BILL ANALYSIS                                                                                                                                                                                                    Ó






          SENATE PUBLIC EMPLOYMENT & RETIREMENT   BILL NO:  SB 1294
          Gloria Negrete McLeod, Chair                              
          Hearing date:  April 18, 2012
          SB 1294 (Berryhill)    as amended  4/09/12   FISCAL:  YES

           PUBLIC EMPLOYEES MEDICAL AND HOSPITAL CARE ACT:  MARIPOSA 
          COUNTY 
           
           HISTORY  :

              Sponsor:  Mariposa County Board of Supervisors

              Prior legislation:  AB 2544, Pavley
                         Chapter 862, Statutes of 2006
                        AB 468, Hayashi
                         Chapter 320, Statutes of 2009
                        AB 2510, Fletcher
                         Chapter 600, Statutes of 2010

           
          SUMMARY  :

          SB 1294 ensures that current Mariposa county retirees will 
          not receive a reduction in their retiree health care benefits 
          as a result of bargaining agreements to change the existing 
          health plan design with current active employees.

           BACKGROUND AND ANALYSIS  :
          
          1)  Existing law  :

            a)  requires that public employers and official employee 
              representatives collectively bargain over issues relative 
              to wages and working conditions.

            b)  establishes the Public Employees Medical and Hospital 
              Care Act (PEMHCA), administered by the Public Employees' 
              Retirement System (CalPERS), which creates a statutory 
              framework for state employee and retiree health care 
              benefits and allows local public agencies to voluntarily 
              contract with CalPERS for health care coverage for their 
              employees and retirees.

          Pamela Schneider
          Date: 4/16/12                                          Page 1 










            c)  requires a local public employer who contracts for 
              PEMHCA coverage for active employees to also provide 
              PEMHCA coverage for retirees.

            d)  requires, as a specific contracting condition, that the 
              local public contracting employer pay the same level of 
              premiums for active employees as for retirees, and that 
              the employer contribution be no less than $97 per month 
              (as set in 2009), adjusted annually for cost of living 
              increases since that time.

            e)  makes an exception to the equal premium rule by 
              allowing an employer to establish a lower premium for 
              retirees for a time, but in those cases, requires the 
              employer to incrementally increase premiums for retirees 
              by 5 percent per year until the retirees receive the same 
              premium amounts as active employees.

          2)   This bill  :

             a)   allows Mariposa County, subject to a memorandum of 
               understanding (MOU) or upon resolution by the board of 
               Supervisors, to:

               i)  Establish employer contributions for employees of no 
               less than the statutorily required amount.
           
                ii)  Provide an employer contribution that is  higher for 
               retirees  than for active employees.

             b)   requires that these changes will not apply to any 
               employee who retired  before  the effective date of the 
               MOU or resolution, and further specifies, regardless of 
               any retroactivity required by the MOU or resolution, 
               that any employee who retires  before  the MOU is signed 
               or the resolution is adopted shall not be affected by 
               these changes.

             c)   requires Mariposa County to provide CalPERS with 
               notification of the MOU agreement or resolution and to 
               provide any necessary information in order to implement 
               the requirements of these changes.

          Pamela Schneider
          Date: 4/16/12                                          Page 2 










             d)   makes findings and declarations that a special law is 
               necessary to enact these changes and that a general law 
               cannot be made applicable within specific constitutional 
               meanings due to the unique circumstances of Mariposa 
               County with respect to public employer and employee 
               contributions to health care coverage.
           

          COMMENTS  :

             1)  Concerns of the PE&R Committee  :  This area of the 
              Government Code defines "board" to mean the board of 
              CalPERS.  The bill references a "resolution adopted by a 
              majority of the board" (paragraph (a) (1)) that is 
              intended to apply to the Mariposa County Board of 
              Supervisors.  The bill should be amended to specify the 
              county board of supervisors since it incorrectly 
              references the CalPERS board as currently written.

               Additionally, the bill is intended to grandfather 
               retiree health benefits for those who retire  prior  to 
               enacting the agreement outlined in the bill.  In order 
               to clarify the bill's intent, the author has agreed to 
               amend the bill with the attached committee amendments 
               prior to having the bill referred out of the committee.







             2)  Argument in Support  :

          According to the author:

              "The county has negotiated a change to their benefit 
              package, which would reduce the health insurance benefit 
              for some current employees.  This change also eliminates 
              an automatic escalator in benefits which was incorporated 
              in some, but not all, of the County's labor agreements.


          Pamela Schneider
          Date: 4/16/12                                          Page 3 










              At this time the employees' overall compensation would 
              not change; however, the health insurance benefit is 
              being adjusted.  For many employees it will increase, but 
              others will see a decrease.  Because the Public 
              Employees' Medical and Hospital Care Act requires the 
              county to provide retirees exactly the same health 
              insurance benefit as current employees, when this program 
              is enacted some of the County retirees would see a 
              reduction in their health benefits, thus running contrary 
              to existing statute.


              SB 1294 would allow Mariposa County to provide current 
              CalPERS retirees with a different level of health 
              insurance benefit than will be provided to current 
              employees.  This would only apply to those who have 
              already retired.  This change will ensure that actions 
              taken by the County will not negatively impact retirees' 
              health benefits."

          The sponsor states the following:

              "In order to address disparate treatment of County 
              employees' health benefits, the Mariposa County Board of 
              Supervisors has recently negotiated new terms with each 
              of the County's bargaining units.  The agreed-upon terms 
              now provide equal medical insurance benefits for all 
              county employees."

              "An unintended consequence has been a reduction in 
              medical insurance benefits for some Mariposa County 
              retirees.  Since this was not their intent, the Board of 
              Supervisors believes it is important to take whatever 
              actions are possible to allow these retirees to keep 
              their current level of medical insurance benefits.  
              Senate Bill 1294 provides the legal means for the County 
              to "grandfather" current retirees medical insurance 
              benefits at their present level."

          2)   SUPPORT  :

            Mariposa County Board of Supervisors, Sponsor

          Pamela Schneider
          Date: 4/16/12                                          Page 4 










          3)   OPPOSITION  :

            None to date




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          Pamela Schneider
          Date: 4/16/12                                          Page 5