BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 846
Lou Correa, Chair Hearing date: August 18, 2010
SB 846 (Correa) as amended 8/9/10 FISCAL: YES
MEMORANDA OF UNDERSTANDING FOR STATE BARGAINING UNITS 5, 12,
AND 18
HISTORY :
Sponsor: California Association of Highway Patrol (CAHP)
International Union of Operating Engineers
(IUOE)
California Association of Psychiatric
Technicians (CAPT)
Department of Personnel Administration (DPA)
Related legislation: AB 1592 (Buchanan, 2010) provides
legislative ratification for memoranda of understandingwith
state bargaining units 8, 16, and 19.
ASSEMBLY VOTES :
Not relevant - new bill with August 9, 2010 Senate amendments
SUMMARY :
This bill provides legislative ratification for memoranda of
understanding between the administration and three state
bargaining units: Highway Patrol (BU 5); Craft and
Maintenance Workers (BU 12); and Psychiatric Technicians (BU
18). URGENCY BILL .
BACKGROUND AND ANALYSIS :
1) Existing law :
a) establishes the Ralph C. Dills Act, which requires the
State to collectively bargain with official representatives
of employee groups (i.e., bargaining units) regarding wages
and working conditions, and to define negotiated agreements
in memoranda of understanding (MOU).
Pamela Schneider
Date: 8/16/10 Page 1
b) requires that any MOU between the State and an official
representative must be ratified by the Legislature.
c) establishes the Public Employees Retirement Law, which
provides health and retirement benefits for state
employees.
d) establishes 5 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.
e) specifies that if the provisions of certain statutes
are in conflict with an MOU, the terms of the MOU shall be
prevailing in those cases.
f) 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 (DPA).
2) This bill :
a) provides legislative ratification for MOUs agreed to
between the State and the following state employee official
representatives:
BU 5: California Association of Highway Patrol (CHP
Officers and Cadets)
BU 12: International Union of Operating Engineers
(Craft and Maintenance Workers)
BU 18: California Association of Psychiatric
Technicians (Psychiatric Technicians)
b) requires new employees, as specified, to receive lower
pension benefits than current employees.
c) 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.
Pamela Schneider
Date: 8/16/10 Page 2
d) requires all employees covered by the agreements to pay
10 or 11 percent of compensation in employee contributions
to fund retirement benefits.
e) requires that compensation for employees covered by
these agreements shall be continuously appropriated in the
event of a late budget.
f) 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),
and makes this bill operative only if AB 1592 is also
passed.
g) ratifies other terms and conditions of the MOUs, which
are summarized in the chart below:
----------------------------------------------------------------
|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 | | |
|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 |
Pamela Schneider
Date: 8/16/10 Page 3
|Contribution | |currently |
|to prefund | | |
|Retiree Health | | |
|(BUs 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 | |
----------------------------------------------------------------
----------------------------------------------------------------
|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 | |
----------------------------------------------------------------
|Personal Leave |Duration=12 months: Reduces pay by approx. |
|Program |4.8% in exchange for 1 day off per month. Time |
|(BUs 12, 16, |off has no cash value and can be used for |
|18, 19) |vacation 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. |
----------------------------------------------------------------
----------------------------------------------------------------
|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 | | |
----------------------------------------------------------------
----------------------------------------------------------------
|Final |No change: New hires at highest 3 years since |
Pamela Schneider
Date: 8/16/10 Page 4
|Compensation |2006 |
|for New Hires | |
----------------------------------------------------------------
----------------------------------------------------------------
|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 | | |
|(BUs 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 | |
----------------------------------------------------------------
----------------------------------------------------------------
|Personal Leave |Duration=12 months: Reduces pay by approx. |
|Program |4.8% in exchange for 1 day off per month. Time |
|(BUs 12, 16, |off has no cash value and can be used for |
|18, 19) |vacation or sick leave. |
|---------------+------------------------------------------------|
|Pay Increase |5% increase to top step of relevant classes, |
|(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. |
----------------------------------------------------------------
----------------------------------------------------------------
|Firefighters |3% at age 55 |3% at age 50 |
|(BU 8) | | |
| | | |
|Retirement | | |
|Formula for | | |
|New Hires | | |
----------------------------------------------------------------
|Member |10% of pay after first |8% of pay after first |
Pamela Schneider
Date: 8/16/10 Page 5
|Contribution |$238 |$238 |
|to PERS | | |
|---------------+------------------------+-----------------------|
|Final |3 Highest Years |1 Highest Year |
|Compensation | | |
|Calculation | | |
|for New Hires | | |
----------------------------------------------------------------
----------------------------------------------------------------
|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. |
----------------------------------------------------------------
----------------------------------------------------------------
|Patrol (BU 5) |3% at age 55 |3% at age 50 |
| | | |
|Retirement | | |
|Formula for | | |
|New Hires | | |
----------------------------------------------------------------
|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 | | |
----------------------------------------------------------------
----------------------------------------------------------------
|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 |
Pamela Schneider
Date: 8/16/10 Page 6
| |employee contributions shall resume. |
----------------------------------------------------------------
In addition, all contracts contain the following agreed upon
elements with noted exceptions:
1. No Furlough Program for the duration of the contracts
(except BUs 12 and 16; however, Governor's Executive
Order reinstating furloughs beginning August 2010
exempts BUs 12 and 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 (except BUs
12 and 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 CalPERS to use supportable
assumptions and data that will be evaluated by another
party agreeable to the Department of Personnel
Administration and the bargaining units.
h) this is an urgency measure.
Contract Duration:
BU5: 3 years-July 3, 2010 to July 3, 2013
BUs 12 and 18: 2 years-July 1, 2010 to July 1, 2012
FISCAL:
DPA has submitted the following savings estimates (in
millions) for FY 10/11:
------------------------------------------------------
| Bargaining | Estimated Savings |
Pamela Schneider
Date: 8/16/10 Page 7
| Unit | |
------------------------------------------------------
|---------------+------------------+-------------------|
| |Gen Fund |Other Funds |
|---------------+------------------+-------------------|
| | | |
|---------------+------------------+-------------------|
|5 |0 |0 |
|---------------+------------------+-------------------|
| | | |
|---------------+------------------+-------------------|
|12 |$9.7 |$22.3 |
|---------------+------------------+-------------------|
| | | |
|---------------+------------------+-------------------|
|18 |$15.0 |$5.3 |
| | | |
------------------------------------------------------
1) COMMENTS :
The Legislative Analyst's office has analyzed these MOUs.
The analysis can be accessed at:
http://www.lao.ca.gov/reports/2010/MOU_Fiscal/MOU_Analysis_071
42010.pdf
2) SUPPORT :
California Association of highway Patrol (cosponsor)
International Union of Operating Engineers (cosponsor)
California Association of Psychiatric Technicians
(cosponsor)
Department of Personnel Administration (cosponsor)
3) OPPOSITION :
None to date
Pamela Schneider
Date: 8/16/10 Page 8
#####
Pamela Schneider
Date: 8/16/10 Page 9