BILL ANALYSIS Ó SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Jerry Hill, Chair 2015 - 2016 Regular Bill No: AB 180 Hearing Date: July 6, 2015 ----------------------------------------------------------------- |Author: |Bonilla | |----------+------------------------------------------------------| |Version: |June 29, 2015 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Mark Mendoza | |: | | ----------------------------------------------------------------- Subject: Cemetery and Funeral Bureau. SUMMARY: Requires the Cemetery and Funeral 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) § 7600 et seq.) 2)Authorizes the Cemetery and Funeral Bureau (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; the scope of examination; and, carrying out the provisions for the protection of the peace, health, safety, welfare and morals of the public. (BPC § 7606) 3)Authorizes the Bureau to inspect the premises in which the AB 180 (Bonilla) Page 2 of ? business of a funeral director is conducted, where embalming is practiced, or where human remains are stored. (BPC § 7607) 4)Authorizes the Bureau to employ investigators and attorneys to assist the Bureau in prosecuting violations of the Funeral Law, as specified. (BPC § 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 § 9600 et seq.) 6)Authorizes the Bureau to establish necessary rules and regulations for the administration and enforcement of the Cemetery Act. (BPC § 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 § 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 Bureau that includes: (BPC § 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; AB 180 (Bonilla) Page 3 of ? 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 § 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 endowment care funds is to be paid by the cemetery authority, as specified. (BPC § 9652(d)) This bill: 1)Requires the powers and duties of the Bureau be reviewed by the appropriate policy committees of the Legislature before January 1, 2020. 2)Requires the Bureau to conduct a study of endowment care funds as specified, by November 1, 2018. 3)Combines the Cemetery Fund and the Funeral Directors and Embalmers Fund to create the Cemetery and Funeral Fund. 4)Merges the Funeral and Directors and Embalmers Law with the Cemetery Act to create the Cemetery and Funeral Act. AB 180 (Bonilla) Page 4 of ? 5)Makes other technical and conforming changes. FISCAL EFFECT: This bill is keyed "fiscal" by Legislative Counsel. According to the Assembly Appropriations Committee analysis dated May 13, 2015, the Bureau operates as a single entity from two separate special funds, the Cemetery Fund and the Funeral Directors and Embalmers Fund. The funds are both supported by fees from licensees, are solvent, and have reserves. The analysis notes that the bill will result in on-going annual Special Fund costs of approximately $2.5 million for the Cemetery Fund and $1.8 million for the Funeral Directors and Embalmers Fund for operating and personnel expenses including enforcement, licensing, auditing and administrative functions. This fund is self-supporting with fee revenue. COMMENTS: 1. 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." 2. 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 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. AB 180 (Bonilla) Page 5 of ? 3. 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 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. 4. Cemetery and Funeral 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. 5. Endowment Care Funds. As noted in the sunset review report, BPC Section 9650 requires cemeteries to file an annual report AB 180 (Bonilla) Page 6 of ? 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 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. 6. Related Legislation This Year. SB 465 (Hill) extends the operation of the Contractors' State License Board until 2020 and makes various changes to the Contractors' State License Law. ( Status: The bill is pending in the Assembly Committee on Business and Professions.) SB 466 (Hill) sunsets the Board of Registered Nursing. ( Status: The bill is pending in the Assembly Committee on Business and Professions.) SB 467 (Hill) extends the operation of the California Board of Accountancy until 2020 and makes various changes in AB 180 (Bonilla) Page 7 of ? regards to the DCA. ( Status: The bill is pending in the Assembly Committee on Business and Professions.) SB 468 (Hill) extends the operation of the Bureau of Security and Investigative Services and the Alarm Company Act, Locksmith Act, Private Investigator Act, Private Security Services Act, Proprietary Security Services Act, and Collateral Recovery Act until January 1, 2020. It also subjects the Bureau to review by the appropriate committees of the Legislature and makes various changes to provisions in the aforementioned Acts to improve the oversight, enforcement and regulation by the Bureau of licensees under each Act. ( Status: The bill is pending in the Assembly Committee on Business and Professions.) SB 469 (Hill) extends the operation of the California State Athletic Commission until January 1, 2020. Makes changes to the laws governing the Commission's operations and the Commission's oversight of professional and amateur boxing, professional and amateur kickboxing, all forms and combinations of full contact martial arts contests, including mixed martial arts and matches or exhibitions conducted, held or given in California. ( Status: The bill is pending in the Assembly Committee on Business and Professions.) AB 177 (Bonilla) extends the operation of the Board for Professional Engineers, Land Surveyors and Geologists and California Architects Board and Landscape Architects Committee until January 1, 2020. ( Status: The bill is also set for a hearing before this Committee on July 6.) AB 178 (Bonilla) extends the operation of the Board of Vocational Nursing and Psychiatric Technicians until January 1, 2020. ( Status: The bill is pending in the Senate Appropriations Committee.) AB 179 (Bonilla) extends the operation of the Dental Board of California until January 1, 2020. ( Status: The bill is also set for a hearing before this Committee on July 6.) AB 181 (Bonilla) extends the operation of the California State Board of Barbering and Cosmetology (BBC) until January 1, 2020. Makes changes to the laws governing the Board's regulation of barbers, cosmetologists, estheticians, AB 180 (Bonilla) Page 8 of ? electrologists, manicurists, apprentices and establishments. ( Status: The bill is also set for a hearing before this Committee on July 6.) 7. Technical Amendments. a) The Bureau has requested to move the deadline from November 1, 2018 to January 1, 2018 to complete the study of endowment care funds. This change will allow the Bureau to focus to its efforts on the study prior to its Sunset Review. The Author has agreed to take this technical amendment on the Senate Floor. b) There is a typographical error on page 38, line 37. The code section should read "Section 7711.1" rather than "Section 7700.1". The Author has agreed to take this technical amendment on the Senate Floor. SUPPORT AND OPPOSITION: Support: None of file as of June 30, 2015. Opposition: None of file as of June 30, 2015. -- END --