BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 478
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        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,









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        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  








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        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.








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        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








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        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.








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        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.









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         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  








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             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.









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         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  








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        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).








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         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.









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        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  








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        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