BILL ANALYSIS Ó
AB 1753
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Date of Hearing: April 6, 2016
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL
SECURITY
Rob Bonta, Chair
AB 1753
(Obernolte) - As Amended March 30, 2016
SUBJECT: State employees: overpayment
SUMMARY: Specifies that the date of overpayment for
overpayments made to state employees that involve leave credits
is either the date the employee receives compensation for the
erroneously credited leave or, in cases where the overpayment is
the result of fraud, embezzlement, or falsification, the date
the state discovers the fraud, embezzlement, or falsification,
whichever is later. This bill also requires that administrative
action by the state to recover overpayments be initiated by
providing written notice to the employee.
EXISTING LAW:
1)Requires the state, when an overpayment has been made to a
state employee, to notify the employee and to receive
reimbursement in a manner mutually agreed to by the employee
and the state, as specified. If mutual agreement is not
reached, the state is required to recoup the overpayment in
installment payments via payroll deduction, as specified.
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2)Specifies that when an employee separates from the state prior
to full repayment, the amount owed will be withheld from any
money owing the employee upon separation. If the money owing
is insufficient to cover the amount owed, the state has the
right to exercise all legal means to recover the additional
amount owed.
3)Limits the amount deducted from payment of salary or wages to
25% of the employee's net disposable earnings.
4)Prohibits the state from taking administrative action to
recover an overpayment unless the action is initiated within 3
years from the date of overpayment.
5)Specifies that if the above provisions are in conflict with a
memorandum of understanding (MOU), the MOU will be
controlling.
FISCAL EFFECT: Unknown.
COMMENTS: According to the author, "In August 2014, the
California State Auditor released a High Risk Update report
detailing a statewide electronic analysis of the leave
accounting system. Upon completion of the analysis, the State
Auditor found that state agencies credited employees with
roughly 197,000 hours of unearned leave between January 2008 and
December 2012. As of December 2013, the value of those
erroneous leave hours was nearly $6.4 million, an amount that
the State Auditor believes will likely increase over time as
employees receive raises or promotions. Furthermore, the report
concluded that those errors also included nearly 16,000 hours of
sick leave, which state employees can convert to state service
credit when they retire, ultimately increasing the state's
pension payments."
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"According to the report, unclear guidance in state law puts the
state at risk of additional costs. While state agencies are
required to initiate collection efforts on overpayments within
three years from the date of overpayment, California law does
not explicitly define when an overpayment occurs. Both the
California Department of Human Resources (CalHR) and CSU
consider overpayments of leave to occur when employees use the
erroneous leave to cover absences from work or cash out unearned
leave hours. Due to the lack of clear statutory language, the
state is at risk of not recovering the funds that represent
inappropriately credited leave hours in the event of
litigation."
The author concludes, "AB 1753 would address this issue by
requiring state agencies to provide written notice to the
employee that he or she was inappropriately credited leave hours
within three years from the date the employee separates from
state service or from the date that the state discovers fraud,
embezzlement, or falsification, whichever period is longer."
The following is an excerpt from the report from the State
Auditor entitled, "Recommendations for the Legislature From
Audits Issued During 2014 and 2015."
The Legislature should amend state law to clarify the statute
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of limitations for recovering the overpayment of leave
credits. For example, it could require state agencies to
provide notice to the employee that he or she was
inappropriately credited leave hours within three years from
the date the employee was credited the hours or three years
from the date the employee separated from state service and,
in instances of fraud, three years from the date the State
discovered the fraud.
REGISTERED SUPPORT / OPPOSITION:
Support
Howard Jarvis Taxpayers Association
Opposition
None on file
Analysis Prepared by:Karon Green / P.E.,R., & S.S. / (916)
319-3957
AB 1753
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