BILL ANALYSIS                                                                                                                                                                                                    



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 151|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
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          |327-4478                          |                         |
           ------------------------------------------------------------ 
           
                                         
                                 THIRD READING


          Bill No:  SB 151
          Author:   Correa (D)
          Amended:  4/14/11
          Vote:     27 - Urgency

           
           SEN. PUBLIC EMPLOYMENT & RETIREMENT COMM. :  3-2, 4/11/11
          AYES:  Negrete McLeod, Padilla, Vargas
          NOES:  Walters, Gaines

           SENATE APPROPRIATIONS COMMITTEE  :  6-3, 4/25/11
          AYES:  Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
          NOES:  Walters, Emmerson, Runner


           SUBJECT  :    State employees: memoranda of understanding

           SOURCE  :     California Attorneys, Administrative Law 
          Judges, and                                            
                        Hearing Officers in State Employment
                      California Correctional Peace Officers 
          Association
                      California Statewide Law Enforcement 
          Association
                      Professional Engineers in California Government
                      California Association of Professional 
          Scientists
                      International Union of Operating Engineers
                      Union of American Physicians and Dentists
                      California Association of Psychiatric 
          Technicians
                      American Federation of State, County and 
          Municipal 
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                        Employees, AFL-CIO
                      Department of Personnel Administration


           DIGEST  :    This bill (1) provides legislative ratification 
          for the memoranda of understanding (MOU) between the State 
          and Bargaining Units (BUs) 2, 6, 7, 9, 10, and 13, (2) 
          approves addenda to MOUs entered into by the State and BUs 
          12, 16, 18 and 19 which provides members with two 
          Professional Development Days, and (3) approves addenda to 
          BUs 1, 3, 4, 11, 14, 15, 17, 20 and 21 which will exempt 
          employees in these bargaining units who work at the State 
          Compensation Insurance Fund from the Personal Leave 
          Program.
           
           ANALYSIS  :    

           Existing Law

           1.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 MOUs.

          2.Establishes the Department of Personnel Administration 
            (DPA) as the official representative of the Governor in 
            all matters related to collective bargaining.

          3.Requires that any MOU between the State and an official 
            representative must be ratified by the Legislature.

          4.Requires that an addendum to a ratified MOU must be 
            submitted to the Joint Legislative Budget Committee 
            (JLBC) before analysis, and, if so required by the JLBC, 
            must also be approved by the Legislature.

          5.Establishes the Public Employees' Retirement Law, which 
            provides health and retirement benefits for state 
            employees.

          6.Specifies that if the provisions of certain statutes are 
            in conflict with a MOU, the terms of the MOU shall be 
            prevailing in those cases..

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          7.Specifies that if a state MOU expires, the provisions of 
            the MOU continue in effect until a new MOU is ratified, 
            as long as the parties continue to bargain in good 
            faith..

          8.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 DPA.

          9.Creates the State Peace Officers' and Firefighters' 
            Defined Contribution Plan (PO/FF II), a defined 
            contribution plan exclusively for correctional peace 
            officers.  Since 1998, the State has contributed two 
            percent of correctional officer pay to this plan for all 
            other officers in the plan.

           This bill:

          1.Provides legislative ratification for the MOUs agreed to 
            between the State and BUs 2 (California Attorneys, 
            Administrative Law Judges, and Hearing Officers in State 
            Employment), 6 (California Correctional Peace Officers 
            Association), 7 (California State Law Enforcement 
            Association), 9 (Professional Engineers in California 
            Government), 10 (California Association of Professional 
            Scientists), and 13 (International Union of Operating 
            Engineers).

          2.Increases the normal employee contribution rate to fund 
            retirement benefits, effective on the first day of the 
            pay period following the legislative ratification, as 
            follows:


              -------------------------------------------------------- 
             |                                |  Current   |   New    |
             |                                |Contribution|Contributi|
             |   Retirement Classification    |            | on Rate  |
             |                                |    Rate    |          |
             |--------------------------------+------------+----------|
             |BU 2:  Miscellaneous &          |     6%     |    9%    |
             |Industrial w/Social Security    |            |          |

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             |--------------------------------+------------+----------|
             |BU 2:  Miscellaneous &          |     7%     |   10%    |
             |Industrial w/Social Security    |            |          |
             |--------------------------------+------------+----------|
             |BU 2:  Safety                   |     7%     |   10%    |
             |--------------------------------+------------+----------|
             |BUs 6, 7, 9, 10:  Miscellaneous |     5%     |          |
             |& Industrial w/Social Security  |            |8%        |
             |--------------------------------+------------+----------|
             |BUs 6, 7, 9, 10:  Miscellaneous |     6%     |    9%    |
             |& Industrial w/o Social         |            |          |
             |Security                        |            |          |
             |--------------------------------+------------+----------|
             |BUs 7, 9, 10:  Safety           |     6%     |    9%    |
             |--------------------------------+------------+----------|
             |BU 6:  Peace Officers           |     8%     |   11%    |
             |--------------------------------+------------+----------|
             |BU 7:  Peace Officers           |     8%     |   10%    |
             |--------------------------------+------------+----------|
             |BU 13:  Miscellaneous &         |     5%     |   10%    |
             |Industrial w/Social Security    |            |          |
             |--------------------------------+------------+----------|
             |BU 13 Miscellaneous &           |     6%     |   11%    |
             |Industrial w/o Social Security  |            |          |
             |--------------------------------+------------+----------|
             |BU 13:  Safety                  |     6%     |11%       |
             |                                |            |          |
              -------------------------------------------------------- 

          3.Requires that compensation for employees covered by these 
            agreements shall be continuously appropriated in the 
            event of a late budget for fiscal years 2012/2013 and 
            2013/2014.

          4.Makes three technical clarifications to previous 
            legislation enacted in 2010 as follows:

             A.    AB 1625 (Perez), Chapter 728, Statutes of 2010:  
                Reduces by one percent the contribution rate for 
                excluded and exempt employees connected to BU 2.  The 
                Senate Public Employment and Retirement Committee was 
                informed by DPA that the current rates in statute are 
                incorrect with regard to these employees, who have 
                always paid the lower amount, as corrected by this 

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                bill.

             B.    SB 846 (Correa), Chapter 162, Statutes of 2010:  
                This bill ratified the 2010 MOU agreement between the 
                State and BU 5 (California Association of Highway 
                Patrol), which allows the member contribution, for a 
                limited time as specified, to be redirected to the 
                members' retirement contribution.  The amendment 
                included in this bill will allow DPA to apply that 
                provision to excluded and exempt patrol members of 
                the California Public Employees' Retirement System as 
                well.

             C.    Changes a section number for a continuous 
                appropriation section added in 2010 so that it is 
                consistent with other such sections.

          5.Ratifies other terms and conditions of the MOUs, 
            including changes to the previous contracts, which are 
            summarized as follows:


              --------------------------------------------------------- 
             |                         |    | Amount/Time Frame/Other  |
             |        Provision        | BU |        Information       |
             |                         |    |                          |
             |-------------------------+----+--------------------------|
             |Increase to Maximum      |All |BU 2:  Misc/Sfty:  4%     |
             |Salary Step (linked to   |    |BU 6:  Misc/Ind:  3%      |
             |amount of increased      |    |           PO:  4%        |
             |member contributions and |    |BU 7:  Misc/Ind/Sfty:  3% |
             |other concessions):      |    |        PO:  2%           |
             |Effective 7/1/13         |    |BU 9, 10:  3%             |
             |                         |    |BU 13:  Misc/Sfty:  5%    |
             |-------------------------+----+--------------------------|
             |Personal Leave Program:  |All |Effective for 12 months:  |
             |Approximately 5% pay     |    |Days have to cash value.  |
             |reduction in exchange    |    |BUs 2, 10, 13:  Employees |
             |for one day of leave per |    |at State Compensation     |
             |month                    |    |Insurance fund exempt     |
             |                         |    |from PLP                  |
             |                         |    |BU 10:  Employees may     |
             |                         |    |choose to have            |
             |                         |    |proportional pay          |

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             |                         |    |reduction in exchange for |
             |                         |    |2 to 3 PLP days per month |
             |                         |    |over successive months    |
             |                         |    |until 12 PLP days are     |
             |                         |    |taken                     |
             |-------------------------+----+--------------------------|
             |Personal/Professional    |All |BU 2:  2 days             |
             |Days:  To be used for    |    |BUs 7, 9, 10, 13:  2 days |
             |personal or professional |    |BU 6:  4 days in 2012 and |
             |development.  No cash    |    |2 days in 2013            |
             |value and must be used   |    |                          |
             |in fiscal year.          |    |                          |
             |-------------------------+----+--------------------------|
             |Other Leave              |BU  |1.73 hours/month through  |
             |                         |2   |6/2013 (may be saved and  |
             |                         |    |cashed out)               |
             |-------------------------+----+--------------------------|
             |Health Benefits:         |All |BUs 2, 7, 10, 13:  80/80  |
             |80/80 Formula            |    |Formula 1/1/12 and 1/1/13 |
             |$482 /'EE only           |    |                          |
             |$946/'EE and 1 dependent |    |BU 9:  85/80 Formula      |
             |$1,241/'EE and 2 or more |    |1/1/12 and 1/1/13         |
             |dependents               |    |                          |
             |                         |    |BU 6:  Partial increase   |
             |85/80 Formula (with      |    |upon ratification with    |
             |COBEN)                   |    |full 80/80 Formula paid   |
             |$509+/'EE only           |    |1/1/12 and 1/1/13         |
             |$981/'EE and 1 dependent |    |                          |
             |$1,285/'EE and 2 or more |    |(NOTE:  BUs 9 and 10 have |
             |dependents               |    |the 80/80 formula         |
             |                         |    |provided n statute, which |
             |                         |    |can be modified via MOU.) |
             |-------------------------+----+--------------------------|
             |Length of Contract       |All |BUs 2, 7, 9, 10, 13:      |
             |                         |    |4/1/2011 to 7/1/2013      |
             |                         |    |BU 6:  4/1/2011           |
             |                         |    |to7/2/2013                |
             |-------------------------+----+--------------------------|
             |Furlough Protection      |All |No furloughs during the   |
             |                         |    |12 months that the        |
             |                         |    |Personal Leave Program is |
             |                         |    |in effect.                |
             |-------------------------+----+--------------------------|
             |Number of Employees      |    |BU 2:  3,300              |

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             |Covered                  |    |BU 6:  28,124             |
             |(in full-time            |    |BU 7:  6,185              |
             |equivalent)              |    |BU 9:  10,112             |
             |                         |    |BU 10:  2,2440            |
             |                         |    |BU 13:  912               |
             |-------------------------+----+--------------------------|
             |Other Provisions         |All |Acknowledge legislation   |
             |                         |    |reducing retirement       |
             |                         |    |formulas for employees    |
             |                         |    |hired after 1/15/2011,    |
             |                         |    |3-year final comp if      |
             |                         |    |applicable, and           |
             |                         |    |elimination of 2 state    |
             |                         |    |holidays.  (SBX# 8,       |
             |                         |    |Ducheny, Chapter 4,       |
             |                         |    |Statutes of 2009-10,      |
             |                         |    |Third Extraordinary       |
             |                         |    |Session; SBX6 22,         |
             |                         |    |Hollingsworth,  Chapter   |
             |                         |    |3, Statutes of 2009-10,   |
             |                         |    |Sixth Extraordinary       |
             |                         |    |Session)                  |
             |-------------------------+----+--------------------------|
             |Other Provisions         |BU  |Terminates employer       |
             |                         |6   |contribution of 2% of pay |
             |                         |    |to PO/FF II.              |
             |                         |    |Employees will fund union |
             |                         |    |release time bank by      |
             |                         |    |contributing 1 hour per   |
             |                         |    |year.                     |
             |                         |    |Acknowledges legislation  |
             |                         |    |prohibiting leave from    |
             |                         |    |being counted as time     |
             |                         |    |worked for the purpose of |
             |                         |    |calculating overtime.     |
             |                         |    |Employees who work on     |
             |                         |    |holidays earn 2 times     |
             |                         |    |normal hourly rate.       |
             |                         |    |$200 month differential   |
             |                         |    |for working at Pelican    |
             |                         |    |Bay State Prison, High    |
             |                         |    |Desert State Prison, or   |
             |                         |    |California Correctional   |
             |                         |    |Center.                   |

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             |-------------------------+----+--------------------------|
             |Other Provisions         |BU  |Employees will fund union |
             |                         |7   |release time bank by      |
             |                         |    |contributing 1.5 hours    |
             |                         |    |per year.                 |
             |                         |    |Time and a half plus      |
             |                         |    |holiday credit for        |
             |                         |    |working on specified      |
             |                         |    |holidays.                 |
             |                         |    |Employees in state-owned  |
             |                         |    |housing will pay fair     |
             |                         |    |market value.             |
             |-------------------------+----+--------------------------|
             |Other Provisions         |BUs |Time and a half for       |
             |                         |9,  |working on specified      |
             |                         |10  |holidays.                 |
             |                         |    |Salary Survey for         |
             |                         |    |informational purposes.   |
             |                         |    |Joint Labor/Management    |
             |                         |    |Committee to assist with  |
             |                         |    |HR Modernization.         |
             |                         |    |                          |
              --------------------------------------------------------- 

          6.Provides legislative ratification for addenda to MOUs 
            ratified in 2010 between the State and BUs 12 
            (International Union of Operating Engineers), 16 (Union 
            of American Physicians and Dentists), 18 (California 
            Association of Psychiatric Technicians), 19 (American 
            Federation of State, County and Municipal Employees).

            Specifically, these addenda provide two 
            personal/professional days for employees in these units, 
            consistent with the two days provided to Service 
            Employees International Union in its 2010 contract and 
            the contracts covered by this legislation.

          7.Provides legislative ratification for addenda to MOUs 
            ratified in 2010 between the State and BUs 1, 3, 4, 11, 
            14, 16, 17, 20 and 21 (Service Employees International 
            Union) which will exempt employees in these bargaining 
            units who work at the State Compensation Insurance Fund 
            from the Personal Leave Program.


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           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes   
          Local:  No

                          Fiscal Impact (in thousands)

           Major Provisions            2010-11             2011-12         
              2012-13            Fund
           
           Summary of MOU       ($67,400)       ($215,900)          
          $18,495       Gen/Spec
          Costs

          Salary increases         --Approximately $151.2 million 
          annually--    Gen/Spec
          7-1-13

          (NOTE:  For detailed fiscal information regarding each 
          bargaining unit, please see the Senate Appropriations 
          Committee analysis.)

          In addition to the fiscal impact noted above, there will be 
          millions of dollars in savings to the state in future years 
          as new state employees are hired on or after January 15, 
          2011, and will be subject to a significantly lesser 
          retirement benefit formula.  Those savings, however, have 
          not been actuarially identified at this time, and will not 
          be realized to the state until those affected new employees 
          retire from state service.  The increase in the employee's 
          retirement contribution will result in an immediate 
          corresponding reduction in the state rate.

           SUPPORT  :   (Verified  4/26/11)

          California Attorneys, Administrative Law Judges, and 
            Hearing Officers in State Employment (co-source)
          California Correctional Peace Officers Association 
          (co-source)
          California Statewide Law Enforcement Association 
          (co-source)
          Professional Engineers in California Government (co-source)
          California Association of Professional Scientists
          International Union of Operating Engineers
          Union of American Physicians and Dentists
          California Association of Psychiatric Technicians

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          American Federation of State, County and Municipal 
            Employees, AFL-CIO (co-source)
          Department of Personnel Administration (co-source)


           ARGUMENTS IN SUPPORT  :    Citing concessions in the MOU and 
          the fact that many California Attorneys, Administrative Law 
          Judges, and Hearing Officers in State Employment (CASE) 
          members will not have had a salary increase in over seven 
          years, while seeing salary cuts during that time, CASE 
          states, "While these concessions were difficult for our 
          members, CASE recognizes the fiscal realities facing the 
          State of California, and understands the need to contribute 
          to solving the current deficit."

          In support, the California Correctional Peace Officers 
          Association states, "A collective bargaining agreement is 
          the foundation of a harmonious relationship between the 
          state employer and its workforce.  Mindful of the fiscal 
          challenges facing the state, we are pleased to have reached 
          an agreement with the current Administration that helps 
          resolve the current budget shortfall while re-establishing 
          a solid framework for the relationship between our members 
          and the state."

          According to the California Statewide Law Enforcement 
          Association, "In recent years, state employees have 
          experienced significant reductions in compensation in order 
          to help the state deal with budget challenges.  This 
          agreement continues to help the state cope with the current 
          budget problem while providing needed stability to our 
                                                                             members."

          Also in support, the Professional Engineers in California 
          Government states, "This bill generates hundreds of 
          millions of dollars in budget savings for the State at the 
          same time it provides state engineers and other state 
          employees' definitive terms of employment."

          The California Association of Psychiatric Technicians 
          states, "SB 151 provides significant savings to the state 
          during difficult times while ensuring stable working 
          conditions for state scientists and other state employees."


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          CPM:cm  4/26/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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