BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1350


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1350 (Salas)


          As Amended  June 16, 2015


          Majority vote


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          |ASSEMBLY:  | 80-0 | (May 14,      |SENATE: |38-0  | (August 20,     |
          |           |      |2015)          |        |      |2015)            |
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          |           |      |               |        |      |                 |
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          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."  








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          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.  








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          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  








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            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  








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            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










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          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  








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            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



















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