BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 88| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 88 Author: Assm. Public Employees, Retirement and Social Security Cmte. Amended: 9/4/09 in Senate Vote: 27 - Urgency SENATE PUBLIC EMP. & RET. COMMITTEE : 5-2, 8/24/09 AYES: Correa, Ducheny, Liu, Padilla, Wiggins NOES: Ashburn, Benoit ASSEMBLY FLOOR : Not relevant SUBJECT : State employees: memoranda of understanding SOURCE : Service Employees International Union DIGEST : This bill approves provisions that require the expenditure of funds pursuant to memoranda of understanding entered into between the state employer and State Bargaining Units 1, 3, 4, 11, 14, 15, 17, 20, and 21, the Service Employees International Union, Local 1000, and provides that these provisions will become effective even if these provisions are approved by the Legislature n legislation other than the annual Budget Act. This bill appropriates $856,500,000 from those funds for state employee compensation in augmentation of the budget Act of 2009. This bill provides that provisions of the memoranda of understanding approved by this bill provisions of the memoranda of funds will not take effect unless funds for these provisions are specifically appropriated by the CONTINUED AB 88 Page 2 Legislature, and authorizes either party to reopen negotiations on all or part of a memorandum of understanding if the Legislature does not approve or fully fund any provision of the memorandum of understanding that requires the expenditure of funds. ANALYSIS : Under existing law, a provision of a memorandum of understanding reached between the state employer and a recognized employee organization representing state civil service employees that requires the expenditure of funds does not become effective unless approved by the Legislature in the annual Budget Act. This bill: 1. Approves the memoranda of understanding (MOU) agreed to earlier this year to by the state and the following state bargaining units (BUs) represented exclusively by the Service Employees International Union (SEIU), Local 1000: A. BU 1 (Professional, Administrative, Financial, and Staff Services), 45,165 employees. B. BU 3 (Professional Educators and Librarians), 2,368 employees. C. BU 4 (Office and Allied), 29,198 employees. D. BU 11 (Engineering and Scientific Technicians), 3,169 employees. E. BU 14 (Printing and Allied Trades), 479 employees. F. BU 15 (Allied Services), 4,632 employees. G. BU 17 (Registered Nurses), 4,962 employees, H. BU 20 (Medical and Social Services), 3,58. I. BU 21 (Educational Consultant and Library), 585 employees. AB 88 Page 3 Background 1. Specific contract provisions The following information regarding the MOUs was provided by DPA: Compensation: Mandatory Personal Furlough Leave Program (PFLP) . Effective February 2009 through June 30, 2010, all employees will be furloughed one day per month for 17 months. For most employees one day is equivalent to eight-hours per month. This "self-directed" furlough program will reduce take home pay by 4.62 percent. Employees will be given personal discretion to use PFLP time in cooperation with their managers. Employees receive no cash value for leave credits accrued under the PFLP and must use accrued PFLP time by July 1, 2012. Unused PFLP time cannot be carried over beyond that date. Compensation: Seasonal Clerks . There shall be no general salary increases during the term of the MOU with the exception of Seasonal Clerks. Effective April 1, 2009, the hourly pay rate for the Seasonal Clerk Classification will increase $0.50 per hour. Overtime . The tentative agreement, dated February 13, 2009, exempts sick leave from being counted in the computation for overtime. In addition, the contract also explicitly states that should the Legislature enact any provision allowing the State to exclude leave from the computation of overtime, that provision, to the extent that it be in conflict with the MOU, would be controlling over and immediately supersede the provisions of the MOU without further action. Contract Protection . If the State enters into agreements with other bargaining units and those agreements provide greater economic packages than provided in SEIU's agreement, then SEIU may reopen related provisions of its own MOU and the State must meet and confer with SEIU over similar or equivalent provisions for SEIU. This only applies to agreements with bargaining units that do not have current MOUs, which would include all other bargaining AB 88 Page 4 units except Bargaining Unit 5 (CAHP). Voluntary Personal Leave Program (VPLP) . The State shall provide employees currently participating in the VPLP a 60 day window period to opt-out and/or modify their VPLP participation. No Layoff . From February 1, 2009 through June 30, 2010, the PFLP period, layoffs will be limited to departmental closures of programs, facilities or offices. This provision sunsets June 30, 2010. Employees may be required to accept jobs in other departments. They will be assured of retaining their state employment in positions that are within 50 miles of current employment and 10 percent of current pay. An employee who is offered a job placement and rejects it could be subject to layoff. Health Benefits: Employer Contribution . Employees in BU 3 will receive health benefits under the State's "80-80" formula beginning the February 2009 pay period. Under this formula, 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; 80 percent for dependent coverage. This benefit is currently provided to the other 8 bargaining units represented by SEIU. For the purpose of mitigating the fiscal effects of the furlough during the term of this agreement, employees enrolled in one of three health care plans on January 1, 2009 (Blue Shield Access+, Blue Shield Net Value, and Kaiser HMO) will receive an additional premium contribution amount to compensate for small increases to the employees' share of the Health Benefit premiums. Amounts are $13.78 (single), $29.96 (2-party), and $43.72 (family). On and after January 1, 2010, a similar increase for employees enrolled on that date will be paid if there are premium increases in 2010. Business and Travel Expenses . The daily meal and incidental rates will be increased from $40 to $55 per day AB 88 Page 5 while employees travel for the State. This is the average meal reimbursement rate in California for federal employees. The last increase in meal reimbursement rates for state employees occurred in 1999. The cost estimate of savings for this contract does not take into account the increased per diem rates. That is because the increase will be absorbed by departments in their current budgets. If travel budgets remain flat or are reduced, departments may have to reduce employee travel proportionally. The contract states the current practice of providing reimbursement for the cost of up to two checked bags when flying. Employees are already being reimbursed for this cost, but the contract makes the two-bag limitation clear. State-Owned Housing - Rental Rate Freeze . Currently, departments may raise rents by up to 25 percent per year. The contract requires that rent in state-owned housing shall remain unchanged during the furlough period (from February 1, 2009 - June 30, 2010). Holidays . Effective March 1, 2009, the February 12 and Columbus Day holidays will be eliminated. (Elimination of the two holidays for all state employees was also codified in SBX3 8). Employees shall receive two personal holidays. Personal holidays can be used at the employees' discretion. State Disability Insurance (SDI) . Current state employees not covered by the SDI program who transfer into a SEIU Bargaining Unit shall maintain NDI (Non-industrial Disability Insurance) coverage for 6 months (waiting period for SDI eligibility). The Institute for Quality Public Services (Joint Labor Management Trust) . The State shall set aside one million dollars for the establishment of a continuing education and professional development institute. This money will be made available on July 1, 2009 after development of trust documents meeting all state and federal requirements. AB 88 Page 6 Duration . SEIU's prior contract expired on June 30, 2008. This new agreement is effective from July 1, 2008 through June 30, 2010. The economic provisions become effective during the February 2009 pay period upon approval by the Legislature unless otherwise stated in the agreement. SEIU's membership ratified the agreement in a vote taken on March 19th and 20th. Impact on Compensation for Related Excluded and Exempt . Related excluded and exempt employees shall be subject to the 1 day per month self-directed furlough and related decrease in take home pay, effective February 1, 2009. They will receive the increased meal and incidental reimbursement rate. Excluded and exempt employees will not receive the health care contribution increase. Related excluded and exempt classes include employees in the Legislative Counsel Bureau (LBC) and the Bureau of State Audits (BSA). These bureaus' employees are civil service and work in classifications identical or similar to those represented by SEIU. They traditionally receive compensation increases when they are bargained for SEIU employees. For example, they received pay increases in 2006 (3.5 percent) and 2007 (3.4 percent), and participated in the personal leave program in 2003 and received five percent pay increases at the end of that program in 2004. Upon legislative approval of the MOU, DPA will include LCB and BSA related excluded and exempt positions in these provisions as well. FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes Local: No This bill appropriates $856,500,000 to the current budget year to cover the costs of the health care contribution. SUPPORT : (Verified 8/24/09) California International Employees Union (source) California Labor Federation AB 88 Page 7 DLW:do 9/10/09 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****