HomeMy WebLinkAboutMINUTES - 09172002 - PR.1 THE BOARD OF SUPERVISORS OF
CONTRA COSTA COUNTY, CALIFORNIA
MATTER OF RECORD SEPTEMBER 17, 2002
ACCEPTED an oral presentation of the State Budget Overview by Joseph
Canciamilla.
THIS IS A MATTER FOR RECORD PURPOSES ONLY
NO ACTION WAS TAKEN
�Hrt
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Joe Canciamiila has earned a reputation as a dedicated,independent thinking
and hardworking public servant. Joe was first elected to the Pittsburg Board of
IN
Education at the age of 17,at the time the youngest elected official in the nation.
After serving almost 4 terms on the school board Joe moved on to the Pittsburg
City Council where he served over two terms, including two years as Mayor. In
1996 Joe was elected to the Contra Costa County Board of Supervisors representing the Fifth District.
ON
Joe was elected to the State Assembly in 2000 with over 67%of the vote.
In each position Joe has proven himself to be an effective leader and consensus builder. He helped to
craft a cutting-edge industrial safety ordinance, led a new growth management effort in the county which
resulted in the protection of thousands of acres of open space,secured new money for trans portatlon
projects and continues to be a leading proponent of sub-regional strategic planning to deo with growth
and its impacts.
Joe has worked successfully to provide a new facility for the Antioch Historical Society,funding for a new
Pittsburg Veterans Building and Created a highly successful code enforcement program. He spear-
headed a successfulpublic/private/community partnership that built a new Transitional Housing Corry
i OR
plea for Homeless families and led the effort to build a new state-of-the-art animal shelter, at the same
tin-e creating new,innovative partnerships between animal services and youth probation.
Joe's vast local government experience also included service on the Contra Costa Local Agency Forma-
tion Commission(LAFCO)the Delta Diablo Sanitation District Board,the delta Protection Commission,
the Contra Costa County Transportation Authority and the Bay Area Air Quality Management District.
As a member of the Assembly Joe has continued'to serve his constituents and the people of California
well by leading the way on difficult and challenging issues. He served as a member of the Committee on
N 11 Energy Costs and Availability, and chaired its sub-committee cin natural gas issues There lis€ff is re
-
y.,
the only unanimous and bi-partisan set of recommendations on this important issue. In his
first year in the Assembly he has authored and had signed into law legislation which protects investors
from fraudulent and deceptive"Enron-like"partnerships,provided better security options for Animal
Control Officers,and provided more energy options for California businesses.
In this seed year Joe has authored legislation to address ERAF problems and return local dollars to
local government, to encourage Smart-Growth at the local level,to continue with policies that foster our
energy inde pendere;to develop water duality standards for the protection of the Delta,to enhance
0 5-1ipennies f criminal acts against seniors and the disabled:;and to provide new options for investing in
California's deteriorating infrastructure.
I°n recognition of his;leadership and experience Speaker Herb Wesson,Jr.,has appointed.toe to Chair
the Asst y's Committee on hater, Parks and ildlife. Joe will also serve as a member of Budget Sub-
committee#3—Resources,as well as the Arts,Entertainment,Sports, Tourism and the Internet Media,
GovrrntI C rt� atron,and lltllities and Commerce committees. Roundin out his res onsibllities
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III Joe will also serve on the following Select Committees: Low Performing Schools,Traffic Congestion Re-
lief,Cal Porn Wine,azul the Protection of Inland Waterways.
Joe also has experience in the private sector as co-owner of Pittsburg Funeral Chapel, Inc., a family
owned'business for over 50 years, and as an attorney who maintained a practice for over 10 years, Joe
is a graduate of Pittsburg High School, St.Mary's College and John F. Kennedy University School of Law:
Joe is married to Dr.Laura Stephenson-Canciamilla,an Assistant Professor in the Graduate School of
Education at St. Mary's College in Moraga and a consultant specializing in improvement strategies for
lour performing schools.
Cos
- 1E
T T S
Thursday,Ju#,1$,2002
Assem, blym- an::, chainge, in stag budget pro
N Pittsburg Democrat East Bay representative to join'
1;1a �S S Ild]n him and three other Democrats
says g negotiating sessions with Re-
pfans; drafted hastily publican leaders: The group of
10 heldits fourth meeting
ew. Wednesda
By Andrew Lar
aM .
rn rss sra wsrrnz { - "The first couple of meetings
SACRAMENTO-•L,awmak- Ny *' were really more'a matter of try-
ers'painful,snail-paced struggle_ � ' ing,to get to know each other a
to passs-a state budget produced ! little bit," Canciamilla said. "I
no apparent progress Wednes- xF think now we're going to get into
day, even as legislative leaders y=6 the specific issues of the budget."
huddled to negotiate. Republicans have described`
And other than the embar- the get-togethers as"cordial."On
rassment of missing the July 1 Monday,Assembly GOP leader
.deadline,which is routine prac-- L7ave Cox pleaded for a meeting
Lice,legislators face little conse- ,with-Gov. Gray Davis and said
quence the Assembly negotiations are of
For Assemblyman Joe Cann- rcw,#d&ALLY/CiM acs zoox little value without the governor,
amilla,D-Pittsburg,that's one of AS5EMBLYMATTJOE CANCIAMILLA, D-Pittsburg,says the, "I 1-think have to have the
the many quirky aspects of how, Legislature doesn't get enough tide to dig into the budget. "l think governor engaged,"Cox said.
the Legislature goes about writ the whole process reeds to be.radically.changed."he said Nevertheless,Caneianulla and
ing_and approving a spending.` :'feilowDe ocratssa. theythnk
plan each year. Another is the for their districts. A freshman in the Legisla --the meetings can produce a com-
common tactic,deployed unsuc- "This shouldn't be the way we. ture's lower-house, Canciamilla promise,and Steve Maviglio,the
cessfuRy this year by Democrats, do business in the fifth-largest is getting-a:front rowview of the governor's spokesman, said
to build support among oppo- economy in the world," Canci- budget, impasse. Assembly
nents by offering thein projects amilla said, Speaker Herb Wesson picked the See BUDGET,Back Page
u4et publicans`is$3.9-billion in pro= oiled,he said.One option wpuld
posed taxes they*say-they Won't be to move to two-year budget-
FROM
udgetFROM PAGE 1 support. Those include raising Mg-'
the cigarette tax by 63 gents a Also;the two-thirds majority
Davis"defers to Mr.Wesson"on pack to $1.54,.more thann dou- required for passage could be
how to win passage of the spend- bling vehicle license fe"e"s for one' scaled back to a 55 percent or 60
ing plaza in the Assembly year and suspending a-va#ety-of Percent majority,making it eas-
Tough budget decisions and tax credits6. ier to pass the budget-
the bickering.associated with -If Republicans can show how "I think the process is poorly
thein are nothing new to Canci- " to prudently reduie:spending>. designed_'..It..is structurally
amilla,a farmer county supervi- thereby lowering the-need for flawed and needs work," Can-
taxes, C'.longtime city councilman taxes, Canciaznilla'v iR embrace ciamilla said."I think the whole
and school board member. The thtise:piroposals,h6 said . process,needs to be radically
difficulty of corning up with a "Nowvve need toget into the changed."
plan that can be backed by the meat of it and'we need to spend 'Whether he can persuade fel-
zoverm_and RU of the 120 mem- some time on,both-sidesgoing low`lawmakers to reform, the
bets of the L.egcslature,however, through theenumbers 7. budgetin"rocess,_sp_me Deng the
is a-novel challenge,especially Bzst cici'sin tree Seal this year Legislature hasn't attempted in a
in a highly politicized'environ- is only.part a whattroubles.Can- decade,remains to be seen.:Can-
ment,he said. ciamilla conceded that drafting
Despite Democratic allega to overhaul the process.As it is, a.spending,.plan is viewed by
tions that Republicans-aim to the : slafur t fit- most legislators as dull, lahori-
block the budget as a ploy to hurt enough time to dQIko the bud- ous work.
Davis're-election chances,Can ,get, he,said,:and a final plan is "It's handled more as `'We
ciamilla said he's'participating thrown together quickly—gen-
1 have to get through this,we have
m.four to six weeks--af-
with an open mind. , - �.' to get dome,' rather than as an
"None,of us is'eagerly run- ter the state's spring tax rezrenues overall piece of policy,"he said.
ning out to raise taxes," Canci- are announced. "It is the single biggest thing we
amilla said. "We've told them -A'$ 4p-billit�n bticiget�that do."
(Republicans), 'As'far as we're guides.spending-do more:.than
concerned,'Everything is still on 100 state;departments and aged-
the table. cies-is au-enohnously complex. Andre La aecovach him at 9I&
Eine sticking paint for Re- monumental document that gov441-2101 or
should be:more-carefully.devel- atamar'c@cctimes,com.
P
VIEWPOINTS Monday, Septernber 2, 2002, Tracy Press
Change how Capitol- makes laws
Someone - it might have been The question is cide with the'federal government,create.
Mark Twain - once observed, not a neer one, hose- a mandatory budget reserve and devote;
"People who love sausage and ever relevant it might the first year of each biennial session;
respect the law should never watch be today. By one "solely to the oversight"and evaluation'
either being made." means or another,the of existing programs and departments";
Anyone who has watched the state Legislature has been
Legislature, or sausage making, knows under constant- and allow only legislation written by,
committees, rather 'than individual,
the essential truth of the observation.. "reform" for nearly members,to be considered.
Familiarity with either process breeds,if 40 years, and by all Canciamilla pegs the problem accu-
not contempt, at least an endemic sleep- accounts has deterio- ,
ticism about the final product. rated as a policymak- rately. His proposals,if adopted and fol-�
If one tried to design a process that ing body during the Dart lowed, probably would >make thea
would be the antithesis of rationality entire period. process a bit more rational and,a bit less:
Wafters chaotic.Unfortunate) however,he can
and consistency, it would be low legis- Now; says some- �,
lators go about their world. They try to one who has served California not change human nature.
do too many things at the same time, in the Legislature for Politics he system is driven not by lei sla-'
and usually fail to do any of them right, just two years,, it is tors or any sense of real world pri-
put off important decisions until the.last. time 'to' overhaul the orities but by the demands of the,
possible moment, write laws that con- system; again. Assemblyman Joe 1,200 lobbyists who labor on behalf of
tradict each other in intent::and word Canciamilla, D-Pittsburg, a veteran of thousands of special interests. if exist
and rarely examine whether what they local government, says 'he's been ing rules and procedures were common- ,
wrought had the intended effect. shocked by the lack of critical exa ina- ly violated for politically expedient rea-
Last week,which was supposed to be tion of legislation, sons, why would one expect any.'
the final'week of the Legislature's 2002 "No one wants to say no around "reformed"system to work better?
session, its essentially dysfunctional here,"he laments. It's a nice try, and worth inclusion iii
process was on display. Hundreds of Using his own experiences and those those periodic academic 'discussions
bills were left until the final days to be related by veterans, and reviewing the about ;legislative reform. But the only
processed, lobbyists and lawmakers many suggestions for change that have reform:that might have a chance of
wrote dozens of entirely new measures been aired, and then forgotten, he has working would be to start over with a
in secret, hours were squandered-on produced his awn reform proposal. clean sheet of paper'and create a leg-
syrupy tributes to retiring members and 44T nless we force ourselves to islative' structure that more completely
the two-month-late state budgetmake the time and space in
remained stalled. the process, we, will never reflects the diversity and energy of the
Could it be better? Could the stop drafting and passing neer laws long state, with, severe and' inescapable
Legislature do its work efficiently and enough to look in the rear-view mirror accountabilityfor outvomes. However
fairly,concentrating its energies on mat- at laws already on the books," he says. sincerely drafted,mere procedural'.over'
ters of vital importance to a fast-growing "Are programs worldng?Arelthey worth hauls, to use an overworked phrase,
and fast-changing state and eschewing the money?'Are they;even going in the probably I accomplish about as much as
time-wasting trivia?Or is the Legislature right direction or providing the services rearranging the deck chairs on a certain
fated to play its little games forever, they were originally designed to pro- doomed ocean liner.
faithfully delivering the goodies to spe- vide?"
cial interest pleaders,. but becoming Canciamilla ,would have the state Dan Watters is a state Capitol coium-'
increasingly irrelevant to Californians' shift to a two-year budget cycle, change nist for the Sacramento.Bee.His e-mail
real world concerns? its fiscal year to Oct. 1-Sept.;30 to coin- address is;dwalters@sacbee.corn-
THE 20 CALIFORNIA PRIVACY LAWS ENACTED SINCE 1999
FINANCIAL AB 2869(Machado)-Chapter 977,Statutes of 2000
SERVICES In the written notice that credit card issuers must provide to customers if the
INFORMATION issuer intends to disclose marketing information, imposes new requirement that
the notice include a preprinted form and a tall-free telephone number for
customers to request their information not be disclosed(opt-out).
SB 1687(Figueroa) -Chapter 978,Statutes of 2000
Expands what credit reporting agencies are required to disclose to consumers
upon request, and requires anyone using credit scoring in connection with home
LU(Z equity loans to provide credit scoring information to consumers.Also requires
LSF P 1 7 credit reporting agencies to better manage information in credit reports.
CLERK BOA"?s. y...:.. "'EAVISORS
Ct��l1"r"t•";i,LilA C0;
DIRECT SB 926(Speier)-Chapter 586,Statutes of 1999
MARKETING Enacts the Supermarket Club Card.Disclosure Act of 1999 which prohibits
requiring an applicant for a supermarket club card to providea driver's license
or Social Security:account number as a condition of obtaining the card. Also
prohibits a club card issuer from selling or sharing personal identification
information regarding cardholders,with some exceptions.
AR 655(Wright)-Chapter 354,Statutes of 2001
Permits consumers to request their names be removed from the lists that a
consumer credit reporting agency furnishes for credit card solicitations.Also
requires credit agencies to block certain information when a consumer provides
a valid investigative report indicating that another person is unlawfully using
the consumer's personal information. And requires those who use credit reports
v and learn that an address on a report is different from the consumer requesting
or being offered credit, to verify the consumer's information and confirm the
request is not for identity theft.
AB 870(Wessoi!)-Chapter 06,Statutes of 2001
Prohibits"phantom calling."That is using automatic calling equipment to snake
telephone calls when no person or prerecorded'message is available for the
person called.
SB 771(Figueroa) Chapter.•2595,',statutes of 2001
Requires the California partmertfiif Consumer Affairs to maintain a"do not
call"list of telephone subscribers who wish to not be solicited by those seeking
to sell goods or services. Provides limited exemptions.
1
IDENTITY AB 1862(Torlakson)-Chapter 631,Statutesof 2000
THEFT Allows victims of identity theft to submit a court order along with fingerprints
to the Department of Justice(DOJ)to verify against DMV records.Also
requires DOJ to maintain a database concerning victims of identity theft
accessible by the victim and law enforcement agencies.
AB 1897(Davis) Chapter 956,Statutes of 2000
Provides various protections for identity theft victims including allowing
victims to initiate a taw enforcement investigation if they learn or suspect
someone else is using their identity:
AB 245( yland)-Chapter 478, Statutes of 2003
Changes identity theft from a misdemeanor to a felony,and removes the
previous requirement that the information used unlawfully was acquired without
consent.
SB 125(Alpert)-Chapter 493,Statutes of 2001
Entitles individuals who discover an unauthorized individual has applied for a
loan,credit card,or bank account in his or her name,to receive a copy of the
application'and any information related to the application.
SB 168(Bowen)-'Chapter 720,Statutes of 2001
Requires credit reporting bureaus to accept security alerts from consumers via a
toll-free telephone number. Allows consumers to impose a renewable security
freeze on their credit file. And prohibits using an individual's Social Security
number in certain ways,including posting it publicly or requiring it for access
to products or services.
STATE' SB 129(Peace)-+Chapter 984,Statutes of 20013
C()VF.RNMY,N'T` Creates an Office of Privacy Protection in the Department of Consumer Affairs,
PItOTE no NSi which will protect the privacy of'individuals'personal information by
identifying consumer problems and facilitating development of fair information
practices:
AB 1740(Ducheny)[2000-01 Budget Bill]-Chapter'52, Statutes of 2000'
Includes provisions requiring that privacy policies be adopted by each state
department and agency stating the purposes of collecting personal information,
the means by which it is protected against unauthorized access,modification,or
disclosure,and the.assiggment, f.someone in each-dep,^.,xtmez t.or agency
responsible for its`p`rtv'acy l5&h y.. ._. . ...
BUSINESS AB 2246('Wayne)-Chapter 1039,Statutes of 2000
RECORDS' Protects consumers'privacy by requiring businesses to dispose of records so as..
to make a customer's personal information unreadable or undecipherable.
PUBLIC AB 771(Briggs)-Chapter 408, Statutes of 1999
RECORDS Prohibits the California Department of Motor Vehicles:from distributing or
selling the photograph or information pertaining to the physical characteristics
of an applicant for driver's license or California identification card without
consent.
AB 1965(Keach)-Chapter 962,statutes of 2000
Prohibits the State Board of Equalization from releasing the names and
addresses of its licensees and registrants to third parties.
MEDICAL AB 2797(Papan)-Chapter 278, Statutes of 2000
RECORDS' Prohibits the use of medical information for the granting of credit,limits the
sharing of medical information by a life or disability insurer to third parties and
affiliates
SB 1903(Speier)-Chapter 1066,Statutes of 2000
2
Extends provisions in existing law regarding sharing,selling,or using medical
information for purposes other than provision of health care services applicable
to corporations and their subsidiaries and affiliates.
ELECTRONIC SB 1.090(Bowen)—Chapter 731,Statutes of 2001
MONITORING Extends current law prohibiting cable operators from using electronic devices to
observe,listen to,record,or monitor events or conversations inside a
subscriber's residence or workplace without the subscriber's written:consent,to
satellite televisions companies:
VICTIMS OF AB 205(Leach)-Chapter 33,Statutes of 2001
DOMESTIC Provides greater protections to victims of domestic violence by allowing victims
VIOLENCE who seek a name change to maintain the confidentiality of the new name to
avoid future violence. '
..:vertu + w»2M ;A
,..
3
SB P773 Assembly Bill - Status Page 1 of 1
CURRENT BILL STATUS
MEASURE :' S.B. No. 773
AUTHOR(S)' Speier.
TOPIC Financial institutions:' confidential consumer
information'.
HOUSE LOCATION ASM
+LAST AMENDED DATE 08/31/2002
TYPE OF BILL
Active
Non'.-Urgency
Non:-Appropriations
Majority;VoteRequired
Non-State-Mandated Local Program
Fiscal
Non-Tax Levy
LAST HIST'. ACT'. DATE: 08/31/2002
LAST HIST. ACTION : In Senate. Senate refuses to concur in Assembly
amendments. (Ayes 1. Noes 33 . Page 6153. )
FILE I ASTM THIRD REARING
FILE DATE 08/31/2002
ITEM 66
TITLE An ;act to add Division 1.2 (commencing with Section
4050) to the Financial Code, relating to financial
privacy.
http://www.leginfo.ca.gov/pub{bill/sen/sb-0751-0800/sb-773-obi ll_20020906_sta€us.html 02109116
SB 773 Senate Pill -History Page I of 2
COMPLETE BILL HISTORY
BILL NUMBER : S.B. 'No. 773
AUTHOR speier
TOPIC Financialinstitutions: confidential consumer information.
TYPE. OF BILL
Active
Non-Urgency
Non'.-Appropriations'
Majority 'Vote ;Required
Non-State-Mandated Local Program
Fiscal
Non-Tax Levy
BILL,' HISTORY
20€32
Aug. 31 In senate. Senate refuses to concur in Assembly;, amendments. (Ayes 1.
Nines 33. Page 6151. )
Aug. 31 Read third time. Refused passage. Motion to reconsider by Assembly
Member Firebaugh;granted. Joint 'Rule ".69(b),. suspended'. Amended. To
inactive file on motion of Assembly Member Rod Pacheco. Motion by
Assembly Member Firebaugh to suspend Assembly Rule 78 adopted. From
inactive file. Amendments by Assembly Member Dutra adopted. Passed. '
To Senate.
Aug. 25 Read second time. To third reading.
Aug.; 24 Read second time. Amended. To second reading.
Aug.'' 23 From committee: Do pass as amended. (Ayes 8. Noes' 3. ).
Aug.° 22 Read second time. Amended.' Re-referred to Com. on JUD.
Aug. 21 From committee: Do pass as amended, but first amend, and; re-refer
to Com. on JUD. (Ayes 8. Noes ' 4.)
Aug.', 19 Read third time. Assembly Rule 9(b) (1) suspended. (Ayes 41. Noes
28. Page 7787. ) Motion by Assembly Member Bogh to table amendments
by Assembly Member Nation refused adaption. (Ayes 28. Noes 42. Page
7787.) Amended. (Ayes 41. Woes 23. Page 7788, ) Re-referred to Coms.
on B.&F. , JUD. , and APPR. pursuant to Assembly Rule 77.2. (Corrected
August 20. )
Aug. 15 Reconsideration granted.
Jan. 7 Aug. 15 Motions to reconsider continued.
2001
Sept. 14 Motion to reconsider continued to next legislative day'.
Sept. 13 (Sep. 14)-Refused passage. (Ayes 32. Noes 26. Page 3939. ) Motion to,
reconsider on next legislative clay made by Assembly Member Jackson. '
Sept;. 13 Read third time.
Sept. 12 (Sep. 13) -Read third time. Amended. To third reading. (Corrected;
September 27. )
Sept. 6 From committee; Do pass as amended. (Ayes 13. 'Noes 5. ) Read
second time Amended. To third reading.
Aug. 30 Joint Rule '61(a)< (10) & (11) suspended.
Aug. 30 From committee with author's amendments. Read second time.
Amended. Re-referred to committee.
Aug. 29 Placed on APPR. suspense file.
Aug. 23 Read second time. Amended. Re-:referred to Coni. on APPR.
Aug. .22 From committee: Do pass as amended, but firstamend, and re-refer
to Com. on APPR. (Ayer 7. Noes 3.)
July 16 From committee: Do pass, but first be re-referred to Com'. on JUD.
(Ayes 8. Nines 2. ) Re-referred to Com. on JUD.
July 14 From committee with author's amendments. Read second time.
Amended. Re-referred; to committee.
July 5 Joint Rule 61(a) (9) suspended.
June 29 From committee with author's amendments. Read second time.
Amended. Re-referred to committee.
http://www.leginfo ca.gov/pub/bill/sen/sb_0751-0800/sb_'773 bill_20020831 history.htrnl O2/09/16
SB 773 Senate Bill - History Page 2 of 2
June 28 Reconsideration granted.
June 25 Set, first hearing. Failed passage in committee'.
June 18 Hearing postponed by committee.
June 13 From committee with author'samendments. Read second:time.
Amended. Re-referred to committee.
June 5 To Coms. on B. & F. and JUD.
June 5 In Assembly. Read first time. Held at Desk.
June 4 Read third time. Passed. (Ayes 25. Noes 13. Page 1322. ) To
Assembly.
May 31 Read second time. To third reading.
May 30 Read third time. »Amended. To second reading.
May 23 Read second time. To third reading.
May 22 From committee: Be placed on second reading file pursuanttoSenate
Rule 28..8.
May 10 Set for hearing May 21.
May 1` Withdrawn from committee. Re-referred to Com. on APPR.
Apr. 25 Read second time. Amended. Re-referred to Com. on RLS.
Apr. 24 From committee: Do pass as amended, but first amend, and re-refer
to Com. on RLS. (Ayes 5. Noes 2 . Page 555. )'
Mar. 29 Set for;hearing April 17.
Mar. '12 To Coms. on JUD. and RLS.
Feb. "26 Read first time.
Feb. 23 Introduced. To Com. on RLS, for assignment. To print.
http://www.leginfo.ca.gov/pubibill/sen/sb_0751-0800/sb_773_bill_20020831-history.html 02/09/16
-s
AMENDED IN ASSEMBLY AUGUST 31, 2002
AMENDED IN .ASSEMBLY AUGUST 24, 2002
AMENDED IN ASSEMBLY AUGUST 2 , 2002'
AMENDED IN ,ASSEMBLY AUGUST 19, 2002
AMENDED IN ASSEMBLY SEPTEMBER '13, 2001
AMENDED IN ASSEMBLY SEPTEMBERb, 2001
AMENDED IN ASSEMBLY AUGUST 30, 2001
AMENDED IN ASSEMBLY AUGUST 23, 2001
AMENDED IN ASSEMBLY JULY 14, 2001
AMENDED IN ASSEMBLY JUNE 29, 2001
AMENDED IN ASSEMBLY JUNE 13, 2001
AMENDED IN SENATE:MAY 30, 2001
AMENDED IN SENATE APRIL 25, 2001
SENATE BILL No. 773
Introduced by Senator Speier
J
H""-. Senators Bowen and Peace)
r r r s r
Keeley, Kebee, r r ?Vfigdee, P"4ey, Reyes, Shelley,
February 23, 2001
B6
S$ 773 —2—
An
2—An act to add Division 1.2(commencing with Section 4050) to the
FinancialCode,'relating to financial privacy.
LEGISLATIVE COUNSEL:S DIGEST
SB 773, as amended, Sp ier, Financial institutions: confidential
consumer information,:
Existing law provides for the regulation of banks, savings
associations, credit unions,' and industrial loan companies by the
Department of Financial Institutions and by certain federal agencies.
Existing federal law, the Gramm-Leach-Bliley Act,requires'financial
institutions to provide'a notice to consumers relative to the use by the
financial'institution of nonpublic 'personal information, and in that
regard authorizes consumers to direct that the information not be shared
with nonaffiliated third parties.
This bill would enact the California Financial Information Privacy
Act, which would require a financial institution,'as defined, to provide
a specified written form to a consumer relative to the sharing of the
consumer's confidential consumer information, as defined. The bi!4
*4;e fine 6P4
The bill would', require the permission of the consumer before the
financial institution could share the confidential'consumer information
with-ems nonaffiliated companies. The bill would provide that a
financial institution is not required to provide this written form to its
consumers if the financial institution does not disclose any confidential
consumer information to any nonaffiliated 3rd party or-to any affiliate,
This bill would provide that a financial institution shall not deny a
consumer a financial product or service because the consumer has not
provided'the necessary consent that would authorize the financial
institution to disclose or share confidential consumer information. The
bill would require a financial'institution to comply with the consumer's
request regarding confidential consumer information within 45 days of
receipt of the request.
This bill would provide
also-p le that a financial institution may' disclose confidential
86
-3—__. SB 773
consumer information to an affiliate or a nonaffiliated 3rd party in order
for it to perform certain services on behalf of the financial institution
if specified requirements are met. The bill would provide other
exceptions from its provisions applicable to particular situations.
The bill would provide that confidential consumer information may
be released in order to identify or locate missing children, witnesses,
criminals and fugitives,patties to lawsuits, and missing heirs and that
it would not change existing law regarding access by law enforcement
agencies to information held by financial institutions.
The bill would also provide for disclosure of confidential consumer
information under various other specified circumstances.
The bill would provide on January 1 2003, that enactment of these
provisions preempts all local agency ordinances and regulations
relating to this subject.
The mill would enact other related provisions.
The bill would also provide various civil penalties for negligent, or
knowing and willful violations of these;provisions.
The bill would, exceptas provided above, become operative on
November- 4-2004.January 1, 2004,except that penalties under the bill
would not become operati=ve until July ',1, 2004.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
The people of the,State of California do enact as follows:
1 SECTION 1 .division 1.2 (commencing with Section 4050)
2 is added to the Financial Code,to read:
3
4 DIVISION 1.2. CALIFORNIA FINANCIAL
5 INFORMATION PRIVACY ACT
0
7 4050. This division shall be known and may be,cited as the
8 California Financial Information Privacy Act.This division shall
104968.6 shaH beeeme "erfttiye en Jftattafy 1, 2OG3. become
11 operative on January 1, 2004.
12 4051. , (a) The Legislature intends for financial institutions to
13 provide their consumers notice and meaningful choice about how
14 consumers' personal information is shared or sold by their
15 financial institutions.
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1
4-1 (b) It is the intent of the Legislature in enacting the California
2 Financial Information 'Privacy Act to afford persons greater
3privacy protection than those provided in Public Law 106-102,the
4' federal Gramm-Leach-Bliley Act, and that this division be
5' interpreted to be consistent with that purpose.
6' 4052. For the purposes of this division:
7 (a) "Confidential consumer information" means personally
8' identifiable financial information (1) provided by a consumer to
9`° a financial'institution, (2)resulting from any transaction with the
10. consumer or any service performed for the consumer, or (3)
11 otherwise obtained by the financial institution. Confidential
12' consumer information does' not 'include publicly available
13'; information that the financial institution has a reasonable basis to
14' believe is lawfully made available to the general public from(1)
15' federal, state, or local government records, (2) widely distributed
16' media, or(3)disclosures to the general public that are required to
17'.' be made by federal, state, or local law. Confidential consumer
18' information shall include any list, description, or other grouping
19 of consumers, and publicly available information pertaining to
20' them that is derived using any nonpublic', personal information
21 other than,publicly available information,but shall not include any
22' list, description, or other grouping of consumers, and publicly
23' available information pertaining to them that is derived without
24 using any confidential consumer information.
25' (b) "Personally identifiable financial information" means
26 information (1)that a consumer provides to a financial institution
27` to obtain a product or service from the financial institution, '(2)
28` about a consumer resulting from any transaction involving a
29'' product or service between the 'financial institution and a
30consumer,,or (3)'that the financial institution otherwise obtains
31' about a consumer in connection with providing a product or
32' service to that consumer. Any;personally identifiable information
33' is financial if it was obtained by a financial institution in
34' connection with providing a financial product or service to a
35' consumer, inclining the fact that a consumer is a customer of a
36' financial institution or has obtained a financial product or service
37'' from a financial institution. Personally identifiable' financial
38 information includes all of the following:
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1 (1) Information a consumer provides to'a financial institution
2'' on an application to obtain a loan, credit card, or other financial
3 product or service.
4 (2) Account balance information, payment history, overdraft
5 history and credit or debit card purchase information.
6 (3) The fact that an individual is or has been a customer of a
7:. financial institution or has obtained a financial product or service
8 from a financial institution.
9'' (4) Any information'about a financial institution's consumer if
10 it is disclosed in a manner that indicates that the individual is or has
11' been the financial institution's consumer.
12 (5) Any information that a consumer provides to a financial
13 institution ;or that a financial'`« institution or its agent otherwise
14' obtains in connection with collecting on a lean or servicing a loan.
15" (6) Any personally identifiable financial information'collected
16 through an Internet cookie or an information collecting device
17' from a Web server.
18' (7) Information from a consumer report.
19 (c,) "Financial institution" means any institution the business
20' of which is engaging in=financial activities as described in Section
21 1843(k) of Title 12 of the United States Code and doing business
22' in this state. An institution that is not significantly engaged' in
23; financial activities is not a financial institution. The term
24ss "financial institution" does not include the Federal Agricultural
25' Mortgage Corporation or any entity chartered and operating under
26 the Farm Credit Act of 1971 (12; U.S.C. Sec. 2001' et seq.),
27' provided that the entity does not sell or transfer confidential
28 consumer information to a nonaffiliated third party. The term
29'` "financial institution" does not include institutions chartered'by
30 Congress specifically to engage in a proposed or actual
31' securitization, secondary market sale,including sales of servicing
32' rights, or similar transactions related to a transaction of the
33 consumer,, as long as those institutions do not sell or transfer
34' confidential consumer information to a nonaffiliated third party.
35' The term "financial institution" does not include any person
36 licensed as a dealer under Article 1 (commencing with Section
37' 11700)of Chapter 4 of Division 5 of the Vehicle Code that enters
38' into contracts for the installment sale or lease of motor vehicles
39 pursuant to the requirements' of Chapter 2b (commencing with
40' Section 2981)or 2d(commencing with Section 2985.7) of Title 14
86
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SB 773 —b--
1 of Part 4 of Division 3 of the Civil Code and assigns substantially
2 all of those contracts to financial institutions within 30 days. The
3 term "financialinstitution" does not include any provider of
4 professional services, or any wholly owned affiliate thereof, that
5 is prohibited by rules of professional ethics or applicable law from
6 voluntarily disclosing confidential client information without the
7 consent of the client.
"
9 ,
10
11 , shall be deefaed
12
13
14
15
16
17
1 , (B) pertfeRe
19 adyisefy sefyiees, ,
20
21
22
23 (e)
24 (d) "Nonaffiliated third party„ means any entity that is not an
25 affiliate of, or related" by common ownership or affiliated' by
26 corporate 'control with, the financial institution, but does not
27 include a joint employee of that institution and a third party.
28
29 (e) "Consumer" means an individual resident of this state who
30 obtains or has obtained a financial product or service from a
31 financial institution that is to be used primarily for;personal,
32 family, or household purposes, or that individual's legal
33 representative. For purposes of this division, an individual resident
34 of this state is someone whose last known mailing address, other
35 than an Armed Farces Post Office or Fleet Post Office address, as
36 shown in the records of the financial institution, is located in this
37 state.For purposes of this division,an individuatis not a consumer
38 of a'financal institution'solely'because he or she is(1)a participant
39 or beneficiary of an ..employee benefit plan that a'' financial
40 institution`' administers'-,or sponsors, or for which the financial
86
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1 institution acts as a trustee, insurer,or fiduciary, (2)covered under
2 a group or blanket insurance policy or group annuity contract
3 issued by the financial institution, (3)a beneficiary in a workers'
4 compensation pian, (4) a beneficiary of a trust for which the
5 financial institution is a trustee,or(5)a person who has designated
6 the financial institution as trustee for a trust provided that (A)the
7 financial institution provides all 'required notices and rights
required by this division to the plan sponsor, group or blanket
9 insurance'policyholder, or group annuity contractholder and (B)
10 the financial institution does not disclose to any affiliate or any
11 nonaffiliated third-party confidential consumer information about
12 the individual except as authorized in Section 4056. A'consumer
13 does not include an individualwho obtains products or services for
14 business, commercial, or agricultural purposes.
15 (g)
16 (f) "Control" means(1)ownership or power to vote 25 percent
17 or more of the outstanding shares of any class of voting security
18 of a company, acting through one or more,persons, (2)control in
19 any manner over the election of a majority of the directors, or of
20 individuals exercising' similar functions, or (3) the 'power to
21 exercise, directly or indirectly, a controlling influence over the
22 management or policies of a company. However, for purposes of
23 the 'application of the definition of control as it:relates to credit
24 unions, a;, credit union has a controlling influence over the
25 management or policies of a credit union service organization
26 (CUSO), ;as that term is defined'by state or federal law or
27 regulation, if the CUSO is at least'67 percent owned by credit
28 unions.For purposes of the application of the definition of control
29 to a'financial institution subject to regulation by the United States
30 Securities and Exchange Commission, a person who owns
31 beneficially, either, directly or through one or more controlled
32 companies, more than 25 percent of the voting securities of a
33 company is presumed to control the company,and a person who
34 does not own more than 25 percent of the voting securities of a
35 company is presumed not to control the company, and a
36 presumption regarding',control may be rebutted by evidence,but
37 in the case of an investment company, the presumption shall
38 continue 'until the United States Securities and Exchange
39 Commission mares a decision to the contrary according to the
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SB 773 —8-
1 procedures described in Section 2(a)(9)of the federal Investment
2 Company Act of 1940.
3 {#
4 (g) "Necessary to effect, administer, or enforce" means the
5 following:
6 (1) The disclosure is required, or is a usual, appropriate, or
7 acceptable method to carry out the transaction or the product or
8 service business of which the transaction is a part, and record or
9 service or maintain the consumer's account in the ordinary course
10' of providing the financial service or financial' product, or to
11 administer or service benefits or claims relating to the transaction
12 or the product or service business of which it is a part, and includes
13' the following:
14 (A) Providing the consumer or the consumer's agent or broker
15 with a confirmation, statement, or other record of the transaction,
16 or information on the status or value of the financial service or
17" financial product.
18' (B) The accrual or recognition of incentives or bonuses
19' associated with the transaction or communications to eligible
20 existing consumers of the financial institution regarding the
21 availability of those incentives and bonuses that are provided by
22 the financial institution or another party.
23 (C) With respect to a financial institution that has issued a credit
24' account bearing the name of a<company primarily engaged in retail
25' sales or a name proprietary to a company primarily engaged in`
26 retail sales,providing the retailer,or licensees or contractors of the
27' retailer that provide products or services in the name of the retailer
28 and under;,a contract with the retailer, with confidential consumer
29 information concerning the credit account in connection with the
30, marketing or provision of the products or services of the retailer
31 and those licensees or contractors.
32 (2) The disclosure is required or is one of the lawful or
33 appropriate methods to enforce the rights of the 'financial
34 institution or of other persons engaged in carrying out the financial
35 transaction or providing the product:or service.
36' (3) The disclosure is required, or is a usual,'appropriate, or
37 acceptable method for insurance underwriting or the placement of
38 insurance products by licensed agents and brokers with authorized
39 insurance companies at the consumer's request, for reinsurance,
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u —9— SB 773
1 stop loss insurance,or excess loss insurance purposes,or for any
2 of the following purposes as they relate to"a consumer's insurance:
3 (A) Accountadministration.
4 (B) Reporting, investigating, or preventing fraud or material
5 misrepresentation.
6 (C) Processing premium payments.
7 (D) Processing insurance claims.
8 (E) Administering insurance benefits, including; utilization
9 review activities.
10 (F) Participating in research projects.
1''1 (G) As otherwise required or specifically permitted by federal
12 or state law.
13 (4) The disclosure is required, or is a usual, appropriate, or
14 acceptable method, in connection with the following:
15 (A) The authorization,' settlement, billing, processing,
16 clearing, transferring, reconciling, or collection of amounts
17 charged, debited, or otherwise paid using a debit, credit or other
18 payment card, check, or account number, or by other payment
19 means.
20 (B) The transfer of receivables,;,accounts, or interests therein.
21 (C) The audit of debit, credit, or other payment information,
22 (5) The disclosure is required in a transaction covered by the
23 federal Real Estate Settlement Procedures Act (12 U.S.C. Sec,
24 2601 et seq.)in order to offer settlement services prior to the close
25 of escrow (as those services are defined in 12 U.S.C. Sec. 2602),
26 provided that (A) the confidential consumer information is
27 disclosed for the sole purpose of offering those settlement services
28 and(B)the confidential consumer information disclosed is limited
29 to that necessary to enable the financial institution to offer those
30 settlement services.
31
32 (h) "Financial product or service" «means any product or
33 service that a financial holding company could offer by engaging
34 in an activity that is financial in nature or incidental to a financial
35 activity under subsection (k) of Section`1843 of Title 12 of the
36 United States Code(the United States Bank Holding Company Act
37 of 1956), Financial service includes a financial institution's
38 evaluation or brokerage of information that the financial
39 institution collects in connection with a request or an application
40 from a consumer fora financial product or service.
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SB 773 — 10-
2
-- 10-2 (i) "Clear and conspicuous" means that a notice is reasonably
3 understandable and designed to call attention to the nature and
4 significance of the information in the notice.
5
6 (j) "Widely'distributed media" means media available to the
7 general public and includes a telephone book,a television or radio
8 program,a newspaper,or a Web site that is available to the general
9 public on an unrestricted basis.
10 4053. (a) A financial institution shall not disclose to,or share
11 a consumer's confidentialconsumer information with, any;
12 nonaffiliated third party unless the financial institution has
13 provided written notice pursuant to subdivision (c), to the
14 consumer to whore the confidential consumer information relates
15 and unless the financial institution has obtained a consent
16 acknowledgment from the consumer pursuant to subdivisions (c),
17 that authorizes the financial institution to disclose or share the
18 confidential consumer information. Nothing in this section shall
19 prohibit the disclosure of confidential consumer information as
20 allowed in Section 40156. A financial institution shall not deny a
21 consumer a financial ',product or a'financial service because the
22 consumer has not provided the consent required by this
23 subdivision to authorize the financial institution to disclose or
24 share his or her confidential consumer information with,any
25 nonaffiliated third. party. Nothing in this section is intended to
26 prohibit a financial institution from offering incentives to elicit a
27 specific response to the notice.
28 , or-s4tafe
29 with;
30
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3
33 infe"at4en may be diselesed to mi affl44ffie of the Anaftetal
34
35
36 , its
7
38 , and employees of the finmei
39
40
86
SB 773
1
}
3
4 en4y as perf.-Afted by this di-vision.
5 (2}
6 (b) (1) Subdivision (a) shall not prohibit the release of
7 confidential consumer information by a financial institution with
8 whom the consumer has a relationship,to;.a nonaffiliated financial
9 institution or institutions for purposes of jointly offering a
10 financialproduct or financial service pursuant to a written
11 agreement with the financial institution that receives the
12 confidential consumer information provided that all of the
13 following requirements are met:
14 (A) The financial product or service offered is a product or
15 service of, and is provided by, .at least one of the financial
16 institutions that is a party to the written agreement.-
1>7 (B) The financial` product or service is jointly offered,'
18 endorsed, or sponsored, and clearly and conspicuously identifies
19 for the consumer the financial institutions' that release the
20 confidential consumer information and the financial institutions
21 that receive that information.
22 (C) The written agreement provides that the financial
23 institution that receives that confidential'consumer information is
24 required to maintain the confidentiality of the information and is
25 prohibited from disclosing or using the information other than to
26 carry out the joint offering or servicing of a financial'product or
27 financial>service that is the subject of the written agreement.
8
29
30
31 }
32
33 {
34 (D) Notwithstanding this section, until January 1, 2004, a
35 financial institution may disclose confidential consumer
36 information to'a nonaffiliated financial institution pursuant to a
7 preexisting contract with the nonaffiliated financial institution,for
38 purposesofoffering a'financial product or financial service, if that
39 contract was entered into on or before January 1, 2003.Beginning
40 on January 1, 2004,no confidential consumer information may be
86'
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SB 773 — 12-
1
_ 12-1 disclosed pursuant to that contract unless all the requirements of
2 this subdivision are met.
3
4 (2) Nothing in this subdivision shall prohibit a financial
5 institution from disclosing or sharing confidentialconsumer
6 information as otherwise specifically permitted by this division.
7 (c) (1) The form:' set forth in this subdivision, or one
8 substantially similar shall be sent by the financial institution to the
9 consumer so that the consumer may make a decision and provide
10 direction to the financial institution regarding the sharing of his or
I1 her confidential consumer'information. A form shall not be
12 deemed substantially similar for purposes of this subdivision
13 unless at least all of the following requirements'are met:
14 (A) The form uses°the same title ("IMPORTANT PRIVACY
15 CHOICES FOR CALIFORNIANS") and headers (headings
16 designated in all capital letters in the form set forth below, such as
17 "SHARING INFORMATION WITH AFFILIATED
18 COMPANIES'°);
19 (B) The titles and headers in the form are clearly and
20 conspicuously displayed, and no text in the form is smaller than
21 10-point type.
22 (C) The form is a separate document.
23 (2) (A) None of the ''instructional' items appearing in
24 parentheses in the form set forth below shall appear in the form
25 provided to the consumer, as those items are for explanation
26 purposes only.If a financial institution dens not disclose or share
27 confidential consumer information as described in any one or _.
28 more of the first three headers of the form,the financial institution
9 is not required to include the applicable header or headers,and the
30 accompanying 'information` and box, in the 'form it provides
31 pursuant to this subdivision.
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1 PRINTER: PLEASE NOTE: TTP-IIT MATERIAL TO BE
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5 (B) A::financial institution shall not be in violation of this
6 subdivision solely because it includes in the form one or more brief'
7 examples or explanations of the purpose or purposes, or context,
8 within which information will be shared.
9 (B)
10 (C) The outside of the envelope in which the form is sent shall
I I clearly state in 16-point boldface type "IMPORTANT'PRIVA.CY
12 CHOICES," except that a financial institution sending the form to
13 a consumer in the same envelope as a bill or account statement does
14 not have to include the wording "IMPORTANT PRIVACY
15 CHOICES" on that envelope.The form shall be sent in any of the
16 following ways;
17 (i) With a bill or other statement of account,in which case the
1`8 information required by Title V of the Gramm-Leach`-Bliley Act
19 may also be included.
20 (ii) As a separate notice or with the information required by
21 Title V of the Gramm-Leach-Bliley Act, and including only
22 information related to privacy.
23 (iii) With any other mailing, in which case it shall be the first
24 page of the mailing.
5 (3) The consumer-shall be providedan opportunity, before
26 disclosure of information pursuant to this division, for 45 days
27 from the date of postmark or other postal verification of mailing
28 of the initial notice required by this subdivision,to direct that the
9 confidential consumer information not be disclosed except as
0 otherwise permitted by this division.A consumer may direct at any
31 time that his or her confidential consumer information not be
32 disclosed, except as otherwise permitted by this division. A
33 financial'institution shall comply with a consumer's directions'
34 concerning the sharing of his or her confidential consumer
35 information within 45 days of receipt by the financial'institution.
36 When a consumer directs that confidential consumer information
37 not be disclosed., that direction is in effect until otherwise stated by
38 the consumer.
9 (4) A financial institution shall not deny a consumer a financial
40 product or a financial``service because the consumer has directed
85 ;
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1773 — 16-
1 pursuant to subdivision(b) that his or her confidential consumer
2 information not be disclosed''provided that nothing in this section
3 shall prohibit the disclosure of confidential consumer information
4 allowed by Section 4056. Nothing in this section is intended to
5 prohibit a financial institution from offering incentives to elicit a
6 specific response to the notice.
7 (5) A financial institution may elect to comply with the
8 requirements of subdivision. (a) with respect to disclosure of
9 confidential consumer information to an affiliate or with respect
10 to confidential consumer information disclosed pursuant to
11 paragraph (2) of subdivision(b).
12 (6) If a financial institution does not have a continuing
13 relationship with a consumer other than the initial transaction in
14 which the product or service is provided, no annual disclosure
15 requirement exists pursuant to this section as long as the financial
16 institution provides the consumer with the form required by this
17 section at the time of the initial transaction. As used in this section,
18 "annually" means at least once in any period of 12 consecutive
19 months during which that relationship exists. The financial
20 institution may,define the 12-consecutive'-month period,but shall
21 apply it to the consumer on'a consistent basis. If, for example, a
22 financial institution defines the 12-consecutive-month period as a
23 calendar year and provides the annual notice to the consumer once
24 in each calendar year,it complies with the requirement to send the
25 notice annually,
26 (7) A financial institution with assets in excess of twenty-five
27 million dollars ($25,000,000) shall include a self-addressed
28 postage paid return envelope with the notice. A financial
29 institution with assets of up to and including twenty-five million
30 dollars ($25,000,000) shall include a self-addressed return
31 envelope with the notice. In addition to the return envelope
32 required by this paragraph a financial institution may offer.
33 additional means for`consumers to communicate their privacy.
34 choices, included, but not limited to, calling a=toll-free number,
35 sending a facsimile, or using electronic means. A financial
36 institution shall clearly and conspicuously disclose in the form
37 required by this subdivision the information necessary to direct the
38 consumer on how to communicate his or her choices,including the
39 toll-free or facsimile number or Web site address:that may be used,
86':
- 17— SB 773
1 if those 'meansof communication are offered by the financial
2 institution,
3 (8) A financial institution shall file a copy of the initial notice
4 or notices required by this subdivision with the Attorney General.
5 No subsequent filing is required until the financial institution`
6 modifies the notice,in which case a copy of the notice as modified
7 shall be filed with the Attorney General.Nothing in this paragraph
8 shall be construed to require that a financial institution file with the
9 Attorney;General a copy of the notice or notices it provides to
10 consumers more often than once in each calendar, year. The
11 interpretations of functional regulators regardingthe form
12 required by this subdivision are not entitled to deference by a
13 court,
14 (d) Nothing in this division shall prohibit a financial institution
15 from marketing its own products and services or the products and
16 services of affiliates or nonaffiliated third parties to customers of
17 the financial institution as long as (1)' confidential consumer
18 information is not disclosed in connection with the delivery of the
19 applicable marketing materials to those customers except as
20 permitted by Section 40:56 and( )in cases in which the applicable'
21 nonaffiliated third party may extrapolate confidential consumer
22 information about the consumer responding to those marketing'
23 materials, the applicable nonaffiliated third party has signed a
4 contract with the financial institution under the terms of which(A)
25 the nonaffiliated third'party is prohibited'from retaining or using'
26 that information for any purpose, and(B)'the financial institution
27 has the right by audit, inspections, or ether means to verify the
28 nonaffiliated third party's compliance with that contract.
29 4053.5. Except as otherwise provided in this division, an
0 entity that receives confidential consumer information from a
31 financial' institution under this division shall';,not disclose this
32 information to any other entity, unless the disclosure would be
3 lawful if made directly to the other entity by the financial
34 institution. An entity that receives confidential consumer
35 information pursuant to any exception set forth in Section 4056
36 shall not use or disclose the information except in the ordinary
37 coarse of business to carry out the activity covered by the
38 exception under which the information was received.
39 4054., (a) Nothing in this division shall require a financial
40 institution to provide a written notice to a consumer pursuant to
s
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SB 773 _ 18-
1
181 Section 4053 if the financial institution does not disclose
2 confidential consumer information to any nonaffiliated third party
3 or to any,affiliate,except as allowed in this division.
4 (b) A°notice provided to a member of'a household pursuant to
5 Section 4053 shall be considered noticeto all members of that
6 household unless that household contains another individual who
7 also has a separate account with the financial institution.
8 (c) (1) The requirement to send'a written notice to a consumer
9 may be fulfilled'by electronic means if the following requirements
10 are met.
11 (A) The notice,and the manner in which it is sent,meets all of
12 the requirements for notices that are required by law to be in
13 writing, as set` forth in Section 101 of the federal Electronic
14 Signatures in Global and National'Commerce Act.
15 (13) All other requirements applicable to the notice,as set forth
16 in this division,are met, including but not limited to,requirements
17 concerning content, timing, form,and delivery.
18 (C) The notice shall be delivered to the consumer in a form the
19 consumer may'keep.
20 (2) A notice'-that is made available to a consumer, and is not
21 delivered to the consumer, does not satisfy the requirements of
22 paragraph (1).
23 (3) Any electronic consumer reply to an electronic notice sent
24 pursuant to this division is effective. A person that electronically'
25 sends a notice required by this division to a consumer may not by
26 contract, or otherwise, eliminate the effectiveness of the
27 consumer's electronic reply.
28 (4) This division modifies the provisions of Section 101 of the
29 federal Electronic Signatures in Global and National Commerce
30 Act. However, it does not modify, limit, or supersede the
31 provisions of subsection (c) (d), (e), (f), or(h) of Section 141 of
32 the federal Electronic Signatures in Global and National
3 Commerce Act; nor does it authorize electronic delivery of any
34 notice of the type described in subsection(b)of Section 103 of that
35 federal act.
36 4054.6. When a financial institution and a membership,
37 organization, tax-exempt organization, not-for-profit
38 organization, or a professional sports team that is not a financial
39 institution have an agreement to issue a credit card in the name of
40 the membership ` organization, tax-exempt organization,
86,
_ 19— SB 773
1 not-for-profit organization, or the professional sports team
2 ("affinity card"), the financial institution shall be permitted to
3 disclose to the entity in whose name the card is issued,the names
4 and addresses,including electronic mail addresses,of the financial
5 institution's consumers in receipt of the affinity card if all of the
6 following requirements are satisfied:
7 (a) The financial institution has a contractual agreement with
8 the membership organization, tax-exempt organization,
9 not-for-profit organization, or professional sports teamthat
10 requires the entity in whose name the affinity card is issued to
1'1 maintain the confidentiality of the confidential consumer
12 information and prohibits the entity in whose name the affinity
13 card is issued from using the information for any purposes tither
14 than verifying ;membership, verifying the affinity cardholder's
15 address or offering the entity's own products or services to the
16 cardholder. Nothing in this section shall prohibit the disclosure of
17 confidential consumer information'allowed by Section 4056.
18 (b) The customer list is not disclosed in any way that reveals or
19 permits extrapolation' of any additional: confidential consumer
20 information about any customer on the list.
21 (c) If the entity in whose name the card is issued sends any
22 message to any electronic mail addresses obtained pursuant to this
23 section, the message shall include at least both of the following:
24 (1) The identity of the sender of the message.
25 (2) A'cost-free means for the recipient to notify the sender not
26 to electronically mail any further messages to the recipient.
27
28
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30
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13 4056. (a) This division''shall not apply to information that is;
14 not personally identifiable to a particular person.
15 (b) Sections 4053 and 4454 shall not prohibit the release of
16 confidential consumer information under the following
17 circumstances:
18 (1) The confidential consumer information is necessary to
19 effect, administer,or enforce a transaction requested or authorized
20 by the consumer, or in connection with servicing or processing a
21 financial product or service requested or authorized by the
22 consumer, or in connection with maintaining or servicing the
3 consumer's account with the financial institution,or with another'
24 entity as part of a private'label credit card program or other
25 extension of credit on behalf of such entity, or in connection with
26 a proposed or actual securitization or secondary market sale,
27 including sales of servicing rights,'or similar transactions related
28 to'a transaction of the consumer.
29 (2) The confidential consumer information is released with the
30 consent of or,at the direction of the consumer.
31 (3) The confidential consumer information is.
32 (A) Released to protect the confidentiality or security of the
33 financial institution's` records pertaining to the consumer, the
34 service or product, or the transaction therein.
35 (13) Released to protect against or prevent actual or potential'
36 fraud, identity theft, unauthorized'transactions, claims, or other
37 liability.
38 (C) Released for required institutional risk control, or for
39 resolving customer disputes or inquiries."
-21 - S$ 77
1 (I7) Released to persons holding a legal or beneficial interest
2 relating to the consumer,including for purposes of debt collection.
3 (E) Released to persons acting in.a fiduciary or representative
4 capacity on behalf of the consumer.
5 (4) The confidential consumer information is released to
6 provide information to insurance rate advisory organizations,
7 guaranty funds or agencies, applicable rating agencies of the
8 financial institution, persons assessing the institution's
9 compliance with industrystandards, and the institution's
10 attorneys, accountants, and auditors.
11 (5) The confidential consumer information:is released to the
12 extent specifically required or specifically permitted under other'
13 provisions of law and in accordance with the Right to Financial
14 Privacy Act of 1978 (12 'U.S.C. Sec. 3401: et sect.), to law
15 enforcement agencies, including a federal functional regulator,the
16 Secretary of tine Treasury with respect to'subehapter 11 of Chapter
17 53 of Title 31, and Chapter 2 of Title I of Public Law 91-508 (12
18 U;S.C. Secs. 1951-1959),the California Department of Insurance
19 or other state insurance regulators, ,or the Federal Trade
20 Commission, and self-regulatory organizations, or for an
21 investigation on a matter related to public safety.
22 (6) The confidential consumer information is released(A)to a
23 consumer reporting agency in accordance with the Fair Credit'
24 Reporting Act; (15 U.S.C. Sec. 1681 et seq); or (B) from a:
25 consumer report reported by a consumer reporting agency.
26 (7) The confidential consumer information is released in
27 connection with a proposed or actual sale, merger, 'transfer, or
28 exchange of all or a portion-of a business or operating unit if the
29 disclosure of confidential consumer information concerns solely .
30 consumers of the business or unit.
31 (8) The confidential consumer information is 'released to
32 comply with federal, state, or 'local laws, rules,' and other
33 applicable legal requirements; to comply with a properly
34 authorized civil, criminal, administrative, or regulatory
35 investigation or subpoena or summons by federal, state, or local
36 authorities; or to respond' to judicial process or government
37 regulatory authorities having jurisdiction over the financial
38 institution for examination, compliance, or other purposes as
39 authorized by law.
{
SB 773 —�2
1 (9) When afinancial institution is ;reporting a known or
2 suspected instance of elder or dependent adult financial abuse or
3 is cooperating'with a local adult protective; services agency
4 investigation of known or suspected elder or dependent adult
5 financial'abuse pursuant to Article 3 (commencing with Section
6 15630) of Chapter 11`of fart 3 of Division 9 of the Welfare and
7 Institutions Code.
8 (10) The confidential consumer information is released to an
9 affiliate or a nonaffiliated third party in order for the affiliate or
10 nonaffiliated third party to perform services, such as mailing
1 services, data processing or analysis, or customer surveys, on
12 behalf of the financial institution,provided that all of the following
13 requirements are met;
14 (A) The services' to be performed by the affiliate or
15 nonaffiliated third party could lawfully be performed by the
16 financial'institution.
17 (B) There is a written contract between the affiliate or
18 nonaffiliated third party and the financial'institution that prohibits
19 the affiliate or nonaffiliated third party, as the case may be, from
20 disclosing or using the confidential consumer information other
21 than to carry out the purpose for which the financial institution
22 disclosed the information, as set forth in the written contract.
23 ;(C) The confidential consumer information provided to the
24 affiliate or nonaffiliated third party is limited to that which is
25 reasonably necessary for the affiliate or nonaffiliated third party'
26 to perform the services contracted for on behalf of the financial
27 institution.
8 (D) The financial«institution does not receive any payment
29 from or through the affiliate or nonaffiliated third party in
30 connection with, or as a result of, the release of the confidential
31 consumer information.
32 (11) The confidential consumer information is released to
33 identify or locate missing' and abducted children,, witnesses,
34 criminals and fugitives, parties to lawsuits,parents delinquent in
35 child support payments,organ and bone marrow donors, pension
36 fund beneficiaries, and missing heirs.
37 (12) The confidential consumer information is released to a
38 real estate appraiser licensed or certified by the state for
39 submission to 'central data repositories such as the California'
40 Market Data Cooperative, and the confidential consumer'
86
-23— SB 773
1 information is compiled strictly to complete other real estate
2 appraisals and is not used for any other purpose.
3 (13) The confidential consumer information is released as
4 required by Title Irl of the federal United and Strengthening
5 America by Providing Appropriate Tools Required to Intercept
6 and Obstruct Terrorism Act of 2001 (USA Patriot Act, P.L.
7 107-56).
8 (c) Nothing in this division is intended to change existing law
9 relating to access by law enforcement agencies to informationheld
10 by financial institutions.
11 4056.5. (a) The provisions of this division do not apply to any
12 person or entity that meets the requirements of paragraph(1)or(2)'
13 below. However, when confidential consumer information is
14 being or will be shared by a person or entity meeting the
15 requirements of paragraph' (1) or (2) with an :.affiliate or
16 nonaffiliated third party, this division shall apply.
17 (1) The person or entity is licensed in one or both of the
18 following categories and is acting within the scope of the
19 respective license or certificate:
20 (A) As an insurance producer, licensed pursuant to Chapter S
21 (commencing with Section 1621) Chapter 6 (commencing with,
22 Section 1760), or Chapter 8 (commencing with Section 183 1)of
23 Division 1 of the Insurance Code, as a registered investment
24 adviser pursuant to Chapter 3 (commencing with Section 25230)
25 of Part 3 of Division'1 of Title 4 of the Corporations Code, or as
26 an investment adviser pursuant to Section 202(a)(11)of the federal
27 Investment Advisers Act of 1940.
28 (B) Is licensed to sell securities by the National Association of
29 Securities Dealers (NASD):
30 (2) The person or entity meets the requirements in paragraph
31 (1)and has a written contractual agreement with another person or
32 entity described in paragraph (1)' and the contract clearly and
33 explicitly includes the following:
34 (A) The rights and obligations between the licensees arising
35 out of the business relationship relating to insurance or securities
36 transactions.
37 (B) An explicit limitation on the use of confidential consumer'
3'8 information about a consumer to'transactions authorized by the
39 contract and permitted pursuant to this division'.
86
I
SB 773 —24-
1
._.;41 (C) A requirementthat transactions specified in the contract
2 fall within the scope of activities permitted by the licenses of the
3 parties.
4 (b) The restrictions on disclosure and use of confidential
5 consumer information, and the requirement for notification and
6 disclosure provided in this division, shall not limit the ability of
7 insurance producers and brokers to respond to written or
8 electronic,including telephone,requests from consumers seeking
9 price quotes on insurance products and services or to obtain
10 competitive quotes to renew an existing insurance contract,
11 provided that any confidential consumer information disclosed
12 pursuant to this subdivision shall not be used or disclosed except
13 in the ordinary course of business in order to obtain those quotes,
14 4057. '(a) An entity that negligently discloses' or shares'
15 confidential consumer information in violation of this division
16 shall be liable, irrespective of the amount of damages suffered by
17 the consumer as a result of that violation, for a civil penalty not to
18 exceed two thousand five hundred dollars ($2,500) per violation.
19 However, the >total 'civil penalty awarded pursuant to this
0 subdivision shall not exceed five hundred 'thousand dollars
21 ($500,0013) per occurrence.
22 (b) An entity that knowingly and willfully obtains, discloses,
23 shares, or uses confidential consumer information in violation of
24 this division shall be liable for a civil penalty not to exceed'two
25 thousand five hundred dollars($2,500)per violation.
26 (c) In determining the penalty to be assessed pursuant to a
27 violation of this division, the court shall take into account the
28 following factors.
29 (1) The total assets and net worth of the violating entity.
30 (2) The nature and seriousness of the violation.
31 (3) The persistence of the violation,including any attempts to
32 correct the situation leading to the violation.
33 (4) The Iength of time over which the violation occurred.
34 (5) The number of times the entity has violated this division.
35 (6) The harm caused to consumers by the violation.
36 (7) The level of proceeds'derived from the violation.
37 (8) The impact of possible penalties on the overall fiscal
38 solvency of the violating entity.
86,
S$ 773
1 (d) In the event a violation of this division results in the identity
2 theft of a consumer,as:,defined by Section 530.5 of the Penal Code,
3 the civil penalties set forth in this section shall be doubled.
4 (e) This section shall become operative on and after July 1,
5 2004, for acts in violation of this division that occur on and after
6 July 1, 2004.
7 4058. This division shall not be construed in a manner that is
8 inconsistent with the federal Fair Credit Reporting Act(15 U.S.C.
9 Sec. 1683 et seq.).
10 4058.5. Nothing in this division shall be construed as altering
11 or annulling the authority of any department or agency of the state
12 to regulate any financial institution subject to its jurisdiction.
13 4058.6. This division shall preempt and be exclusive of all
14 local agency ordinances and regulations relating to the use and
15 sharing of confidential consumer information on by financial
16 institutions. This section shall apply both prospectively and
17 retroactively.
18 4059. The provisions of this division shall be severable; and
19 if any phrase, clause, sentence, or provision is declared to be
20 invalid or is preempted by federallaw or regulation,the validity
21 of the remainder of this division shall not be affected'thereby.
0
86
S'13 773''Senate Bill'-Bill Analysis Page 1 of 6
SB 773
Page 1
SENATE THIRD READING
SB 773 (Speier)'
As Amended August 31, 2002
Majority vote
SENATE VOTE :25-13
BANKING AND FINANCE8-4 JUDICIARY 8-3
- -------
lAye's: lAlquist, Chan, Chavez, Ayes lcorbett, Jackson,
JCorbett, Correa, Nation, I ILongville, Rod Pacheco,
Washington, Wiggins Shelley, Steinberg,
IAlquist, Aroner
--------------------------------+-----+--------------------- ----�
Nays: (Bill Campbell, Leslie, Nays: lHarman, Bates, Robert
(Strickland, Wyman JPacheco
SUBJECT Financial institutions, confidential consumer
information.
SUMMARY : Would enact the California Financial Information
Privacy Act, which would require a financial institution, as
defined, to provide a specified written form to a consumer
relative to the sharing of the consumer's confidential
consumer information, would require the permission of the
consumer before' the financial institution could share the
confidential consumer information with other nonaffiliated
companies. The bill would provide that -,a financial institution
is not required to provide this written form to its consumers if
the financial institution does not disclose any confidential
consumer information to any nonaffiliated 3rd party or to any
affiliate.. Would provide that a financial' institution shall not
deny a consumer a financial product or service because the
consumer has not provided the necessary consent that would
authorize the financial institution to disclose or share
confidential consumer information Would become' operative on
January 1, 2004 and its penalties become operative on July 1
2004 for acts in violation of the bill that occur on and after
July ;1, 2004.
Specifically, this bill
SB 773
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'B 773 Senate Bill Bill Analysis Page 2 of 6
1)Requires a financial institution to obtain the consent of a
consumer before the financial institution may discloseor
share the consumer's "confidential consumer information" with
any nonaffiliated third party (an "opt-in" approach) and
requires the financial institution to provide written notice,
as 'described 'below, to the consumer to ,.whom the confidential
consumer information relates.
2)Requires a financial institution to provide written notice to
a consumer so that the consumer may provide';,direction to the
financial institution regarding whether the consumer wishes to
authorize their financial institution to share their personal
information with third parties. The bill contains a 'statutory'
notice form which a financial institution may use but also
allows a financial' institution to use a "substantially
similar" form that must include specified provisions.
3)Provides' that financial' institutions with assets in excess of
$25 million must include a self-addressed stamped envelope'
with the notice and financial institutions with assets of up
to and including $25 million must 'include a self-addressed '
envelope with the notice. The bill also provides that a
financial institution may offer additional means for consumers
to communicate their privacy:choices, including offering a'
toll-free telephone number, Web site or fax number.
4)Provides that; its restrictions do not prohibit the release of
confidential consumer information''under, among others, the
following circumstances:
a) The confidential consumer information is necessary to:
effect, administer, or enforce a transaction requested or
authorized by the consumer, or,in connection with servicing
or processing a financial product or service requested or
authorized by the consumer or in connection with
maintaining or servicing the consumer's account with the
financial institution or with another entity as part of a
private label credit card program.
b}, The confidential consumer information is released to an
affiliate or a nonaffiliated third party in order for the
affiliate or nonaffiliated, third party to; perform services,
such as mailing` services, 'data ,processing' or analysis, or
customer surveys on behalf of the financial institution
provided that specified requirements' are met.
SB 773
Page 3
5)Provides for civil?penalties for violation of the bill's
provisions, dependent upon whether, the violation was negligent
or 'knowing and willful and requires a court to consider
mitigating factors when assessing penalties, including, among
others, the total assets' and net worth of the violating
entity, the nature and seriousness: of the violation, the harm
caused to consumers by the violation and the impact of :the
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SB 773 Senate Bill Bili Analysis Page 3 of 6
penalties on the overall fiscal solvency of the entity.
6)Providesthat the bill preempts all local ordinances and
regulations on the issue and applies this preemption both
prospectively and retroactively.
Becomes operative on January 1 2004. The bill provides that
its penalties become operative on July 1, 2004 for acts in
violation of the bill that occur on and after`July '1, 2004.
EXISTING LAW: Regulation of the transmission of nonpublic
personal information is found in 15 U.S.C. 6801 and following.
These provisions are from P.L. 106-102 (Glubba) . The provisions
control both the collection and dissemination of nonpublic
personal information' and require that customers have the
opportunity to "opt out" of transmission of such information to
nonaffiliates and other third parties. Although Glubba states
that it "shall not be construed as superseding, altering, or
affecting any statute, regulation, order, or interpretation in
effect in any State, except to the extent that such statute,
regulation;, order, or interpretation is inconsistent with the
provisions of this subchapter, and then only to the extent of
the inconsistency" and such state statute "is not inconsistent
with the provisions of this subchapter if the protection such
statute, regulation, order, or interpretation affords any person
is greater than the protection '> provided under this subchapter. 11
Opponents allege that the state law may be preempted by
Glubba's provisions in Section 6806 which state, "Except for the
amendments,: made by subsections (a) and (b) , nothing in this
chapter shall be construed to modify, limit, or supersede the
operation .of the Fair Credit Reporting Act (15 U.S.C. 1681 et'
seq. ) , and' no inference shall be drawn on the basis of the
provisions of this chapter regarding whether information is
transaction or experience information under section, 603 of such
Act (15 U.S.C. 1681x) . " Those provisions' relate to the
transmission of non-public personal information. If there is a
preemption issue it is narrowly defined. ''
SB 773
Page 4
FISCAL EFFECT Unknown
COMMENTS This is an issue that certainly resonates with the
public. It also resonates with this Legislature which has
passed 20 privacy laws since 1999, starting with AB 205 (Leach) ,
Chapter 33 Statutes of 2000 to SB 1090 (Bowen) , Chapter 731,
Statutes of 2001.
In addition we have the California Constitution Article 1.
Declaration of Rights
SECTION 1. All 'people are by nature` free'and independent and
have inalienable rights. Among these are..enjoying and defending
life and liberty, acquiring, possessing, and protecting
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SB 773 Senate Bill Bill Analysis Page 4 of 6
property, and pursuing and obtaining safety, happiness, and
privacy.
Civil Code Sections 1798-1798.1
1798 This chapter shall be known and may be cited as the
Information Practices Act of 1977.
B&P Code Sections 35`0-352
B&P 350. (a) There is hereby created in the Department of
Consumer Affairs an ;Office of Privacy Protection under the
direction of the Director of Consumer Affairs and the Secretary
of the State and Consumer Services Agency. The office's purpose
shall be protecting the privacy of individuals' personal
information in a manner consistent with the California
Constitution by identifying consumer problems :in the privacy'
area and facilitating development of fair information practices
in adherence with the Information Practices Act of 1977 ,(Chapter
1 (commencing with Section 1798) of Title 1.8 of Part 4 of
Division 3' of the Civil Code)
Ideally under the doctrine of separation of powers the
Legislature should enact policy which is interpreted by the
judiciary and implemented by the executive agencies through
adoption of regulations within the ambit of statutory authority.
However because of inherent fear of the 'regulated becoming the
regulators we resort to specificity; in statute which should
better be 'incorporated in regulation.
SB 773
Page 5
Under long standing common law ever 'since 1863 when Mr. Byrne
was strolling down a" Liverpool street and got bonked by Mr.
Boadle's barrel', whoever has control of that which gives- rise to
the harm bears the risk for that harm. This is expressed in `
many ways such as assumption of risk, comparative fault,
contributory negligence, laches, estoppel', contracts construed
against the drafter, etc. What is that which generates the call
for "Privacy" legislation? Is it the interruptions at dinner
time by those marketing goodies that, according to the vendor,
you can't absolutely do without, is it the unsolicited offers of
credit in the mail, is it the fear of identity theft or is it
the personally unauthorized act of transmission personal
financial or other personal information that was given to a
specific entity for a specific purpose? There is no question
that negligent managing of personal information which gives rise
to identity theft and economic 'loss or damage to one's
reputation' should result in severe sanctions including damages,
exemplary damages, casts and attorney fees. Although there are
sanctions in this bill should there not be more specific
provision for a'personal cause of action?
Can we make a simpler policy statement that impels regulators to
construct the types of regulations that will contain the.
necessary specificity to address each of the variety of
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SB 773Senate Bill - Bill Analysis Page S of 6
financial institutions included with in this bill?
There will:, be a' variety of opposition to this bill including
preemption' under the Fair' Credit Reporting Act. However it
would be appropriate to see Trans Union LLC v. Federal Trade
Commission' Civil Action No. 00-2087 'Memorandum Opinion &'. Order
filed April 30, 2001 by Judge Ellen Segal Huvelle wherein the
court'. stated, "The FORA does not regulate the 'dissemination of
information that is not contained in a 'consumer report' In
2000,' the FTC stated' that: the 'credit header' 'data at issue in
this litigation - the name, address, social security number and
phone number - was not subject to the FCRA because ,it does not
'bear on creditworthiness, credit capacity, credit ;standing, ;
character, general reputation, personal characteristics or mode
of living unless such terms are given animpermissibly broad
meaning.
Analysis Prepared by William C George B. & F. / ``-(916)``
319-31081
SB 77,3
Page 6
FN:
0007923
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SB 773 Senate Bill -Bill Analysis Page 6 of 6
http://www.leginfo.ca.gov/pub/bill/sen/sb-O.../sb 773,cfa_20020906_161017_asrn_floor.htm 02/09116
JOSEPH CANCIAMILLA
ASSEMBLYMEMBER ELEVENTH DISTRICT
THE CANCIAMILLA LEGISLATIVE REFORM PLAN
PROBLEM&TO SOLVE:
TSE BL7DGtT
u Budgetary gridlock.
❑ Lack..of..a long range view and plan.
❑ Crisis oriented budgeting.
❑ Limited legislator and public participation in the budget';process.
LEGISLATIVE OVERSIGHT
❑ Lack of thorough legislative oversight of previously enacted legislation and state
programs.
❑ A crisis based system of oversight.
❑ A persistent"legislative assembly line"or"bill mill" that continuously churns out
new legislation and programs without a thorough prior review of existing programs.
❑ Limited legislative staff and resources devoted to oversight.
SOLUTIONS:
❑ Two,year budget.',
❑ Adopt federal fiscal year.
❑ Firstyear (30 months)of session for BUDGET and OVERSIGHT ONLY.
u1 Budget reserve of 3% required with mid-session correction mechanism.
❑ Joint budget and oversight hearings with relevant budget and policy committees.'
❑ No member authored bilis allowed in first year of session. (Only Budget and
Committee bills.),',
❑ Increase resources for maintaining public record of legislativehearings.
❑ Increase staff and member training to conduct thorough legislative oversight.
Most everyone involved in the legislative'process recognizes'we have a serious problem. In the
past decade,numerous'commissions and think tanks have made similar recommendations for
reform. Yet, as a result of many factors, including but not limited to term limits',partisanship,
inertia, and just general lack of interest, the legislature'has never stripped long enough to step off
the legislative treadmill cycle to reform itself. Unless we force ourselves to make the time and
space in the process, we will never stop drafting and passing new laws long enough to look in the
rear view mirror at the laws already on the books. Are programs working? Are they worth the
E-mail:assernblymember.canciamflia0assembly.ca.gov Websites http://democrats.assemblyca.gov/membersialI/
Printed on Recycled Paper
................... ................................ ................. ...................... .................... .......................
........................ ........................... .............. ..................... ...........- ...................
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money? Are they even going in the right direction or providing the services they were originally
designed to provide?
In order to prepare a budget for the future we must first examine the budgets and programs of the
past. And in order to draft responsible legislation, we must review the effectiveness of the
legislation that has been passed and the programs:and services now in place. This should be
done in a bi-partisan effort while maintaining a sense of stewardship for the future of California.
I have spent the last month reviewing numerous recommendations from prior commissions, task
forces, and academics think tanks on how the State can improve its budgeting and oversight
process. I have spoken with veteran policy experts who have been involved in this field for
decades,both in California and in other legislatures. I have incorporated what I consider the
most practical of the recommendations I have reviewed along with a few ideas of my own into a
reform proposal that I hope others will seriously consider. This can and should be the beginning
of more in depth discussions regarding the budget process. My proposal is as follows:
1. The Fiscal(Budget)and Oversight Session—Year one of a two-year session would be
devoted solely to the oversight and evaluation of existing programs and departments.
The committee chairs and leadership of the two houses would first meet to coordinate the
oversight review for the year,in order to avoid duplication of effort. The committees
would then focus on oversight in the subject areas of their committees'
Over the course of the year, the oversight efforts of committees would focus on existing
programs and appropriations within their jurisdictions, identifying cost-savings.
effectiveness, overlap, service gaps,etc
The committees would recommend legislative as well as administrative remedies to
identified deficiencies. Each committee would be allowed to prepare committee bills
that would deal exclusively with their oversight findings.
NOTE: No individually authored bills would be allowed during this first year.
Members would be encouraged to utilize the oversight session to completely develop
bills for introduction in the second year of the session, called the "Policy Session".
The Fiscal and Oversight Session would be 10 months in duration. The Policy Session
would be 14 months. All legislative and other deadlines would be adjusted to conform to
this schedule.
2. The Budget—The first year of each two-year session would also be dedicated to the review,
analysis and development of a final two.-year budget.
The budget calendar would be changed from one to two years. An adjusted budget would
be required in the second year of the two-year session if the budget reserve is inadequate
(see number 4 for details).
The fiscal calendar would also be changed,beginning.on October 1 instead of July 1, in
order to correspond with the Federal fiscal calendar and to give more time to the
Legislature to deliberate its appropriations after,the Governor issues the May revise."
Additional specifics regarding the budget process should be worked out through a
separate commission that would be appointed by the Governor.
. ... .....................
.... ......
3. Oversight Support
- Official record
In order to facilitate oversight efforts,and to maintain documentation of whatis done
by the body of the State Assembly, the Assembly would begin keeping an official
record'of all:of its proceedings. To accomplish this, all committee hearings,floor
sessions, and other official activity would be digitally recorded, and a library of these
recordings would be indexed and Dept by the Joint Rules Committee and the State
Library. Official records would be available for review by the general public.'
Staff Training
Legislative staff would be trained to assume a different role in the first year of each
two-year session. The Hertzberg institute, which already provides training to
Assembly staff on many Legislative issues, would develop a comprehensive
curriculum to familiarize staff with the oversight process and train them to serve
effectively as support staff to the process.
4 Budget Reserve
The legislature would be required to establish a three-percent budget reserve within each
two-year budget period to veal with unanticipated emergencies. Expenditures of the
budget reserve would have to be replenished within two fiscal periods.'
'
Variations of similar recommendations made by the Senate Cost Control Commission,the California Citizens
Budget Commission,the'California Governance Consensus Project,and the Finance Project. Actions taken by the
State:None.
Currently,there are six states in the United States that limit one year of a two-year'legislative session to
consideration of specific types of legislation.They are Connecticut,Louisiana,Maine,New Mexico,North Carolina,
and Wyoming.Actions taken by the State:None.
Ir'Similar recommendations made by the California Citizens'Budget Comm ssion,the Little Hoover Commission,
Ellwood&Sprague's"Options for Reforming the California State Budget Process" the California Constitution
Revision Commission:,the California Business Roundtable,and the League of Women Voters of California.Action'
taken by the State.--None.
"'The Federal fiscal year was changed to begin on October 1 in 1974 to allow more time for deliberation after the
April collection of tax receipts.Two states-Alabama and Michigan—have adopted the Federal practice.
"Similar recommendations made by the California Citizens Budget Commission,the California Constitution
Revision Commission,the California Business Roundtable,,and the League of Women Voters of California.Action
taken by the State:In 1988,California voters enacted a constitutional requirement to establish a"reasonable and
necessary"prudent reserve.However,a specified reserve amount was not specified,and as a result,the state has not
consistently retained reserve funds:
r
k3"A L AND OBJECTIVES OF THE
JOINT LEGI LATIVE SUNSETREVIEW CONBUTTEE
Primary Goal and Purpose of Joint Legislative Sunset Review Committee:
The primary goal of the Joint Committee is to systematically examine and evaluate all
consumer boards and specified programs under the Department of Consumer Affairs, and
assure they,are carrying out their primary mission: "To protect the public against incompetent,
negligent,fraudulent, deceptive, or other unscrupulous or illegal acts of licensed professionals
or unlicensed persons posing as professionals, and provide for improved and effective service
to the consumer and licensees. "
Other Goals Include:
• Eliminate unneeded, nonfunctional, or redundant boards or programs, or any
unnecessary rules and regulations.
• Improve the quality of services:provided to..the consumer by examining
the beards requirements for education, experience and testing of professionals, and
other'actions taken to assure competency_
• ;Eliminate overly restrictive eligibility standards, or standards of practice, which
unduly limits competition between professionals, or places undue burdens on those
who.want to enter the occupation.
• Ensure that the public knows where they can go if injured or harmed by a licensed
(or unlicensed) person, what actions they can take; add ghat the outcomes may be.
• . Ensure that the public's complaints are handled in a courteous and expeditious
manner.
• Ensure that boards are providing the appropriate remedy for the consumer:
mediation, arbitration, restitution, disciplinary action.;:and/or criminal action against
the licensee or person posing as a licensee.
r '
• Ensure the public is informed about any csthplaints, disciplinary actions, judgments
and criminal actions against a licensed professional.
• And in the future, with information technology advancements,'provide better and
more uniform information on licensed professionals as to education, experience,
prior employment, or any other relevant information considered necessary for the
consumer to make informed decisions about'using the services of particular
professionals.
In Pursuin`' 'hese Goals The Joint Committee Has As The Follovding Ob`ectiyes To:
• Determine if the membership of the board adequately represents both-consumer
interests and the licensing population, and whether the board encourages public
participation in its decision making.
• Examine the boards organization and management and recommend elimination,
consolidation and reorganization of programs where appropriate.
* Identify opportunities for improvements in the management of the boards daily
operations, and for providing more efficient and effective consumer services.
* Identify consumer concerns and those of the regulated profession regarding the way
the board operates.
* Establish appropriate performance measures for each board reviewed;
* Evaluate the boards,programs and policies to identify overlapping functions and
outmoded methodologies.
* Determine whether the:board's licensing, examination and enforcement programs
are administered so as to protect the public, or if they are instead self-serving to the
profession, industry, or individuals being regulated by the board.
• Review the laws and regulations pertaining to the board and determine whether they
restrict competition in the marketplace, the extent to which they are still necessary
to regulate the profession, and.whether the board is carrying out its legal mandate
or has exceeded their authority.
* Examine the boards fiscal management practices and financial relationships with
other agencies.
Examine workforce issues.
Identify,advances in information technology applicable to the board's functions.
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ua92 1 ..#fi!i� 3 fi;l....f ....flt: a3 .... -
fiscal and Procedural Reforra.
Recotmeadations made by commi,.Ssioras, task forces, etc
Pnp,=d ar Charlene Wear Siraunom, A.D.
l ixecor, Ca.Zzfo=ica-8,Iaaarch Bureau
Issue: budget and Appropriations Review- The Legislature doses not regularly hold state
departments accountable, due in pan to its ina7emental. fragmented approach to budgeting.
Recommendations:
The Senate CostContrcll Cox fission: "The Legislature should hold information hearings on
departmental activities'prior to the introduction of the Governor's proposed budget.'
71,-California Citizens Budget Comxuiss�on: Create a Joint Fiscal 0versiglat Committee to monitor
the budget's implementation during the year, including during the legislature interim, and
recommend .needed changes to beep it in balance. Hold- Joint Assetnbly-Senate Fiscal
Subcommittee hearings on the budget.
Issue:r Multi Year Budgets: The State undertakes only limited-long term planning, a problem
exacerbated by the yearly baselinebudget.
Recommendations:
Ccalfor is Citizens Budget Commissicu: Impl—ent long range or zmulti-year budgets For major
programs'. The costs of aR legislation should be analyzed from a three-yea perspective, with
sources of funding identified..
Little Hoo Commlirsion: F-cpl€ire the potential for adoptir g`.bud ets that span more than one
year. -
EII;vood and Sprit iterMo7e to-a-multz-y r'budge prp;cess, to increase fledbility, as budget
changes can become part of a multi-year agenda.
Cali.forma Constitution-Revision Corllzu=an: Adept a tvvo=year budget: ..:the le a wi be
able to spend more tune evaluating'program outcomes and effecd7eness...and to adjust to
economic and caseload changes in amore.or nixe manner.='
'r
,r
Ca!foxnia Business R =drable: The state should adopt a two-year budget cycle and enact a five-
year capital improvement plan-
League eague orf i#lomen'Yorr:z of Calafo=ia: Urges consideration of a two-year budget and four-year
capital outlay plan.
Issue: Budget Reserve Account: Downturns in the economic cycle have a considerable impact on
California's budget due to de :eased revenues and caseload-driven increases in e Tendstures, and
the state periodically e Teriences natural disasters and other''fiscal emergencies. The state's
constitution requires a "reasonable and necessary" prudent reserve {Artice B, Section S.S),
but its role in state finance is ma.elear.
Recommendations:
California Citizens Budget Commission: Create a budget reserve account for emergencies,
une_Ypected ecpe tses and revenue shortfalls. Include provisions to maintain specified levels of
funding and methods for replenishing funds.
Califarnia Constitution Revision Commission: Require a three- percent reserve within each two-
year budgetary period,phased in at a rate of one percent each year. Specify the rules governing
the reserve and its use in statute, andd require a two-thirds legislative vote to spend reserve
funds. Replenish the reserve within two fiscal periods.
California Business Roundtable: "The state budget should include a three percent reserve for
contingencies."
League of Women Y'oters of California:Supports a statutory provisionfora three- percent reserve
in the state budget_
Bibhogmphy
California Constitution Revision Commission, Final Report a Recoendatons to the. Governor and
the Legislature,Sacramento, 1996.
Senate Advisory'Commission on Cost Control in State Government,-California's~Budget-Process:_
Fra roviu uCast��iclenc�, E ectivencssaud�Jrrouu�ilzrp in State Gbrei�ieat 1999 w=
California Citizens Budget Cornm;a on, Reforminng California's .budget Process, PreBm=7 Report and
Rectsmrateztdatians, Center for Governmental Studies, 1995
John W. Ellwood, Mary,Sprague, Options favi deforming the California Szare Budget Process, Conference
on.California Constitutional Reform,Bemkeley;"Califordia;�une 840, 1995.
.r
California' Business-Higher Education Forum, California Fiscal Reform: APlan-far 'Action,
Re ommendations and Surnmar7,June 1994-.
California Business Roundtable, Revenue and Toxation.�Task Force Agenda for Governance and Fiscal
Reform, 1995.
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