BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2735


                                                                    Page  1





          ASSEMBLY THIRD READING


          AB  
          2735 (Jones-Sawyer)


          As Introduced  February 19, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Public          |7-0  |Bonta, Waldron,       |                    |
          |Employees       |     |Cooley, Cooper,       |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |O'Donnell, Wagner     |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |19-0 |Gonzalez, Bigelow,    |                    |
          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |Gallagher, Eduardo    |                    |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Jones, Obernolte,     |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Wagner, Weber, Wood   |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 










                                                                    AB 2735


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          SUMMARY:  Allows state confidential, supervisory, excluded, or  
          managerial employees to elect to "cash-out" up to 80 hours of  
          eligible unused leave credit if the Department of Human  
          Resources (CalHR) chooses to offer a leave buy-back program.    
          Specifically, this bill:  


          1)Allows, upon the annual determination by CalHR as to whether  
            or not a buy-back program will be offered, state employees  
            designated as supervisory, confidential, excluded or  
            managerial to annually elect to cash-out up to 80 hours of  
            unused leave credit at their regular rate of pay.


          2)Specifies that for purposes of the buy-back, eligible leave  
            may be a combination of vacation leave, annual leave, personal  
            leave, personal holiday, or holiday credit.


          3)Requires CalHR to the date of eligibility and conditions of  
            buy-back and the period for application.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee:


          1)Unknown but absorbable costs for departments to offer  
            additional hours as part of a leave buyback program, if CalHR  
            determines that existing budgetary resources for a state  
            agency can accommodate the additional hours available for  
            buyback.


          2)Longer-term cost savings as a result of shifting future costs  
            forward. Leave buyback programs are thought to generate  
            long-term savings and are considered one strategy to curb the  
            growth in unfunded leave liabilities.









                                                                    AB 2735


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          COMMENTS:  Existing CalHR regulations establish Excluded  
          Employee Buy Back Program which authorizes payment of leave  
          credits to employees who are excluded from collective  
          bargaining.  On an annual basis CalHR will determine whether or  
          not a leave buy-back will be offered.  Eligible employees may  
          receive payment at their regular salary rate in exchange for  
          accrued vacation, annual leave, personal leave, and/or personal  
          holiday credits.  The maximum amount of buy back for managerial  
          and related classes is 80 hours.  Supervisors, confidential, and  
          other eligible excluded employees may cash out up to 40 hours. 


          According to the author, "This bill will increase allowable paid  
          leave buy-back hours to 80 for ALL excluded employees.  In  
          current policy, managers are allowed 80 hours and non-managers  
          (supervisors, confidential, and other excluded employees) are  
          ONLY allowed 40 hours of unused leave available for buy-back.   
          This bill will equate the number of hours for buy back to 80 for  
          both state supervisors and managers, removing the discrepancy in  
          the number of hours.


          According to a March 2013 report by the Legislative Analysts'  
          Office (LAO), the state's liability to pay employee leave  
          balances totaled $3.9 billion as of June 2013.  The LAO  
          concluded that 'the state's large balance of unfunded leave  
          liabilities can pose fiscal stress on departments, reduce budget  
          transparency, strain management-employee relations, and  
          negatively affect public trust in state employee management.'   
          The LAO recommended that the legislature act to reduce leave  
          balance liabilities by 'instituting a leave buy-back program'  
          because 'it reduces the employer's outstanding long-term  
          liabilities.'"


          The author concludes, "This bill will also help to ensure that  
          the benefits for state supervisors and managers are consistent  
          with their rank and file counterparts.  Under recently  








                                                                    AB 2735


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          negotiated rank and file Memorandum of Understanding (for  
          Bargaining Units 9/Engineers and 10/Scientists), rank and file  
          state engineers and scientists are provided up to 80 hours of  
          leave buy-back in a given year."




          Analysis Prepared by:                                             
                          Karon Green / P.E.,R., & S.S. / (916) 319-3957    
                                                                    FN:  
          0002801