BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1661
                                                                  Page  1

          Date of Hearing:   August 14, 2002

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                    SB 1661 (Kuehl) - As Amended:  August 8, 2002 

          Policy Committee:                               
          InsuranceVote:11-7

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill creates, within the state disability insurance (SDI)  
          program, a family temporary disability insurance (FTDI) program  
          to provide up to 12 weeks of wage replacement benefits to  
          workers who take time off work to care for a seriously ill  
          child, spouse, parent, domestic partner, or to bond with a new  
          child.   Specifically, this bill:

          1)Expands disability insurance rights and benefits due to an  
            employee's need to provide care for any sick or injured family  
            member, as defined, or the birth, adoption, or foster care  
            placement of a new child.

          2)Creates a family temporary disability insurance program to  
            provide up to 12 weeks of wage replacement benefits to workers  
            who take time off work to care for a seriously ill child,  
            spouse, parent, domestic partner, or to bond with a new child.  


          3)Provides that 50 percent of the benefits must be provided from  
            the employee's FTDI contribution to the Disability Fund. 

          4)Provides that the balance of the benefits be provided by the  
            employer, either directly or by means of insurance procured by  
            the employer. 

          5)Requires the Director of the Employment Development Department  
            (EDD) to increase the rate of worker contributions by 0.05  
            percent for the 2004 and 2005 calendar years to cover the cost  
            of FTDI benefits.









                                                                  SB 1661
                                                                  Page  2

           FISCAL EFFECT  

          EDD estimates the following fiscal impact ($ in thousands, all  
          costs would be paid from the Disability Fund):

           ----------------------------------------------------------------- 
          |Provision            |2003-04              |2004-05              |
          |---------------------+---------------------+---------------------|
          |Programming          |  $7,500             |                     |
          |---------------------+---------------------+---------------------|
          |Addl. 1st time       |  $9,200             |$9,200               |
          |claims               |                     |                     |
          |---------------------+---------------------+---------------------|
          |   Subtotal EDD      |$16,700              |$9,200               |
          |Admin Costs          |                     |                     |
           ----------------------------------------------------------------- 



           ----------------------------------------------------------------- 
          |Employer FTDI        |($55,000)            |($110,000)           |
          |contributions        |                     |                     |
          |---------------------+---------------------+---------------------|
          |Employee FTDI        |($110,000)           |($220,000)           |
          |contributions        |                     |                     |
          |---------------------+---------------------+---------------------|
          |FTDI Benefit         | $53,500             | $108,500            |
          |Payments             |                     |                     |
          |---------------------+---------------------+---------------------|
          |   Net Disability    |($56,500)            |($221,500)           |
          |Fund Change          |                     |                     |
           ----------------------------------------------------------------- 


          EDD's estimates that one-half of the state's 800,000 employers  
          would choose to contribute 0.05 of payroll to the FTDI program  
          (up to the taxable wage ceiling of $68,829 in 2004), rather than  
          opting through private insurance. Employers would contribute  
          $110 million to the SDI Fund in 2004 and 2005.  Employee payroll  
          contributions of 0.05 percent of payroll (up to the taxable wage  
          ceiling) would generate $220 million in 2004 and 2005.  The  
          employee and employer contributions would increase the  
          Disability Fund surplus by $56.5 million in 2003-04 and by  
          $221.5 million in 2004-05.









                                                                  SB 1661
                                                                  Page  3

           COMMENTS  

           1)Background  . The United States is one of the few developed  
            countries in the world without a national paid parental leave  
            program. One hundred and thirty countries have leave policies.  
            Just three of those countries - Ethiopia, Australia and the  
            United States - provide only unpaid leave. 

            The current SDI program is financed through a mandatory  
            employee payroll contribution that is paid into the Disability  
            Trust Fund. The director of EDD determines the contribution  
            rate, based upon a statutory formula.  The current  
            contribution rate is 0.9 percent of wages not to exceed  
            $46,327 per year (i.e. the worker's contribution is about  
            $417). In 2003, the wage base will increase to $56,916, and in  
            2004, to $68,829. The maximum contribution rate cannot exceed  
            1.3 percent. 

            EDD allows up to four weeks pre-partum and six weeks  
            post-partum SDI leave without requiring the worker to obtain  
            additional information from her treating physician beyond  
            stating that the disability is for a normal pregnancy. EDD has  
            based this policy on established medical guidelines for  
            medical disabilities and accepted practice in the medical  
            community to allow four weeks pre-partum and six weeks  
            post-partum leave. 

            The California Family Rights Act (CFRA) establishes that it is  
            an unlawful employment practice for any employer to refuse to  
            grant a request by any employee with more than one year of  
            service and who has worked at least 1,250 hours during the  
            previous 12-month period, to take unpaid family care and  
            medical leave for up to 12 workweeks: (a) in connection with  
            the birth or adoption or serious health condition of the  
            employee's child; (b) to care for a parent or spouse who has a  
            serious health condition, or; (c) because of the employee's  
            own serious health condition. 

           2)Purpose  .  It is the intent of the author to create the FTDI  
            Program to help reconcile the demands of work and family. In  
            recognition of the shared benefit, the program will be  
            implemented through employee contributions and the provision  
            of benefits by employers, and shall be administered in  
            accordance with the policies of the SDI program. 









                                                                  SB 1661
                                                                  Page  4

           Analysis Prepared by  :    Stephen Shea / APPR. / (916) 319-2081