BILL ANALYSIS SB 357 Page 1 SENATE THIRD READING SB 357 (Perata) As Amended August 14, 2006 2/3 vote. Urgency SENATE VOTE :vote not relevant PUBLIC EMPLOYEES 4-1 APPROPRIATIONS 13-0 ----------------------------------------------------------------- |Ayes:|Torrico, Jones, Mullin, |Ayes:|Chu, Bass, Berg, | | |Negrete McLeod | |Calderon, | | | | |De La Torre, Karnette, | | | | |Klehs, Leno, Nation, | | | | |Oropeza, Ridley-Thomas, | | | | |Saldana, Yee | |-----+--------------------------+-----+--------------------------| |Nays:|Leslie | | | | | | | | ----------------------------------------------------------------- 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, this 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. SB 357 Page 2 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 General Fund), assuming the Consumer Price Index (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 SB 357 Page 3 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. 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% 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% during the second year. Both MOUs are effective July 1, 2006, through June 30, 2008. Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916) 319-3957 FN: 0016301