BILL ANALYSIS Ó
Bill No: SB
1270
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
SB 1270 Author: De Leon
As Introduced: February 23, 2012
Hearing Date: April 24, 2012
Consultant: Art Terzakis
SUBJECT
Milton Marks "Little Hoover" Commission on California State
Government Organization and Economy
DESCRIPTION
SB 1270 imposes special conflict-of-interest requirements
on the members of the Milton Marks Little Hoover
Commission. Specifically, this measure:
1.Prohibits a commissioner from serving on, or acting as a
chairperson of a committee, or from voting on any matter
where the commissioner has a conflict of interest or
where the commissioner's interest may cause a reasonable
person to doubt the commissioner's impartiality.
2.Requires the Commission, on or before July 1, 2013, to
adopt regulations to define a conflict of interest and
establish remedies for a conflict of interest.
3.Stipulates that regulations shall include, but not be
limited to, actual or perceived conflicts of interest
arising from a commissioner's employment or financial
interests as well as prohibitions against serving on, or
chairing a committee and voting on a matter.
EXISTING LAW
Existing law (Government Code Section 8501) establishes the
Milton Marks "Little Hoover" Commission on California State
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Government Organization and Economy consisting of
13-members, nine of which are public members, to oversee
the Bureau of State Audits and assist the Governor and the
Legislature to promote efficiency in state government.
Additionally, the Commission has a statutory obligation
(Government Code Section 8523) to review and make
recommendations on proposed government reorganization
plans.
Five members of the Commission are appointed by the
Governor, two members by the Senate Committee on Rules and
two by the Speaker of the Assembly. Additionally, two
members of the Senate are appointed by the Senate Committee
on Rules and two members of the Assembly are appointed by
the Speaker of the Assembly. No more than five of the nine
public members may be from the same political party and
none shall hold public office in the executive branch of
government. The law also provides that the legislators
from each house shall not be registered with the same
political party.
The Political Reform Act of 1974 (Government Code 81000, et
seq.) regulates conflicts of interests of public officials
and prohibits public officials from participating in
governmental decisions when personal financial interests
may be affected by those decisions. The Act requires that
all government employees and officials disqualify
themselves from participating in a government decision when
a financial conflict of interest is present. The Act also
requires that public officials file periodic statements of
economic interests (Form 700) disclosing certain
information regarding income, investments, and other
financial data. Existing law makes a knowing or willful
violation of the Act a misdemeanor and subjects offenders
to criminal penalties.
BACKGROUND
Federal "Hoover" Commission
The Hoover Commission, officially named the Commission on
Organization of the Executive Branch of the Government, was
a body appointed by President Harry S. Truman in 1947 to
recommend administrative changes in the federal government.
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It took its nickname from former President Herbert Hoover,
who was appointed by Truman to chair it. In early 1949,
the Hoover Commission forwarded its findings and hundreds
of recommendations to Congress in a series of nineteen
separate reports. The commission was officially terminated
in June of 1949. A second Hoover Commission was created by
Congress in 1953 during the administration of President
Dwight D. Eisenhower. Also chaired by former President
Hoover, the second commission sent its final report to
Congress in June 1955.
California's "Little Hoover" Commission
The California Little Hoover Commission, officially the
Milton Marks "Little Hoover" Commission on California State
Government Organization and Economy, is an independent
California state oversight agency modeled after the federal
Hoover Commission and established in 1961 ÝAB 1510 (Marks)
Chapter 2038, Statutes of 1961], that investigates state
government operations and promotes efficiency, economy and
improved service through reports, recommendations and
legislative proposals.
Purpose of SB 1270
The author's office notes that since its creation fifty
years ago the intended role of the Milton Marks Little
Hoover Commission (Commission) is to be the state's
leading, unbiased voice on matters of policy and state
government and thus the Commission must ensure that its
members maintain impartiality and objectivity when carrying
out the Commission's work. The author's office points out
that the Commission's conflict of interest protocol, as
defined by the Political Reform Act and the implementing
regulations, primarily addresses actions that could result
in traceable financial gain for a commissioner or his/her
employer. The author's office maintains that these alone
are insufficient to ensure a reputation for impartiality
that is central to the unique charge and work of the
Commission. The author's office offers the following as
an example - "neither the Act nor the regulations clearly
address situations where a commissioner is connected to an
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organization that is perceived to be aligned with a
particular policy agenda or the commissioner's employer is
an advocacy organization." The author's office contends
that in this sense, though the employer does not have a
clear financial stake in the Commission's decision per se,
it may be ideologically or politically interested and a
commissioner might use his/her official position to promote
an employer's agenda. The author's office believes that
such a conflict would be too remote to trigger the
Commission's current conflict of interest rules but would
significantly undercut the Commission's reputation for
impartiality and by extension its work product.
According to the author's office, at the center of this
protocol shortfall is the recent controversy surrounding
the Commission's regulatory reform report relative to the
impact of regulations on the state's economy and business
entitled, "Better Regulation: Improving California's
Rulemaking Process" (October 2011). The author's office
notes that a commissioner who works with one of
California's most prominent business groups that routinely
advances an anti-regulation legislative agenda and whose
own Commission biography boasts of his efforts to resist
further regulation or costs on business oversaw the
drafting of the report. The author's office claims that
"the report drew a highly unusual dissent from one of the
commissioners which challenged not only the unproven nature
of the assumptions behind the report, its conclusions, and
its failure to abide by the recommendations, but also the
fairness of the process by which the report was crafted."
The author's office argues that the problem exposed by the
above-referenced controversy is a larger one. For example,
if a commissioner who worked for the Prison Law Office were
to spearhead a report on prison reform or if a union
lobbyist were to spearhead a report on union organizing and
its economic effects, the same type of Commission impairing
bias could be inferred, and the Commission's work rightly
questioned by the public even though the conflict would not
necessarily create a financial gain for the advocacy
organization employer or the commissioner.
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The author's office believes that in order to prevent
future controversies it's imperative that the Commission
craft conflict of interest rules with greater precision to
ensure the integrity of the Commission's work product. The
author's office emphasizes that the Commission's work is
too valuable and its mandate too broad to be undermined by
questions of bias.
Arguments in Support
Writing in support of this measure, the Center for Public
Interest Law (CPIL), the California Nurses Association and
the California Labor Federation note that the controversy
surrounding the Commission's October 2011 report referenced
above exposed a hole in the Commission's conflict of
interest policies and demonstrates that the
"standard-brand" provisions of the Political Reform Act are
inadequate to safeguard the Commission. Proponents state
that this measure would prevent conflicts that would lead
the public reasonably to question a Commissioner's
impartiality - it would require the Commission to
accomplish this by way of formal, conflict-of-interest
rule-making.
Proponents contend that SB 1270 would keep intact the
Commission's discretion when it comes to
conflict-of-interest rules. Additionally, proponents point
out that this measure first identifies areas where the
possibility of a conflict exists, such as in employment or
finances. Second, this measure simply lists the things
commissioners could do that could lead to conflicts:
voting, serving on drafting committees. What exactly
constitutes a conflict and what the remedies are for such
conflicts would be left to the Commission to determine but,
under this measure, the Commission must make such
determinations.
Summary of Milton Marks Little Hoover Commission
Recommendations Contained in October 2011 Report Referenced
Above
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Recommendation 1: The state should require
departments promulgating regulations or rules that
impose costs on individuals, businesses or government
entities to perform an economic assessment that takes
into account costs that will be incurred and benefits
that will result.
Recommendation 2: The state should require
departments proposing a major regulation to perform a
high-quality, rigorous economic analysis.
Recommendation 3: The state should create
guidelines that set out standards and the appropriate
use of different types of economic assessment
methodologies and data quality that can be used to
properly describe and analyze the economic impact of
new regulations. The use of these guidelines should
be mandated by the Administrative Procedure Act.
Recommendation 4: To improve the quality of
regulations promulgated by California agencies and to
ensure the process of developing regulations is
consistent and transparent, the Governor should form
an Office of Economic and Regulatory Analysis.
Recommendation 5: The state should create a
look-back mechanism to determine whether regulations
are still needed and whether they work.
Staff Comments
It should be noted that the role of the Commission
is to make policy and governance recommendations to
the Legislature and the Governor - thereafter, the
recommendations go through the legislative or
executive management process where they are generally
thoroughly vetted and considered. The Commission has
no authority to take direct action on any matter; by
comparison, it is far removed from the sphere of
direct influence enjoyed by other boards and
commissions that have the ability and authority to
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change policy, issue administrative penalties and
fines, and adopt regulations. The Commission's
recommendations are advisory only and may or may not
be acted upon through the political process.
As currently drafted, this measurer would, among
other things, impose new conflict of interest
provisions on the members of the Milton Marks Little
Hoover Commission that could be viewed as duplicative
of existing law. For example, 8509 (a) of the bill
prohibits a commissioner from serving on, or chairing
a committee, or from voting on any matter where the
commissioner has a conflict of interest. Under
current Fair Political Practices Commission (FPPC)
rules, if a public official has a conflict of interest
with regard to a particular governmental decision, the
public official is essentially barred from serving on
a committee that is reviewing an issue that results in
a government decision that would impact the public
official's economic interests - nor would that public
official be allowed to cast a vote on the matter.
Section 8509 (a) also prohibits a commissioner from
serving on or chairing a committee or from voting on a
matter where the commissioner's interest may cause a
"reasonable person to doubt the commissioner's
impartiality." This particular language could be
viewed as broadening the definition of a conflict of
interest to such a vague degree that just about any
issue the Commission reviews could be considered a
conflict for one or more of its members. For example,
a commissioner who brings experience as a medical
doctor could be considered "partial" to the medical
community if serving on a committee that is reviewing
the state's Medi-Cal program. Such language could
remove commissioners who could impart relevant and
important knowledge.
Section 8509 (b), as currently drafted, requires
the Commission to adopt regulations to define
conflicts of interest and associated remedies.
Additionally, the regulations must include actual or
"perceived" conflicts of interest arising from a
commissioner's employment or financial interests.
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This particular language may be a bit vague and raises
the practical question of who makes the determination
of the "perception" of conflict and whether that
person may have a conflict of their own in doing so.
PRIOR/RELATED LEGISLATION
SB 37 (Maddy) Chapter 12, Statutes of 1993. Among other
things, created the Bureau of State Audits under the Little
Hoover Commission and headed by the State Auditor and
renamed the 13-member Commission on California State
Organization and Economy (Little Hoover Commission) as the
Milton Marks Commission on California State Government
Organization and Economy.
AB 1510 (Marks) Chapter 2038, Statutes of 1961. Created
the Commission on California State Government Organization
and Economy (Little Hoover Commission).
SUPPORT: As of April 20, 2012:
California Labor Federation
California Nurses Association
Center for Public Interest Law (based at the University of
San Diego School of Law)
OPPOSE: None on file as of April 20, 2012.
FISCAL COMMITTEE: Senate Appropriations Committee
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