BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
AB 2746 (Blakeslee) Hearing Date: June 16, 2010
As Amended: April 8, 2010
Fiscal: Yes
Urgency: No
VOTES: Asm. Floor(05/06/10)74-0/Pass
Asm. Appr. (04/28/10)15-0/Pass
Asm. Ins. (04/21/10)12-0/Pass
SUMMARY Would authorize the California Earthquake Authority
(CEA) to contract for the services of a chief mitigation
officer, whose duties shall be established and directed by the
CEA board to support and enhance the authority's various
mitigation programs, including collaborative efforts with public
and private entities.
DIGEST
Existing law
1. Established in 1996 the California Earthquake authority
as a privately financed publicly managed entity regulated
as a monoline private earthquake insurer by the Department
of Insurance (DOI);
2. Provides for the CEA to be operated as a private
monocline insurer, regulated by the DOI, including in the
matter of rate approvals, but under the guidance of a
governing board that is obligated to comply with
California's open meeting laws;
3. Establishes in the CEA an earthquake loss mitigation
fund to support programs to retrofit homes to protect
against earthquake damage, with funds set aside annually ,
except insofar as the set aside would impair the actuarial
soundness of the CEA;
AB 2746 (Blakeslee), Page 2
4. The CEA is authorized to contract for a Chief Executive
officer, a Chief Financial Officer, an operations manager
and numerous other specialized positions not classified as
civil service positions;
5. Requires the members of the CEA Board and the
Authority's CEO, CFO and operations manager to file
financial disclosure statements with the Fair Political
Practices Commission.
This bill
1. Would authorize the CEA to contract for the services of a
Chief Mitigation Officer (CMO);
2. Would make the CMO's duties subject to establishment and
direction of the CEA board;
3. Would state the CMO's duties are to include programs and
efforts supporting and enhancing appropriate CEA efforts to
create and maintain:
a. Programs mitigating seismic risk for the benefit of
homeowners, other property owners (including landlords
with smaller holdings), and the California public;
b. Collaboration with academic institutions, nonprofit
entities, and commercial business entities in joint
efforts to conduct mitigation-related research and
educational activities, and for program activities
mitigating seismic risk;
c. Programs providing financial assistance in the form
of loans, grants, credits, rebates or other financial
incentives that further mitigation of seismic risk,
including, but not limited to, structural and contents
retrofitting of residential structures;
d. Collaborations and joint programs with subdivisions
and programs of local, state, and federal governments;
e. Other programs, support efforts, and activities the
board deems appropriate to further the authority's
mitigation and mitigation-related goals;
AB 2746 (Blakeslee), Page 3
COMMENTS
1. Purpose of the bill To strengthen effectiveness of the CEA's
mitigation efforts by establishing a position focused upon
that activity under the guidance and direction of the
Governing Board.
2. Background According to the author, the Authority's retrofit
programs to date have been unsuccessful. However with over
$12 millions dollars currently in the CEA's Loss Mitigation
Fund, there is a great opportunity to protect California
homeowners by establishing a successful retrofit program.
3. In 2001, a California Bureau of State Audits study of the
CEA noted that its mitigation program was having limited
success. Since the CEA's inception, the mitigation program
has slowly grown and the CEA's 2006 strategic plan goals
includes one to "Encourage Californians to protect
themselves and their property from earthquake damage through
preparedness and mitigation".
4. The addition of a Chief Mitigation Officer (CMO) is
consistent with sharpening the CEA's focus on mitigation
consistent with the 2001 BSA general perspective.
5. Questions Current CEA law subjects the board members and
chief officers subject to FPPC reporting. The CMO position
is being added on a par with the CEO and CFO but is not yet
included in the separate listing that carries the FPPC
filing requirement to support transparency and the impartial
conduct of the public's business. In view of the
significance of the public trust invested in this post for
responsibly and fairly supervising and allocating CEA
millions of mitigation dollars to various entities and
individuals, should the CMO position be added to the list of
required FPPC Act filers?
6. Suggested Amendment The new Chief Mitigation Officer's
duties will entail allocation of significant amounts of CEA
mitigation funds. To support accountability and
transparency in such a sensitive post, when a broader bill
was approved by this committee in 2009, the new CMO post was
made subject to the requirement for filing an FPPC Form 700
(Conflict of Interest).
AB 2746 (Blakeslee), Page 4
At the Committee's request Assemblymember Blakeslee will
offer an FPPC Filer amendment prepared by Legislative
Counsel to insert "chief mitigation officer" on page 5, line
16, after "chief financial officer," and make associated
changes.
7. Prior and Related Legislation
AB 43 of 2009 proposed to remove a 25 person cap on the
number of civil service exempt CEA employees in addition to
addition the Chief Mitigation Officer post as proposed by
this bill. AB 43 was vetoed by the Governor who objected to
removal of the 25 person cap but indicated support for the
Chief Mitigation Officer portion.
Veto Message:
To the Members of the California State Assembly:
I am returning Assembly Bill 43 without my signature.
While I am supportive of the California Earthquake
Authority (CEA) contracting for the services of a Chief
Mitigation Officer to be responsible for the mitigation
activities of the CEA, I cannot support the provision in
this bill eliminating the limit on the number of civil
service employees that can be employed by the CEA.
For these reasons, I am unable to sign this bill.
Sincerely,
Arnold Schwarzenegger
POSITIONS
Support
United Policyholders
Oppose
None
AB 2746 (Blakeslee), Page 5
Consultant: Kenneth Cooley (916) 651-4102