BILL ANALYSIS Ó
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Senator Mark Leno, Chair
2015 - 2016 Regular
Bill No: AB 1627 Hearing Date: August 17,
2016
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|Author: |Committee on Budget |
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|Version: |August 11, 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: memorandum of understanding:
Bargaining Unit 7
Summary: Provides legislative ratification for the memoranda of
understanding (MOU) agreed to by the state and Bargaining Unit
(BU) 7, which includes protective service and public safety
employees represented by the California Statewide Law
Enforcement Association.
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 five 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 five 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
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collective bargaining.
Proposed
Law: AB 1627 would ratify the proposed BU 7 MOU provisions,
effective July 2, 2016 through July1, 2019 and affecting
approximately 7,204 full-time equivalent positions, as
summarized by CalHR below:
HEALTH BENEFITS
1)Employer Contribution for Active State Employees . The state's
monthly consolidated 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 BU
7 members will prefund retiree healthcare with the goal of
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:
a. Effective July 1, 2017, 1.3 percent of pensionable
compensation.
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b. Effective July 1, 2018, an additional 1.4 percent
for a total of 2.7 percent of pensionable compensation.
c. Effective July 1, 2019, an additional 1.3 percent
for a total of 4.0 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 a retiree health benefit
plan for Medicare Part B premiums.
COMPENSATION
1)General Salary Increase (GSI)
a. Effective July 1, 2016, BU 7 employees shall receive
a three percent GSI.
b. Effective July 1, 2017, BU 7 employees shall receive
a three percent GSI.
c. Effective July 1, 2018, BU 7 employees shall receive
a two percent GSI.
2)Special Salary Adjustments
a. Effective July 1, 2016, BU 7 employees in the public
safety dispatcher, public safety operator, and
communications operator classifications shall receive a
special salary adjustment of five percent.
b. Effective July 1, 2016, BU 7 employees in the motor
carrier specialist I classification shall receive a
special salary adjustment of three percent.
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c. Effective July 1, 2016, BU 7 employees in the state
park peace officer (ranger and lifeguard) classifications
shall receive a special salary adjustment of five
percent.
d. Effective July 1, 2016, BU 7 employees in specified
investigator classifications shall receive a special
salary adjustment of five percent.
e. Effective July 1, 2016, BU 7 employees in the agent,
alcoholic beverage control classification shall receive a
special salary adjustment, which will increase the bottom
and top steps of pay ranges. After this special salary
adjustment and the GSI, these employees will receive up
to a 22 percent pay increase over the course of the MOU.
f. Effective July 1, 2016, BU 7 employees in the
coordinator (fire and rescue services, and law
enforcement) classifications shall receive a special
salary adjustment, which will increase the bottom and top
steps of pay ranges for these classifications. After this
special salary adjustment and GSI, these employees will
receive up to a 36 percent pay increase over the course
of the MOU.
3)Longevity Peace Officer Pay Differential
a. Effective the first day of the pay period following
ratification, each step of the longevity pay differential
for peace officers shall be increased by one percent.
4)Education Incentive Pay
a. Effective the first day of the pay period following
ratification, the monthly education incentive pay shall
increase from $50 to $75 for an Associate of Arts or
Associate of Science degree and from $100 to $125 for a
Bachelor of Arts or Bachelor of Science degree.
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5)Uniform Allowance
a. Effective the first day of the pay period following
ratification, the uniform replacement allowance shall be
increased as follows:
o From $640 to $950 for full-time employees
in specified classifications;
o From $540 to $640 for less than full-time
employees in specified classifications;
o From $20 to $55 for specified Lifeguards;
o From $385 to $950 for oil spill prevention
specialist;
o From $450 to $950 for communications
operators employed at Department of Forestry and
Fire Protection.
a. Effective the first day of the pay period following
ratification, specified employees shall receive a uniform
maintenance and cleaning allowance of $25 per month.
b. Effective the first day of the pay period following
ratification, employees in the motor carrier specialist I
and school pupil transportation safety coordinator
classifications shall receive an annual boot
reimbursement of $150.
MISCELLANEOUS
1)The maximum amount of leave that can be deducted from each
employee for the Union Release Time Bank shall increase from
1.5 hours to two hours.
2)Effective May 1, 2017, and depending on the availability of
departmental funds, the amount of leave that can be cashed
out each year shall increase from 20 hours to 80 hours.
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3)Incorporates the Wounded Warriors Transitional Leave Act
(Chapter 794, Statutes of 2015) which provides up to 96 hours
of additional sick leave for an employee hired on or after
January 1, 2016, who is a military veteran with a
service-connected disability rated 30 percent.
4)Allows an employee to transfer up to three months of leave
credits to a family member under certain conditions.
5)Removes the requirement that a new employee must work two
years before receiving the full employer health contribution
for dependents.
6)Effective the first day of the pay period following
ratification, the lodging reimbursement rates shall increase
from $125 to $140 for Alameda, San Mateo, and Santa Clara
counties and from $150 to $250 for San Francisco.
7)Effective the first day of the pay period following
ratification, the Overtime Meal Allowance shall increase from
$7.50 to $8.00.
8)Requires the state to provide specified items of protective
equipment based on an employee's classification and place of
employment.
9)Effective the first day of the pay period following
ratification, physical fitness pay shall be included in
regular base pay, and will no longer be contingent on an
employee's physical condition.
10)Extends the amount of time between voluntary transfers from
12 months to 24 months for special agents and special agent
supervisors at the Department of Justice.
11)Requires special agents and special agent supervisors at
Department of Justice who reinstate or are hired from a
reemployment list to work 24 months before requesting a
voluntary transfer.
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Fiscal
Effect: According to CalHR, BU 7's MOU results in the following costs:
Fiscal Year 2016-17: $38.6 million ($9.7 million
General Fund)
Total Incremental Cost: $91.5 million ($24.8 million
General Fund)
Total Budgetary Cost: $267.9 million ($71.3 million
General Fund)
In addition, according to CalHR roughly $4 million General Fund
a year will be absorbed within departmental resources for costs
associated with leave cash out.
Support: None on file.
Opposed: None on file.
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