BILL ANALYSIS Ó
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Senator Mark Leno, Chair
2015 - 2016 Regular
Bill No: AB 1620 Hearing Date: June 13,
2016
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|Author: |Committee on Budget |
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|Version: |June 13, 2016 As amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Anita Lee |
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Subject: State Employment
Summary: Makes necessary statutory and technical changes to the
labor-related provisions of the Budget Act of 2016.
Additionally, provides legislative ratification for the
memoranda of understanding (MOU) agreed to by the state and
bargaining unit (BU) 12 represented exclusively by International
Union of Operating Engineers (IUOE).
Existing Law:
1)Establishes the Ralph C. Dills Act, which requires the state
to collectively bargain with the exclusive representatives of
employee groups (i.e. bargaining units) regarding wages and
working conditions, and to define negotiated agreements in
MOUs.
2)Establishes the California Department of Human Resources
(CalHR) as the official representative of the Governor in all
matters related to collective bargaining with state employees.
3)Requires that any MOU between the state and an exclusive
representative must be ratified by the Legislature.
4)Establishes the California Public Employees' Retirement System
(CalPERS), which administers health and retirement benefits
for state employees.
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5)Requires the Legislative Analyst's Office (LAO) to analyze all
state MOUs and to provide analyses of an MOU and its fiscal
impact to the Legislature within 10 days of receipt of an MOU
from CalHR.
6)Provides that fully vested state retirees (e.g., 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.
7)Requires that Medicare-eligible retirees enroll in Medicare
and choose a Medicare-coordinated health plan. Since these
plans may be cheaper than non-Medicare (or "Basic" plans),
thus resulting in some portion of the employer contribution
going 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.
8)Provides that most state employees (those hired after 1985 or
1989, depending on class) must work for 10 years to receive 50
percent of the 100/90 formula, with an additional 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.
9)Provides that retirees who were covered in certain bargaining
units while actively employed will receive an employer retiree
health contribution based on the 80/80 formula (i.e., 80
percent of the weighted average premium of the four health
plans most highly utilized by all members).
10)Provides that the employer contribution for active state
employee health care shall be determined through collective
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bargaining. In its MOU effective 2013 to 2015, BU 12 (IUOE)
agreed to a flat dollar amount, as specified.
Proposed
Law: Bargaining Unit 12 Memorandum of Understanding: the
following information summarizing the general provisions of the
MOU was provided by CalHR.
Number of Employees: The BU 12 agreement affects approximately
10,778 full-time equivalents, and includes the following
agreements.
HEALTH BENEFITS
1)Employer Contribution for Active State Employees . Effective
the pay period following ratification, the state's monthly
health benefit contribution for each employee shall continue
to be a flat dollar amount equal to 80 percent of the weighted
average of the basic health benefit plan premiums of the four
largest enrolled basic health plans. For each employee with
enrolled family members, the employer shall continue to
contribute an additional flat dollar amount equal to 80
percent of the weighted average of the additional premiums.
The flat dollar amounts shall be increased as appropriate,
pursuant to the formulas on January 1, 2017, January 1, 2018,
and January 1, 2019.
2)Employer Contribution for Future Retirees . Employees first
hired on or after January 1, 2017, will receive an employer
contribution for retiree health benefits based on an "80/80"
formula. Retirees and their dependents enrolled in a basic
health benefit plan will receive an employer contribution
equal to 80 percent of the weighted average premium of the
four largest basic health benefit plans based on state active
employee enrollment. Retirees and their dependents enrolled in
a Medicare health benefit plan will receive an employer
contribution equal to 80 percent of the weighted average
premium of the four largest Medicare health benefit plans
based on state retiree enrollment.
3)Prefunding of Other Post-Employment Benefits . The state and
Bargaining Unit 12 members will prefund retiree healthcare
with the goal of reaching 50 percent cost- sharing of
actuarially determined total normal cost for employer and
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employees by July 1, 2019. The state and employees will each
make the following contributions:
a. Effective July 1, 2017, 1.4 percent for a total of
1.9 percent of pensionable compensation.
b. Effective July 1, 2018, an additional 1.4 percent
for a total of 3.3 percent of pensionable compensation.
c. Effective July 1, 2019, an additional 1.3 percent
for a total of 4.06 percent of pensionable compensation.
4)Post-Employment Health and Dental Benefit Vesting Schedule .
All employees first employed by the state on or after January
1, 2017, will be subject to an extended vesting schedule
providing 50 percent of the employer contribution upon
completion of 15 years of state service, increasing five
percent for each additional year of service, until the
employee is 100 percent vested at 25 years of state service.
5)Medicare Part B Supplemental Benefit . All employees first
hired on or after January 1, 2017, will no longer be eligible
to use the employer contribution for retiree health benefits
for Medicare Part B premiums.
COMPENSATION
6)General Salary Increase (GSI)
a. Effective July 1, 2016, Unit 12 employees shall
receive a three percent GSI.
b. Effective July 1, 2017, all Unit 12 employees shall
receive a four percent GSI.
c. Effective July 1, 2018, all Unit 12 employees shall
receive a three percent GSI.
7)Special Salary Adjustments
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a. Effective July 1, 2016 and 2017, Unit 12 employees
in specified heavy equipment mechanic classifications
shall receive a special salary adjustment of five
percent.
b. Effective July 1, 2016, Unit 12 employees in
specified electrician classifications shall receive a
special salary adjustment of five percent.
c. Effective July 1, 2016, and 2017, Unit 12 employees
in specified telecommunications technician
classifications shall receive a special salary adjustment
of five percent.
8)Uniform Allowance
a. Increases the uniform reimbursement from $470 to
$670 for full-time employees that work for the Department
of Parks and Recreation, or the Department of Forestry
and Fire Protection.
b. Provides an annual footwear allowance of $82 for
specified permanent full-time employees that work for the
Department of Corrections and Rehabilitation or the
California Highway Patrol.
MISCELLANEOUS
9)Leave Cash Out, Additional Sick Leave, Overtime Meal
Allowance, Monthly Payroll Cycle
a. Increases the amount of leave that can be cashed out
annually from 20 hours to 80 hours, depending on the
available department funds effective May 1, 2017.
b. Incorporates the Wounded Warriors Transitional Leave
Act to provide up to 96 hours of additional sick leave
for employees hired after January 1, 2016, who are
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military veterans and have a service connected disability
rated 30 percent.
c. Increases the Overtime Meal Allowance from $6.00 to
$8.00, effective approximately three months after
ratification, for employees that work for Caltrans.
d. Converts all Caltrans employees to a monthly payroll
cycle and provides a one-time supplemental payment
equivalent to the employee's existing semi-monthly gross
salary, not to exceed $1,200 effective approximately
three months after ratification.
DURATION
July 1, 2015 through July 1, 2019.
JUDICIAL BRANCH EMPLOYEE BENEFITS
1)Post-Employment Health and Dental Benefit Vesting Schedule . A
judicial branch employee first employed by the state on or
after January 1, 2017, will be subject to a vesting schedule
providing 50 percent of the employer contribution upon
completion of 15 years of state service, increasing five
percent for each additional year of service, until the
employee is 100 percent vested at 25 years of state service.
2)Employer Contribution for Future Retirees . Employees first
hired on or after January 1, 2017, will receive an employer
contribution for retiree health benefits based on an "80/80"
formula. Retirees and their dependents enrolled in a basic
health benefit plan will receive an employer contribution
equal to 80 percent of the weighted average premium of the
four largest basic health benefit plans based on state active
employee enrollment. Retirees and their dependents enrolled in
a Medicare health benefit plan will receive an employer
contribution equal to 80 percent of the weighted average
premium of the four largest Medicare health benefit plans
based on state retiree enrollment.
3)Prefunding of Other Post-Employment Benefits . The state and
state employees in the judicial branch will prefund retiree
healthcare with the goal of reaching 50 percent cost-sharing
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of actuarially determined total normal cost for employer and
employees by July 1, 2019. The state and employees will each
make the following contributions:
a. Effective July 1, 2016, 1.4 percent of pensionable
compensation.
b. Effective July 1, 2017, up to an additional 1.5
percent for a total employee contribution of up to three
percent of pensionable compensation. The additional
amount shall be determined by the Director of Finance no
later than April 1, 2017.
4)Medicare Part B Supplemental Benefit . All employees first
hired on or after January 1, 2017, will no longer be eligible
to use the employer contribution for retiree health benefits
for Medicare Part B premiums.
5)Employee Pension Contribution . Increases the employee pension
contribution on or after July 1, 2017, from five percent to
eight percent.
6)Judges Salary Survey . Clarifies the statutory methodology used
to calculate the annual salary adjustment for state judges and
justices to include both salary increases and decreases to be
considered when calculating the average state wage growth for
purposes of adjusting salaries of judges and justices.
CIVIL SERVICE IMPROVEMENT
7)Exempt Employee Reinstatement . Simplify the exempt appointee
reinstatement guidelines by consolidating various periods
which an employee is required to make a request for
reinstatement. The new guidelines require no break in state
service, and submittal of a request within 10 working days
after the effective date of termination, regardless of exempt
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appointment type. If an employee seeks reinstatement after
more than 10 working days after the effective date of
termination, reinstatement is at the discretion of the
appointing power. Provides exempt appointees who have at least
five years of state service, within four years of termination,
a right to obtain civil service appointment list eligibility
by taking a deferred examination for any class that has a
current eligible list and for which the employee meets the
minimum qualifications of the class.
8)Leave Credit . Specifies that an overpayment of leave credits
to state employees occurs when the employee receives
compensation in exchange for leave erroneously credited to the
employee for the purposes of an action to recover overpayment.
9)Training . Specifies managers, supervisors and career executive
assignment (CEAs) employees will be required to complete
various leadership training and development as prescribed by
the department.
Fiscal
Effect: According to CalHR, BU 12's MOU results in the
following costs:
Fiscal Year 2016-17: $37.9 million ($12.4 million
General Fund)
Total Incremental Cost: $139.5 million ($44.3
million General Fund)
Total Budgetary Cost: $396.9 million ($126.5 million
General Fund)
In addition, according to CalHR roughly $5 million General Fund
a year will be absorbed within departmental resources for costs
associated with leave cash out.
Judicial Branch Employee Benefits will result in $9.9 million
General Fund costs.
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