BILL ANALYSIS �
AB 1144
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CONCURRENCE IN SENATE AMENDMENTS
AB 1144 (Hall)
As Amended June 19, 2013
Majority vote
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|ASSEMBLY: |51-19|(May 16, 2013) |SENATE: |32-4 |(August 19, |
| | | | | |2013) |
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Original Committee Reference: P.E.,R.& S.S.
SUMMARY : Establishes, for the City of Carson, a specific vesting
schedule and employer contribution amount for annuitant health care
premiums under the Public Employees' Medical and Hospital Care Act
(PEMHCA). 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.
3)Specifies that the employer contribution for unrepresented
employees will be determined by a resolution adopted by the city
council, as specified.
4)Clarifies that the new vesting schedule and employer contribution
amount only apply to employees hired on or after January 1, 2014.
The Senate amendments :
1)Clarify that the new vesting schedule and employer contribution
amount only apply to employees hired on or after January 1, 2014.
2)Specify that the employer contribution for unrepresented employees
will be determined by a resolution adopted by the city council and
filed with the California Public Employees' Retirement System
(CalPERS).
EXISTING LAW :
1)Establishes PEMHCA under the administration of CalPERS. If a
AB 1144
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contracting agency elects to cover their employees for health care
under PEMHCA, they have the following options to choose from in
determining 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. Based on the formula, it may take 20 years for the
lesser contribution amount to equal the active employee
contribution amount. Under this option, an employee who
retires and meets the definition of annuitant becomes 100%
vested and receives an employer contribution amount equal to
the lesser contribution amount.
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 qualify for an
employee contribution and would have to work 20 years to become
100% vested.
2)Permits Mariposa County to provide a higher employer contribution
for health benefits for its retirees than for its active
employees. This must be executed through a memorandum of
understanding (MOU) or by a resolution adopted by a majority of
its County Board of Supervisors.
3)Permits the City of San Diego to contribute to postretirement
health care coverage for the San Diego Police Officers Association
members, and also for unclassified or unrepresented employees with
at least 10 years credited service. The employer contribution
amount is subject to an MOU, and applies only to those employees
retiring on or after the effective date of the MOU. In addition,
the City of San Diego is permitted to establish different vesting
schedules for employees in the same category with similar job
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duties, notwithstanding other provisions of PEMHCA.
4)Permits school employers to base the contracting agency's
postretirement health benefit on credited years of service as
determined by an MOU which is mutually agreed upon through
collective bargaining.
FISCAL EFFECT : According to the Senate Appropriations Committee:
1)Minor, absorbable administrative costs to CalPERS (Special Fund).
2)Unknown, potentially significant savings to City of Carson (Local
Fund).
COMMENTS : Vesting is the amount of time in employment needed to be
eligible to receive employer contributions towards the cost of
retirees' monthly health premiums. The vesting requirements for
employer-paid retiree health benefits are different for CalPERS'
State, California State University, judicial, public agency, and
school members.
According to the author, "The City of Carson does not have a vesting
schedule for their post-retirement medical program. 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. 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."
This bill is similar to AB 1346 (Pan) of this year which creates a
specific vesting schedule and employer contribution amount for
annuitant health care premiums for the Sacramento Metropolitan Fire
District.
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957 FN:
0001311