BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1263 (Vargas) - Unemployment Insurance Appeals Board: annual
salary.
Amended: As Introduced Policy Vote: L&IR 4-1
Urgency: No Mandate: No
Hearing Date: May 7, 2012 Consultant: Bob Franzoia
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1263 would delete the salary provisions for the
chairperson and members of the Unemployment Insurance Appeals
Board (board).
Fiscal Impact: Salary savings of up to $900,840 annually to the
Unemployment Administration Fund for the unemployment insurance
program and from the Disability Fund for the disability
insurance program.
Uncertain impact on unemployment insurance appeals process
including workload shift to administrative law judges and
delays in processing appeals.
Uncertain, but potentially major costs to address appeals
backlog.
Background: The board consists of a chairperson with an annual
salary of $81,635 and six board members with an annual salary of
$79,122 (Government Code 11553). Those compensation levels
increase in any fiscal year in which a general salary increase
is provided for state employees (Government Code 11553.5 (b)).
The current chairperson's salary is $132,168 and the current
board member salary is $128,112. The board has two vacancies
(Governor appointments).
Staff Comments: Defunding the board begs the question of what
happens next. Eliminating statutorily authorized second level
appeals would be the corresponding action to adopt in order to
eliminate the numerous administrative and fiscal issues that a
nonfunctional board will create. However, eliminating second
level appeals has obvious policy issues.
As part of the 2012-13 budget, the Governor proposes to
eliminate the board and restructure the second-level appeals
SB 1263 (Vargas)
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process. The Legislative Analyst's Office has reviewed that
proposal and recommended an alternative. The Legislative
Analyst's Office notes: Under the Governor's proposal, decisions
on second-level appeals would be issued by an ALJ from among the
group of ALJs who currently serve as authors of Board decisions.
A new four-member panel of presiding ALJs (PALJs) would review a
random sample of second-level appeal decisions for quality
control. In addition, a new Bureau Director-appointed by the
Governor-would assume the remainder of the Board's current
responsibilities (with the exception of establishing precedent
decisions, which would be done by a Precedent Decisions
Committee consisting of CUIAB upper-level management and headed
by the Bureau Director).
The LAO Alternative
We recommend the Legislature take two actions. First, we
recommend the Legislature eliminate two vacant ALJ positions in
the budget year and four vacant ALJ positions in 2013-14-as
proposed by the Governor-for a savings of $354,000 in the budget
year and $710,000 in the out years. These reductions are
appropriate given declining ALJ workload.
Second, we recommend the Legislature adopt a modified version of
the Governor's proposal which would achieve an equivalent level
of budgetary savings, by eliminating two Board member positions,
while maintaining a greater level of legislative oversight of
the CUIAB.
Action on the Governor's budget proposal is pending.
Staff notes it is unlikely any board member is going to serve
without compensation. Without board members to review appeals,
the board will accumulate a major backlog that will in some
manner, require significant General Fund or special fund support
to address. Presumably amendments to address this impact will
be proposed. As noted above, such amendments could result in
major savings annually.