BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1144
Jim Beall, Chair HEARING DATE: June 10, 2013
AB 1144 (Hall) as amended 4/29/13 FISCAL: YES
PUBLIC EMPLOYEES: POST-RETIREMENT HEALTH BENEFITS
HISTORY :
Sponsor: City of Carson
Other legislation:AB 1346 (Pan) 2013,
Currently in Senate PE&R Committee
AB 2510 (Fletcher),
Chapter 600, Statutes of 2010
ASSEMBLY VOTES :
PER & SS 5-2 4/24/13
Appropriations 12-5 5/08/13
Assembly Floor 51-19 5/16/13
SUMMARY :
AB 1144 would require the City of Carson, upon a conforming
MOU with the exclusive representatives of city employees, to
use an alternative vesting schedule than what is currently
available in statute for providing its employees
post-retirement health benefits under the Public Employees'
Medical and Hospital Care Act (PEMHCA).
Under the proposed schedule, an employee would have to work 5
years to get post-retirement benefits with a 50% employer
contribution toward the premium. The schedule would increase
by 10% annually so that an employee who had worked for the
city for 10 years would receive 100% of the employer
contribution.
BACKGROUND AND ANALYSIS :
1) Existing law :
a) establishes the Public Employees' Medical and Hospital
Care Act (PEMHCA), administered by the California Public
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Employees' Retirement System (CalPERS), to provide health
coverage for employees and annuitants of the State and
the California State University.
b) allows a school or local agency employer to contract
with CalPERS for PEMHCA and requires the employee or
annuitant contribution, when added to the employer
contribution, to cover the total cost of the PEMHCA
coverage premium.
c) defines an annuitant as one who, among other
requirements, retires from the system within 120 days of
separation from public employment.
d) does not allow contracting employers to provide PEMHCA
coverage to active employees without also covering
retired annuitants. However, with respect to the
employer contribution for annuitants, provides specified
options available to the contracting agency, including:
i. an equal employer contribution amount 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; or
ii. for a contracting agency that joins PEMHCA on
or after January 1, 1986, 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 as
specified; or
iii. a pre-set "vesting schedule" based on an
employee's credited years of service to determine a
set percentage of the employer contribution amount for
annuitants. Under this option, an annuitant would
have at least 10 years of CalPERS credited service to
qualify for 50% of the employer contribution and would
need 20 years, all with the employer providing PEMHCA,
to become eligible for 100% of the employer
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contribution. At least 5 years must be with the
employer providing PEMHCA.
iv. allows under the 10-20 year vesting schedule, an
employer contribution of 100% if the annuitant retired
for disability or if the annuitant had 20 years of
service, regardless of the length of separation from
service prior to retirement.
e) provides specified and individual variations to the
above options and requirements under separate statutes
specific to the City of San Diego, school employers,
Alameda County Transportation Improvement Authority, and
Mariposa County. These statutes are subject to
collective bargaining agreements.
2) This bill :
a) requires the City of Carson, upon a conforming MOU with
its employees' exclusive representative, to use an
alternative vesting schedule than what is currently
available in statute for providing its employees
post-retirement health benefits under PEMHCA.
b) provides that a City of Carson annuitant would have to
be credited with 5 years of service with the city to
receive an employer contribution for post-retirement
health care benefits equal to 50% of the employer
contribution provided to active employees. The
percentage of the employer contribution would increase 10
% annually until reaching 100% for annuitants who have 10
years of credited service.
c) requires the employer contribution to be agreed upon
through collective bargaining, permits the city to adjust
the employer contribution from time to time through an
MOU that has been collectively bargained, and requires
that such changes also be ratified by a resolution passed
by the city council.
d) with respect to employees who are not represented by a
bargaining unit, requires the City of Carson to certify
to CalPERS that there is not an applicable MOU.
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e) defines credited service as credited service performed
with the City of Carson.
f) requires the city to provide to CalPERS any information
as determined by CalPERS as necessary to implement the
provisions of AB 1144.
g) specifies that the proposed vesting schedule does not
apply to any employee who retirees before the effective
date of the MOU, or in the case where an MOU is
retroactive, before the MOU is signed.
FISCAL :
According to the Assembly Appropriations Committee, AB 1144
would result in minor and absorbable costs for CalPERS.
COMMENTS :
1) Argument in Support :
According to the sponsor, the City of Carson does not
currently have a vesting schedule (i.e., annuitants currently
get 100% of the employer contribution toward post-retirement
PEMHCA if they have 5 years of CalPERS credited service).
The City of Carson and its employees' representative have
collectively bargained to implement a vesting schedule that
would require annuitants to have at least 10 years of
credited service with the city to get 100% of the employer
contribution. However, "this vesting schedule is not
currently authorized by law and would require legislative
action to authorize an exemption from the pre-set vesting
schedule currently in statute."
2) SUPPORT :
City of Carson, Sponsor
American Federation of State, County and Municipal
Employees (AFSCME), Local 809
City of Carson Association of Confidential Employees (ACE)
City of Carson Association of Management Employees (AME)
City of Carson Professional and Supervisors Association
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3) OPPOSITION :
None to date
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