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 Page 2 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 Page 3 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 Page 4 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