BILL ANALYSIS
SB 846
Page 1
SENATE THIRD READING
SB 846 (Correa)
As Amended August 9, 2010
2/3 vote. Urgency
SENATE VOTE :Vote not relevant
PUBLIC EMPLOYEES 4-1 APPROPRIATIONS 14-3
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|Ayes:|Torrico, Furutani, |Ayes:|Fuentes, Conway, |
| |Hernandez, Ma | |Bradford, |
| | | |Charles Calderon, Coto, |
| | | |Davis, |
| | | |De Leon, Gatto, Hall, |
| | | |Nielsen, Skinner, |
| | | |Solorio, Torlakson, |
| | | |Torrico |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey |Nays:|Harkey, Miller, Norby |
| | | | |
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SUMMARY : Ratifies the provisions of a memorandum of
understanding (MOU) between the state and the following three
state bargaining units (BUs): BU 5 (Highway Patrol), represented
exclusively by the California Association of Highway Patrolmen;
BU 12 (Craft and Maintenance), represented exclusively by the
International Union of Operating Engineers; and, BU 18
(Psychiatric Technicians), represented exclusively by the
California Association of Psychiatric Technicians.
Specifically , this bill:
1)Provides legislative ratification for MOUs agreed to between
the State and state BUs 5, 12, and 18.
2)Requires new employees, as specified, to receive lower pension
benefits than current employees.
3)Requires new employees, as specified, to receive a retirement
benefit based on the highest averaged three years of
compensation, instead of the highest one year.
4)Requires all employees covered by the agreements to pay 10 or
SB 846
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11% of compensation in employee contributions to fund
retirement benefits.
5)Requires that compensation for employees covered by these
agreements will be continuously appropriated in the event of a
late budget.
6)Includes statutory changes that apply to these bargaining
units and also state bargaining units 8, 16, and 19, which
MOUs are to be ratified in AB 1592 (Buchanan, Huber and Nava),
and makes this bill operative only if AB 1592 is also passed.
EXISTING LAW :
1)Requires, under the State Employee-Employer Relations Act (the
Dills Act), 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.
2)Establishes five separate retirement classes for state
employees: State Miscellaneous and Industrial (which receive
substantially the same benefits), State Safety, State Peace
Officer/Firefighter, and State Patrol.
3)Specifies that if the provisions of certain statutes are in
conflict with a MOU, the terms of the MOU are prevailing.
4)Requires the Legislative Analyst's Office to analyze all state
MOUs and to provide analyses of the MOUs and their fiscal
impact to the Legislature within 10 days of receipt of the
MOUs from the Department of Personnel Administration.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, the bill's near term impact of state costs is
summarized in the following table.
Net Fiscal Impact of Bargaining Agreements*
(millions of dollars)
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| | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
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|-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------|
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|Bargaining | GF | SF | GF | SF | GF | SF | GF | SF |
|Unit | | | | | | | | |
|-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------|
|BU 5 | 0 | 0 | 0 | 8.5 | 0 | 9.3 | 0 | 41.6 |
|-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------|
|BU12 | -9.7 | -22.3 | 4.2 | 8.9 | 3.7 | 7.9 | -- | -- |
|-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------|
|BU 18 | -15.0 | -5.3 | 5.7 | 2.1 | -- | -- | -- |-- |
| | | | | | | | | |
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* - The saving in 2010-11 are mainly related to the 12 month
personal leave program (PLP) and increased employee
contributions for retirement in BUs 12 and 18. (The increased
retirement contribution for BU 5 members is offset by a
suspension in their existing contribution to prefund retiree
health care, so there are no state costs or savings for BU 5 in
2010-11.) Out year costs are related to the termination of the
PLP program, the additional pay step, and changes in the
compensation survey methodology for setting CHP pay rates.
Under existing law, CHP pay is based on a survey of local law
enforcement agencies. Starting in 2013, the contributions to
pre-fund retiree health care will no longer count as part of
their compensation for purposes of the survey comparison.
In the longer term, the state will realize significant savings,
eventually in the millions of dollars annually, from the
reduction in retirement and health benefits for new hires, as
well as from pre-funding of health care benefits for existing
and new employees.
COMMENTS : The terms and conditions of the MOUs are summarized
in the chart below:
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|Retirement |2010 Tentative |Current Requirements |
|Class and BU |Agreements | |
|---------------+------------------------+-----------------------|
|Miscellaneous |2% at age 60 for new |2% at age 55 |
|Employees |hires | |
|(BUs 5, 8, 12, | | |
|16, 18,19) | | |
| | | |
|Retirement | | |
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|Formula | | |
|---------------+------------------------+-----------------------|
|Member |10% of pay after first |5% of pay after first |
|Contribution |$513 |$513 |
|to PERS | | |
|(BUs 5, 8, 12, | | |
|16, 18,19) | | |
|---------------+------------------------+-----------------------|
|Employer |80%/80% for employees |No statutory formula |
|Health |and dependents |for these BUs (most |
|Contribution | |other BUs have |
|(BUs 12, 18) | |statutory |
| | |formulas-either 85/80 |
| | |or 80/80) |
|---------------+------------------------+-----------------------|
|Employee |.5% of base salary |No contribution |
|Contribution | |currently |
|to prefund | | |
|Retiree Health | | |
|(BU 12, 16) | | |
|---------------+------------------------+-----------------------|
|Vesting for |Hew hires vest for 50% |50% after 10 years, |
|Retiree Health |after 15 years, |increasing 5%/annually |
|(BU 12) |increasing 5%/annually |to 100% after 20 years |
| |to 100% after 25 years | |
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|Final |BUs 12, 16, 18, 19: No change; new hires at |
|Compensation |highest 3 years since 2006 |
|Calculation |BUs 5 and 8: New hires go to highest 3 years |
|for New Hires | |
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|Personal Leave |Duration=12 months: Reduces pay by approx. 4.8% |
|Program |in exchange for 1 day off per month. Time off |
|(BUs 12, 16, |has no cash value and can be used for vacation |
|18, 19) |or sick leave. |
| | |
|---------------+------------------------------------------------|
|Pay Increase |5% increase to top step of relevant classes, |
|(BUs 5, 8, 12, |effective 1/1/2012: Allows employees who are |
|16, 18, 19) |topped out (i.e., no longer receive annual |
| |merit salary increases) to receive a 5% |
| |increase. |
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|State Safety |2% at age 55 increasing |2.5% at age 55 |
|Employees |to 2.5% at age 60 | |
|(BUs 12, 16, | | |
|18, 19) | | |
| | | |
|Retirement | | |
|Formula for | | |
|New Hires | | |
|---------------+------------------------+-----------------------|
|Member |11% of pay after first |6% of pay after first |
|Contribution |$513 |$513 |
|to PERS | | |
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|Final |No change: New hires at highest 3 years since |
|Compensation |2006 |
|for New Hires | |
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|Employer |80%/80% for employees |No statutory formula |
|Health |and dependents |for these BUs (most |
|Contribution | |other BUs have |
|(BUs 12, 18) | |statutory |
| | |formulas-either 85/80 |
| | |or 80/80) |
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|Employee |.5% of base salary |No contribution |
|contribution | |currently |
|to prefund | | |
|Retiree Health | | |
|(BU 12, 16) | | |
|---------------+------------------------+-----------------------|
|Vesting for |Hew hires vest for 50% |50% after 10 years, |
|Retiree Health |after 15 years, |increasing 5%/annually |
|(BU 12) |increasing 5%/annually |to 100% after 20 years |
| |to 100% after 25 years | |
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|Personal Leave |Duration=12 months: Reduces pay by approx. 4.8% |
|Program |in exchange for 1 day off per month. Time off |
|(BUs 12, 16, |has no cash value and can be used for vacation |
|18, 19) |or sick leave. |
| | |
|---------------+------------------------------------------------|
|Pay Increase |5% increase to top step of relevant classes, |
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|(BUs 12, 16, |effective 1/1/2012: Allows employees who are |
|18, 19) |topped out (i.e., no longer receive annual |
| |merit salary increases) to receive a 5% |
| |increase.. |
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|Firefighters |3% at age 55 |3% at age 50 |
|(BU 8) | | |
| | | |
|Retirement | | |
|Formula for | | |
|New Hires | | |
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|Member |10% of pay after first |8% of pay after first |
|Contribution |$238 |$238 |
|to PERS | | |
|---------------+------------------------+-----------------------|
|Final |3 Highest Years |1 Highest Year |
|Compensation | | |
|Calculation | | |
|for New Hires | | |
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|Pay Increase |4% increase to top step of relevant employee |
| |classes, effective 1/1/2012: Allows employees |
| |who are topped out (i.e., no longer receive |
| |annual merit salary increases) to receive a 4% |
| |increase. |
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|Patrol (BU 5) |3% at age 55 |3% at age 50 |
| | | |
|Retirement | | |
|Formula for | | |
|New Hires | | |
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|Member |10% of pay after first |8% of pay after first |
|Contribution |$863 |$863 |
|to PERS | | |
|---------------+------------------------+-----------------------|
|Final |3 Highest Years |1 Highest Year |
|Compensation | | |
|Calculation | | |
|for New Hires | | |
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|Pay Increase |2% increase to top step of relevant employee |
| |classes, effective 1/1/2012: Allows employees |
| |who are topped out (i.e., no longer receive |
| |annual merit salary increases) to receive a 2% |
| |increase. |
|---------------+------------------------------------------------|
|Other |Redirection of current 2% member contribution |
|Provisions |to retiree health pre-funding. This |
| |contribution shall be paid instead as employee |
| |contributions to pension until July 2013, at |
| |which time the retiree health pre-funding |
| |employee contributions shall resume. |
| | |
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In addition, the contracts contain the following agreed upon
elements:
1. No Furlough Program for the duration of the contracts.
(This provision is not included in the MOUs for BU 12 or BU
16.)
2. Continuous appropriation of wages in the event of a late
budget.
3. Requirements to reopen negotiations if any other state
bargaining unit enters into a contract that does not
include pension reforms and provides a greater value than
that provided to these bargaining units. (This provision
is not included in the MOUs for BU 12 or BU 16.)
4. Agreements to delete two state holidays from the
contracts (which were already deleted in law as of February
2009): Lincoln's Birthday and Columbus Day.
5. Premium pay (i.e., time and a half) for the following
holidays: January 1st, last Monday in May, July 4th, first
Monday in September, Thanksgiving, and Christmas.
6. Agreements by bargaining units to not oppose legislation
requiring the California Public Employees' Retirement
System to use supportable assumptions and data that will be
evaluated by another party agreeable to the Department of
Personnel Administration and the bargaining units.
Contract Duration:
BU 5: 3 years - July 3, 2010 to July 3, 2013
BUs 12 and 18: 2 years - July 1, 2010 to July 1, 2012
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Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0005719