BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1346
Jim Beall, Chair HEARING DATE: June 10, 2013
AB 1346 (Pan) as amended 4/25/13 FISCAL: YES
PUBLIC EMPLOYEES: POST-RETIREMENT HEALTH BENEFITS
HISTORY :
Sponsor: California Professional Firefighters (CPF)
Other legislation:AB 1144 (Hall) 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 50-21 5/20/13
SUMMARY :
AB 1346 would authorize the Sacramento Metropolitan Fire
District (SMFD) to contract under the Public Employees
Medical and Hospital Care Act (PEMHCA), administered by the
California Public Employees' Retirement System (CalPERS), for
a retiree health care vesting schedule that is not currently
available in law. This new schedule will be subject to, and
dependent upon, a memorandum of understanding (MOU) between
the SMFD and the affected SMFD employees' exclusive
representative.
BACKGROUND AND ANALYSIS :
1) Existing law :
a) establishes the Public Employees' Medical and Hospital
Care Act (PEMHCA), administered by the California Public
Employees' Retirement System (CalPERS), to provide health
coverage for employees and annuitants of the State and
the California State University.
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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 to become eligible for 100% of the
employer 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
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Date: June 3, 2013 Page
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for disability or if the annuitant had 20 years of
service, all with the employer providing PEMHCA,
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 SMFD to pay 25% of the employer contribution
for an SMFD annuitant 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.
b) requires the employer contribution to be determined
pursuant to a MOU that is not subject to impasse
procedures.
c) allows all of the employees' years of credited CalPERS
service to be used to determine the employer contribution
but requires that at least five years of service must
have been with the SMFD.
d) requires SMFD to provide notification to CalPERS of the
MOU and any additional information, as requested, to
CalPERS.
e) specifies that the new vesting schedule applies to
employees who retire for service on or after the
effective date of the MOU.
f) 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.
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Date: June 3, 2013 Page
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FISCAL :
According to the Assembly Appropriations Committee, this bill
would result in minor and absorbable costs to the California
Public Employees' Retirement System (CalPERS).
COMMENTS :
1) Argument in Support :
According to the sponsor, 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."
The sponsor also states that, "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 taxpayer who fund those services."
2) SUPPORT :
California Professional Firefighters (CPF), Sponsor
Professional Engineers in California Government (PECG)
3) OPPOSITION :
None to date
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Date: June 3, 2013 Page
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