BILL ANALYSIS Ó AB 478 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 478 (Gomez and Rendon) As Amended September 3, 2013 2/3 vote. Urgency ---------------------------------------------------------------------- |ASSEMBLY: |53-21|(May 30, 2013) |SENATE: |32-5 |(September 6, 2013) | | | | | | | | ---------------------------------------------------------------------- ------------------------------------------------------------------------ |COMMITTEE VOTE: |4-2 |(September 10, |RECOMMENDATION: |concur | |(P.E., R. & | |2013) | | | |S.S.) | | | | | ------------------------------------------------------------------------ Original Committee Reference: P.E., R. & S.S. SUMMARY : Provides legislative ratification for the memoranda of understanding (MOU) agreed to by the state and the following state bargaining units (BUs): 1)BU 6 (Corrections), represented exclusively by the California Correctional Peace Officers Association (CCPOA); 2)BU 7 (Protective Services and Public Safety), represented exclusively by the California Statewide Law Enforcement Association (CSLEA); 3)BU 9 (Professional Engineers), represented exclusively by the Professional Engineers in California Government (PECG); 4)BU 12 (Craft and Maintenance), represented exclusively by the International Union of Operating Engineers (IUOE); 5)BU 16 (Physicians, Dentists and Podiatrists), represented exclusively by the Union of American Physicians and Dentists (UAPD); 6)BU 18 (Psychiatric Technician), represented exclusively by the California Association of Psychiatric Technicians (CAPT); and, AB 478 Page 2 7)BU 19 (Health and Social Services/Professional), represented exclusively by the American Federation of State, County and Municipal Employees (AFSCME). The Senate amendments delete the Assembly version of the bill, and instead provide legislative ratification for MOUs agreed to between the state and state BUs 6, 7, 9, 12, 16, 18, and 19. 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 California Department of Human Resources (CalHR) 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) for analysis, and, if so required by the JLBC, must also be approved by the Legislature. 5)Establishes the California Public Employees' Retirement System (CalPERS), which provides health and retirement benefits for state employees. 6)Requires the Legislative Analyst's Office (LAO) 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 CalHR. 7)Establishes comprehensive public employee pension reform through enactment of the Public Employees' Pension Reform Act of 2013 (PEPRA) that apply to all public employers and public pension plans on and after January 1, 2013, excluding the University of California and charter cities and counties that do not participate in a retirement system governed by state statute. FISCAL EFFECT : According to the Senate Appropriations Committee, this bill appropriates $18,538,000 for expenditure in the 2013-14 AB 478 Page 3 fiscal year as follows: $16,509,000 from the General Fund, $1,359,000 from unallocated special funds, and $670,000 from other unallocated nongovernmental cost funds, for the purpose of state employee compensation for the current fiscal year for BUs 6, 7, 12, 18, and 19. The costs of several provisions such as depending health vesting, dental benefits and travel reimbursements will be absorbed within each department's existing resources and will, therefore, not require an appropriation for fiscal year (FY) 2013-14. Additionally, this bill provides for a continuous appropriation for the payment of employee compensation and benefits for members of BUs 7, 16, 18, and 19 for the 2013-14, 2014-15, and 2015-16 FYs; and for Units 6, 9 and 12 for FYs 2013-14 and 2014-15. COMMENTS : Beginning in 2008, state employees saw significant erosion in their earnings. Most employees saw salary reductions of 15% pursuant to Governor Schwarzenegger's furlough program. According to the LAO, the average state worker saw his or her salary reduced by approximately $21,000 over the course of the furlough period. In 2011, with the furlough program ended, most state contracts required a 5% pay reduction in exchange for one personal leave day per month and increases of 3% to 5% in member contributions to CalPERS-an overall reduction of 8% to 10%. With the end of the personal leave program and a salary adjustment on July 1st equivalent to the increase in member contributions, state employees were finally be made whole after approximately five years of reduced compensation. Prior to the reductions detailed above, the last general salary increase for state employees (3.4%) occurred in 2007. The following information summarizing the general provisions of the MOUs was provided by CalHR: Number of Employees : The BU 6 agreement affects approximately 28,357 full-time equivalents. The BU 7 agreement affects approximately 6,780 full-time equivalents. AB 478 Page 4 The BU 9 agreement affects approximately 10,824 full-time equivalents. The BU 12 agreement affects approximately 10,819 full-time equivalents. The BU 16 agreement affects approximately 1,517 full-time equivalents. The BU 18 agreement affects approximately 5,413 full-time equivalents. The BU 19 agreement affects approximately 4,859 full-time equivalents. Retirement Benefit Formula Calculation : BUs 6 and 7 employees who first become CalPERS members on or after January 1, 2013, who are subject to the Peace Officer/Firefighter (PO/FF) retirement category, under PEPRA, will be subject to the 2.5% at age 57 formula. BUs 7, 9, 12, 16, 18, and 19 employees who first become CalPERS members on or after January 1, 2013, who are subject to the State Safety retirement category, under PEPRA, will be subject to the 2% at age 57 formula. BUs 6, 7, 9, 12, 16, 18, and 19 employees, who first become CalPERS members on or after January 1, 2013, who are subject to the Miscellaneous/Industrial (First Tier) retirement category under PEPRA, will be subject to the 2% at age 62 formula. BUs 6, 7, 9, 12, 16, 18, and 19 employees who first become CalPERS members on or after January 1, 2013, who are subject to the Second Tier retirement category, under PEPRA will be subject to the 1.25% at age 67 formula. Pensionable compensation caps will apply to new CalPERS members subject to PEPRA as defined under PEPRA. Employee Pension Contribution - Peace Officer/Firefighter : Effective July 1, 2013, BU 6 PO/FF members will contribute an additional 1% towards AB 478 Page 5 retirement. BU 6 PO/FF members will contribute 12% effective July 1, 2013. Effective July 1, 2014, BU 6 PO/FF members will contribute an additional 1% towards retirement. BU 6 PO/FF members will contribute 13% effective July 1, 2014. Effective July 1, 2013, BU 7 PO/FF members will contribute an additional 1.5% towards retirement. BU 7 PO/FF members shall contribute 11.5% effective July 1, 2013. Effective July 1, 2014, BU 7 PO/FF members will contribute an additional 1.5% towards retirement. BU 7 PO/FF members will contribute 13% effective July 1, 2014. Employee Pension Contribution - State Safety : Effective July 1, 2013, BU 7 State Safety members will contribute an additional 1% towards retirement. BU 7 State Safety members will contribute 10% effective July 1, 2013. Effective July 1, 2014, BU 7 State Safety members will contribute an additional 1% towards retirement. BU 7 State Safety members will contribute 11% effective July 1, 2014. Effective July 1, 2013, all BU 9 members in State Safety Retirement will have their contribution increased from 9% to 10% of monthly compensation over $317. Effective July 1, 2014, all BU 9 members in State Safety Retirement will have their contribution increased from 10% to 11% of monthly compensation over $317. Employee Pension Contribution - Miscellaneous/Industrial : BU 6 First Tier members, under the Miscellaneous retirement category subject to Social Security will continue to contribute 8% towards retirement. BU 6 Miscellaneous members not subject to Social Security will continue to contribute 9%. Effective July 1, 2013, BU 6 First Tier members, under the Industrial retirement category, will contribute an additional 1% towards retirement. BU 6 Industrial members subject to Social Security will contribute 9% effective July 1, 2013. Industrial members not subject to Social Security will contribute 10% effective July 1, 2013. AB 478 Page 6 BU 7 First Tier members under Miscellaneous/Industrial shall continue to pay 8% towards retirement. All BU 9 members if First Tier Miscellaneous Retirement will contribute 8% of monthly compensation over $513. Effective July 1, 2013, all BU 9 members in First Tier Industrial Retirement will have their contribution increased from 8% to 9% of monthly compensation over $513. Effective July 1, 2013, all BU 9 members in First Tier Industrial Retirement who do not participate in Social Security shall have their contribution increased from 9% to 10% of monthly compensation over $317. Employee Pension Contribution - Second Tier : Effective July 1, 2013, all BUs 6, 7, 9, 12, 16, 18, and 19 employees subject to the Second Tier retirement plan will contribute 1.5% of monthly pensionable compensation and the contribution will increase by 1.5% points annually. The final annual increase in the contribution rate shall be adjusted as appropriate to reach 50% of normal cost. Compensation - BU 6 : Effective January 1, 2015, all BU 6 represented classifications will receive a 4% General Salary Increase (GSI). 1959 Survivor's Benefit language changed to be consistent with CalPERS law (employee pays 50% of the premium). Compensation - BU 7 : All BU 7 represented classifications will receive a 3% GSI effective July 1, 2015. Hospital Police Officers and Peace Officers working in the following classifications will receive a 4.67% Special Salary Adjustment effective July 1, 2015 - Hospital Police Officer and Peace Officer I, Developmental Center. AB 478 Page 7 Compensation - BU 9 : Effective July 1, 2015, all BU 9 represented classifications will receive a 3.3% GSI. Effective July 1, 2015, BU 9 employees who regularly work shifts will receive a night shift differential increase from 40 cents per hour to 80 cents per hour (for employees whose shift is 6 p.m. to midnight) from 50 cents per hour to one dollar per hour (for employees whose shift is between 12 midnight and 6 a.m.) Effective July 1, 2015, BU 9 employees working at the Department of Water Resources are eligible to participate in the Operational Availability Incentive Program, which provides up to 80 hours of compensatory time off (CTO) if operational goals are met within the calendar year. Effective July 1, 2015, the state and PECG agree to seek State Personnel Board (SPB) approval to implement deep classes within the classifications of Junior Civil Engineer, Assistant Civil Engineer, and Associate Civil Engineer into the Engineer, Civil classification. Effective July 1, 2015, the state and PECG agree to seek SPB approval to implement deep classes within these classifications of Sanitary Engineer range (A and B) and Associate Sanitary Engineer into the Sanitary Engineer classification. Compensation - BU 12 : Effective July 1, 2014, BU 12 employees will receive a one-time bonus of $1,200 (pro-rated for seasonal employees and employees with a time-base of less than full-time) and a 3% GSI effective July 1, 2015. The 2014 one-time bonus and GSI increase is contingent on the projected state revenues in the 2014-15 Budget. If the funding is determined to be insufficient to fund the one-time bonus and GSI then all employees will receive a 3.25% GSI effective July 1, 2015. The following increases are also contingent upon the projected state revenues in the 2014-15 Budget: Dependent Vesting of 75% (initial enrollment) and 100% (after AB 478 Page 8 12 months) Footwear Allowance increase of $32 Uniform Reimbursement- California Department of Forestry and Fire Protection increase of $20 Uniform Reimbursement- Department of Parks and Recreation increase of $20 If these sections are not implemented on July 1, 2014, based on the conditions described above, they will be effective July 1, 2015. Compensation - BU 16 : Effective July 1, 2014, contingent on the projected state revenues of the 2014-15 Budget, all BU 16 represented classifications will receive a 2 % GSI. If the GSI on July 1, 2014 is provided, effective July 1, 2015, all BU 16 represented classifications, will receive a 2% GSI, with the following exceptions as listed below: The Department of State Hospitals', Developmental Services' and Veterans Affairs' Physicians and Surgeons will receive a 6% GSI effective July 1, 2015. Medical Consultants and Public Health Medical Officers in specified classifications will receive a 3% GSI effective July 1, 2015. This only applies to the rank and file classifications covered by this MOU that have a U designation, and are represented. If the projected state revenues are not achieved all employees represented by UAPD will receive a GSI of 4% effective July 1, 2015, with the following exceptions as listed below: Department of State Hospitals', Developmental Services', and Veterans Affairs' Physicians and Surgeons will receive an 8% GSI effective July 1, 2015. Medical Consultants and Public Health Medical Officers in specified classifications will receive a 5% GSI effective July 1, 2015. This only applies to the rank and file classifications covered by this MOU that have a U designation, and are represented. AB 478 Page 9 Compensation - BU 18 : Effective July 1, 2014, contingent on the projected state revenues of the 2014-15 Budget, all BU 18 represented classifications will receive a 2% GSI. Effective July 1, 2015, all BU 18 represented classifications will receive a 2.25% GSI. If the projected state revenues are not achieved, all BU 18 represented classifications will receive a 4.25% GSI effective July 1, 2015. Compensation - BU 19 : Effective July 1, 2014, contingent on the projected state revenues of the 2014-15 Budget, all BU 19 represented classifications, except those classifications listed below, will receive a 1.5% GSI. The following classifications, Senior Vocational Rehabilitation Counselor, Qualified Rehabilitation Professional and Adoptions Specialist will receive a 4% GSI on July 1, 2014, contingent on the projected state revenues of the 2014-15 Budget. If the GSI on July 1, 2014, is provided, effective July 1, 2015, all BU 19 represented classifications, except those classifications listed below, will receive a 1 .5% GSI. The following classifications, Senior Vocational Rehabilitation Counselor, Qualified Rehabilitation Professional and Adoptions Specialist will receive a 4% GSI on July 1, 2015, if the GSI on July 1, 2014 is provided. If the projected state revenues are not achieved all employees represented by AFSCME will receive a GSI of 3% effective July 1, 2015, except those classifications listed below: Senior Vocational Rehabilitation Counselor, Qualified Rehabilitation Professional and Adoptions Specialist classifications will receive an 8% GSI effective July 1, 2015, if the state revenues are not achieved. In addition, following the ratification of the agreement, but no later than July 1, 2015, the state and AFSCME will study inequities in specified classification and will mutually decide on appropriate salary adjustments. Salary adjustments and related benefits shall AB 478 Page 10 not exceed .6% of payroll for AFSCME as of April 2013. The following criteria will be utilized: severity of the inequity; recruitment and retention issues; and, number of existing employees. Health Benefits - Employer Contribution : BU 6 - The state's monthly contribution to the health insurance portion of the BU 6 employee's allowance will be an amount equal to 80% of the weighted average of the premiums for the four Basic health benefit plans with the largest enrollment (the 80/80 formula) to determine the state's contribution to health care on January 2014 and January 2015. BU 7 - The pay period following ratification, the state's monthly contribution to the health insurance portion of the BU 7 employee allowance will be set at a dollar amount that equals the 80/80 formula. The amounts will be increased on January 1, 2014, January 1, 2015, and January 1, 2016. BU 9 - The state's monthly contribution to the health insurance portion of the BU 9 employee's allowance will be an amount equal to 85% of the weighted average of the premiums for the four Basic health benefit plans with the largest enrollment (the 85/80 formula). BU 12 - Upon ratification, the state's monthly contribution to the health insurance portion of each employee's allowance will be set at a dollar amount that equals the 80/80 formula. The amounts shall be increased on January 1, 2014, and January 1, 2015. BU 16 - Upon ratification, the employer health benefits contribution for each employee will be an amount equal to 80% of the weighted average of the Basic health benefit plan premiums (the 80/80 formula). BU 18 - The state's monthly contribution to the health insurance portion of the BU 18 employee allowance will be set at a dollar amount that equals the 80/80 formula. The amounts shall be increased on January 1, 2014, January 1, 2015, and January 1, 2016. BU 19 - Upon ratification, the employer health benefits contribution for each employee will be an amount equal to 80% of the weighted average of the Basic health benefit plan premiums (the 80/80 formula). AB 478 Page 11 Health Benefits - Dependent Coverage : BU 18 - Effective July 1, 2015, employees will become eligible for the full employer contribution for dependent health coverage after one year of state employment. The state will contribute 75% of the normal amount for dependents during the vesting period. BU 19 - Effective July 1, 2014, employees will become eligible for the full employer contribution for dependent health coverage after one year of state employment. The state will contribute 75% of the normal amount for dependents during the vesting period. The implementation of this is based on the state achieving the projected revenues of the 2014-15 Budget. If the savings are not achieved the dependent vesting benefit will be effective July 1, 2015. Miscellaneous : The agreements contain various miscellaneous provisions including the following: The state will not mandate a reduction in work hours (furlough/Personal Leave Program) program for BUs 6, 7, 9, 12, 16, 18, and 19 employees during the term of this agreement. The state and the exclusive representatives agree to present to the Legislature, as part of the legislation implementing the MOUs, a provision to appropriate funds to cover the economic terms of the agreements, as specified. BU 7 - Personal Leave Program 2010 and 2012 must be used before any other leave, excluding Sick Leave. BUs 6, 7, 9, 12, 16, 18, and 19 - Business and Travel, the state increased the meal/incidental reimbursement rates and lodging rates as specified in the agreements. BU 9 - Time off for Blood Donation was incorporated into the MOU agreement. BU 9 - Employees will be allowed to cash out up to 20 hours of vacation or annual leave once per fiscal year if their department head determines funds are available. AB 478 Page 12 BU 12 - California Department of Transportation (CalTrans) employees not currently on a monthly pay cycle will be changed to the monthly pay cycle on July 1, 2014. BU 12 - Subject to departmental approval and fiscal viability, employees may cash out up to 20 hours of Vacation/Annual leave per fiscal year. Each department head (Director, Executive Officer, etc.) or designee will advise department employees whether the department has funds available for the purpose of cashing out accumulated Vacation/Annual Leave. BU 16 - Medical Consultants are eligible for bonus pay, if the plan is invoked, for up to a maximum of 55 (change from 65) cases per week (beyond the required 110 cases (change from 90) reviewed per week). Bonus pay is not considered compensation towards retirement. BU 16 - The state will provide up to 56 hours (change from seven days) per fiscal year of Continuing Medical Education (CME). CME carry over may not exceed 112 hours (change from 14 days). The state will approve $1,000 per fiscal year for tuition, registration; cost of course related books, training, etc. The state and union will meet within 90 calendar days after ratification in order to streamline the payment of CME by establishing a process in which $1000 would be provided at the beginning of each fiscal year. BU 18 - Effective July 1, 2015, the Evening (6:00 p.m.-midnight) shift differential increases to $1.00 and is not considered compensation towards retirement. Effective July 1, 2015, the NOC (midnight-6:00 a.m.) shift differential increases to $1.25 and is not considered compensation towards retirement. BU 19 - Night/Weekend Shift Differentials will be adjusted, as specified in the agreement, based on the state achieving the projected revenues of the 2014-15 Budget. BU 19 - The state agrees to reimburse Psychologists and Social Workers employed by California Department of Corrections and Rehabilitation and assigned to the Division of Adult Parole Operations who obtain provider credentialing from the California Sex Offender Management Board. The reimbursement will be for actual costs, not to exceed $180, of the initial credentialing as well as the biannual renewal fees. The implementation of this is based on the state achieving the projected revenues of the 2014-15 AB 478 Page 13 Budget. BU 19 - The state agrees to reimburse up to $200 of the total amount spent annually on Continuing Education Units. The implementation of this is based on the state achieving the projected revenues of the 2014-15 Budget. BU 19 - A Contracting Out and Professional Retention Committee will be established to develop recruitment and retention plans and promotional pathway. The committee will also explore the creation of an "In-House" registry of BU 19 employees who would enjoy priority over outside contractors. Duration : BU 6 - Two years - July 3, 2013, through July 2, 2015. BU 7 - Three years - July 2, 2013, through July 1, 2016. BU 9 - Two years - July 2, 2013, through July 1, 2015. BU 12 - Two years - July 1, 2013, through July 1, 2015. BUs 16, 18, and 19 - Three years - July 1, 2013, through July 1, 2016 Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916) 319-3957 FN: 0002743