BILL ANALYSIS
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THIRD READING
Bill No: AB 468
Author: Hayashi (D)
Amended: 6/16/09 in Senate
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE : 4-2, 6/22/09
AYES: Correa, Liu, Padilla, Wiggins
NOES: Ashburn, Benoit
NO VOTE RECORDED: Ducheny
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 50-30, 5/11/09 - See last page for vote
SUBJECT : Public Employees Medical and Hospital Care Act:
Alameda
County
SOURCE : Alameda County Transportation Improvement
Authority
DIGEST : This bill creates a specific vesting schedule
and employer contribution amount for annuitant health care
premiums for Alameda County Transportation Improvement
Authority (ACTIA) employees hired on or after October 1,
2004, and provides that an employee that works for ACTIA
for 15 years shall be eligible to participate in the health
care plan when they retire regardless of the length of the
period between their separation for ACTIA employment and
their actual retirement.
CONTINUED
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ANALYSIS : Existing law establishes the Public Employees
Medical and Hospital Care Act (PEMHCA) under the
administration of the Public Employees' Retirement System
(PERS).
If a governmental agency elects to cover their employees
for health care under PEMHCA, they have the following
options in determining contribution amount for their
retirees: (1) A PEMHCA contracting agency could opt to
make the employer contribution amount equal for both active
employees and retirees, providing that when an employee who
is eligible retires (minimum five years of service and age
50), they become 100 percent vested and receive an employer
PEMHCA contribution amount equal to what the active
employees receive, or (2) a contracting agency that joins
PEMHCA on or after January 1, 1986, has the option to pay a
lesser employer PEMHCA contribution amount for retirees
than for active employees, as long as the agency increases
its contribution for retirees each year until it equals the
agency's contributions for active employees (based on this
statutory formula, it may take 20 years for the lesser
retiree contribution amount to equal the active employee
contribution amount), or
(3) a PEMHCA contracting agency also has the option to
establish a "vesting schedule" of specific percentages
based on an employee's credited years of service to
determine the employer contribution amount after they
retire, providing that an employee would have to work at
least 10 years to qualify for an employee contribution and
would have to work 20 years to become 100 percent vested
for the full employer contribution.
ACTIA was created with the passage of Measure B in 2000, to
administer a half-cent sales tax program dedicated to
funding transportation projects and programs.
The bill's sponsor, ACTIA, states that existing PEMHCA law
does not provide flexibility to address the fact that ACTIA
sunsets in 2022, which produces unique staff recruitment
challenges.
This bill:
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1. Requires ACTIA to pay 50 percent of the employer
contribution for employees who retire after five years
of credited service with the agency, and increase the
employer contribution by five percent each year until
the employer contribution reaches 100 percent after 15
years of credited service.
2. Specifies that the employer contribution rate is
determined by the weighted average of the health benefit
plan premiums for an employee or retiree enrolled for
"self-alone."
3. Provides that an employee that works for ACTIA for 15
years shall be eligible to participate in the health
care plan when they retire regardless of the length of
the period between their separation for ACTIA employment
and their actual retirement.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/6/09)
Alameda County Transportation Improvement Authority
(source)
American Federation of State, County and Municipal
Employees
ARGUMENTS IN SUPPORT : According to the bill's sponsor,
the Alameda County Transportation Improvement Authority
(ACTIA): "ACTIA generally recruits staff from local
jurisdictions to fill administrative and professional
positions. In order to stay competitive, the post
retirement health benefit is an essential element in
ACTIA's employee benefits package. Retiree health coverage
is an important benefit as our prospective employee pool
ages. Nearly all competing agencies offer some post
employment health coverage. Having coverage that
accommodates ACTIA as a sunsetting agency, place it in a
competitive position for future employees. While the
default of 100% vesting after completing ACTIA's
probationary period is an option, this would not be a
fiscally responsible decision. The modified vesting period
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proposed in AB 468 will provide ACTIA employees the chance
to fully vest in this benefit before the Authority
sunsets."
Supporters state: "Sunset agencies such as ACTIA are
unique and efficient in delivering large county-wide
transportation projects. ACTIA operates with only 9
employees, costing less than 1% of annual sales tax
revenues in staff costs and under 4.5% in total overhead
costs to deliver $3 billion-plus in transportation projects
over a fixed 20-year term."
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans,
Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi,
Hernandez, Hill, Huffman, Jones, Krekorian, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, John A. Perez, V.
Manuel Perez, Portantino, Price, Ruskin, Salas, Saldana,
Skinner, Solorio, Swanson, Torlakson, Torres, Torrico,
Yamada, Bass
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Duvall, Emmerson,
Fletcher, Fuller, Gaines, Garrick, Gilmore, Hagman,
Harkey, Huber, Jeffries, Knight, Logue, Miller, Nestande,
Niello, Nielsen, Silva, Smyth, Audra Strickland, Tran,
Villines
DLW:mw 7/6/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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