BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1377
Jim Beall, Chair HEARING DATE: June 27, 2013
AB 1377 (Asm. PER&SS Comm) as amended 6/20/13
FISCAL: YES
MEMORANDUM OF UNDERSTANDING BETWEEN THE STATE AND SERVICE
EMPLOYEES INTERNATIONAL UNION
HISTORY :
Sponsors: California Department of Human Resources (CalHR)
Service Employees International Union, Local 1000
(SEIU)
ASSEMBLY VOTES :
PER & SS 5-2 4/24/13
Appropriations 12-1 5/24/13
Assembly Floor PENDING
SUMMARY :
AB 1377 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 the
following state bargaining units:
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)
BU 21 (Educational Consultant and Library)
This is an URGENCY BILL.
BACKGROUND AND ANALYSIS :
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1)Existing law :
a) requires, under the State Employee-Employer Relations
Act (the Ralph C. Dills Act), that the state,
represented by the Department of Human Resources
(CalHR), collectively bargain with exclusive employee
representatives over all aspects related to wages and
working conditions, and that agreements be formalized in
MOUs that are subsequently approved by the Legislature.
b) requires the Office of the Legislative Analyst to
analyze state MOUs and to report on its findings to the
Legislature within 10 days of receiving the MOU from
CalHR.
1)This bill approves the agreement between the state and the
state bargaining units represented by SEIU, Local 1000.
This agreement affects approximately 91,077 full-time
equivalents.
The duration of this agreement is three years: July 2, 2013,
through July 1, 2016.
FISCAL :
According to 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 :
1)Comments of the Committee
Beginning in 2008, state employees saw a significant
erosion in their earnings. Most employees saw salary
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reductions of 15% pursuant to Governor Schwarzenegger's
furlough program. According to the Office of the
Legislative Analyst, the average state worker saw his or
her salary reduced by approximately $21,000 over the course
of the furlough period.
In 2011, with the furlough program ended, most state
contracts required a 5% pay reduction in exchange for one
personal leave day per month and increases of 3% to 5% in
member contributions to CalPERS-an overall reduction of 8%
to 10%. With the end of the personal leave program and a
salary adjustment on July 1st equivalent to the increase in
member contributions, state employees will finally be made
whole after approximately 5 years of reduced compensation.
Prior to the reductions detailed above, the last general
salary increase for state employees (3.4%) occurred in
2007.
2)The following information summarizing the general
provisions of the MOUs was provided by CalHR:
a) Retirement Benefit Formula Calculation
Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, and 21
employees who become CalPERS miscellaneous 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 safety 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 miscellaneous members on or
after January 1, 2013, and who elect the Second Tier
retirement plan are subject to the Second Tier PEPRA
retirement formula of 1.25% at age 67.
b) Employee Pension Contributions
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All Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, and 21
members in the First Tier miscellaneous retirement
classification 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 the First Tier industrial retirement
classification 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 the First Tier industrial retirement
classification 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 members in the Second Tier
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 the state safety retirement
classification shall have their contribution increased
from 9% to 10% of monthly compensation over $317.
Effective July 1, 2014, all BU 1, 3, 4, 11, 14, 15, 17,
20, and 21 members in the state safety retirement
classification shall have their contribution increased
from 10% to 11% of monthly compensation over $317.
c) 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
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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 GSI
effective July 1, 2015.
d) Health Benefits - Employer Contribution
The state employer'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 employer'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.
e) Health Benefits - Dependent Coverage
Thirty (30) 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.
f) Business and Travel
The state increased the meal reimbursement rates by
$2.00. The state increased lodging rates as follows:
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----------------------------------------------------------
|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 | |
----------------------------------------------------------
g) Miscellaneous
The state will not mandate a reduction in work hours
(furlough/Personal Leave 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.
State Owned 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
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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.
1)The report of the Office of the Legislative Analyst is
available on its website:
http://www.lao.ca.gov/laoapp/main.aspx
2)The full test of the MOUs and accompanying summaries may be
found on the website of CalHR:
http://www.calhr.ca.gov/state-hr-professionals/Pages/bargain
ing-contracts.aspx
3)ARGUMENTS IN SUPPORT:
According to CalHR:
These contracts represent savings in pension changes for
employees as enacted last year by the legislature in the
Public Employee Pension Reform Act (PEPRA). This bill
also allocates prudent cost of living increases in 2014,
and 2015, contingent upon projected state revenues, as
determined by the Department of Finance. There are no
mandatory furloughs or Personal Leave Program (PLP) days
in this contract. These are modest agreements that
recognize the role state workers have played over the
past few years in stabilizing California's finances.
SEIU states that "AB 1377 approves the most recent MOU so
that California's workers can feel more employment security
in the future."
4)SUPPORT :
California Department of Human Resources (CalHR),
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Co-Sponsor
Service Employees International Union, Local 1000 (SEIU),
Co-Sponsor
American Federation of State, County and Municipal
Employees (AFSCME), AFL-CIO
5)OPPOSITION :
None to date
#####
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