BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1406 (Emmerson) - State Compensation Insurance Fund:
appointments.
Amended: April 18, 2012 Policy Vote: Insurance 5-1
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 1406 bill would require the State Compensation
Insurance Fund board of directors to appoint up to 20 positions,
including an administrator, senior management employees next in
line of authority to specified positions, subordinate
administrators with specialized training and knowledge, and
other legal staff. The board would be required to report to the
Legislature by January 1, 2014 regarding these additional
positions and current or replaced positions.
Fiscal Impact: Unknown, likely major costs annually, ongoing
from the State Compensation Insurance Fund
Depending on the position, personnel costs may range
between $150,000 and $315,000 annually, based on the current
SCIF exempt pay scale, for up to 13 new positions.
Background: The SCIF, a publicly run workers' compensation
insurer, was created in large part to act as the "insurer of
last resort" for California's workers' compensation insurance
system-insuring workers in occupations deemed too risky to be
insured by private-sector companies. The state also contracts
with SCIF to administer its workers' compensation insurance
program for state employees. In addition to these lines of
business, SCIF also competes with private-sector insurers,
Insurance Code 11781 delegates administrative authority to the
board. The board provides the Department of Finance with an
actual personnel position count and an estimate of future year
costs. SCIF has what is referred to as a special display in the
Governor's Budget which does not include salary and wages (a
display of position classifications and related salaries). SCIF
personnel positions and salaries do not require Department of
Finance approval.
SB 1406 (Emmerson)
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Proposed Law: Though this bill provides that the board may
appoint up to 20 position, seven of those positions (president,
chief financial officer, chief operating officer, chief
information technology officer, chief investment officer, chief
risk officer and general counsel) were authorized by SB 1145
(Machado) Chapter 344/2008. The board was authorized to appoint
a president. This bill would authorize SCIF to fill up to 13
new positions and set the salary for each position. These
positions would not be subject to otherwise applicable
provisions of the Government Code and the Public Contract Code.
Preliminary information indicates the compensation range for the
SCIF president is $37,500 to $48,780 a month. The compensation
for the SCIF chief operating officer is $13,000 to $17,000 a
month, the lowest compensation of the positions authorized by
Chapter 344/2008. Likely similar compensation ranges would be
adopted for the positions proposed to be authorized.
Preliminary information indicates these employees may opt into
the Public Employees Retirement System after three years of
employment.
Related Legislation: SB 1513 (Negrete McLeod) would expand the
State Compensation Insurance Fund board's choice of investments
of excess moneys.
Staff Comments: As amended on April 18, 2012, this bill would
require the board to report to the Legislature one year after
the effective date of the bill. This is likely after the
positions have been filled.
Recommended Amendments: Preliminary information indicates SCIF
needs additional expertise in actuarial services, pricing and
technology. In order to provide a clearer understanding of the
potential fiscal impact of this bill now, and not after
personnel are hired, staff recommends this bill be amended to
delete the report and instead statutorily identify the positions
noted below:
- Information Technology; infrastructure engineering, data
management and systems engineering/applications (three
positions).
- Claims Medical (appropriate medical credential required)
SB 1406 (Emmerson)
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- Chief Actuarial Officer
- Chief of Internal Affairs
Based on current compensation for the positions authorized by
Chapter 344/2008, monthly salaries would range from $13,000 to
$26,265. At a mid-range monthly salary of $19,633, six
positions would have a cost of $1,413,540.
The board is in the process of identifying additional positions
up to the 13 proposed by the bill.