BILL ANALYSIS
AB 1447
Page 1
GOVERNOR'S VETO
AB 1447 (John A. Perez)
As Amended June 4, 2009
2/3 vote
INSURANCE 10-0 APPROPRIATIONS 16-0
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|Ayes:|Coto, Garrick, Blakeslee, |Ayes:|De Leon, Nielsen, |
| |Charles Calderon, Carter, | |Ammiano, |
| |Feuer, Hayashi, Nava, | |Charles Calderon, Davis, |
| |Niello, Torres | |Duvall, Krekorian, Hall, |
| | | |Harkey, Miller, |
| | | |John A. Perez, Price, |
| | | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson |
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|ASSEMBLY: |73-0 |(May 14, 2009) |SENATE: |39-0 |(August 24, |
| | | | | |2009) |
| | | | | | |
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|ASSEMBLY: |76-0 |(August 31, | | | |
| | |2009) | | | |
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SUMMARY : Declares the State Compensation Insurance Fund (SCIF)
to be a state agency for purposes of authorizing the Bureau of
State Audits to conduct financial and performance audits of
SCIF, and requires SCIF to include a specific disclaimer in any
advertising.
The Senate amendments require that any advertising by SCIF
include the following disclaimer: "The State Compensation
Insurance Fund is self-supported and is not funded by the State
of California."
AB 1447
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EXISTING LAW :
1)Establishes the State Compensation Insurance Fund (SCIF) as a
public enterprise fund for the purpose of transacting workers'
compensation insurance that insures employers, and provides
employees and their dependents with workers' compensation
benefits. SCIF is required to be fairly competitive with
other insurers and is directed to be self-supporting. SCIF is
administered by an 11-member board of directors, nine of whom
are appointed by the Governor.
2)Specifies that in some respects SCIF is considered a state
agency, but in other respects it is not considered a state
agency. The following are examples:
a) The employees of SCIF are part of state civil service
(except the seven top officers) and may select an exclusive
employee organization to be their representative in
employer-employee relations matters. Also, SCIF is subject
to the California Public Records Act.
b) Generally, SCIF is not subject to the provisions of the
Government Code made applicable to state agencies unless
the section of law specifically names SCIF as an agency to
which the provision applies.
c) The SCIF board of directors is required to appoint
several key officers including a president, a chief
financial officer, a chief operating officer, and a chief
investment officer. These positions are not subject to the
state civil service laws. For this purpose, SCIF is not
considered a state agency.
d) The state is not liable for the obligations of SCIF and
any advertising by SCIF shall include the disclaimer: "The
State Compensation Insurance Fund is not a branch of the
State of California."
3)Establishes the Bureau of State Audits (BSA) under the
direction of the Milton Marks "Little Hoover" Commission on
AB 1447
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California State Government Organization and Economy. The
bureau is independent of the executive branch and legislative
control. The State Auditor is the head of that bureau and is
appointed by the Governor from a list of three qualified
individuals nominated by the Joint Legislative Audit
Committee.
4)Requires BSA to examine and report annually upon the financial
statements prepared by the executive branch of the state and
to perform other related assignments, including performance
audits. BSA conducts audits of governmental agencies as
directed by statute and as requested by the Joint Legislative
Audit Committee.
5)Authorizes the State Auditor to have access to examine a wide
range of books, accounts, reports, vouchers, other records,
bank accounts, money and other property of any agency of the
state, any local agency including any city, county, school or
special district, and publicly created entity, for any audit
or investigative audit.
6)Provides in one section of law that SCIF is subject to the
authority of BSA.
AS PASSED BY THE ASSEMBLY , this bill declared SCIF to be a state
agency for purposes of authorizing BSA to conduct financial and
performance audits of SCIF.
FISCAL EFFECT : Minor absorbable costs to SCIF. SCIF is
financed by insurance premium revenues paid by employers, and is
not state financed.
COMMENTS :
1)According to the author, the purpose of the bill is to clarify
existing law by stating that SCIF is a state agency for
purposes of being audited by BSA.
2)The author provides the following information as background on
the bill:
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The people of California are best served when state
agencies conduct their operations openly and
transparently. The State Auditor's primary
responsibility is to ensure that government agencies
are conducting their business in an appropriate
manner.
SCIF is public entity created by the state of
California and employed with civil servants. As
such, it should be subject to audits by the State
Auditor. But existing law does not clearly state
that SCIF is a state agency that is subject to the
State Auditor. This ambiguity is caused from the
Insurance Code exempting SCIF from many provisions
in the Government Code and multiple
cross-referencing of the definition of a state
agency within the Government and Insurance Codes.
Clarification is needed to address this ambiguity.
This bill will clarify that SCIF is a state agency
as defined in Government Code Section 11000, and is
subject to the same oversight as other state
agencies, in order to insure the proper operation of
the agency responsible for providing workers'
compensation to employees injured on the job.
3)In 2006, legislation was enacted that specified in the
Insurance Code that SCIF is subject to being audited by the
State Auditor [SB 1452 (Speier), Chapter 452, Statutes of
2006].
4)The issue of this bill seems to center on what code needs to
specify that SCIF is subject to auditing by BSA. Already a
section of the Insurance Code includes this authority, but one
reading of the existing law can be interpreted to mean that a
specific section of the Government Code must specify that SCIF
is subject to auditing by BSA. This bill specifically adds a
section to the Government Code to accomplish this purpose.
GOVERNOR'S VETO MESSAGE :
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"This bill would clarify that the State Compensation Insurance
Fund (SCIF) is a state agency for purposes of the Bureau of
State Audits (BSA) and its audit, evaluation, and investigatory
jurisdiction and would impose a requirement that all SCIF
advertising include a disclaimer indicating it is self-supported
and not funded by the State of California.
"This bill is unnecessary. Insurance Code 11873(b) already
explicitly provides that SCIF is subject to audits by the State
Auditor. Furthermore, the BSA has performed audits of SCIF
several times in the past three years."
Analysis Prepared by : Tracy Elwell / INS. / (916) 319-2086
FN: 0003449