BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 241 |Hearing |6/8/16 |
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|Author: |Gordon |Tax Levy: |No |
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|Version: |6/1/16 |Fiscal: |Yes |
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|Consultant|Weinberger |
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Bankruptcy: retired employees: disclosure of names and
mailing addresses
Requires a local public entity to provide contact information
for each of its retirement plan beneficiaries to an organization
representing the local public entity's retired employees in
certain situations related to the public entity's efforts to
seek municipal bankruptcy protection.
Background
Federal bankruptcy law for public agencies (Chapter 9) gives
government debtors time to come up with repayment plans,
providing them a breathing spell from creditors' collection
efforts. Only a municipality, which federal law defines as a
political subdivision, public agency, or instrumentality of a
state, can initiate a Chapter 9 proceeding. The municipality
must be insolvent and desire to effect a plan to adjust its
debts.
Unlike private bankruptcy law (Chapter 11), municipal bankruptcy
law must respect the states' sovereign powers. Consequently,
the states can control their local agencies' access to federal
bankruptcy protection. California state law allows a local
government to petition for bankruptcy protection only after it
either participates in a neutral evaluation process or declares
a fiscal emergency (AB 506, Wieckowski, 2011).
AB 241 (Gordon) 6/1/16 Page 2
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The California Public Records Act (PRA) requires public records
to be open to inspection during office hours and gives every
person a right to inspect public records, with specific
exceptions. The PRA exempts from disclosure "personnel,
medical, or similar files, the disclosure of which would
constitute an unwarranted invasion of personal privacy."
However, state law also specifically allows for disclosure of
some personnel information under specific circumstances. For
example, although state law generally prohibits public the
public disclosure of information regarding persons paid by the
state to provide in-home supportive services or personal care
services, it does require that copies of names, addresses, and
telephone numbers of those service providers must be made
available, upon request, to an exclusive bargaining agent and to
any labor organization seeking representation rights pursuant to
state law (AB 515, Wright, 1999).
Because a local government's bankruptcy has the potential to
alter the benefits that the local government provides to its
retirees, those retirees' have an interest in being represented
as stakeholders in the local government's bankruptcy process.
Advocates for retired public employees want to help retirees
organize as a group to ensure that they are properly represented
as a party in a local government bankruptcy. They want the
Legislature to require that a local government that has taken
steps towards a municipal bankruptcy must provide contact
information for its retirement beneficiaries to an organization
that is formed for the purpose of representing the local
government's retired employees.
Proposed Law
Assembly Bill 241 requires a local public entity to provide a
list of 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 pursuant to
state law and qualified pursuant to Section 501(c)(5) of Title
26 of the Internal Revenue Code for the purpose of representing
retired employees of the local public entity, upon that
organization's request, if any of the following occur:
The local public entity began the process of
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participating in a neutral evaluation process pursuant to a
specified statute.
The local public entity declared a fiscal emergency and
adopted a resolution by a majority vote of the governing
board pursuant to a specified statute.
The local public entity filed a petition pursuant to
applicable federal bankruptcy law.
AB 241's requirements to disclose names and mailing addresses
apply to a local public entity notwithstanding any other law,
with one specified exception. Specifically, upon written
request of any retired employee, or his or her beneficiary
receiving the retired employee's retirement benefit, a local
public entity must not disclose the name and home address of the
retired employee, or his or her beneficiary receiving the
retired employee's retirement benefit, and must remove the
retired employee, or his or her beneficiary receiving the
retired employee's retirement benefit, from any mailing list
maintained by that local public entity in compliance with the
bill's disclosure requirements.
AB 241 requires that an organization receiving a list of the
name and mailing address of a retired employee or his or her
beneficiary receiving the retired employee's retirement benefit
must 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.
The bill requires that an organization that misuses the list of
names and mailing addresses must be subject to a civil penalty
in the amount of twenty-five thousand dollars ($25,000).
State Revenue Impact
No estimate.
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Comments
1. Purpose of the bill . AB 241 responds to a problem
experienced by retirees from the City of Stockton during that
city's municipal bankruptcy process. When the City of Stockton
filed for bankruptcy in 2012, retirees from the city organized
as a group in order to become a party to the bankruptcy. This
group received approval as a labor organization under the
Internal Revenue Code. They were then able to obtain donations
and hire legal counsel to represent them in bankruptcy court.
However, they were unable to obtain, from the city, the names
and addresses of the city's retirees so they could notify them
of their intent to seek representation before the bankruptcy
court. AB 241 strikes a balance between retiree organizations'
legitimate interests in being effective advocates for their
members and individual retiree's fundamental interests in
protecting the privacy of their personal information. The bill
is modelled on a narrow exception in state law that allows
contact information for in-home care service providers to be
provided to labor organizations for specified purposes. AB 241
protects individual privacy rights by allowing individual
retirees to request that their information not be disclosed and
by imposing a penalty for the unauthorized use of a list of the
contact information.
2. Clarification . State law requires that either a neutral
evaluation process or declaration of a fiscal emergency must
precede a local entity's filing a bankruptcy petition pursuant
to federal law. AB 241 specifies three circumstances under
which a local government must produce a list of its retirement
beneficiaries upon the request of an organization representing
the government's retirees: initiating a neutral evaluation
process, declaring a fiscal emergency, or filing a petition
pursuant to federal bankruptcy law. As a result, AB 214's
language could be misconstrued as implying that a local entity
can file a bankruptcy petition under federal law without having
either gone through a neutral evaluation process or declared a
fiscal emergency. The Committee may wish to consider amending
AB 241 to clarify this provision either by deleting the
reference to a local entity's filing a bankruptcy petition or by
narrowing that language to apply only to local entities that
filed a bankruptcy petition before the neutral evaluation and
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fiscal emergency statutes were enacted by AB 506 (Wieckowski,
2011).
3. Who pays ? The Legislative Counsel's Office says that AB 241
would impose a state-mandated local program because it requires
local government officials to perform additional duties related
to producing a list of contact information for retirees. The
California Constitution generally requires the state government
to reimburse the costs of new or expanded state mandated local
programs. However, on June 3, 2014, California voters approved
Proposition 42, which amended the California Constitution to
require local agencies to comply with the California Public
Records Act. Proposition 42 also requires local agencies to
comply with any subsequent statutory enactment amending the
Public Records Act that contains specified findings that the
newly enacted statute furthers specified constitutional
provisions guaranteeing public access to public agency meetings
and records. AB 241 contains legislative findings that the bill
furthers the purpose of Section 3 of Article I of the California
Constitution because it "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." As a result, AB 241 disclaims the state's
responsibility for reimbursing local governments' costs of
complying with the bill's requirements.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Privacy & Consumer Protection Committee: 11-0
Assembly Appropriations Committee: 13-4
Assembly Floor: 61-14
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Support and
Opposition (6/2/16)
Support : Retired Public Employees Association of California;
American Federation of State, County, and Municipal Employees,
AFL-CIO; California Alliance for Retired Americans; California
State Retirees.
Opposition : Unknown.
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