BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 1157 (Nielsen)
As Amended March 31, 2011
Hearing Date: July 3, 2012
Fiscal: Yes
Urgency: No
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SUBJECT
Public Entity Liability: Payment of Claims
DESCRIPTION
This bill would require the California Victims Compensation and
Government Claims Board (VCGCB) to provide notice to the
Legislature, as specified, at least 15 days prior to payment, of
prior year claims of $500,000 or more, or any claim in excess of
$500,000 in one year, submitted by a single provider of goods or
services rendered with respect to a single department.
BACKGROUND
In 1911, California established procedures for submitting claims
against government entities. In 1963, the Tort Claims Act (Gov.
Code Sec. 900 et seq.) was enacted and provides for the filing
of claims against public entities for harm caused to any person,
and establishes liability and immunity of the public entity for
those acts. The timeline and procedures for presentation of the
claim and the public entity's action on that claim are specified
in the Act. Under these rules, claims against local public
entities are filed with the entity's governing body, while
claims against the state are filed with the State Board of
Control. AB 2321 (Hertzberg, Ch. 1007, Stats. 2002), among
other things, renamed the State Board of Control to be the
California Victim Compensation and Government Claims Board
(VCGCB).
After a claim against the public entity is submitted to VCGCB, a
determination is made as to whether the claim is valid, and if
so, whether the claim can proceed as a civil action, and in some
(more)
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cases, whether the claim should be paid outright or through
settlement. The VCGCB then determines how the payment should be
made.
The provisions in this bill are nearly identical as were
contained in SB 80 (Committee on Budget and Fiscal Review, Ch.
11, Stats. 2011), which, as proposed in this bill, required the
VCGCB to provide notice to the Legislature, at least 15 days
prior to allowing either the use of a current year appropriation
to pay claims for prior year costs of $500,000 or more, or
claims from a single provider of goods or services with respect
to a single department that exceeds $500,000 within one year.
SB 80 was chaptered on March 24, 2011. On June 28, 2011, AB 119
(Committee on Budget, Ch. 31, Stats. 2011) repealed that
requirement.
This author-sponsored bill would reestablish the 15-day notice
requirement of the VCGCB regarding large claims payouts.
CHANGES TO EXISTING LAW
Existing law , the Tort Claims Act, provides for the filing of
claims against public entities for harm caused to any person and
establishes liability and immunity of the public entity for
those acts. (Gov. Code Sec. 900 et seq.)
Existing law requires claims against public entities, other than
claims against judicial branch entities or judges, to be
submitted to the California Victim Compensation and Government
Claims Board (VCGCB) for a determination of the validity of the
claim and the appropriate resolution of the claim. (Gov. Code
Sec. 910 et seq.)
Existing law provides that, upon allowance by the VCGCB of all
or part of a claim for which the Director of Finance certifies
that a sufficient appropriation for the payment of the claim
exists, and the execution and presentation of documents the
VCGCB may require which discharge the state of all liability
under the claim, the VCGCB shall designate the fund from which
the claim is to be paid and the state agency concerned shall pay
the claim from that fund. (Gov. Code Sec. 965(a).)
Existing law provides that, if there is no sufficient
appropriation for the payment available, the VCGCB shall report
to the Legislature. Claims arising out of the activities of the
State Department of Transportation may be paid if either the
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Director of Transportation or the Director of Finance certifies
that a sufficient appropriation for the payment of the claim
exists. (Gov. Code Sec. 965(a).)
Existing law provides that, if there is no sufficient
appropriation for the payment of claims, settlements, or
judgments against the state arising from an action in which the
state is represented by the Attorney General, the Attorney
General shall report the claims, settlements, and judgments to
the Chairperson of either the Senate Committee on Appropriations
or the Assembly Committee on Budget, who shall cause to be
introduced legislation appropriating funds for the payment of
the claims, settlements, or judgments. (Gov. Code Sec. 965(b).)
This bill would require the VCGCB to provide notice to the
chairpersons of the committees in each house of the Legislature
that consider appropriations and the annual Budget Act, and the
Chairperson of the Joint Legislative Budget Committee, at least
15 days, or a shorter period as the chairperson of the joint
committee, or his or her designee, may in each instance require,
prior to allowing either the use of a current year appropriation
to pay claims for prior year costs of $500,000 or more, or
claims from a single provider of goods or services with respect
to a single department that exceeds $500,000 within one year.
COMMENT
1. Stated need for the bill
The author writes:
It has come to the attention of those on the Budget Committee
last year that certain departments and agencies in California
have circumvented the appropriate budgetary process and have
used the Victims Compensation and Government Claims Board
(VCGCB) to transfer funds. As Vice-Chair of the Assembly
Budget Committee, Mr. Nielsen feels that this is not the
appropriate venue for such a transfer, as these requests
should be made through and by the Legislature.
AB 1157 would simply state that if a department submits a
claim for more than $500,000, they must notify the
chairpersons of the Budget and Appropriation Committees, and
the Chair of the Joint Legislative Budget Committee. AB 1157
does NOT state that the VCGCB needs legislative approval
before making any appropriation. It may turn out the money
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appropriated by the VCGCB to these departments was used
correctly, but there is no question that blindly approving
such a large claim to a department without any questions asked
is a serious breach of the Budget process.
2. Reenacting repealed provision
This bill would require the VCGCB to notify the Legislature, as
specified, within 15 days prior to allowing either the use of a
current year appropriation to pay claims for prior year costs of
$500,000 or more, or claims from a single provider of goods or
services with respect to a single department that exceeds
$500,000 within one year.
The provisions in this bill are nearly identical as those
contained last year in SB 80 (Committee on Budget and Fiscal
Review, Ch. 11, Stats. 2011). SB 80 was chaptered on March 24,
2011. On June 8, 2011, AB 119 (Committee on Budget, Ch. 31,
Stats. 2011) was amended in the Senate and, among other things,
repealed the notification requirement enacted by SB 80 and
contained in this bill. This repeal came after a public hearing
with a written analysis regarding this repeal. Indeed, the
Senate Budget Committee Sub. 4 analysis of AB 119 stated:
It is proposed that a reporting requirement enacted as part of
a previous General Government trailer bill be repealed.
Chapter 11, Statutes of 2011 (SB 80) required the board to
provide notice to the chairpersons of the committees in each
house of the Legislature that consider appropriations and the
annual Budget Act, and the Chairperson of the Joint
Legislative Budget Committee, within a specified period of
time prior to allowing for the payment of certain claims.
Subsequent to enactment, it has been determined that this
reporting requirement is too restrictive and may hinder the
Board's ability to conduct its claims process
responsibilities.
After being approved by the Senate on a vote of 23-15, the
Assembly concurred in the amendments to AB 119 by a vote of
52-26.
3. Payment of claims; reports of action taken
The Tort Claims Act provides that if the VCGCB allows a claim
for which the Director of Finance certifies there are sufficient
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funds to make a payment, the VCGCB designates from which state
agency fund the claim would be paid. If there are not
sufficient funds to pay claims, the VCGCB may, with approval of
the Governor, report to the Legislature and recommend what
action to take. If there is no sufficient appropriation for
payment of claims, settlements and judgments where the Attorney
General represents the state, the Attorney General is required
to report claims, settlements, and judgments to the Chairperson
the Senate Appropriations Committee or the Assembly Committee on
the Budget, who must then cause legislation to be introduced to
appropriate the funds necessary for payment. This bill would
require additional notice to the Legislature by the VCGCB for
specified claims in an amount over $500,000 15 days prior to
payment of the claim.
The author argues that this bill is necessary to provide
legislative oversight for claims submitted to the VCGCB because
certain government agencies are circumventing the budget process
by appropriating funds from the VCGCB. According to the author,
although most claims submitted to the VCGCB range from $1,000 to
$100,000, last year the Department of Corrections and
Rehabilitations submitted a claim for $1 million, and the
Department of Mental Health used the VCGCB to appropriate
several million dollars. Notably, the author reports that there
have been no changes or additional revelations regarding payment
of claims made by the VCGCB since the provisions in this bill
were repealed last year.
The author suggests that the VCGCB may be making inappropriate
payments and the Legislature should oversee these payments. The
Department of Finance is opposed to this bill because "approval
of the payment of claims is appropriately a �VCGCB]
responsibility. Requiring legislative notification prior to the
approval of a claim implies that legislative approval is
necessary." There appears to be some merit to this argument.
If this bill was merely aimed at providing information to the
Legislature, this bill would not predicate that claims be sent
to the Legislature more than two weeks before the VCGCB intends
to make a payment. On a policy level, the Legislature, and
thus, the public, should be informed as to how the VCGCB is
appropriating state funds. However, by requiring that certain
claims be submitted to the Legislature prior to payment, this
bill appears to be an attempt to alert the Legislature of these
claims in the hopes that the Legislature may take some action to
stop the payments.
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Support : None Known
Opposition : California Department of Finance
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation :
SB 1504 (Kehoe, Ch. 19, Stats. 2011), among other things, made
technical revisions to the code section amended by this bill.
AB 119 (Committee on Budget, Ch. 31, Stats. 2011) See Background
and Comment 2.
SB 80 (Committee on Budget and Fiscal Review, Ch. 11, Stats.
2011) See Background and Comment 2.
AB 2321 (Hertzberg, Ch. 1007, Stats. 2002) See Background.
Prior Vote :
Assembly Floor (Ayes 75, Noes 0)
Assembly Committee on Appropriations (Ayes 17, Noes 0)
Assembly Committee on Judiciary (Ayes 10, Noes 0)
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