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 ----------------------------------------------------------------- |Author: |Committee on Budget | |----------+------------------------------------------------------| |Version: |January 9, 2015 Introduced | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Farra Bracht | |: | | ----------------------------------------------------------------- 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 AB 124 (Committee on Budget) Page 2 of ? 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 AB 124 (Committee on Budget) Page 3 of ? 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. -- END --