BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1377
                                                                  Page  1

          ASSEMBLY THIRD READING
          AB 1377 (Public Employees, Retirement and Social Security  
          Committee) 
          As Amended  June 20, 2013
          2/3 vote.  Urgency 

           PUBLIC EMPLOYEES    6-1                                         
           
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          |Ayes:|Bonta, Harkey,            |     |                          |
          |     |Jones-Sawyer, Mullin,     |     |                          |
          |     |Rendon, Wieckowski        |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Allen                     |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           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)









                                                                  AB 1377
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           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.

           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  








                                                                  AB 1377
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          appropriate to reach 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. 

          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 $0.50 per hour GSI.

          If the projected state revenues are not achieved, effective July  
          1, 2015, the Seasonal Clerk classification shall have a $0.50  
          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  








                                                                  AB 1377
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          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 days after ratification, employees will become 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 SEIU 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                          |                                |
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                                                                  AB 1377
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          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.

          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.


           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916)  
          319-3957 


                                                                FN: 0001243