BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 2764|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 2764
Author: Assembly Judiciary Committee
Amended: 8/20/10 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-0, 6/29/10
AYES: Corbett, Harman, Hancock, Leno
NO VOTE RECORDED: Walters
ASSEMBLY FLOOR : 71-1, 5/13/10 - See last page for vote
SUBJECT : State Bar Act: fees
SOURCE : State Bar of California
DIGEST : This bill authorizes the State Bar of California
to collect active membership dues of up to $410 for the
year 2011, which would continue the current active dues
amount of $410. Consistent with existing law, those dues
would fund only mandatory programs of the State Bar, and
members can deduct $5 if they did not wish to support
lobbying and other legislative activities. Members can
also deduct an additional $5 if they did not wish to fund
access and elimination of bias programs.
Senate Floor Amendments of 8/20/10 make various changes to
the State Bar Act: (1) require the State Bar to create a
Governance in the Public Interest Task Force made up of 11
members, as specified, and require that the Task Force
report to the Supreme Court, Governor, and the Senate and
CONTINUED
AB 2764
Page
2
Assembly Committees on Judiciary on recommendations for
enhancing public protection; (2) require the State Bar,
upon request, to make available the classification and
total annual compensation paid to its employees as well as
any rules, policies, and agreements relating to employee
compensation and benefits; and (3) create the Temporary
Emergency Legal Services Voluntary Assistance Option which
will, until January 1, 2014, permit $10 of membership dues
to be allocated to the Legal Services Trust Fund unless a
member requested that his/her membership dues instead be
reduced by $10 rather than going to that Fund.
ANALYSIS : Existing law, the State Bar Act, provides for
the licensure and regulation of attorneys by the State Bar
of California, a public corporation. The State Bar is
governed by a board known as the
board of governors of the State Bar. The board of
governors consists of 16 attorney members and six public
members.
This bill requires, on or before February 1, 2011, a
Governance in the Public Interest Task Force to be created
within the State Bar and to be made up of 11 specified
board members appointed by the President of the State Bar.
This bill requires, on or before May 15, 2011, and every
three years thereafter, that the Task Force prepare a
report, including a dissenting report, if applicable, to be
submitted to the Supreme Court, the Governor, and the
Judiciary Committees that includes its recommendations for,
among other things, enhancing and ensuring the protection
of the public.
This bill also requires that the State Bar, commencing on
or before
February 1, 2011, make available, upon request of a member
of the public, specified classification and compensation
paid to its employees as well as other specified
information relating to compensation and benefits.
Existing law requires the board of governors to charge an
annual membership fee for active members of up to $315 for
the year 2010. Existing law also requires the board to
charge an annual membership fee for inactive members of up
to $75. Under existing law, these fees are payable on or
CONTINUED
AB 2764
Page
3
before the first day of March 2010.
This bill requires the board to charge that annual
membership fee for active members for 2011. This bill also
specifies that the annual membership fee for active members
and inactive members is payable on or before the first day
of February of each year. This bill authorizes, until
January 1, 2014, $10 of those membership fees to be
allocated to support specified activities, and authorizes a
member to deduct that amount from his/her annual fee if the
member elects not to make this allocation.
Existing law, until January 1, 2011, authorizes the board
of governors to increase the annual membership fee for
active members by up to $10 in any year to be used for the
costs of upgrading its information technology system, and
requires this additional amount to be separately listed and
described in the annual membership fee invoice. Existing
law also requires the board to report to the Assembly and
Senate Committees on Judiciary, on or before April 1, 2009,
and twice thereafter as specified, on the use of these
additional funds.
This bill extends the operation of the provision
authorizing an increase of the annual membership fee to
January 1, 2014, and requires the board to report on the
use of these additional funds on or before April 1, 2011,
and twice thereafter.
Background
Recent embezzlement and Bar's response . On April 6, 2009,
the Attorney General filed embezzlement and tax evasion
charges against Sharon Pearl, the Bar's former Director of
Real Property (DRP). Pearl embezzled Bar funds over a
period of eight years, and estimates of the loss ranged
from $655,000 to $675,820. In response to the incident,
Laura Chick, Chair of the State Bar Board of Governors'
Audit Committee, submitted a six-page letter to the Chairs
and Vice Chairs of the Senate and Assembly Judiciary
Committees explaining how the embezzlement occurred and
describing the Bar's response to the incident. According
to the letter:
CONTINUED
AB 2764
Page
4
The [Bar's internal] investigation determined that the
DRP diverted tenants' payments for rent and fees to a
non-State Bar account over which she had control, and hid
the non-receipt of those payments by manipulating
information about expected rent revenue and falsifying
documentation supporting rent credits for various tenant
renovations or service interruptions due to the Bar's
seismic retrofit project. . . . She used her position
to become the single point of contact between the State
Bar and its tenants; she verified the rent payment
schedules prepared by the Office of Finance; and she was
personally responsible for both issuing invoices to
tenants and collecting rent checks from them. This,
ultimately, was the point of failure in the internal
controls over rent billing and collection, as the DRP was
able to divert rent payments while providing plausible
explanations for their absence to the Office of Finance,
and to the Bar's independent auditors (Deloitte & Touche)
during the annual financial audit.
After the incident came to light, the State Bar hired a
certified public accounting firm specializing in local
governments to perform an independent forensic review and
make recommendations for improvements to the internal
controls relating to rent billing and collection
procedures. As a result, according to the letter, the Bar
has taken a number of actions to improve rent billing and
collection procedures including:
1. The Office of General Counsel prepared a lease profile
for each tenant, clearly outlining all lease terms and
conditions.
2. The Office of Operations prepared a rent income schedule
for each tenant, listing the expected rent, by month,
for the entire term of the lease.
3. Leases, lease profiles, rent income schedules, and all
relevant supporting documents related to tenants have
been jointly verified and signed-off by the State Bar's
Offices of Operations, Finance, and General Counsel and
are jointly accessible to all three in a secure location
on the State Bar's network. This change ensures
appropriate checks and balances, as no single department
CONTINUED
AB 2764
Page
5
or individual employee has a monopoly on information;
lease terms and expected revenues are verifiable and any
deviations are transparent.
4. The Office of Finance now invoices tenants directly,
based on the rent schedules that have been loaded into
the accounting system. Tenants have been instructed to
mail rent checks directly to the Office of Finance. The
Bar is also exploring the possibility of collecting rent
payments via electronic funds transfer from tenants.
5. The State Bar will explore the possibility of engaging a
professional property management company.
Prior legislation . SB 641 (Corbett), 2009-10 Session,
which would have authorized annual State Bar membership
dues for 2010, passed the Senate (39-0) on May 26, 2009,
but was vetoed. In his veto message, the Governor stated:
"I am returning Senate Bill 641 without my signature.
This bill would, among other provisions, authorize the
State Bar to collect annual bar dues from its members for
2010.
"In 1997, Governor Pete Wilson vetoed the annual State
Bar dues bill, citing numerous concerns that the State
Bar had become overly political, unresponsive to its
membership, and inefficient. Unfortunately, twelve years
later, inefficiencies remain unaddressed and questions
about the State Bar's role in the evaluation of judicial
nominees suggest that the State Bar's political agenda
continues.
"In July, the State Auditor released a report critical of
the State Bar. Among the problems noted by the report:
salaries for staff have risen significantly over the past
five years; the costs of its disciplinary system have
escalated by $12 million from 2004 to 2008 while the
number of disciplinary inquiries opened has declined; and
a lack of internal controls allowed the embezzlement of
nearly $676,000 by a former employee. As the
organization charged with regulating the professional
conduct of its members, the conduct of the State Bar
CONTINUED
AB 2764
Page
6
itself must be above reproach. Regrettably, it is not.
"In addition, recent actions by the State Bar's Judicial
Nominees Evaluation Commission (JNE) also call into
question the State Bar's impartiality in considering
judicial appointments. All JNE Commission proceedings
are required by law to be confidential and qualification
ratings are not to be released to the public prior to the
Governor considering an appointment. Unfortunately,
recent events have required the State Bar to launch an
official inquiry into the confidentiality of such
proceedings. Moreover, the Chief Justice of the Supreme
Court has recently questioned the reliability of the
Commission's recommendations by noting its failure to
follow statutory guidelines when considering judicial
nominees. By failing to follow the law, the JNE
Commission has damaged its reputation for impartiality
and, in turn, the State Bar's.
"There is no question the State Bar has an essential role
in the state's justice system and must continue to
oversee the licensing, education, and discipline of
California's lawyers. However, I am returning this bill
without my signature because the State Bar cannot
continue with business as usual. It must take the time
to reexamine the problems noted by the State Auditor and
continue its investigation into the JNE Commission. I
urge the State Bar to resolve these issues as soon as
possible so the Legislature can reintroduce this measure
early next year."
In response to the veto, State Bar President Howard Miller
stated, "The Governor's veto of the State Bar dues bill is
regrettable, but we must take the Governor's concerns
seriously. Many of them are justified. There have been
serious management and financial issues at the State Bar,
starting with the embezzlement by a single employee over an
eight-year period of $675,000. The State Auditor, and
others, have also criticized with precision the management
of the Office of Chief Trial Counsel. We will look closely
at these and all other issues raised by the Governor.
Events such as his veto message can challenge the State Bar
to renew itself as an institution and its service to the
public and the legal profession. I am confident the Board
CONTINUED
AB 2764
Page
7
of Governors is up to that challenge."
In January 2010, the Legislature passed and the Governor
signed SB 55 (Corbett), Chapter 2, Statutes of 2010,
authorizing the State Bar to collect annual membership dues
for 2010.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/8/10) (Unable to reverify)
State Bar of California (source)
ARGUMENTS IN SUPPORT : According to the California State
Bar, this bill continues the State Bar's authority to
assess and collect dues from licensed attorneys in
California in order to support the Bar's operations,
including discipline. This bill authorizes the Bar to
continue to collect active membership dues of up to $410
for the year 2011, maintaining 2010 dues levels. The
author's office notes that, consistent with existing law,
those dues would fund only mandatory programs of the Bar,
and members will continue to be able to deduct $5 if they
do not wish to support lobbying and other legislative
activities. This bill also extends the sunset on the $10
special assessment to fund information technology upgrades
which expires January 1, 2011.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Bass, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Bradford, Brownley, Buchanan, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Lieu, Logue, Bonnie Lowenthal,
Ma, Mendoza, Monning, Nava, Nestande, Niello, Norby, V.
Manuel Perez, Portantino, Ruskin, Salas, Saldana, Smyth,
Solorio, Audra Strickland, Swanson, Torlakson, Torres,
Torrico, Tran, Villines, Yamada, John A. Perez
CONTINUED
AB 2764
Page
8
NOES: Anderson
NO VOTE RECORDED: Caballero, DeVore, Hagman, Miller,
Nielsen, Silva, Skinner, Vacancy
RJG:mw 8/22/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED