BILL ANALYSIS Ó AB 180 Page 1 Date of Hearing: April 28, 2015 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Susan Bonilla, Chair AB 180 Bonilla - As Amended April 22, 2015 SUBJECT: Cemetery and Funeral Bureau. SUMMARY: Requires the Cemetery and Funeral Bureau (Bureau) to report to the appropriate policy committees of the Legislature, before January 1, 2020, and conduct a review of endowment care fund requirements, as specified, by November 1, 2018. EXISTING LAW: 1)Establishes the Funeral and Directors and Embalmers Law (Funeral Law) which provides for the licensure and regulation of funeral directors and embalmers, within the Department of Consumer Affairs (DCA), and requires the director of the DCA to administer and enforce the Funeral Law. (Business and Professions Code (BPC) Section 7600 et seq.) 2)Authorizes the Bureau to adopt and enforce reasonably necessary rules and regulations relating to: the practice of embalming; the business of a funeral director; the sanitary conditions of places where such practice or business is conducted; specifying conditions for approval of funeral establishments for apprentices and mortuary science programs; AB 180 Page 2 the scope of examination; and, carrying out the provisions for the protection of the peace, health, safety, welfare and morals of the public. (BPC Section 7606) 3)Authorizes the Bureau to inspect the premises in which the business of a funeral director is conducted, where embalming is practiced, or where human remains are stored. (BPC Section 7607) 4)Authorizes the Bureau to employ investigators and attorneys to assist the Bureau in prosecuting violations of the Funeral Law, as specified. (BPC Section 7608) 5)Establishes the Cemetery Act which provides for the licensure and regulation of cemetery salespersons, cemetery managers, crematory managers, cemetery brokers, and cremated remains disposers. (BPC Sections 9600 et seq.) 6)Authorizes the Bureau to establish necessary rules and regulations for the administration and enforcement of the Cemetery Act. (BPC Section 9630) 7)Excludes: a religious corporation, church, religious society or denomination; a corporation sole administering temporalities of any church or religious society or denomination, or any cemetery organized, controlled, and operated by any of them; a public cemetery; any private; or, fraternal burial park not exceeding 10 acres, as specified, from the requirements of the Cemetery Act. (BPC Section 9609) 8)Requires each cemetery authority to file with the Bureau annually, on or before June 1, or within 5 months after close of their fiscal year, as specified, a written report to the AB 180 Page 3 Bureau that includes: (BPC Section 9650.3) a) The number of square feet of grave space and the number of crypts and niches sold or disposed of under endowment care; b) The amount collected and deposited as specified; c) A statement showing separately the total amount of the general and special care funds invested in each of the investments as authorized; d) A statement showing separately the locations, description, and character of the investments in which the special endowment care funds are invested; and, e) A statement showing the transactions entered into between the corporation or any officer, employee or stockholder as specified. 9)Permits the Bureau to examine endowment care funds of a cemetery authority for the following reasons: (BPC Section 9652 (a-c )) a) Whenever it deems necessary, at least once every five years; b) Whenever the cemetery authority in charge of endowment care funds fails to file the required report; and, c) Whenever the accountant or auditor qualifies his or her certification of the report that is prepared and signed by a licensed certified public accountant. 10)Specifies that the reasonable costs of the examination of AB 180 Page 4 endowment care funds is to be paid by the cemetery authority, as specified. (BPC Section 9652(d)) THIS BILL: 11)Requires the powers and duties of the Bureau be reviewed by the appropriate policy committees of the Legislature before January 1, 2020. 12)Requires the Bureau to conduct a study of endowment care funds as specified, by November 1, 2018. FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Council. COMMENTS: 13)Purpose. This bill is one of five author-sponsored sunset bills. According to the author, "Although the Bureau is subject to sunset review, and was subject to a sunset review oversight hearing on March 18, 2015, its statutory provisions do not contain a sunset review provision. This bill simply seeks to make clear that the Bureau is subject to sunset review, and to reinforce the recommendations contained in the Bureau's sunset review report, including a review of endowment care funds, in order to increase accountability." 14)Background. The Bureau licenses and regulates more than 11,000 licensees in 13 different licensing categories. The Bureau does not license or regulate cemeteries operated by religious organizations, cities, counties, cemetery districts, the military, Native American tribal organizations, or other groups. The Bureau has the oversight responsibility for both fiduciary AB 180 Page 5 and operational activities of its licensing population and has the statutory authority to enforce the licensing and practice acts in the BPC along with jurisdiction over specified provisions of the Health and Safety Code (HSC) dealing specifically with human remains, cemetery, and crematory provisions. Joint Oversight Hearings and Sunset Review of DCA Licensing Boards. In March of 2015, the Assembly Business and Professions Committee and the Senate Business, Professions and Economic Development Committee (Committees) conducted multiple joint oversight hearings to review 10 regulatory boards and other entities within the DCA. This and other sunset bills are intended to implement legislative changes recommended in the respective background reports drafted by the Committees for all of the agencies reviewed this year. The Sunset Review Process. The sunset review process provides a formal mechanism for the DCA; the Legislature; the regulatory boards, bureaus and committees; interested parties; and stakeholders to make recommendations for improvements to the authority of consumer protection boards and bureaus. This is performed on a standard four-year cycle and was mandated by SB 2036 (McCorquodale), Chapter 908, Statutes of 1994. Each eligible agency is required to submit to the Committees a report covering the entire period since last reviewed that includes, among other things, the purpose and necessity of the agency and any recommendations of the agency for changes or reorganization in order to better fulfill its purpose. During "sunset review", the Committees take public testimony and evaluate the eligible agency prior to the date the agency is scheduled to be repealed. An eligible agency is allowed to sunset unless the Legislature enacts a law to extend, consolidate, or reorganize the eligible agency. The legislation pertaining to this bill was based on specific issues raised and addressed in the background report prepared by the Assembly Business and Professions Committee. This is the Bureau's second sunset review. AB 180 Page 6 Cemetery Bureau. Prior to regulation as a Bureau, cemetery and funeral issues were handled by two separate entities, the California State Board of Funeral Directors and Embalmers and the California State Cemetery Board, which were created in 1939 and 1949, respectively. Ultimately, the Legislature determined that the DCA was the best structure for managing the Programs, and through a memorandum of understanding with the Cemetery Board, the DCA assumed responsibility for the Cemetery Program in October 1995. The DCA was vested with all of the duties, powers, purpose, responsibilities, and jurisdiction of both the Cemetery Board and the Board of Funeral Directors and Embalmers, and consolidated the functions into the Bureau. During the sunset review of the Bureau, several issues were raised in the Assembly Business and Profession Committee's background paper, and suggestions were raised by Committee staff regarding the functions and operations of the Bureau, including: the fund condition of both the Cemetery Fund and the Funeral Director Fund and the accompanying practice acts; ensuring compliance with required General Price Lists (GPL) disclosure information for consumers by funeral establishments; the enforcement for cemeteries with disciplinary concerns; the need for a review of endowment care funds requirements; and, the Bureau's preparation for the changing death care industry. Endowment Care Funds. As noted in the sunset review report, BPC Section 9650 requires cemeteries to file an annual report regarding the amount collected for endowment care funds and special care funds (preneed cemetery merchandise and services), the manner of investment of the funds, as well as other financial information and related documents. The annual report must be submitted with an audit report signed by a certified public accountant. The Bureau's audit unit reviews each of those annual reports and assesses any potential risk to the funds. In 2008, the Bureau reported to the Legislature the results from its Endowment Care Fund Survey, which AB 180 Page 7 addressed the need to increase endowment care fund requirements. The Bureau's survey requested all licensed cemeteries, as of December 31, 2006, to provide information regarding maintenance expenses, cemetery space and availability, and a five-year forecast for maintenance and expenses. While an increase in funding for endowment care was enacted in 2008. It was recommended in the background paper that the Bureau conduct an updated study on endowment care fund requirements and needs. This bill will require the Bureau to conduct a study of endowment care funds and report back to the Legislature by November 1, 2018. This bill will authorize the continued operation of the Bureau as it is currently functioning under the DCA and request the Bureau to be reviewed by the Legislature again in four years. By continuing the functions of the Bureau, this bill will allow the Bureau to continue in its regulatory capacity for the protection of consumers and the regulation of all aspects of the funeral and cemetery industries. Previous Related Legislation. AB 2946 (Hayashi), Chapter 504, Statutes of 2008, deleted the December 31, 2007, sunset date of, thereby extending indefinitely, the $8.50 quarterly fee the Bureau charges cemeteries for each burial, entombment, inurnment, or cremation made during the preceding quarter. SB 658 (Negrete McLeod), Chapter 386, Statutes of 2011, required funeral establishments to make their general price list available by mail, facsimile, or electronic mail, or to post that information on its Internet Web site, as specified, by January 1, 2013. AB 180 Page 8 SB 363 (Figueroa), Chapter 874, Statutes of 2003, implemented several changes to the provisions regarding the California Council for Interior Design Review pursuant to recommendations of the Joint Legislative Sunset Review Committee (JLSRC), made changes to several other boards and commissions, including the Bureau, within the DCA, and extends the sunset for the JLSRC. SB 1952 (Figueroa) Chapter 825, Statutes of 2002, required the Bureau to report to the Legislature on certain specified topics; extended the sunset date requiring cemetery authorities and crematories to pay a fee of $8.50 per cremation, burial, entombment or inurnment; authorized the Bureau to assess a fee for developing, purchasing, grading, and administering the cemetery manager and crematory manager examinations; and made other changes regulating the Bureau pursuant to recommendations of the JLSRC and DCA. REGISTERED SUPPORT: None on file. REGISTERED OPPOSITION: None on file. Analysis Prepared by:Elissa Silva / B. & P. / (916) 319-3301 AB 180 Page 9