BILL ANALYSIS �
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1377|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1377
Author: Assembly Public Employees, Retirement and Social
Security Committee
Amended: 6/20/13 in Assembly
Vote: 27 - Urgency
SENATE PUBLIC EMPLOY. & RETIRE. COMMITTEE : 3-1, 6/27/13
AYES: Beall, Block, Yee
NOES: Gaines
NO VOTE RECORDED: Walters
SENATE APPROPRIATIONS COMMITTEE : 4-2, 7/1/13
AYES: De Le�n, Hill, Lara, Steinberg
NOES: Walters, Gaines
NO VOTE RECORDED: Padilla
ASSEMBLY FLOOR : 63-9, 6/25/13 - See last page for vote
SUBJECT : State employees: memorandum of understanding
SOURCE : Department of Human Resources
SEIU, Local 1000
DIGEST : This bill 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
CONTINUED
AB 1377
Page
2
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)
ANALYSIS :
Existing law:
1. 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.
2. Requires the Legislative Analyst's Office (LAO) to analyze
state MOUs and to report on its findings to the Legislature
within 10 days of receiving the MOU from CalHR.
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.
Comments
According to the Senate Public Employement and Retirement
Committee analysis, beginning in 2008, state employees saw a
significant erosion in their earnings. Most employees saw
salary reductions of 15% pursuant to Governor Schwarzenegger's
furlough program. According to the LAO, the average state
worker saw his/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 the California Public Employees' Retirement System (CalPERS)
CONTINUED
AB 1377
Page
3
-an overall reduction of 8% to 10%. With the end of the
personal leave program and a salary adjustment on July 1
equivalent to the increase in member contributions, state
employees will finally be made whole after approximately five
years of reduced compensation.
Prior to the reductions detailed above, the last general salary
increase for state employees (3.4%) occurred in 2007.
The following information summarizing the general provisions of
the MOUs was provided by CalHR:
1. Retirement benefit formula calculation . BU 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.
BU 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.
BU 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.
2. Employee pension contributions . All BU 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.
CONTINUED
AB 1377
Page
4
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 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.
3. 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 GSI effective July 1, 2015.
4. 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
CONTINUED
AB 1377
Page
5
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.
5. Health benefits - dependent coverage . 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.
6. Business and Travel . The state increased the meal
reimbursement rates by $2. 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 | |
----------------------------------------------------------
7. 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
CONTINUED
AB 1377
Page
6
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 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.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal year (FY) 2013-14 costs of approximately $1.4 million
($373,000 General Fund (GF))
FY 2014-15 costs of $134.6 million ($56.7 million GF)
FY 2015-16 costs of $$303 million ($127.6 million GF)
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
CONTINUED
AB 1377
Page
7
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 GF).
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 GF costs.
SUPPORT : (Verified 7/2/13)
Department of Human Resources (co-source)
SEIU, Local 1000 (co-source)
AFSCME, AFL-CIO
ASSEMBLY FLOOR : 63-9, 6/25/13
AYES: Achadjian, Alejo, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chesbro, Conway, Cooley,
Daly, Dickinson, Eggman, Fong, Fox, Frazier, Garcia, Gatto,
Gomez, Gonzalez, Gordon, Gray, Hagman, Hall, Roger Hern�ndez,
Holden, Jones-Sawyer, Levine, Linder, Logue, Medina, Mitchell,
Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Perea, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Stone, Ting, Waldron, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. P�rez
NOES: Dahle, Donnelly, Beth Gaines, Grove, Maienschein,
Mansoor, Morrell, Patterson, Wagner
NO VOTE RECORDED: Allen, Ch�vez, Gorell, Harkey, Jones,
Lowenthal, Melendez, Vacancy
JL:k 7/2/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED