMC MoU or agreement covering the terms and conditions of
employment.
3)Authorized the Authority to determine the number of employees,
the number of full-time equivalent positions, job
descriptions, the nature and extent of classified employment
positions and salaries of employees, except as provided in the
transfer agreement described above.
4)Required the Authority to conform to the following:
a) Be a government entity separate from the County and any
other public agency that is not governed by or subject to
the policies or operational rules of the County or any
other public entity;
b) Be subject to state and federal taxation laws that are
applicable to public entities, except to apply from
exemption from social security taxation with an agreement
with the exclusive representatives of the affected
employees, pursuant to federal law;
c) Comply with the Meyers-Milias-Brown Act, the Public
Records Act, the Ralph M. Brown Act, and other existing
laws that apply to public agencies and laws relating to
peer review;
d) Carry professional and general liability insurance or
programs to the extent sufficient to cover its activities;
e) Comply with current law regarding the settlement of
terminated employment contracts; and,
f) Meet all local, state, and federal data reporting
requirements.
5)Required the Authority to be responsible for human resources
functions pursuant to written rules, regulations, and
procedures adopted. Prohibited a member of the Authority's
administrative staff from engaging in activities inconsistent
and incompatible with his or her duties as a result of prior
employment or affiliation with the County or the governing
board.
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FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)Purpose of this bill. This bill is permissive and allows the
Board of Supervisors to establish a separate Authority to
govern the County's medical center. This bill contains
several provisions to ensure that healthcare services remain
accessible to patients regardless of their ability to pay and
that the Authority, as a separate entity from the County, will
still continue to serve as a hospital. This bill also
establishes requirements for the Authority upon the transfer
of KMC employees. This bill is author-sponsored.
2)Previous legislation. The Legislature has granted several
counties the ability to create health authorities, including
Alameda [AB 2374 (Bates), Chapter 816, Statues of 1996], San
Luis Obispo [SB 538 (O'Connell), Chapter 899, Statues of
1999], Santa Barbara, and Sonoma (for dental).
This bill is similar to AB 276 (Alejo), Chapter 686, Statutes of
2012, which authorized the Monterey County Board of
Supervisors to establish the Central Coast Hospital Authority
(CCHA) and prohibited the Monterey County Board of Supervisors
from establishing the CCHA until an agreement to affiliate or
consolidate the Natividad Medical Center with at least one
other health care facility was reached. Prior to AB 276,
previous health authorities were established with existing
county-run and operated hospitals and programs.
Similar to AB 276, this bill authorizes the Authority to issue
bonds and levy taxes. However, unlike AB 276 this bill does
not require that an agreement to be reached with the Board of
Supervisors and another health care facility to consolidate or
merge the facilities. This bill also contains a different
governing board structure.
3)Author's statement. According to the author, "Existing state
law requires counties to be the 'provider of last resort' for
indigent individuals with no other means. KMC has fulfilled
this role for the County of Kern as a vital community
resource: it provides the only trauma care between Los
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Angeles and Fresno, and is vital to training physicians
through academic residency and education programs. However,
recent investigations have revealed that the hospital is in
poor fiscal condition. There have been interests in modifying
the way KMC is governed. Creating a Hospital Authority to
govern the KMC is only one option of several currently being
explored."
KMC continues to face significant financial challenges.
Although the monthly operating deficits have decreased, KMC
still faces a sizable total deficit and is continuing to take
steps to reduce costs.
4)Kern Medical Center (KMC). According to KMC's Web site,
"Since our beginning in 1867, KMC has been striving for
excellence in serving the community in which we operate.
Employing an average of 1,800 staff members, KMC is an
integral part of the community. KMC is a 222-bed acute care
teaching hospital. The Medical Center serves a community of
approximately 650,000, and the hospital is owned and operated
by the County. The health of the citizens of the County is a
priority to KMC, and it is the only hospital dedicated to
physician resident training."
5)Policy considerations. The Legislature may wish to consider
if some of the specifics contained in this bill are more
appropriately dealt with outside of the state legislative
process and handled at the local level.
6)Arguments in support. Supporters argue that the formation of
the Authority will give KMC the ability to be more flexible,
responsive, and innovative as they continue to provide care to
the large number of uninsured and low-income residents in the
County.
7)Arguments in opposition. None on file.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
FN: 0004677
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