BILL ANALYSIS
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|Hearing Date:June 8, 2009 |Bill No:AB |
| |124 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 124Author:Galgiani
As Introduced: January 15, 2009Fiscal: No
SUBJECT: Cemeteries: temporary manager.
SUMMARY: Urgency measure authorizing a court of competent
jurisdiction to appoint a temporary manager to manage the property and
service prepaid interments of a licensed cemetery, if the court finds
that a cemetery manager has ceased to perform his or her duties, as
specified; permits the court to authorize reasonable compensation to
the temporary manager to be made from the income from the cemetery's
trust funds, as specified.
Existing law:
1)Licenses and regulates approximately 200 certificates of authority
(cemeteries), and 340 cemetery managers by the Cemetery and Funeral
Bureau (Bureau) within the Department of Consumer Affairs. Provides
for the Bureau to also license and regulate funeral establishments,
funeral directors, embalmers, crematories, crematory managers,
cemetery brokers, cemetery salespersons, and cremated remains
disposers.
2)Exempts from the Bureau's jurisdiction specified types of cemeteries,
including: religious, public, and district cemeteries.
3)Defines a "cemetery manager" as a person engaged in the maintenance,
operation, or improvement of a licensed cemetery, and involved in
the interring of human remains, and the care, preservation, and
embellishment of cemetery property.
4)Requires every licensed cemetery to employ a licensed cemetery manager to
manage, supervise and direct its operations.
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5)Prohibits a person from engaging in the business of, acting as, or
advertising as a cemetery or crematory manager without a license
from the Bureau.
6)Authorizes the Bureau to revoke the license of any cemetery licensee and
the certificate of authority of any cemetery when certain conditions
are met, as specified.
7)Authorizes the Bureau to serve as conservator of cemetery endowment care
funds under specified circumstances.
This bill:
1) Authorizes a court of competent jurisdiction to appoint a
temporary manager to manage the property and service prepaid
interments of a licensed cemetery, if the court finds that a
cemetery manager has ceased to perform his or her duties.
2) Requires the temporary manager to be a licensed cemetery
manager.
3) Confers upon the appointed manager the same powers and
duties as a licensed cemetery manager, as provided for in law,
and provides that the temporary manager shall serve for a
limited term not to exceed six months, or until a new licensed
manager has been hired.
4) Authorizes the court to authorize payment of reasonable
compensation for the temporary manager's services. The
compensation shall be paid from available income in the
cemetery's endowment care funds, and if appropriate, from the
special care funds.
5) Would take effect immediately as an urgency measure.
FISCAL EFFECT: This bill has been keyed non-fiscal by Legislative
Counsel.
COMMENTS:
1.Note : Last Year's AB 1816 (Galgiani). This bill is a
reintroduction of last year's
AB 1816 by the same Author which passed this Committee on a vote
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of 9-0. The bill was ultimately vetoed by the Governor stating,
"This bill is unnecessary because the courts already maintain
and have exercised authority to appoint temporary cemetery
managers when circumstances warrant."
2.Purpose. This bill is sponsored by the Author to ensure continual
up-keep of private cemeteries when a cemetery is abandoned or
neglected by an owner. The Author states that the bill will
authorize the appointment of a licensed temporary manager in these
dire situations to care for and maintain the cemetery property. The
Author believes this is a common sense measure that will make
certain that California's deceased loved ones are treated with
dignity and respect.
3.Background. This bill is the result of deteriorated conditions and
corresponding public discontent at Evergreen Memorial Park and
Funeral Home (Evergreen) located in Merced, a cemetery in the
Author's district. A January 2008 article in the Merced Sun-Star
chronicled the troubled history of this cemetery, which surrendered
its license to the Bureau in June 2007. Without this license,
cemetery operations cannot be carried out, nor can the cemetery
conduct new business. The property had been in foreclosure since
October 2007, and public auction of the property had been postponed
at least three times. Since the cemetery is privately owned, the
city and county are limited in their ability to intervene, according
to the Author. The Author states that the conditions are so poor
and dilapidated that there are sinking graves, broken headstones,
litter and unkempt grounds in the cemetery.
The Author states, "Although Assembly Bill 124 was inspired by events
in the 17th Assembly District, this is a statewide issue. There are
privately-owned cemeteries across California, and what has occurred
to the Evergreen Memorial Park and Funeral Home in my district has
transpired in other jurisdictions and the current law provides
insufficient recourse. My bill will rectify this situation."
4.Cemetery Endowment Care Funds and Care of Cemeteries. The law
requires each cemetery owner, with specified exceptions, to
establish, maintain, and operate an endowment care fund (ECF) and
specifies that the principal of the ECF must be invested and the
income may only be used for care, maintenance and embellishment of
the cemetery. The law requires that when interment property is
sold, the cemetery must deposit specified minimum amounts into its
ECF.
The law requires the owner of the cemetery (termed "cemetery
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authority") to appoint either a board of trustees, or a bank or
trust company (institutional trustee) as trustee over the ECF. A
board of trustees or institutional trustee has fiduciary authority
over the endowment care funds and is responsible for investing the
funds in such a way that the funds will earn revenues for the care,
maintenance and embellishment of the cemetery. The ECF trustee
authorizes expenditures from the earnings of the fund to care for
the cemetery.
When there is no board of trustees, or if the integrity of the ECF is
in jeopardy, the Bureau may take action, which is ultimately secured
through an order of the Superior Court, to seize and take possession
of the ECF. In some circumstances, the Bureau may also order the
cemetery authority to appoint an institutional trustee over the ECF.
Caring for a cemetery that has been abandoned or for which there is no
longer a cemetery license has been a problematic issue for a number
of years. When there is an ECF that is sufficiently large enough to
generate an appropriate amount of income, the trustees of the ECF
could arguably authorize expenditures from the income for care of
the cemetery grounds. However, institutional trustees (banks and
trust companies) have been reluctant over the years to authorize
such expenditures.
Furthermore, a local government such as a city or county, based upon
its charter, ordinance or inherent police power, may exercise its
authority to address public health, safety, or welfare issues in
connection with a cemetery within its jurisdiction. In such cases,
if the Bureau holds the ECF, the city or county could be reimbursed
for its costs from the ECF income.
It is the understanding of Committee staff from background information
submitted by the Author that the Evergreen Cemetery in Merced, the
specific focus of this bill, has an ECF of about $400,000 that is
held by a bank as the ECF trustee.
While it appears that the city or county may have the authority to
perform some care at the cemetery under its general powers, the
reality often is that local governments are reluctant to take action
in such cases. Institutional trustees are also usually reluctant to
authorize expenditures for cemetery maintenance when there is not a
current cemetery license. In such situations it is essential for
cooperative and collaborative efforts to be made among members of
the public, the local authorities, the cemetery owner, the ECF
trustee, and the Bureau. This measure is intended to facilitate
solutions to these kinds of difficult situations where a cemetery
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has been left to fall into disrepair and neglect by authorizing a
court to appoint a qualified individual to care for the cemetery and
conduct burials that have already been paid for by customers.
In light of the discussion above, it is important to clarify that the
cemetery manager does not administer the ECF. It is the ECF
trustees (whether a board of trustees appointed by the cemetery
authority, or a bank or trust company) that manages the trust funds
and authorizes any expenditures from the trust fund earnings. The
cemetery manager may request funds from the ECF trustees for
cemetery care and maintenance, but the trustees are ultimately
responsible for making fiscal decisions on spending the ECF
earnings.
5.Prior Legislation. SB 1135 (Ducheny, Chapter 545, Statutes of 2008)
increases the minimum amounts an endowment care cemetery is required
to have deposited in its endowment care fund.
AB 1911 (Galgiani, Chapter 490, Statutes of 2008) requires a managing
funeral director, cemetery manager, crematory manager, or cemetery
broker to notify the Bureau if an employee or prospective employee
has had a license or registration from the Bureau revoked or
suspended, as specified. Provides a civil penalty of $2,500 to
$25,000 for knowingly making a false statement to the Bureau
regarding a transfer of cemetery ownership.
SB 1490 (Ducheny, Chapter 401, Statutes of 2006) requires the Bureau
to adopt regulations that establish minimum standards of maintenance
for endowment care cemeteries under its jurisdiction, and requires
the Bureau to disclose specific information about cemeteries on its
Internet site.
6.Policy Issue: Licensed Cemetery. According to the Author, this
bill was prompted by issues brought about by Evergreen Cemetery in
Merced. According to newspaper reports, the cemetery surrendered
its license to the Bureau in June 2007. The bill would authorize a
court to "appoint a temporary cemetery manager to manage the
cemetery property and service the prepaid interments of the licensed
cemetery." In its current form, it would appear that the bill would
not authorize a court to appoint a temporary manager at Evergreen
Cemetery because the cemetery no longer has a license from the
Bureau. Last year, AB 1816, referred to "private cemetery" instead
of "licensed cemetery."
The Author may wish to amend the bill to refer to the appointment of a
temporary manager at a "private" cemetery rather than a "licensed"
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cemetery.
On page 2, line 9, strike out "licensed" and insert: private.
5.Technical amendment. Committee staff recommends the following
technical amendment.
On page 2, line 17, after "terminate" insert: the
SUPPORT AND OPPOSITION:
Support:
None received as of June 2, 2009.
Opposition:
None received as of June 9, 2009.
Consultant:G. V. Ayers