BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 447
                                                                  Page  1

          Date of Hearing:   August 8, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                  SB 447 (DeSaulnier) - As Amended:  June 15, 2012 

          Policy Committee:                              Business and 
          Professions  Vote:                            9 - 0 

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill prohibits state agencies from sending any 
          communication to any individual that contains the full social 
          security number (SSN) of that individual, unless required to do 
          so by federal law. 

           FISCAL EFFECT  

          The Employment Development Department is one of the few major 
          agencies that still uses SSNs on its correspondence. Costs 
          associated with revising forms and reprogramming for the 
          Unemployment Insurance (UI) and Disability Insurance programs 
          alone would be in the range of $5 million (federal UI 
          Administrative Grant and GF).  It is unlikely that the 
          California's Federal UI Administrative Grant will be able to 
          cover the costs of the automation changes. 

           COMMENTS  

           1)Purpose.  The intent of this legislation, according to the 
            author, is to counter identity theft and ensure every 
            Californian's privacy is protected.  This bill ensures that a 
            state agency will not send any communication to any individual 
            that contains the full SSN of that individual, unless required 
            by federal law. 

          2)The UI program  is financed by unemployment tax contributions 
            paid by employers for each covered worker. Unemployment 
            contributions have a federal and a state portion-both levied 
            on a taxable wage base of $7,000 in California. The federal 
            portion of unemployment contributions is primarily used to 








                                                                  SB 447
                                                                  Page  2

            fund administration at the state and federal level, while the 
            state portion funds UI benefit payments. The federal 
            unemployment tax rate is 6.2 percent. However, a state's 
            effective federal tax rate may be lowered to 0.8 percent as 
            long as the state is in compliance with federal program 
            requirements. (This is the case in California.) Compliance 
            with federal requirements also allows the state to receive an 
            annual federal grant to fund state administration of the UI 
            program. State unemployment tax rates are set by a series of 
            rate schedules ranging from AA (the lowest rates) to F+ (the 
            highest). A rate schedule is selected annually based on the 
            condition of the UI fund. Contributions have been set to the 
            highest rate schedule (F+) since 2004. 



           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916) 
          319-2081