BILL ANALYSIS Ó
AB 241
Page 1
ASSEMBLY THIRD READING
AB
241 (Gordon)
As Amended April 29, 2015
Majority vote
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|Committee |Votes |Ayes | |
| | | | |
|----------------+------+---------------------+-------------------|
|Local |9-0 |Maienschein, | |
|Government | |Gonzalez, Alejo, | |
| | |Chiu, Cooley, | |
| | |Gordon, Holden, | |
| | |Linder, Waldron | |
| | | | |
|----------------+------+---------------------+-------------------|
|Privacy |11-0 |Gatto, Wilk, Baker, | |
| | |Calderon, Chang, | |
| | |Chau, Cooper, | |
| | |Dababneh, Dahle, | |
| | |Gordon, Low | |
| | | | |
|----------------+------+---------------------+-------------------|
|Appropriations |13-4 |Gomez, Bloom, |Bigelow, |
| | |Bonilla, Bonta, |Gallagher, Jones, |
| | |Calderon, Chang, |Wagner |
| | |Daly, Eggman, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Holden, Quirk, | |
AB 241
Page 2
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Requires a local public entity to provide the name and
mailing address of each retired employee to an organization
representing retired employees of the local public entity, in
specified instances leading up to and when a local public entity
files for bankruptcy. Specifically, this bill:
1)Requires, notwithstanding any other law, including the
California Public Records Act, a local public entity to provide
the name and mailing address of each retired employee, or his or
her beneficiary receiving the retired employee's retirement
benefit, to any organization that is incorporated as a
California nonprofit mutual benefit corporation, as specified,
for the purpose of representing retired employees of the local
public entity, upon that organization's request, if any of the
following occur:
a) The local public entity began the process of participating
in a neutral evaluation process;
b) The local public entity declared a fiscal emergency and
adopted a resolution by a majority of the governing board, as
specified; or,
c) The local public entity filed a petition pursuant to
applicable federal bankruptcy law.
2)Requires an organization receiving the name and mailing address
of a retired employee or his or her beneficiary receiving the
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retired employee's retirement benefit to use that information
only for the purpose of representing the retired employee or his
or her beneficiary as a member of the organization as an
interested party in a neutral evaluation process, the
declaration of a fiscal emergency and adoption of a resolution,
or a bankruptcy proceeding.
3)Requires a $25,000 civil penalty for an organization that
violates 2) above, under conditions that are not specified.
4)Prohibits, upon written request of any retired employee, or his
or her beneficiary receiving the retired employee's retirement
benefit, the local public entity from disclosing the name and
home address of the retired employee, or his or beneficiary
receiving the retired employee's retirement benefit, and
requires the local public entity to remove the retired employee,
or his or her beneficiary receiving the retired employee's
retirement benefit, from any mailing list maintained by the
local public entity in compliance with 1) above.
5)Finds and declares that Section 1 of the bill furthers, within
the meaning of paragraph (7) of subdivision (b) of Section 3 of
Article 1 of the California Constitution, the purposes of that
constitutional section as it relates to the right of public
access to the meetings of local public bodies or the writings of
local public officials and local agencies, and declares,
pursuant to paragraph (7) of subdivision (b) of Section 3 of
Article 1 of the California Constitution, that the Legislature
makes the following findings:
This act ensures that public retirees and their
beneficiaries have the opportunity to meaningfully
participate in the legal processes of a local public
entity filing a petition and exercising powers
pursuant to applicable federal bankruptcy law.
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6)Provides that no reimbursement is required because the only
costs that may be incurred by a local agency or school district
under this act would result from a legislative mandate that is
within the scope of paragraph (7) of subdivision (b) of Section
3 of Article I of the California Constitution.
EXISTING LAW:
1)Declares, pursuant to the California Constitution, that people
have the right of access to information concerning the conduct
of the people's business, and, therefore, the meetings of public
bodies and the writings of public officials and agencies shall
be open to public scrutiny.
2)Requires, as specified in paragraph (7) of subdivision (b) of
Section 3 of Article I of the California Constitution, that in
order to ensure public access to the meetings of public bodies
and the writings of public officials agencies, each local agency
is required to comply with the California Public Records Act and
the Ralph M. Brown Act, and with any subsequent statutory
enactment amending either act, enacting a successor act, or
amending any successor act that contains findings demonstrating
that the statutory enactment furthers the purposes of this
section of the Constitution.
3)Provides, pursuant to the California Constitution Article XIII
B, Section 6, that whenever the Legislature or any state agency
mandates a new program or higher level of service on any local
government, the state shall provide a subvention of funds to
reimburse that local government for the costs of the program or
increased level of service, except that the Legislature may, but
need not, provide a subvention of funds for specified mandates,
which include legislative mandates contained in statutes within
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the scope of paragraph (7) of subdivision (b) of Section 3 of
Article I.
4)Specifies, pursuant to the California Public Records Act, that
the Act does not require the disclosure of personnel, medical,
or similar files, if the disclosure of which would constitute an
unwarranted invasion of personal privacy.
5)Provides, pursuant to the California Public Records Act, that
information regarding persons paid by the state to provide
in-home supportive services, as specified, is not subject to
public disclosure pursuant to the Act, except as provided in 6)
below.
6)Requires copies of names, address, and telephone numbers of
persons described in 5) above, to be made available, upon
request, to an exclusive bargaining agent and to any labor
organization seeking representation rights, as specified, and
provides that this information shall not be used by the
receiving entity for any purpose other than the employee
organizing, representation, and assistance activities of the
labor organization.
7)Allows a local public entity to initiate a neutral evaluation
process if the local public entity is or likely will become
unable to meet its financial obligations as and when those
obligations are due or become due and owing.
8)Allows a local public entity to file a petition and exercise
powers pursuant to applicable federal bankruptcy law (Chapter 9)
if the local public entity declares a fiscal emergency and
adopts a resolution by a majority vote of the governing board at
a noticed public hearing that includes findings that the
financial state of the local public entity jeopardizes the
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health, safety, or well-being of the residents of the local
public entity's jurisdiction or service area absent the
protections of Chapter 9.
9)Requires the local public entity and interested parties to
mutually agree upon a process and select the neutral evaluator
to oversee the neutral evaluation process and facilitate all
discussions in an effort to resolve their disputes.
10)Requires a neutral evaluator to have experience and training in
conflict resolution and alternative dispute resolution and meet
specified qualifications, and requires the neutral evaluator to
be impartial, objective, independent, and free from prejudice,
and prohibits the neutral evaluator from imposing a settlement
on the parties.
11)Requires the local public entity and interested parties
participating in the neutral evaluation process to negotiate in
good faith.
12)Require the neutral evaluation process to end if any of the
following occur:
a) The parties execute a settlement or agreement;
b) The parties reach an agreement or proposed plan of
readjustment that requires the approval of a bankruptcy
judge;
c) The neutral evaluation process has exceeded 60 days and
the parties have not reached an agreement, and no agreement
is made to extend the process past the initial 60-day time
period;
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d) The local public entity initiated the neutral evaluation
process but received no responses from interested parties
during the specified time frame; or,
e) The fiscal condition of the local public entity
deteriorates to the point that a fiscal emergency is declared
and necessitates the need to file a petition for Chapter 9.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, local mandate costs would fall under Proposition 42
(2014) and, thus, are not reimbursable.
COMMENTS:
1)Bill Summary. This bill would require a local public entity to
provide the name and mailing address of each retired employee or
his or her beneficiary receiving the retired employee's
retirement benefit to any organization that is incorporated as a
501(c)(5) for the purpose of representing retired employees,
upon the request of that organization, if that local public
entity has begun the process of participating in a neutral
evaluation, has declared a fiscal emergency, or has filed a
petition pursuant to applicable federal bankruptcy law (known as
Chapter 9).
The bill also prohibits a 501(c)(5) that receives the name and
mailing address of a retired employee or his or her beneficiary
from a local public entity from using the information for any
other purpose than representing the retired employee or his or
her beneficiary as a member of the organization as an interested
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party in a neutral evaluation process, the declaration of a
fiscal emergency, or a bankruptcy proceeding. The bill provides
a $25,0000 civil penalty for a 501(c)(5) that violates using the
information for any other purpose beyond what is specified in
the bill.
The bill is sponsored by the Retired Public Employees
Association.
2)Author's Statement. According to the author, "When the City of
Stockton filed for bankruptcy, retirees from the city attempted
to organize to protect their interests in bankruptcy court. In
the case of Stockton, the retirees were able to organize and
incorporate a group to be a party to the bankruptcy of the City.
This group received approval as a labor organization under IRS
Code Section 501(c)(5). They were then able to obtain donations
and hire legal counsel to represent the group in bankruptcy
court.
"The retiree forming the 501(c)(5) requested from the city, the
names and addresses of retired persons from the city be provided
to the organization that had been incorporated and approved
under IRS Section 501(c)(5) status so they could notify the
retirees of their intent to seek representation before the
bankruptcy court. However, the City of Stockton, citing the
California Public Records Act, refused the request of the
501(c)(5) to provide names and addresses of city retirees,
making it very difficult for the retirees to organize and appear
in the bankruptcy proceedings.
"Although individual retired persons may appear, because they
have an individual claim, the ability to make a significant
argument in bankruptcy court to protect the retirees' interest
requires competent legal counsel. Other creditors, active
employee organizations, and public agencies that have a claim in
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the bankruptcy proceedings do not have the problem of
organization and funding the legal costs.
"A similar exception to the California Public Records Act allows
the names, addresses, and telephone numbers of in home health
care workers to be provided to labor organizations for the
purpose of organization and representing these workers."
3)Background on Municipal Bankruptcy. According to the United
States Courts, "the purpose of Chapter 9 is to provide a
financially-distressed municipality protection from its
creditors while it develops and negotiates a plan for adjusting
its debts. Reorganization of the debts of a municipality is
typically accomplished either by extending debt maturities,
reducing the amount of principal or interest, or refinancing the
debt by obtaining a new loan." Chapter 9 provides a municipal
debtor with two primary benefits: a) a breathing spell with the
automatic stay; and, b) the power to readjust debts through a
bankruptcy plan process. The process enables municipalities to
continue to provide essential public services while allowing
them to adjust their debts.
Existing law prohibits a local public entity from filing under
federal bankruptcy law unless the local public entity has
participated in a neutral evaluation process with interested
parties, or the local public entity has declared a fiscal
emergency and has adopted a resolution by a majority vote of the
governing board at a noticed public hearing.
The requirements for a neutral evaluation process or fiscal
emergency declaration were put into place by AB 506
(Wieckowski), Chapter 675, Statutes of 2011. Prior to AB 506,
local public entities in California had unfettered access to
filing under Chapter 9 provisions of federal bankruptcy law,
meaning that there was no state involvement or state-mandated
requirements placed on the local entity in order to file for
Chapter 9. There were several years of legislative attempts to
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enact some sort of "gatekeeping" provisions and state
involvement leading up to the passage of AB 506, including AB
155 (Mendoza) and SB 88 (DeSaulnier) of the 2009-10 Regular
Session.
4)Proposition 42. Proposition 42 was passed by voters on June 3,
2014, and requires all local governments to comply with the
California Public Records Act and the Ralph M. Brown Act and
with any subsequent changes to those Acts. Proposition 42 also
eliminated reimbursement to local agencies for costs of
complying with the California Public Records Act and the Ralph
M. Brown Act.
This bill, in Section 2, contains language that says that the
Legislature finds and declares that Section 1 of the bill
furthers the purpose of the California Constitution as it
relates to the right of public access to the meetings of local
public bodies or the writings of local public officials and
local agencies. Pursuant to paragraph (7) of subdivision (b) of
Section 3 of Article I of the Constitution, the bill also
includes a finding that says that "This act ensures that public
retirees and their beneficiaries have the opportunity to
meaningfully participate in the legal processes of a local
public entity filing a petition and exercising powers pursuant
to applicable federal bankruptcy law." Section 3 of the bill
specifies that no reimbursement for local agencies to implement
the bill's provisions is necessary because "the only costs that
may be incurred by a local agency or school district?would
result from a legislative mandate that is within the scope of
paragraph (7) of subdivision (b) of Section 3 of Article I of
the California Constitution."
5)Arguments in Support. According to the sponsor, "Other
creditors, employee organizations, and public agencies that have
a claim in the bankruptcy proceedings do not have the issue of
organization and funding legal costs. Retirees do. Organizing
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retired workers to be represented in a bankruptcy proceeding by
their former employee should be an equivalent exemption."
6)Arguments in Opposition. None on file.
Analysis Prepared by:
Misa Lennox and Debbie Michel / L. GOV. / (916)
319-3958 FN:
0002570