The Connecticut General Assembly

OFFICE OF LEGISLATIVE RESEARCH

February 28, 1994 94-R-0369

TO:

FROM: Daniel Duffy, Principal Analyst

You asked for an analysis of “An Act Concerning the Regulation of Cemeteries” (HB 5448) and for policy options concerning cemetery regulation.

SUMMARY

The bill establishes a Cemetery Board within the Department of Consumer Protection (DCP) to regulate cemetery associations. It requires cemetery associations to establish and transfer all perpetual funds to a single endowment maintenance fund. It gives certain duties to both the board and the department.

It repeals current law on the establishment and maintenance of perpetual funds by cemetery associations and ecclesiastical societies. It also repeals the authority of local selectmen to step in and take over care of a perpetual fund if the cemetery association fails to comply with relevant law.

The bill could be amended in several respects to improve the state's ability to oversee the operations of cemetery associations and to respond to public complaints. Its recordkeeping requirements are not specific. The bill could specify the type and form of records to be kept. It could also require cemetery associations to keep these records open to state inspection. It could specify the elements of an annual report to the state on the association's operations, especially those relating its endowment maintenance fund. Finally, it could be amended to make DCP's relationship to the board identical to its relationships with other boards. This would make it clear that the department would receive and investigate complaints and the board would adjudicate them.

BILL SUMMARY

The bill establishes the Cemetery Board within DCP. It separates the regulation of cemetery associations from the regulation of other entities operating cemeteries (ecclesiastical societies and towns) and requires associations to register with DCP. It requires each cemetery association to establish an endowment maintenance trust fund. It eliminates the current law permitting ecclesiastical societies and cemetery associations to set aside surplus funds as a perpetual fund.

It establishes certain duties and responsibilities for both the board and the department.

Under the bill, a “cemetery” is (1) land used, or intended for use, for the interment of human dead, whether underground or in a mausoleum or crypt; (2) a crematory located within a cemetery; or (3) a columbarium for cinerary interments. A “cemetery association” is a nonstock corporation formed to own and operate a cemetery.

It becomes effective on October 1, 1994.

CEMETERY BOARD

Membership

The governor appoints the board's seven members, including three public members, and designates the chairman. Like other licensing boards, it must meet at least once each quarter and keep minutes. Members who fail to attend three consecutive meetings or 50% during a calendar year are deemed to have resigned. Members may not participate while they are the subject of disciplinary proceedings.

Powers and Duties

The board may conduct investigations or hold hearings when reviewing an application for registration. It may also ask the attorney general to seek court orders ordering the disclosure of relevant material.

Endowment Maintenance Funds

The board must require all associations to establish a trust fund known as the endowment maintenance fund. This requirement is instead of the current law allowing an association's directors or members to set aside surplus funds for a perpetual fund. The bill requires the Cemetery Board to review each cemetery's maintenance needs and the financial assets of any existing funds to determine the amount of funding necessary to maintain the cemetery into perpetuity. The board must require an initial deposit of up to $50,000 and set a minimum deposit amount for the sale of each grave, crypt, niche, or plot. All existing funds established for the cemetery's care must be transferred to the endowment maintenance fund. Unlike the current law for perpetual funds, the bill does not establish the number of trustees or require the fund's treasurer to be the same individual as the cemetery association's treasurer.

The bill provides that it does not prohibit an association from (1) contributing additional funds; (2) charging additional fees for deposit into the fund; or (3) receiving grants, gifts, devises, bequests, agreements, money, or property in trust or perpetuity for the care, maintenance, or embellishment of the cemetery or any part of it.

The bill authorizes the board to impose civil penalties of up to $5,000 on any cemetery association which violates any of its provisions.

CEMETERY ASSOCIATION

All existing cemetery associations must register with DCP by October 1, 1996. Those formed after the act becomes effective must register before beginning operations. Applications must be on forms provided by DCP. Registrations are valid for two years. The fee is $150.

The treasurer of each cemetery association must file an annual financial report with the board containing the revenues and expenses of the endowment maintenance fund and any other information required by the board.

DCP RESPONSIBILITIES

Issuing Registration Certificates

The department must, with the board's approval, issue registration certificates to associations that (1) properly perform the services identified in their applications; (2) comply with the requirements, rules, and regulations of the board, DCP, the Department of Public Health and Addiction Services, and local health authorities; and (3) properly and efficiently maintain its cemetery.

Disciplining Registrants

The DCP commissioner is authorized to suspend or revoke a registrant's certificate, or refuse to issue or renew one, for violating any of the bill's provisions or regulations adopted under it. Disciplinary action may be taken only after giving an opportunity for a hearing. The commissioner may ask the attorney general to seek court enforcement orders.

Issuing Regulations

The bill requires the consumer protection commissioner, with the board's advice, to adopt regulations (1) establishing a code of practice including interment procedures, burial practices, cemetery surveys, and the sale and installation of grave markers; and (2) carrying out the purposes of the bill.

PERPETUAL FUNDS

Current law, which the bill would repeal, allows cemetery associations to set up perpetual funds. It also sets standards for perpetual funds operated by ecclesiastical societies. They must be under the control of at least three people elected by the association or society, which must meet at least once each year. The society's or association's treasurer must also, by virtue of his office, be the treasurer of the perpetual fund committee. He must give the committee a bond, with surety, for the faithful discharge of his duties. The treasurer must spend the income from the fund (1) for the management, care and maintenance of the cemetery; or (2) for the purpose set forth in the instrument or declaration of trust giving money to the fund. The treasurer must annually report to the society or association, on or before July 1, on the income received, the amount of expenditures and to whom they were paid, the fund's condition, and how it is invested. A copy must be filed with the local probate court. Failure to file subjects the treasurer to a fine of up to $50.

SELECTMAN'S AUTHORITY

The bill also repeals the selectman's authority to take over the care of a perpetual fund if an association fails to comply with relevant law. The law authorizes the selectmen to appoint a cemetery committee consisting of three town residents who serve staggered terms. The committee has all the powers and duties of a committee established by an association or society.

POLICY OPTIONS

Recordkeeping

The apparent intent of the bill is to improve the state's ability to oversee the operations of cemetery associations. It authorizes the consumer protection commissioner to adopt regulations concerning interment procedures, burial practices, cemetery surveys, and the sale and installation of grave markers. It does not establish specific recordkeeping requirements.

The bill could, like the laws of several states, including Tennessee, Arkansas, California, and Washington, establish specific recordkeeping requirements. Tennessee requires records of every burial, showing the date, name of the person buried, and the designation of the burial lot or space. It also requires records showing the date of sale of each lot, grave, crypt, niche, or mausoleum; the amount of sale; contract number; name of the purchaser; the amount of the sale to be included in that state's equivalent of the endowment maintenance fund; and the date of receipt of the final payment. Importantly, it requires all records to be kept in a form acceptable to the state. It requires the cemetery to keep records showing the full amount received for installation of each memorial or grave marker, identified by lot owner and decedent. The same information must be kept if deposits into its trust fund are collected periodically (Tenn. Code Ann. § 46-2-201).

State Inspection

The bill authorizes the Cemetery Board to investigate applications and review each cemetery's maintenance needs. It authorizes DCP to take disciplinary actions but does not explicitly authorize it to investigate complaints of alleged violations. Neither the department nor the board has free access to records because the bill does not require cemetery associations to keep their records open to state inspection.

The State of Washington is very explicit in this respect. It gives the state “free access to the books and records relating to endowment care funds, their collection and investment, and the number of graves, crypts, and niches under endowment care.” It authorizes its licensing board to inspect and examine endowment care funds to determine their condition (Wash. Rev. Code § 68.05.150).

Annual Reporting

The bill requires each association to file an annual financial report on the endowment maintenance fund's revenues and expenses and on anything else required by the board. California's law has much more explicit reporting requirements. It requires a report stating (1) the number of square feet of grave space and the number of crypts and niches sold or disposed of under endowment care, (2) the amount collected and deposited in the cemetery's general fund and its endowment maintenance care fund, segregated as to the amounts for crypts, niches, and grave space; (3) how both are invested, and the amount of cash on hand; and (4) the transactions entered into between the cemetery association or any of its officers and the trustees of the funds. The report must be certified by the accountant who prepared it.

Relationship Between Board and Department

The relationship between the Cemetery Board and DCP is different from the relationships between the department and all other licensing boards within it. By including the Cemetery Board in the statutory provisions establishing the powers and duties of licensing boards (CGS § 21a-7) and of the department in relation to them (CGS § 21a-8), the bill would clearly identify DCP as the organization which receives and investigates complaints, issues licenses with the board's approval, and the board as the one which rules on alleged law violations.

DD:lav