BILL ANALYSIS
AB 468
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 468 (Hayashi)
As Amended June 16, 2009
Majority vote
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|ASSEMBLY: |50-30|(May 11, 2009) |SENATE: |22-15|(August 27, |
| | | | | |2009) |
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Original Committee Reference: P.E.,R.& S.S.
SUMMARY : Creates a specific vesting schedule and employer
contribution amount for annuitant health care premiums for the
Alameda County Transportation Improvement Authority (ACTIA)
employees hired on or after October 1, 2004. Specifically, this
bill :
1)Requires ACTIA to pay 50% of the employer contribution after
five years of credited service and increase the employer
contribution by 5% each year until the employer contribution
reaches 100% 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 annuitant enrolled for "self-alone."
3)Provides that an employee that works for ACTIA for 15 years is
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.
The Senate amendments change, from November 1, 2004 to October
1, 2004, the date by which ACTIA employees impacted by these
provisions must be hired on or after and make other technical
changes.
EXISTING LAW establishes the Public Employees' Medical and
Hospital Care Act (PEMHCA) under the administration of
California Public Employees Retirement System (CalPERS). If a
contracting agency elects to cover their employees for health
care under PEMHCA, they have the following options to choose
from in determining contribution amount for annuitants:
1)A contracting agency could opt to make the employer
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contribution amount equal for both active employees and
annuitants. Under this option, an employee who retires and
meets the definition of annuitant becomes 100% vested and
receives an employer contribution amount equal to what the
active employees receive.
2)A contracting agency that joins PEMHCA on or after January 1,
1986, has the option to pay a lesser employer contribution
amount for annuitants than for active employees as long as the
agency increases its contribution for annuitants each year
until it equals the agency's contributions for active
employees. Based on the formula, it may take 20 years for the
lesser contribution amount to equal the active employee
contribution amount. Under this option, an employee who
retires and meets the definition of annuitant becomes 100%
vested and receives an employer contribution amount equal to
the lesser contribution amount.
3)A contracting agency has the option to establish a pre-set
"vesting schedule" of specific percentages based on an
employee's credited years of service to determine the employer
contribution amount for annuitants. Under this option, 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% vested.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version approved by the Senate.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : According to ACTIA, the sponsor of this bill, "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. In Alameda County ACTIA
is an independent entity that will cease to exist in 2022.
ACTIA contracts with CalPERS to implement PEMHCA laws and
regulations in the administration of its retiree health
benefits. Unfortunately, existing PEMHCA law does not provide
flexibility to address the fact that ACTIA sunsets in 2022,
which produces unique staff recruitment challenges."
The sponsor goes on to state, "ACTIA generally recruits staff
from local jurisdictions to fill administrative and professional
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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 proposed in
AB 468 will provide ACTIA employees the chance to fully vest in
this benefit before the Authority sunsets."
Supporters conclude, "Sunset agencies such as ACTIA are unique
and efficient in delivering large county-wide transportation
projects. ACTIA operates with only nine 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."
Since 2005, ACTIA has contracted with CalPERS to provide health
benefits to its employees and annuitants. The employer
contribution for current employees in based on the single party
basic rate for Kaiser-North (approximately $508 per month).
Although health benefits are available to dependents, ACTIA does
not contribute to these benefits. ACTIA's postretirement health
coverage is based on the graduating vesting schedule available
to contracting agencies under PEMHCA.
AB 524 (Hancock) of 2008, would have given the West County Waste
Water District (District) a contract option under PEMHCA to
provide an employer contribution at the 100/90 formula for post
retirement health coverage if the employee completes at least 10
years of state service with the District at retirement. AB 524
was vetoed by Governor Schwarzenegger due to the 2008-2009 State
Budget delay.
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0001791