BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1294
                                                                  Page  1

          Date of Hearing:   June 20, 2012

            ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL 
                                      SECURITY
                              Warren T. Furutani, Chair
                   SB 1294 (Berryhill) - As Amended:  June 13, 2012

           SENATE VOTE  :   37-0
           
          SUBJECT  :   Public employee health benefits: Mariposa County.

           SUMMARY  :   Allows Mariposa County to provide a higher employer 
          contribution for its retirees than for its active employees, and 
          require it be executed through a memorandum of understanding 
          (MOU) or by a resolution adopted by a majority of the County 
          Board of Supervisors.  Specifically,  this bill  :   

          1)Allows Mariposa County, subject to a MOU or, for employees not 
            represented by a bargaining unit, upon adoption of a 
            resolution by the Board of Supervisors, to:

             a)   Establish employer contributions for employees of no 
               less than the statutorily required amount.

             b)   Provide an employer contribution that is higher for 
               retirees than for active employees.  This provision will 
               only apply to employees who retired prior to the effective 
               date of the MOU or resolution, regardless of any 
               retroactivity required by the MOU or resolution.  

          2)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.

          3)Specifies that the obligations or benefits of either the 
            annuitants or the county that exist at the time of the bill's 
            enactment will not be affected.

           EXISTING LAW  :

          1)Establishes the Public Employees' Medical and Hospital Care 
            Act (PEMHCA), administered by CalPERS, which creates a 
            statutory framework for state employee and retiree health care 
            benefits and allows local public agencies to voluntarily 








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            contract with CalPERS for health care coverage for their 
            employees and retirees.

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

          3)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.

          4)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% per year until the 
            retirees receive the same premium amounts as active employees.

           FISCAL EFFECT  :   According to the Senate Appropriations 
          Committee, pursuant to Senare Rule 28.8, negligible state costs.

           COMMENTS  :   Because PEMCHA requires contracting agencies to 
          provide retirees the same employer health care premium 
          contributions as current employees, Mariposa County is 
          sponsoring SB 1294 to ensure its current retirees will not 
          experience a reduction in benefits as a result of the change it 
          has negotiated in employer contributions for current employees 
          and future retirees.

          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.

          "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 








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          existing statute."

          According to the sponsor, Mariposa County Board of Supervisors, 
          "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."

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          Mariposa County Board of Supervisor (Sponsor)
           
            Opposition 
           
          None on file

           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916) 
          319-3957