BILL ANALYSIS Ó SB 98 Page 1 (Without Reference to File) SENATE THIRD READING SB 98 (Committee on Budget and Fiscal Review) As Amended June 16, 2015 Majority vote. Budget Bill Appropriation Takes Effect Immediately SENATE VOTE: Vote not relevant SUMMARY: Includes a statutory provision related to employee compensation necessary to enact the 2015 Budget Act. Specifically, this bill: 1)Repeals Government Code Section 12439 related to vacant positions. 2)States that "family member" does not include a former spouse or former domestic partner of an employee or annuitant. 3)Expands the definition of prefunding to add periodic payments by an employee to fund or partially fund the "normal costs" of postemployment health care benefits. SB 98 Page 2 4)Requires an employing office to maintain the verifying documentation in the employee or annuitant's official personnel or member file. 5)Requires the employing office of the state employee or state annuitant to substantiate eligibility for family members as follows: a) At least once every three year for spouses, domestic partners, children and stepchildren, domestic partner children b) At least annually for other children for whom the state employee or state annuitant has assumed a parent-child relationship 6)States that the employing office of a state annuitant is the Public Employee's Retirement System (CalPERS). 7)Prohibits CalPERS from granting any further exemptions after July 1, 2015, to the rule against enrolling employees, annuitants, and their family members who are eligible for Medicare in a basic health benefit plan. 8)Requires CalPERS to provide an initial estimate of proposed changes and costs in writing to the Joint Legislative Budget Committee, chairpersons of the Public Employees' Retirement System's budget, the State Controller, the Trustees of the California State University, the Department of Human Resources, the Director of Finance, and the Legislative analyst not later than 30 days prior to the approval. 9)Requires the CalPERS Board to report various items to the Legislature and the Director of Finance annually regarding the health benefits program. SB 98 Page 3 10)Prohibits the funds in the designated state subaccounts of the fund, or a successor fund, that are derived from investment income from being used to pay benefits for state annuitants until the earlier of: a) The date the funded ratio of the designated state subaccount reaches at least 100% as determined in the employer's postemployment benefits; or b) July 1, 2046. 11)Defines "designed state subaccount" as a separate account maintained within the fund to identify prefunding contributions and assets attributable to a specified state collective bargaining unit or other state entity. 12)Does not prohibit an alternative funding strategy agreed to in a written memorandum of understanding. FISCAL EFFECT: Statutory changes contained in this bill related to state costs are consistent with the 2015-16 budget package. COMMENTS: This trailer bill language provides the necessary statutory references to enact the 2015-16 Budget related to employee compensation. Analysis Prepared by: Genevieve Morelos / BUDGET / (916) 319-2099 FN: 0000976 SB 98 Page 4