BILL ANALYSIS Ó AB 1377 Page 1 Date of Hearing: June 20, 2013 ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL SECURITY Rob Bonta, Chair AB 1377 (P.E.,R.& S.S. Com.) - As Amended: June 20, 2013 SUBJECT : State employees: memorandum of understanding. SUMMARY : Approves the recent memoranda of understanding (MOU) agreed to by the state and the state bargaining units (BUs) represented exclusively by the Service Employees International Union (SEIU), Local 1000, including BU 1 (Professional, Administrative, Financial, and Staff Services), BU 3 (Professional Educators and Librarians), BU 4 (Office and Allied), BU 11 (Engineering and Scientific Technicians), BU 14 (Printing and Allied Trades), BU 15 (Allied Services), BU 17 (Registered Nurses), BU 20 (Medical and Social Services), and, BU 21 (Educational Consultant and Library). EXISTING LAW requires, under the State Employee-Employer Relations Act (the Dills Act), collective bargaining agreements (MOUs) that are negotiated between the state and exclusive representatives of each of the 21 state bargaining units. FISCAL EFFECT : According to the California Department of Human Resources (CalHR) Fiscal Year 2013-2014 Cost: $1.4 million (General Fund - $0.4 million and Other Funds - $1.0 million) Total Incremental Cost: $303.0 million (General Fund - $127.6 million and Other Funds - $175.4 million) Total Budgetary Cost: $439.0 million (General Fund - $184.7 million and Other Funds - $254.3 million) COMMENTS : The following information regarding the general provisions of the MOUs was provided by CalHR: Number of Employees This agreement affects approximately 91,077 full-time equivalents. AB 1377 Page 2 Retirement Benefit Formula Calculation Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, and 21, employees who become CalPERS members on or after January 1, 2013, are subject to the Public Employees' Pension Reform Act (PEPRA) Retirement Formula of 2% at age 62. Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, and 21 employees who become CalPERS members on or after January 1, 2013, are subject to the State Safety PEPRA Retirement Formula of 2% at age 57. Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, and 21, employees who become CalPERS members on or after January 1, 2013, are subject to the Second Tier PEPRA Retirement Formula of 1.25% at age 67. Employee Pension Contribution All Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, and 21 members in First Tier Miscellaneous Retirement shall contribute 8% of monthly compensation over $513. Effective July 1, 2013, all BU 1, 3, 4, 11, 14, 15, 17, and 20 members in First Tier Industrial Retirement shall have their contribution increased from 8% to 9% of monthly compensation over $513. Effective July 1, 2013, all BU 1, 3, 4, 11, 14, 15, 17, and 20 members in First Tier Industrial Retirement who do not participate in social security shall have their contribution increased from 9% to 10% of monthly compensation over $317. Effective July 1, 2013, all Second Tier members shall contribute 1.5% of monthly pensionable compensation and the contribution will increase by 1.5% points annually. The final annual increase in the contribution rate shall be adjusted as appropriate to reach fifty percent (50%) of normal cost. Effective July 1, 2013, all BU 1, 3, 4, 11, 14, 15, 17, 20, and 21 members in State Safety Retirement shall have their contribution increased from 9% to 10% of monthly compensation over $317. AB 1377 Page 3 Effective July 1, 2014, all Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, and 21 members in State Safety Retirement shall have their contribution increased from 10% to 11% of monthly compensation over $317. Compensation - Cost of Living Increase Effective July 1, 2014, contingent on the projected State revenues of the 2014-15 Budget, all BU 1, 3, 4, 11, 14, 15, 17, 20, and 21 represented classifications (excluding Seasonal Clerks) will receive a 2% General Salary Increase (GSI). Effective July 1, 2015, all BU 1, 3, 4, 11, 14, 15, 17, 20, and 21 represented classifications (excluding Seasonal Clerks) will receive a 2.5% GSI. If the projected State revenues are not achieved, all BU 1, 3, 4, 11, 14, 15, 17, 20, and 21 represented classifications (excluding Seasonal Clerks) will receive a 4.5% GSI effective July 1, 2015. Effective July 1, 2014, contingent on the projected State revenues of the 2014-15 Budget, the Seasonal Clerk classification shall receive a 50 cents per hour GSI. If the projected State revenues are not achieved, effective July 1, 2015, the Seasonal Clerk classification shall have a 50 cents per hour General Salary Increase effective July 1, 2015. Health Benefits - Employer Contribution The State's monthly contribution to the health insurance portion of the BU 1, 4, 11, 14, 15, 17, 20, and 21 employee's allowance shall be an amount equal to 80% of the weighted average of the premiums for the four Basic health benefit plans with the largest enrollment (the 80/80 formula). The State's monthly contribution to the health insurance portion of BU 3 employee allowance will be set at a dollar amount that equals the 80/80 formula. The amounts shall be increased on January 1, 2014, January 1, 2015, and January 1, 2016. Health Benefits - Dependent Coverage Thirty (30) days after ratification, employees will become AB 1377 Page 4 eligible for the full employer contribution for dependent health coverage after one year of State employment. The State will contribute 75% of the normal amount for dependents during the vesting period. Miscellaneous The State will not mandate a reduction in work hours (furlough/Personal Leave Program) program for BU 1, 3, 4, 11, 14, 15, 17, 20, and 21 employees during the term of this agreement. The State and SEI U Local 1000 agree to present to the Legislature, as part of the legislation implementing this MOU, a provision to appropriate funds to cover the economic terms of this agreement through July 1, 2016. Business and Travel, the State increased the meal reimbursement rates by $2.00. The State increased lodging rates as follows: ----------------------------------------------------------------- |County |Lodging Rate | |--------------------------------+--------------------------------| |All counties except those |$90 | |listed below. | | |--------------------------------+--------------------------------| |Los Angeles, Orange, Ventura, |$120 | |Edwards AFB, less the city of | | |Santa Monica | | |--------------------------------+--------------------------------| |Sacramento, Napa, Riverside |$95 | |--------------------------------+--------------------------------| |San Diego, Monterey, Alameda, |$125 | |San Mateo, Santa Clara | | |--------------------------------+--------------------------------| |San Francisco, City of Santa |$150 | |Monica | | ----------------------------------------------------------------- State Owed Housing- rental rates will be frozen until July 1, 2015, for those employees required to live in state housing. Organ Donation was incorporated into the MOU agreements consistent with AB 1825 (Nakano), Chapter 869, Statutes of 2002. AB 1377 Page 5 The State continues its commitment to work with SEIU within the already established Contracting Out Committees in an effort to reduce unnecessary costs in contracting out. The State agrees to ensure that Retired Annuitants work in accordance with PEPRA requirements and will be utilized for mission critical work. The State agrees to continue to provide Student Assistants the opportunity to gain work experience consistent with their field of study. Duration Three years - July 2, 2013, through July 1, 2016. REGISTERED SUPPORT / OPPOSITION : Support California Department of Human Resources (Co-Sponsor) SEIU Local 1000 (Co-Sponsor) Opposition None on file Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916) 319-3957 FN: 0000772