BILL ANALYSIS Ó
AB 1144
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1144 (Hall) - As Amended: April 29, 2013
Policy Committee: PERSSVote:5-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill allows the City of Carson flexibility from existing
Public Employees' Medical and Hospital Care Act (PEMHCA)
requirements. Specifically, this bill:
1)Provides a schedule for specified employer contributions for
postretirement health benefits for an employee of the city
based on the employee's completed years of credited service.
2)Specifies the employer contribution shall be mutually agreed
upon through collective bargaining by the City of Carson and
the exclusive representatives of city employees.
FISCAL EFFECT
Minor and absorbable for the California Public Employees'
Retirement System (CalPERS).
COMMENTS
1)Purpose . According to the author, the vesting schedule agreed
upon through the collective bargaining process between the
city and their respective bargaining units adopted a
post-retirement local service vesting schedule of 10 years,
decreasing the pre-set schedule of vesting schedule
requirement from 20 years of service to 10 years. However,
the author states, this vesting schedule is not currently
authorized by law and requires legislative action to authorize
an exemption from the pre-set vesting schedule currently in
statute.
2)CalPERS view . According to CalPERS, in January 2012 the Board
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approved a list of strategies and initiatives for providing
retirement health benefits which included providing regulatory
flexibility for public agencies. CalPERS states that providing
contracting agencies and their employees the ability to agree
to a health vesting schedule through collective bargaining is
consistent with the Board's direction. CalPERS does not have
an official position on this bill.
3)PEMHCA . The Public Employees Medical and Hospital Care Act
(PEMHCA) is a health plan administered by the California
Public Employees Retirement System (PERS) that provides health
benefits for all active and retired state employees. Local
governmental entities such as cities, counties, school
districts and special districts can also opt to participate in
PEMHCA. Upon choosing to provide health benefits under PEMHCA
for their employees and retirees, participating local
governmental entities enter into a contract with the PERS
Board of Administration. These contracting agencies then pay
the health benefit premiums to PERS in the manner specified in
PEMHCA.
If a contracting agency elects to cover their employees for
health care under PEMHCA, they have the following options to
choose from in determining the contribution amount for
annuitants:
a) A contracting agency could opt to make the employer
contribution amount equal for both active employees and
annuitants. Under this option, an employee who retires and
meets the definition of annuitant becomes 100% vested and
receives an employer contribution amount equal to what the
active employees receive.
b) A contracting agency that joins PEMHCA on or after
January 1, 1986, has the option to pay a lesser employer
contribution amount for annuitants than for active
employees as long as the agency increases its contribution
for annuitants each year until it equals the agency's
contributions for active employees.
c) A contracting agency has the option to establish a
pre-set vesting schedule of specific percentages based on
an employee's credited years of service to determine the
employer contribution amount for annuitants. Under this
option, an employee would have to work at least 10 years to
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qualify for an employee contribution and would have to work
20 years to become 100% vested.
There are already exceptions in existing law for the County of
Mariposa and the City of San Diego.
4)Related legislation . AB 1346 (Pan) creates a specific vesting
schedule and employer contribution amount for annuitant health
care premiums for the Sacramento Metropolitan Fire District.
5)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081