BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1377 (Bonta) - SEIU Memorandum of Understanding
Amended: June 20, 2013 Policy Vote: PE&R 3-1
Urgency: Yes Mandate: No
Hearing Date: July 1, 2013 Consultant: Maureen Ortiz
This bill meets the criteria for referral to the Suspense File.
However, due to the urgency of the legislation the committee may
wish to vote on this measure today.
Bill 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, These units
include 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).
AB 1377 appropriates $1,351,000 for expenditure in the 2013-14
fiscal year as follows: $373,000 from the General Fund,
$655,000 from unallocated special funds, and $323,000 from other
unallocated nongovernmental cost funds, for the purpose of state
employee compensation.
Additionally, AB 1377 provides for a continuous appropriation
for the payment of employee compensation and benefits for
members of Bargaining Units 1, 3, 4, 11, 14, 15, 17, 20 and 21
for the 2013-14, 2014-15, and 2015-16 fiscal years.
Fiscal Impact:
FY 2013-14 costs of approximately $1.4 million ($373,000
General Fund)
FY 2014-15 costs of $134.6 million ($56.7 million General
Fund)
FY 2015-16 costs of $$303 million ($127.6 million General
Fund)
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The costs estimates above are based on the assumption that a 2%
general salary increase will be implemented on July 1, 2014, and
that a 2.5% general salary increase will take effect on July 1,
2015. The 2% increase that will take effect on July 1, 2014 is
contingent on a determination by the Director of Finance that
the state has sufficient revenue to meet its existing
obligations and that there is also funding available for the 2%
salary increase. If the determination is that there are NOT
sufficient funds available on July 1, 2014, then all SEIU
employees will instead receive a 4.5% general salary increase on
July 1, 2015. If that occurs, the fiscal impact of the salary
increase will be $295.4 million ($123.4 million General Fund).
Should CalHR opt to provide the 4.5% general salary increase to
nonrepresented employees, additional costs would be $118.8
million of which $43.1 million will be General Fund costs.
Background: Existing law 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.
Additionally, the Legislative Analyst Office (LAO) is required
to analyze state MOUs and to report on its findings to the
Legislature within 10 days of receiving the MOU from CalHR. The
LAO presented its analysis on June 21, 2013.
Proposed Law: 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
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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.
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,
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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
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
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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:
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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 | |
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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.
Nearly 900 custodians at the Department of General Services will
receive a $100 annual allowance to purchase oil and slip
resistant footwear.
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
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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.
Staff Comments: The state is experiencing a severe compaction
problem where state managers and supervisors earn little or no
higher salary than the employees that they supervise. If CalHR
does not opt to provide the 4.5% salary increase to
nonrepresented managers and supervisors that SEIU has negotiated
for its rank and file employees, this compaction problem will
increase, likely resulting in a greater shortage of state
managers and supervisors.
The last general salary increase state employees received was
3.4% in 2007.
The retirement formula and employee pension contribution
provisions noted above were part of the Public Employees'
Pension Reform Act which took effect January 1, 2013.