BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 131|
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THIRD READING
Bill No: AB 131
Author: Committee on Budget
Amended: 9/8/15 in Senate
Vote: 21
SENATE BUDGET & FISCAL REVIEW COMMITTEE: 11-5, 9/11/15
AYES: Leno, Allen, Beall, Block, Hancock, Mitchell, Monning,
Pan, Pavley, Roth, Wolk
NOES: Nielsen, Anderson, Moorlach, Nguyen, Stone
ASSEMBLY FLOOR: Not relevant
SUBJECT: State public employment
SOURCE: Author
DIGEST: This bill provides legislative ratification for
memoranda of understanding (MOU) agreements between the state
and various state bargaining units (BU), and provides for
statutory changes to the state civil service system.
ANALYSIS:
Existing law:
Retiree Health Benefit
1)Provides, the state and state employees do not make
contributions to prefund retiree health care costs for most
state employees. The state has already established at least
partial prefunding agreements with three of its labor unions,
BU 5 (Highway Patrol), BU 12 (Operating Engineers-Craft and
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Maintenance), and BU 16 (Physicians, Dentists, and
Podiatrists). For BU 5 (Highway Patrol), contributions are
made by the state in lieu of salary increases. For BU 12
(Operating Engineers-Craft and Maintenance) and BU 16
(Physicians, Dentists and Podiatrists), only the employees are
making contributions.
2)Provides fully vested state retirees (i.e., with 20 or more
years of state employment) are entitled to an employer
contribution for retiree health care equal to 100 percent of
the weighted average premium of the four health plans most
highly utilized by all members. Dependents are eligible for a
contribution based on 90 percent of the average additional
premiums paid for dependents during the benefit year in which
the formula is applied. This is referred to as the 100/90
formula. Currently, there is no formula based solely on the
most highly utilized Medicare-coordinated health plans.
3)Provides most state employees (those first hired after 1985 or
1989, depending on class) must work for 10 years to receive 50
percent of the 100/90 formula. They then add 5 percent per
year of service until, after 20 years, they are vested to
receive 100 percent of the 100/90 formula. Individuals hired
prior to 1985 or 1989 could be subject to either 5 year or 10
year vesting for full coverage of the 100/90 formula. One
bargaining unit, BU 12 (Operating Engineers-Craft and
Maintenance), agreed via collective bargaining, beginning in
2011, to be subject to a 15/25 year vesting schedule.
4)Requires that Medicare-eligible retirees enroll in Medicare
and choose a Medicare-coordinated health plan. These plans may
be cheaper than non-Medicare (or "Basic" plans) and, as a
result some portion of the employer contribution goes unused.
Current law requires that any unused portion of the 100/90
formula contributions may be applied to reimburse retirees for
the costs of Medicare Part B premiums. These reimbursements
are made in the form of an additional payment to the retiree
on the retirement warrant up to the cost of the Part B
premium. Whether or not a retiree receives the Medicare Part B
reimbursement in full or in part depends upon the cost of that
retiree's health plan.
State Civil Service System: Ranking of Civil Service Employees
and Applicants
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5)Provides, in general, state employment is based on a system of
merit achieved through competitive examination. Applicants for
promotion or employment are ranked based on exam scores and
employers may promote or hire from either the top three names
or ranks, as specified. An employee may receive a passing
score on an exam, but not score high enough to place in the
top three ranks, and therefore, may not be eligible for hire
or promotion. As people in the top three ranks are hired,
promoted, or otherwise fall off the hiring list, individuals
who have passed the exam may move up into the top three ranks
and become eligible for hire or promotion.
Career Executive Assignments (CEA)
6)States CEAs are state employees in high-level managerial
positions that serve at the top levels in a department. Their
responsibility includes developing and implementing policy,
and may serve in a department director's cabinet or form a
department's executive staff.
7)Provides, in general, CEAs in state employment must be hired
from among individuals with permanent civil service status. In
addition, CEA applicants can include legislative employees,
executive branch appointees (i.e., exempt employees), or
former military, as specified. CEAs are not subject to the
same job protections or hiring and disciplinary standards as
apply to non-executive state civil service employees. CEAs may
be terminated "at will." CEAs must be hired or promoted via a
competitive process that is overseen by the State Personnel
Board (SPB). Former civil service employees who become CEAs
and are subsequently terminated have certain rights to return
to civil service positions following termination, as
specified.
This bill provides legislative approval of the MOUs entered into
between the state and BU 9, (Professional Engineers), on August
31, 2015 and the state and BU 10, (Professional Scientists) on
September 4, 2015. The BU 9 MOU shall be effective from July 2,
2015 through June 30, 2018, and BU 10 MOU shall be effective
from July 2, 2015 through July 1, 2018. Specifically, this bill
enacts the following:
Retiree Health Benefit Reforms
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Prefunding of Other Post-Employment Benefits
1)Applies to all BU 9 (Professional Engineers) and BU 10
(Professional Scientists) employees, including related
excluded and exempt employees.
a) The state and all Unit 9 members will prefund retiree
healthcare with the goal of each reaching 50 percent
cost-sharing of actuarially-determined total normal cost
for employer and employees by July 1, 2019. The state and
employees will each make the following contributions:
i) Effective July 1, 2017, 0.5 percent of pensionable
compensation.
ii) Effective July 1, 2018, an additional 0.5 percent
for a total of 1.0 percent of pensionable compensation.
iii) Effective July 1, 2019, an additional 1.0 percent
for a total of 2.0 percent of pensionable compensation.
b) The state and all Unit 10 members will prefund retiree
healthcare with the goal of each reaching 50 percent
cost-sharing of actuarially-determined total normal cost
for employer and employees by July 1, 2019. The state and
employees will each make the following contributions:
i) Effective July 1, 2017, 0.7 percent of pensionable
compensation.
ii) Effective July 1, 2018, an additional 0.7 percent
for a total of 1.4 percent of pensionable compensation.
iii) Effective July 1, 2019, an additional 1.4 percent
for a total of 2.8 percent of pensionable compensation.
c) All employees eligible for health care benefits shall
contribute in proportion to their working time-base.
d) Any contributions made by the employee shall not be
recoverable under any circumstances by the employee or the
employee's beneficiary or survivor (e.g., if the employee
should retire, die, or separate from service before
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becoming eligible for a health care benefit).
Employer Contribution for Future Retirees' Health Care
2)Applies 80/80 formula to all new BU 9 and BU 10 employees
first hired on or after January 1, 2016, including related
excluded and exempt employees.
a) For non-Medicare-eligible retirees, the employer
contribution for retiree health benefits shall be an amount
equal to 80 percent of the weighted average premiums of the
four health benefit plans most highly utilized by active
state employees.
The employer contribution for a non-Medicare-eligible retiree's
dependent shall be an amount equal to 80 percent of the weighted
average of the additional premiums required for enrollment of
those family members during the benefit year in which the
formula is applied.
b) For Medicare-eligible retirees, the employer
contribution for retiree health benefits shall be an amount
equal to 80 percent of the weighted average premiums of the
four Medicare-coordinated plans most highly utilized by
Medicare eligible retirees.
The employer contribution for a Medicare -eligible retiree's
dependent shall be an amount equal to 80 percent of the weighted
average of the additional premiums required for enrollment of
those family members during the benefit year in which the
formula is applied.
The contribution for a Medicare-eligible retiree shall not
exceed the formula whether or not the individual is enrolled in
Medicare.
c) A retiree shall not be able to use any portion of the
employer's retiree health care contribution toward the
payment of Medicare Part B premiums.
Post-Employment Health Benefit Vesting Schedule
3)Provides all BU 9 and BU 10 employees first hired into state
employment on or after January 1, 2016, will be subject to an
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extended vesting schedule for retiree health benefits.
Specifically, BU 9 and BU 10 retirees first hired into state
employment on or after January 1, 2016 will receive 50 percent
of the employer contribution upon completion of 15 years of
state service, increasing 5 percent for each additional year
of service, until the employee is vested for 100 percent of
the employee contribution after 25 years of state service.
4)States, additionally, the MOU agreements provided the
following General Salary Increases (GSI) to BU 9 and BU 10:
a) Effective July 1, 2016, all Unit 9 represented
classifications shall receive a five percent GSI.
b) Effective July 1, 2017, all Unit 9 represented
classifications shall receive a two percent GSI.
c) Effective July 1, 2016 through July 1, 2018, all Unit 10
represented classifications shall annually receive a five
percent GSI.
Civil Service Reform
5)Makes the following statutory changes to laws governing the
civil service system for state employees. Specifically, this
bill impacts two key areas of law governing a) the competitive
ranking of state civil service employees and applicants, and
b) eligibility and hiring of state employees in "Career
Executive Assignments (CEA).
6)Eliminates the "Rule of Three Names," which requires hiring
managers to consider only the top three individuals on
promotional hiring eligibility lists whose examination scores
result in them being in the top three names.
7)Eliminates the "Rule of Six Ranks," which requires all
managerial hiring eligibility lists to be organized into six
ranks, depending on the scores applicants receive on the
classification's exam, and limits a department's hiring
manager to only consider applicants whose examination scores
result in them being in the top three ranks.
8)Eliminates the "Rule of One Rank," which requires departmental
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hiring managers to only consider individuals whose examination
scores result in them being in the first rank for supervisory
positions.
9)Consolidates various hiring eligibility list requirements into
a single process, the "Rule of Three Ranks", which would apply
to all promotional or open state jobs. This change will allow
hiring managers to consider eligible persons whose examination
scores result in them being in the top three ranks for rank
and file and managerial lists, as specified.
10)Expands the pool of CEA candidates by making the following
changes:
a) Eliminating the requirement that a former legislative or
non-elected exempt employee be separated from employment
for no more than 12 months prior to applying for the CEA
position.
b) Expanding the pool of eligible candidates that can be
appointed to a CEA position to include individuals from the
private sector who meet the requirements of the applicable
position.
c) Providing terminated CEAs hired from outside state civil
service the right to appeal to the SPB for restoration of
their assignment.
d) Clarifying that terminated CEAs who were previously
employed by the state and had permanent civil service
status, have return rights to a (non-CEA) civil service
position, with at least the same salary level as the last
position they held. If the employee had a minimum of five
years of state service, he or she may return to a position
that has the same salary level as the last position or at
least the same salary level that is at least two steps
lower than the CEA position from which the employee is
being terminated. These provisions are consistent with
existing law.
11)States that terminated CEAs hired from outside civil service
would be eligible for deferred examination for any open
position at the department they were employed at and meet the
minimum qualifications.
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12)Eliminates rules prohibiting a CEA applicant from competing
in multiple civil service promotional exams at more than one
department in the same class.
13)Provides $300,000 one-time General Fund for the Department
of Finance (DOF) to post all budget requests included as a
part of the Governor's Budget on DOF's website. The funds
will be used to purchase high-speed industrial scanners and
additional software programming.
FISCAL EFFECT: Appropriation: Yes Fiscal
Com.:YesLocal: No
SUPPORT: (Verified9/10/15)
None received
OPPOSITION: (Verified9/10/15)
None received
Prepared by:Anita Lee / B. & F.R. / (916) 651-4103
9/11/15 15:16:00
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