BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 357
                                                                  Page  1

          Date of Hearing:   August 16, 2006

            ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL  
                                      SECURITY
                               Alberto Torrico, Chair
                    SB 357 (Perata) - As Amended:  August 14, 2006

           SENATE VOTE  :   vote not relevant
           
          SUBJECT  :   State employees: memoranda of understanding: State  
          Bargaining Units 12 and 13.

           SUMMARY  :  Approves the recent Memorandum of Understanding (MOU)  
          agreed to by the state and state bargaining units (BUs) 12  
          (Craft and Maintenance) and 13 (Stationary Engineers),  
          represented exclusively by the International Union of Operating  
          Engineers (IUOE), appropriates the funding for the required  
          expenditures, and makes the required statutory changes to  
          implement the retirement elements of the agreement.  

           EXISTING LAW  :  Requires, under the State Employee-Employer  
          Relations Act (the Dills Act), that collective bargaining  
          agreements (MOUs) that are negotiated between the state and  
          exclusive representatives of each of the 21 state bargaining  
          units be ratified by the Legislature.

           FISCAL EFFECT  :   According to the Assembly Appropriations  
          Committee, the bill appropriates $47.756 million in augmentation  
          of the amounts appropriated for employee compensation in the  
          State Budget Act of 2006, as follows:

          1)$17.563 million from the General Fund (GF) in augmentation of  
            Item 9800-001-0001.

          2)$19.323 million from special funds in augmentation of Item  
            9800-001-0494.

          3)$10.87 million from unallocated nongovernmental cost funds in  
            augmentation of Item 9800-001-0988.

          Beginning in 2007-08, the ongoing costs of each MOU will be  
          incorporated into the baseline budgets of the various state  
          departments that employ BU 12 and 13 members.  The cost of the  
          2007-08 Cost-of-Living Adjustment (COLA) will be in the range of  
          $30 million ($10 million GF), assuming the Consumer Price Index  








                                                                  SB 357
                                                                  Page  2

          (CPI) is 3% over the 12-month period from April 2006 through  
          March 2007.

           COMMENTS  :   BU 12 consists of 10,811 members who operate and  
          maintain state equipment, facilities, building, grounds, and  
          roads.  Among the largest classifications in the unit are  
          California Department of Transportation (Caltrans) equipment  
          operators and Caltrans highway maintenance workers.  About 46%  
          of BU 12 members work for Caltrans, 25% for the California  
          Department of Corrections and Rehabilitation (CDCR), and 5% each  
          for the California Highway Patrol and the Department of Parks  
          and Recreation.

          BU 13 consists of 947 members who maintain and operate heating,  
          cooling, water, wastewater, and other major mechanical systems  
          at state facilities.  Among the largest classifications are  
          stationary engineers and water and sewage plant supervisors.   
          About 55% of BU 13 members work for CDCR, 16% for the Department  
          of General Services, and 6% each for the Department of  
          Developmental Services and the Department of Mental Health.

          The major provisions of each MOU are as follows:

           1)One-Time Bonus  .  Upon ratification, all employees in BUs 12  
            and 13 will receive a one-time bonus of $1,000.
           
          2)       Salary Increases  .   Effective July 1, 2006, all  
            employees in BUs 12 and 13 will receive a 3.5% general salary  
            increase.  Effective July 1, 2007, all employees in BUs 12 and  
            13 will receive a COLA of 2-4% (based on the CPI for the  
            12-month period from April 2006 through March 2007).
           
          3)       Equity Adjustments - BU 12  .  Effective January 1, 2007,  
            the top salary for specific hydroelectric classifications will  
            be raised 7.5%; the top salary for specific telecommunication  
            and electronics classifications will be raised 5%; and the top  
            salary for specific equipment operator classifications will be  
            raised 5%. 
           
          4)       Pay Differentials - BU 13  .  Effective January 1, 2007,  
            the existing monthly differential for specified chief plant  
            operators will increase from 5% to 6%; employees in specified  
            water and sewage plant classifications will receive a 4%  
            differential.
           








                                                                  SB 357
                                                                  Page  3

          5)       Retirement Benefit Calculation  .  For all BU 12 and 13  
            employees hired on or after January 1, 2007, retirement  
            benefits will be based on the highest consecutive-three-year  
            average salary (rather than the 12 consecutive months highest  
            final compensation formula that applies to existing  
            employees).
           
          6)       Employer Health Benefits Contribution .  Effective July  
            1, 2006, the state's monthly contribution to employee health  
            premiums will be set at a dollar amount that equals the 80/80  
            formula (under which the employer contribution for  
            single-party coverage is 80 percent of that year's weighted  
            average premium of the four plans with the highest employee  
            enrollment).  When premiums increase January 1, 2007, and  
            January 1, 2008, the state will raise its contribution so the  
            dollar amount continues to equal the 80/80 formula.
           
          7)       Dependent Coverage  .  Employees hired on or after January  
            1, 2007, will become eligible for the full employer  
            contribution for dependent health coverage after completing  
            their first two years of state employment. The state will  
            contribute half the normal amount for dependents during the  
            first year and 75 percent during the second year.

          Both MOUs are effective July 1, 2006, through June 30, 2008. 









           REGISTERED SUPPORT / OPPOSITION  :

           Support 

           Department of Personnel Administration (Co-sponsor)
          International Union of Operating Engineers (Co-sponsor)
          California-Nevada Conference of Operating Engineers
           
            Opposition 

           None on file








                                                                  SB 357
                                                                  Page  4


           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916)  
          319-3957