BILL ANALYSIS �
AB 1346
Page 1
Date of Hearing: April 24, 2013
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Rob Bonta, Chair
AB 1346 (Pan) - As Amended: April 11, 2013
SUBJECT : Postemployment health benefits: Sacramento
Metropolitan Fire Department: employer contributions.
SUMMARY : Creates a specific vesting schedule and employer
contribution amount for annuitant health care premiums for the
Sacramento Metropolitan Fire Department (SMFD), as specified.
Specifically, this bill :
1)Requires SMFD to pay 25% of the employer contribution after
five years of credited service and increases the employer
contribution by 5% each year until the employer contribution
reaches 100% after 20 years of credited service.
2)Requires the employer contribution to be determined pursuant
to a memorandum of understanding (MOU) that is not subject to
impasse procedures.
3)Allows all of the employees' years of credited service to be
used to determine the employer contribution but requires that
at least five years of service must have been with the SMFD.
4)Requires SMFD to provide CalPERS with notification of the MOU
and any additional information requested by CalPERS.
5)Specifies that the new vesting schedule applies to employees
who retire for service on or after the effective date of the
MOU.
6)Specifies that employees who retire for disability or who
retire for service with 20 or more years of service with SMFD
regardless of the number of days between separation from
employment and retirement will receive 100% of the employer
contribution.
EXISTING LAW :
1)Establishes PEMHCA under the administration of CalPERS. If a
contracting agency elects to cover their employees for health
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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 an 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 ten 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
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for employees in the same category with similar job 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 : Unknown
COMMENTS : According to the sponsor, the California
Professional Firefighters, "For PEMHCA contracting agencies,
only one alternative "optional" vesting schedule is available
and is contained in Section 22893 of the Government Code. Some
PEMHCA contracting agencies, like the City of San Diego, the
County of Mariposa, and the Alameda County Transportation
Improvement Authority, have bargained with their employee groups
and, through previously enacted legislation, have statutorily
imposed alternative vesting schedules that are consistent with
their respective collective bargaining agreements."
"As amended, AB 1346 adds an additional alternative vesting
schedule to PEMHCA, which reflects the terms of the collective
bargaining agreement between the Sacramento Metropolitan Fire
District (SMFD) and Sacramento Area Firefighters, Local 522 with
respect to employer-provided retiree healthcare contributions.
This bill applies only to the Sacramento Metropolitan Fire
District."
"The vesting schedule proposed by AB 1346 strikes the
appropriate balance between much needed cost savings for SMFD
and the assurance and security of a vested retiree health care
contribution for the firefighters of SMFD."
"Specifically, for firefighters who retire from SMFD on or after
the effective date of the collectively bargained memorandum of
understanding (MOU), which establishes the retiree healthcare
contribution amount, they will be vested in an employer-provided
post-retirement health care contribution based on a revised
formula in which the obligation of the employer to provide that
contribution starts with 25% of the amount agreed to in the MOU
at five years of service and reaches 100% of the specified
amount if the retiree attained 20 years of credited service. AB
1364 exempts from the vesting requirement those annuitants who
have retired for industrial disability or who have a normal
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service retirement with 20 or more years of service with SMFD.
In those limited instances, 100% of the specified amount would
be extended in those cases."
Supporters conclude, "The provisions of AB 1346 exemplify how,
in difficult economic times, employers and employees can work
together at the bargaining table to achieve compromises. This
bill appropriately protects those firefighters who have
faithfully delivered life and property saving services to their
communities, while at the same time, provides much needed cost
savings to the employer and subsequently the taxpayers who fund
those services."
The Committee recommends that the bill be amended to replace all
references to the "Sacramento Metropolitan Fire Department" with
"Sacramento Metropolitan Fire District" since this is the
correct term for the contracting agency.
REGISTERED SUPPORT / OPPOSITION :
Support
California Professional Firefighters (Sponsor)
Professional Engineers in California Government
Opposition
None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957