BILL ANALYSIS SB 1550 Page 1 Date of Hearing: August 16, 2006 ASSEMBLY COMMITTEE ON APPROPRIATIONS Judy Chu, Chair SB 1550 (Figueroa) - As Amended: August 7, 2006 Policy Committee: JudiciaryVote:6-3 Business and Professions 7-1 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill establishes the Board of Professional Fiduciaries (Board) within the Department of Consumer Affairs (DCA) for the purpose of licensing and regulating professional fiduciaries. Specifically, this bill: 1)Establishes a licensing and disciplinary scheme for "professional fiduciaries" and defines the term as a person who acts as a conservator, guardian, trustee, personal representative, agent under a durable power of attorney for health care, or agent under a durable power of attorney for finances, for two or more persons at the same time who are not related to the professional fiduciary by blood, adoption, marriage, or registered domestic partnership. 2)Exempts from the licensing requirements financial institutions and their employees, public agencies and their employees, attorneys licensed with the State Bar, and certified public accountants. 3)Establishes the Board (located in DCA), and its membership, administration and funding. 4)Allows the Board to adopt regulations pursuant to the Administrative Procedures Act, as specified, and requires the Board, by regulation, to adopt a Professional Fiduciaries' Code of Ethics, which shall comply with all statutory requirements, as well as requirements developed by the Judicial Council and the courts. 5)Establishes qualifications for licensure, including submitting SB 1550 Page 2 to a criminal background check, passing a licensing examination administered by the Board, having specified experience, and completing pre-licensing education (and continuing education for license renewals), as specified. 6)Requires that licensees file a $100,000 to $1 million surety bond with the Board, which shall be payable to any person damaged by the fiduciary. 7)Prohibits, on and after January 1, 2008, a person from holding himself or herself out to the public as a professional fiduciary unless he or she is licensed as a professional fiduciary under the Professional Fiduciary Act (Act). 8)Sunsets the Statewide Registry and the local court registry for professional fiduciaries on January 1, 2008, and sunsets the Board on January 1, 2011 unless otherwise extended. 9)Makes enactment of the bill contingent on enactment of AB 1363, SB 1116, and SB 1716. FISCAL EFFECT The DCA estimates the following costs and revenues to support the operations of the new Board: 1)Costs: $550,000 (including $40,000 in start-up costs) in 2006-07; $750,000 in 2007-08; and $650,000 in 2008-09 and thereafter. Costs cover an executive director and four support positions and all other costs associated with board meetings, facilities, and examinations, and enforcement. 2)Revenues: $715,000 in 2006-07 (assumes 1,300 licensees and an initial fee of $550); $789,000 in 2007-08; and $731,000 in 2008-09 and thereafter. COMMENTS 1)Background . An in-depth investigatory series published in November 2005 by the Los Angeles Times, "Guardians for Profit," exposed the many failings of California's conservatorship system for elderly and dependent adults. The Times' articles included stories of private conservators who misuse the system and get themselves appointed inappropriately and then either steal or mismanage the money their SB 1550 Page 3 conservatees spent a lifetime earning; public guardians who do not have the resources to help truly needy individuals; probate courts which do not have sufficient resources to provide adequate oversight to catch the abuses; and a system that provides no place for those in need to turn to for help. A Times editorial, which ran at the end of the series, called on both the courts and elected officials to "turn this abusive system into the honest guardianship it was meant to be." 2)Purpose . According to the author, "conservators serve one of the most vulnerable and rapidly growing segments of the state's population: the elderly. Professional fiduciaries must make a broad range of complex decisions that seriously affect conservatees, including where he or she lives, home care arrangements, major medical decisions, and control of all of the conservatee's financial matters from bank accounts to investment and tax decisions. The conservatee or their family or friends may be unable to evaluate the competency or honesty of the conservator, the quality of the care received, or articulate concerns regarding his or her care." The author indicates that this bill will "bring greater accountability and oversight by licensing and regulating conservators, guardians and trustees (professional fiduciaries) by a regulatory board within DCA." 3)Sunrise Review . This bill underwent "sunrise review" by the Joint Committee on Boards, Commissions, and Consumer Protection (Joint Committee) in December 2005. The Joint Committee reviewed the need for the Board and the problems surrounding the existing system for conservatorships. In April 2006, the Joint Committee concluded that the proposal to create a Board met the threshold for licensure ("the potential for serious injury or death, or severe financial harm") and recommended that the Board be established to protect California consumers. 4)Related Legislation . SB 1116 is part of a package of four bills intended to address deficiencies with the conservatorship system. a) SB 1116 (Scott), pending in the Assembly, creates a presumption that the least restrictive, appropriate setting for a conservatee is their personal residence and increases requirements for the sale of a conservatee's residence. SB 1550 Page 4 b) SB 1716 (Bowen), pending on this committee's Suspense file, expands court review of conservatorships and allows for ex parte communications in cases involving fiduciaries and conservatees. c) AB 1363 (Jones), pending in the Senate Appropriations Committee, includes several provisions to expand and improve court oversight of conservatorships. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081