BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
                              Senator Mark Leno, Chair
                                2015 - 2016  Regular 

          Bill No:            AB 124          Hearing Date:    June 18,  
          2015
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          |Author:   |Committee on Budget                                   |
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          |Version:  |January 9, 2015    Introduced                         |
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          |Urgency:  |No                     |Fiscal:    |Yes              |
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          |Consultant|Farra Bracht                                          |
          |:         |                                                      |
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                            Subject:  Budget Act of 2015.


          Summary: This bill is necessary for the enactment of the 2015 budget act  
          and makes various changes relating to retiree health care and  
          vacant positions. 

          Background:  The Public Employees' Medical and Hospital Care Act (PEMHCA)  
          governs the funding and provision of postemployment health care  
          benefits for eligible retired public employees and their  
          families. The Board of Administration of the Public Employees'  
          Retirement System administers PEMHCA. PEMHCA defines "family  
          member" for these purposes. PEMHCA also authorizes the board to  
          contract with carriers offering health benefit plans and  
          prohibits employees, annuitants, and their family members who  
          are eligible for Medicare from enrolling in a basic health  
          benefit plan. PEMHCA requires the board to make certain  
          notifications and reports to the Legislature in connection with  
          health benefit plans.

          Proposed  
          Law:  This bill would:
          
             1.   Clarify the definition of family to specifically exclude  
               former spouses and former domestic partners.
          
             2.   Require a state employee's or state annuitant's employer  
               to possess and maintain documentation verifying eligibility  
               of an employee's family members and to verify this  







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               information every three years, or annually for children for  
               whom the state employee or annuitant has assumed a  
               parent-child relationship.
          
             3.   Prohibit the board from granting further exceptions to  
               the rule against enrolling employees, annuitants, and their  
               family members who are eligible for Medicare, as specified,  
               in a basic health care plan. 
          
             4.   Revise the entities to which the board is required to  
               provide notification of approval of proposed benefits and  
               premium readjustments to exclude the Legislature as a  
               whole, and instead requires provision of an initial  
               estimate of the proposed changes in writing to the Joint  
               Legislative Budget Committee, the chairpersons of the  
               committee and subcommittees in each house of the  
               Legislature that consider the Public Employees' Retirement  
               System's budget and activities, the State Controller, the  
               Director of Finance, and the Legislative Analyst.  
             5.   Require the board to provide a detailed report to the  
               Legislature and the Director of Finance annually, on  
               November 1, regarding the health benefit plans it provides.  

          
             6.   Establish the Annuitants' Health Care Coverage Fund,  
               which is continuously appropriated for the purpose of  
               prefunding health care coverage for annuitants, including  
               administrative costs. 
          
             7.   Prohibit the use of state funds in the Annuitants'  
               Health Care Coverage Fund for the payment of benefits until  
               the date the funded ratio reaches at least 100 percent, or  
               July 1, 2046. 
                
             8.   Revise the definition of prefunding to include employee,  
               as well as, employer payments and to provide that payments  
               may fund the actuarially-determined normal costs of  
               postemployment health care benefits.
          
             9.   Repeals state law pertaining to vacant positions that  
               requires the Controller to abolish state positions that are  
               vacant for six consecutive months. 

          Fiscal  








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          Effect:  Uncertain fiscal impacts depending on future bargaining  
          agreements and other changes to employment rules.  
          
          Support:   None on file. 
          
          Opposed:  None on file. 
          
          Comments:   This trailer bill language provides the necessary statutory  
          references to enact the 2015-16 budget related to employee  
          compensation.   
          
          
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