HB 5381 — AN ACT CONCERNING UNLAWFUL FUNERAL SERVICE PRACTICES.

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744 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 27 $ FY 28 $ Consumer Protection, Dept.

GF - Cost None 76,750 State Comptroller - Fringe GF - Cost None 31,260 Benefits1 Consumer Protection, Dept.

Funeral Service None See Below Guaranty Account - Potential Cost Consumer Protection, Dept.

Funeral Service None See Below Guaranty Account - Potential Revenue Gain Note:

GF=General Fund Municipal Impact:

None Explanation The bill requires the Department of Consumer Protection (DCP) to oversee the funeral service guaranty account (FSGA) and make grants to eligible applicants resulting in a cost to the state.

To meet the requirements of the bill, DCP will have to hire a paralegal specialist for a salary and other expenses cost of $76,750 in FY 28 , along with 2 associated fringe benefit costs of $31,260 in FY 28.

The new employee is needed to review applications, make payments from the account, and answer applicant questions.

The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller.

The estimated active employee fringe benefit cost associated with most personnel changes is 41.82% of payroll in FY 27.

The fiscal impact begins in FY 28 due to the 7/1/27 start date of the FSGA.

sHB5381 / File No.

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744 The bill specifies that DCP may deduct and retain up to two percent of the balance of the FSGA for the costs incurred in managing the account resulting in a potential cost to the FSGA and a corresponding potential revenue gain to DCP.

House "A" strikes the underlying bill and its associated fiscal impact resulting in the impact described above.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to employee wage increases and inflation.

for the purposes of information, summarization and explanation and does not represent the intent of the Generaly Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

sHB5381 / File No.

744 sHB5381 File No.

744 OFA Bill Analysis sHB 5381 (File 637, as amended by House "A") AN ACT ESTABLISHING AN ACCOUNT TO COMPENSATE VICTIMS OF UNLAWFUL FUNERAL SERVICE PRACTICES.

SUMMARY:

The bill makes various changes regarding funeral services laws, described below.

*HouseAmendment"A"(1)addstotherequirementstheDepartment of Consumer Protection (DCP) must follow when administering the funeral service guaranty account, (2) requires DCP to adopt regulations, (3) alters the requirements of funeral service contracts, and (4) creates a working group to study prepaid funeral service contracts.

EFFECTIVE DATE:

Sections 1 and 3 are effective from passage, section 2 is effective July 1, 2026.

Funeral Service Guaranty Account The bill establishes a separate, non-lapsing account, called the "funeral service guaranty account." The account must contain (1) any amounts appropriated or made available by the state, (2) any monies required to be deposited in the account, and (3) gifts, grants, donations, or bequests.

Investment earnings shall become part of the assets of the account and the State Treasurer is required to administer the account.

The bill allows DCP to deduct and retain up to two percent of the balance in the account for costs incurred by the department for administering the account.

Beginning July 1, 2027, DCP is required to use the funds in the account to provide restitution to eligible persons who were victims of sHB5381 / File No.

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744 fraudulent or unlawful practices when purchasing funeral services.

DCP cannot provide restitution that exceeds the balance in the account.

An eligible person may make a claim from the account by submitting the following documents to DCP:

1.

A copy of the original funeral service contract, 2.

Proof of any funeral services provided under the contract, 3.

Proof that the person is a beneficiary or purchaser of a contract, the estate of a beneficiary, or a legally authorized agent of a beneficiary, 4.

Proof of any payment for funeral or burial services not provided in the contract.

DCP may consider a court order entered against the provider of the funeral service contract with the eligible person but will not require the document to be submitted.

Payments from the Funeral Service Guaranty Account DCPmustfollowthese requirementswhendispersingfundsfromthe account:

1.

No payment over $10,000 will be made from the account for any one contract.

2.

To preserve the integrity of the account DCP may order payment in an amount less than the eligible person's actual loss or damages or less than the restitution awarded.

3.

If the account has insufficient funds to satisfy a claim, DCP shall satisfy any unpaid claim amounts once sufficient funds have been deposited into the account, in the order that the claims or portions of claims were determined.

4.

Once an eligible person has been paid from the account, DCP sHB5381 / File No.

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744 shall be subrogated to all the rights of the eligible person up to the amount paid plus reasonable interest.

Any funds recovered by DCP shall be deposited into the account.

5.

If DCP orders payment of any amount to an eligible person against a provider of a funeral services contract, DCP will determine if the provider has assets liable to be sold or applied in satisfaction of the claim.

If DCP discovers any assets, the agency may request the Attorney General to take any action necessary to reimburse the account.

Regulations The bill requires DCP to adopt regulations concerning requirements for obtaining restitution for eligible persons no later that April 1, 2028 or ninety daysafter theissuedreport fromtheworking group.

DCPwill also adopt policies and procedures to implement the provisions of the bill not later than June 1, 2027.

Funeral Services Contracts The bill makes the following changes to funeral services contracts:

1.

That the notice from the escrow agent acknowledging receipt of the initial deposit be in bold type and state the amount of the deposit.

2.

The contract is required to include a statement signed by the purchaser saying that prior to executing the contract the purchaser received:

(1) the DCP fact sheet on funeral service contracts and (2) had time to review the fact sheet.

Prepaid Funeral Service Contracts Working Group The bill creates a working group to study issues related to prepaid funeral service contracts, the creation of consumer protections for these contracts, and the establishment and implementation of the guaranty fund for these consumers.

The working groupconsistsoftwelve membersappointedby various sHB5381 / File No.

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744 legislators, commissioners, and associations.

All initial appointments shall be made within thirty days of the effective date of the section.

The administrative staff of the General Law Committee shall serve as the administrative staff to the working group.

The working group will submit its initial report to the General Law committee by December 1, 2027 and shall submit its final report to the General Law committee by January 1, 2028.

The working group shall terminate the day it submits its final report or by January 1, 2028, whichever is later.

COMMITTEE ACTION Appropriations Committee Joint Favorable Substitute Yea 49 Nay 2 sHB5381 / File No.

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