BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Kevin Murray, Chairman 357 (Perata) Hearing Date: 8/28/06 Amended: 8/14/06 Consultant: Maureen Ortiz Policy Vote: P. E. & R. 4-1 _________________________________________________________________ ____ BILL SUMMARY: SB 357, an urgency measure, ratifies an agreement between the State and State Bargaining Unit 12 (Operating Engineers) and Bargaining Unit 13 (Operating Engineers). The bill appropriates $47,756,000 for expenditure in the 2006-07 fiscal year for state employee compensation in augmentation of the Budget Act of 2006. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2006-07 2007-08 2008-09 Fund Unit 12: Salary/health/other $42,327 $38,494 Gen/Spec Unit 13: Salary/health/other $5,428 $3,819 Gen/Spec _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria to be referred to the Suspense file, however, due to the urgent nature of bills that ratify an MOU, this committee generally does not refer that legislation to the Suspense file. There are approximately 10,811 FTE's in Unit 12, and approximately 947 FTE's in Unit 13. The provisions of the MOU include the following: Compensation: 1) Upon ratification, all employees of Unit 12 and Unit 13 will receive a one-time bonus of $1,000. 2) Effective July 1, 2006, all employees of Units 12 and 13 will receive a general salary increase of 3.5%. 3) Effective July 1, 2007, all employees of Units 12 and 13 will receive a COLA of 2-4% based on the CPI as specified 4) Unit 12: Effective January 1, 2007, the top salary for Hydroelectric classifications will be raised 7.5%, the top salary for Telecommunication and Electronics classifications will be raised 5%, and the top salary for specific Equipment Operator classifications will increase 5%. 5) Unit 13: Effective January 1, 2007, the existing monthly differential for specified chief plant operators increases from 5% to 6%; and a 4% differential will be implemented for specified water and sewage plant classifications, as specified. Retirement : For all employees of Units 12 and 13 hired on or after January 1, 2007, retirement benefits will be based on the highest consecutive three year average salary. SB 357 (Perata) Page 2 Health Benefits: 1) Effective July 1, 2006, for Units 12 and 13, the state's monthly contribution to employee health premiums will be set at a dollar amount that equals the "80/80" formula. When premiums increase January 1, 2007 to January 1, 2008, the state will raise its contribution so the dollar amount continues to equal the "80/80" formula. 2) Dependent coverage will be limited to 50% during the first year, and 75% during the second year for employees hired on or after January 1, 2007. After two years of employment, the state will contribute the normal amount for dependent coverage. Other Provisions : 1) For Units 12 and 13, eligible employees will be able to claim mileage reimbursement at the federal standard mileage rate (currently 44.5 cents per mile). 2) Employees at CalTrans assigned to perform duties outside their classification specifications that involve rock scaling, climbing, transporting of explosives, or suspended work may receive special duty pay at the rate of $6 per hour when they actually perform these duties. In addition, SB 357 provides that members of Unit 12 who are working on the California highway system performing highway maintenance will be provided the Special Death Benefit if his or her death occurred as a direct result of injury arising out of an din the course of his or her official duties. Staff notes that the costing analysis prepared by the Department of Personnel Administration (DPA) indicates costs of approximately $47,755,000 for fiscal year 2006-07, and costs of approximately $42,313,000 for FY 2007-08. The fiscal analysis prepared by the LAO generally concurs with the DPA estimate for 2006-07, but believes that the costs for 2007-08 may be overstated by approximately $7 million due primarily to a high estimate of inflation. Staff notes that this agreement was reached on July 19, 2006, and presented to the Legislature. Pursuant to Chapter 499, Statutes of 2005 (SB 621, Speier), the Legislative Analyst's Office prepared and distributed an analysis of this MOU on July 28, 2006. Senate Rule 29.4 requires the final version of an MOU to be available to the Legislature for seven legislative days before the Senate may act on the MOU. This MOU between the state and Bargaining Units 12 and 13 has been delivered in sufficient time to be acted upon by the Senate. The terms of these MOU's are from July 1, 2006 through June 30, 2008.