BILL ANALYSIS Ó
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Senator Mark Leno, Chair
2015 - 2016 Regular
Bill No: AB 1630 Hearing Date:
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|Author: |Committee on Budget |
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|Version: |August 30, 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: Provides legislative ratification for the memoranda of
understanding (MOU) agreed to by the state and Bargaining Unit
(BU) 2, which includes attorneys and hearing officers
represented by California Attorneys, Administrative Law Judges,
and Hearing Officers in State Employment (CASE).
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.
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
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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
collective bargaining.
Proposed
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Law: AB 1630 would ratify the proposed BU 2 MOU provisions,
effective July 1, 2016 through July 1, 2019, and affect
approximately 3,890 full-time equivalent positions. This bill
provides the following:
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 adjusted 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
2 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:
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a) Effective July 1, 2017, 0.7 percent of pensionable
compensation.
b) Effective July 1, 2018, an additional 0.6 percent
for a total of 1.3 percent of pensionable compensation.
c) Effective July 1, 2019, an additional 0.7 percent
for a total of 2.0 percent of pensionable compensation.
1)Post-Employment Health and Dental 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.
2)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 the first day of the pay period following
ratification, BU 2 employees shall receive a five percent
GSI.
b) Effective July 1, 2017, BU 2 employees shall receive a
five percent GSI.
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c) Effective July 1, 2018, BU 2 employees shall receive a
four percent GSI.
MISCELLANEOUS
1)Prohibits the implementation of a furlough program or a
mandatory personal leave program during the first year of the
agreement. Any furlough during the second or third year must
be authorized by the Legislature.
2)Effective May 1, 2017, and depending on the availability of
departmental funds, the amount of leave that can be cashed
out each year increases from 20 hours to 80 hours.
3)Removes the requirement that a new employee must work two
years before receiving the full employer health contribution
for dependents.
4)Effective the first day of the pay period following
ratification, the lodging reimbursement rate increases from
$150 to $250 for San Francisco.
5)Incorporates the Wounded Warriors Transitional Leave Act
(Senate Bill 221, 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.
6)Increases the pension contribution rates by one percent for BU
2 excluded employees for the purpose of ensuring the same
contribution rate as BU 2 rank and file employees.
OTHER PROVISIONS
1) Chief Sergeant-at-Arms. This bill also classifies the
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chief sergeant-at-arms of the Assembly as a peace officer
in CalPERS for the purpose of ensuring that the Assembly
chief sergeant-at-arms and the rank and file sergeants are
subject to the same retirement benefit formulas. The chief
sergeant-at-arms of the Senate will continue to be excluded
from the peace officer classification in CalPERS.
This change is due to the passage of the Public Employees'
Pension Reform Act of 2013, which closed the Legislator's
Retirement System to new members and inadvertently resulted in a
new chief sergeant-at-arms (now classified as a "miscellaneous"
member in CalPERS) receiving a retirement benefit formula lower
than that provided to rank and file sergeants who are classified
as peace officers in CalPERS.
Fiscal Effect: According to CalHR, BU 2's MOU results in the
following costs:
Fiscal Year 2016-17: $24.2 million ($6.6 million
General Fund)
Total Incremental: $109.1 million ($29.7 million
General Fund)
Total Budgetary: $309 million( $84.1 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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