BILL ANALYSIS Ó AB 1350 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1350 (Salas) As Amended June 16, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: | 80-0 | (May 14, |SENATE: |38-0 | (August 20, | | | |2015) | | |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: L. GOV. SUMMARY: Makes changes to existing law which authorizes the Kern County Board of Supervisors (Board of Supervisors) to establish the Kern County Hospital Authority (Authority). The Senate amendments: 1)Define "legacy employee" to mean "employees of the county who retired from the medical center prior to the date of transfer of control of the medical center, employees of the county who are initially transferred to the authority on the date of transfer of control of the medical center, and employees first hired by or retired from the authority during the 24-month period following the date of transfer of control of the medical center." AB 1350 Page 2 2)Define "new employee" to mean "employees first hired by the authority after the 24-month period following the date of transfer of control of the medical center." 3)Require the Authority, if a memoranda of understanding (MOU) is expired on the date of the transfer of control of Kern Medical Center (KMC), to continue to be bound by the terms and conditions of the most recent MOU, unless modified by a mutual agreement with each of the exclusive employee representatives, and the benefits and wages of transferred employees, as specified. 4)Require legacy employees to be deemed to be Kern County (County) employees for purposes of participation in a benefit plan administered by the Kern County Employees Retirement Association, but only for that purpose, and not to be employees of the County for any other purpose. 5)Require the County, upon the transfer of control of KMC and thereafter, to include legacy employees in a special county employee group for which the County has primary financial responsibility to fund all employer contributions, as specified, that are necessary to fund all benefits for legacy employees administered by the Kern County Employees Retirement Association, as specified. 6)Require the County, if the Authority fails to make required employer contributions for legacy employees and new employees and after demand and notice from the Kern County Employees Retirement Association, to be obligated to make employer contributions in the place of the Authority. 7)Require the Authority to be primarily responsible for any employer contributions, as specified, that are necessary to fund all benefits for new employees. AB 1350 Page 3 8)Require the County to maintain the obligation of employer contributions for new employees, as specified, until the Authority demonstrates and the Kern County Employees Retirement Association's Board of Retirement determines that the Authority is sufficiently capable financially to fully assume the obligation to make all employer contributions for new employees based on a plan of participation incorporated within a written agreement between the County and the Authority. Require the County, if the Authority fails to make contributions due to dissolution or bankruptcy of the Authority, to be obligated to make required contributions after receipt of notice and demand from the Kern County Employee's Retirement Association. 9)Make technical and conforming changes. EXISTING LAW authorizes the Board of Supervisors to establish the Authority, and specifies the Authority's governance, powers, and procedures. AS PASSED BY THE ASSEMBLY, this bill: 1)Made a number of changes to existing law which authorizes the Board of Supervisors to establish by ordinance the Authority and to allow for the transfer of the county-run KMC to the Authority. 2)Defined "transfer of control of the medical center" to mean "the transfer by the County to the Authority of the maintenance, operation, management, and personnel of the medical center, whether by lease, transfer of ownership, or other means, as provided by, and subject to, any conditions and limitations specified by the Board of Supervisors in the AB 1350 Page 4 enabling ordinance." 3)Added to the list of terms and conditions the Board of Supervisors may include in the enabling ordinance to transfer control to the Authority from the County, whether funds of the Authority shall be deposited in the custody of, and paid out solely through, the County's treasurer's office. 4)Changed the effective date from the date the County adopts the enabling ordinance to transfer control to the Authority instead to the actual date of the transfer of control to the Authority in a number of provisions in existing law which require the Authority to be bound by the terms of MOU between the County and its employee representatives and in several other provisions that provide protections for employee benefits. 5)Required the Authority to be treated as a public employer that offered a plan of replacement benefits prior to January 1, 2013. Provides that the County's plan of replacement benefits that was in effect prior to January 1, 2013, is deemed to be the Authority's replacement plan for the sole purpose of allowing the Authority to continue to offer the plan of replacement benefits, immediately after the transfer for Kern County Employees' Retirement Association members who meet specified requirements. 6)Authorized the Authority, if not otherwise required pursuant to the enabling ordinance to deposit its funds in the county treasury, to establish its own treasury. 7)Provided that the powers granted to the Authority, pursuant to existing law, may be subject to any terms, conditions, and limitations imposed by the County's enabling ordinance. 8)Added physicians and other provider types and coverage AB 1350 Page 5 mechanisms to the list of services, coverage, and programs that the Authority has the same rights as the county with respect to owning, operating, and providing. 9)Expanded the County's authority to issue debt instruments, beyond revenue anticipation notes, to provide by loan or otherwise amounts necessary to the Authority to meets its operating and capital needs. 10)Provided that existing law, which governs the Authority, shall not be construed to limit the borrowing authority of the County. 11)Authorized the Board of Supervisors, as applicable, to hold meetings relating to the Authority's trade secrets, as specified. 12)Authorized the Board of Supervisors to contract for services or purchase items on behalf of the Authority. 13)Provided that the Authority's governing body as authority over procurement and contracts, unless otherwise provided for and subject to the limitations and conditions established in the enabling ordinance. Requires the Authority to adopt written rules, regulations and procedures with regard to procurement and contract functions. 14)Required the Authority's ability to contract for personnel or other services and items, as specified, to only be limited by the provisions in this chapter and the Meyers-Milias-Brown Act. FISCAL EFFECT: None AB 1350 Page 6 COMMENTS: 1)Prior Legislation. Facing escalating costs, some county hospitals have sought to restructure their governance or affiliate with other hospitals in their areas. In these instances, the Legislature has granted several counties the ability to create health authorities, including Alameda [AB 2374 (Bates), Chapter 816, Statutes of 1996], Monterey [AB 276 (Alejo), Chapter 686, Statutes of 2012], San Luis Obispo [SB 538 (O'Connell), Chapter 899, Statutes of 1999], Santa Barbara, and Sonoma (for dental). Most recently, the Legislature passed AB 2546 (Salas), Chapter 613, Statutes of 2014, which authorized the Board of Supervisors to establish a separate Authority to govern the KMC. AB 2546 contains several provisions to ensure that healthcare services remain accessible to patients regardless of their ability to pay and that the Authority, as a separate entity from the County, will still continue to serve as a hospital. AB 2546 also established requirements for the Authority upon the transfer of KMC employees. 2)Bill Summary. This bill builds upon the authority granted to the Kern County Board of Supervisors by AB 2546 to establish the Authority and to transfer the medical center to the separate Authority. This bill makes a number of changes to the laws governing the transfer of KMC. Senate amendments define "legacy employees" and "new employees" and specify the County's obligations to make required employer contributions in the event that the Authority fails to do so. This bill is author-sponsored. 3)Author's Statement. According to the author, "KMC serves a AB 1350 Page 7 community of over 650,000 residents, including indigent individuals with no other means of obtaining medical care. KMC provides the only trauma care between Los Angeles and Fresno, and is vital to training physicians through academic residency and education programs. "A hospital authority allows Kern County to benefit from the cost savings that can be generated by operating under a separate governance structure and provide opportunities for increased flexibility, responsiveness, and innovation. The law established extensive provisions intended to ensure the medical center will continue to provide affordable, high-quality health care services and that medical center employees will have a seamless transition of wages, benefits, and contracts without loss of rights or status. This bill contains technical and clarifying changes to ensure the successful transfer of KMC to an Authority." 4)Arguments in Support. Supporters argue that this bill makes a number of changes to provide for a smooth and equitable transition of KMC to a hospital authority. 5)Arguments in Opposition. None on file. Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958 FN: 0001296 AB 1350 Page 8