BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  September 10, 2015


                            ASSEMBLY COMMITTEE ON BUDGET


                                Shirley Weber, Chair


          SB  
          99 (Committee on Budget and Fiscal Review) - As Amended  
          September 10, 2015


          SENATE VOTE:  Vote not relevant 


          SUBJECT:  Budget Act of 2015.


          SUMMARY Makes necessary statutory and technical changes to  
          implement the Budget Act of 2015 related to Civil Service  
          improvement provisions.  Additionally, provides legislative  
          ratification for the memoranda of understanding (MOU) agreed to  
          by the state and bargaining units (BUs) 9 and 10.  Specifically,  
          this bill:  


             1.   Provides legislative ratification for the memoranda of  
               understanding for the following state bargaining units:


                  a.        BU 9 (Professional Engineers), represented  
                    exclusively by Professional Engineers in California  
                    Government (PEGC), and 


                  b.        BU 10 (Professional Scientists), represented  
                    exclusively by the California Association of  








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                    Professional Scientists (CAPS).  


             2.   Updates and expands the definition of career executive  
               to mean an employee appointed from an employment list  
               established for the express purpose of providing a list of  
               persons who are eligible for career executive assignment  
               (CEA) as specified for persons employed by the Legislature,  
               persons who served in the US military, persons holding  
               nonelected exempt positions in the executive branch of  
               government and private sector employees.


             3.   Simplifies and streamlines the process for persons  
               employed by the Legislature, persons who served in the US  
               military, and to persons holding nonelected exempt  
               positions in the executive branch of government to obtain  
               eligibility on a civil service list by taking a promotional  
               or CEA exam.  


             4.   Clarifies the termination rights of CEAs who were, prior  
               to their CEA appointment, legislative employees or  
               nonelected exempt executive branch employees to state that  
               he or she shall have the right to request a deferred  
               examination for any promotional list that his or her  
               appointment power has in existence at the time of  
               termination and for which he or she meets the minimum 1  
               qualifications.   


             5.   Repeals Government Code Section 19057 relating to the  
               Rule of Three Names for candidates who are eligible for  
               promotion within civil service.  


             6.   Expands the list of eligible employees for the purpose  
               of hiring persons into civil service positions by making  
               the Rule of Three Ranks the default certification list.   








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                  a.        Allows appointing powers discretion to look at  
                    candidates based on a full evaluation of their merit  
                    (shown by results other than the exam results through  
                    a hiring process).  


             7.   Repeals Government Code Section 19057.2 relating to  
               creating a list of Six Ranks for the purpose of hiring  
               managers.  


             8.   Makes conforming changes to reflect repealing Government  
               Code Section 19057.


             9.   Repeals Government Code Section 19057.4 relating to the  
               Rule of One Rank.  


             10.  Extends existing due process rights to private sector  
               employees when an appointment power terminates a career  
               executive assignment, specifically,


                  a.        An employee who at the time of his or her  
                    appointment to a CEA was employed by the state and had  
                    civil service status shall be reinstated to a civil  
                    service position that is (1) not a CEA and (2) that is  
                    at least at the same salary level as the last position  
                    that he or she held as a permanent or probationary  
                    employee.


                  b.        If an employee had completed a minimum of five  
                    years of state service, he or she may return to a  
                    position that is (1) at substantially the same salary  
                    level as the last position or (2) at a salary level  








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                    that is at least two steps lower than that of the CEA  
                    position from which he or she is being terminated.  


                  c.        Allows an employee who at the time of his or  
                    her appointment to a CEA was from the outside civil  
                    service shall have the right to request a deferred  
                    examination for any open eligible list that his or her  
                    appointing power or the Department has in existence at  
                    the time of termination.    


                  d.        Requires a request for a deferred examination  
                    to be made not later than 10 days after the effective  
                    date of termination of the CEA.  


                  e.        Requires the department or its designee to  
                    administer the deferred examination within 30 days of  
                    the date of the request. 


             11.  Includes various technical clean up language.  


             12.  Appropriates $300,000 to Department of Finance for the  
               posting on the department's internet website of all budget  
               requests included as part of the Governor's budget. 





          EXISTING LAW:


             1)   Establishes the Ralph C. Dills Act, which requires the  
               state to collectively bargain with official representatives  
               of employee groups (i.e., bargaining units) regardless of  








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               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.  


             3)   Requires that any MOU between the state and an official  
               representative must be ratified by the Legislature.


             4)   Requires that an addendum to a ratified MOU must be  
               submitted to the Joint Legislative Budget Committee (JLBC)  
               for analysis, and, if so required by the JLBC, must also be  
               approved by the Legislature.  


             5)   Establishes the California Public Employees' Retirement  
               System (CalPERS), which provides health and retirement  
               benefits for the state employees.


             6)   Requires the Legislative Analyst's Office (LAO) to  
               analyze all state MOUs and to provide analyses of the MOUs  
               and their fiscal impact to the Legislature within 10 days  
               of receipt of the MOUs from CalHR.  


             7)   Establishes comprehensive public employee pension reform  
               through enactment of the Public Employees' Pension Reform  
               Act of 2013 (PEPRA) that apply to all public employee and  
               public pension plans on and after January 1, 2013,  
               excluding the University of California and charter cities  
               and counties that do not participate in a retirement system  
               governed by the state statute.  










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             8)   Provides that State BU 5 (Highway Patrol) make  
               prefunding contributions under its contract and that the  
               contributions are made by the State in lieu of salary  
               increases that BU 5 employees bargained in order to divert  
               the funds to prefunding their retiree health care  
               obligations.  


             9)   Provides that fully vested state retirees (i.e., 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. Currently, there is no  
               formula based solely on the most highly utilized Medicare-  
               coordinated health plans


             10)  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. 

             11)   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. They then add 5  
               percent per year of service until, after 20 years, they are  








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               vested to receive 100 percent of the 100/90 formula.  
               Individuals hired prior to 1985 or 1989 could be subject to  
               either 5 year or 10 year vesting for full coverage of the  
               100/90 formula. BU 12 (Operating Engineers-Craft and  
               Maintenance), agreed via collective bargaining, beginning  
               in 2011, to be subject to a 15/25 year vesting schedule. 
          


          FISCAL EFFECT:  The bill would appropriate $300,000 one-time  
          General Fund for the Department of Finance to post all budget  
          requests included as part of the Governor's budget on its  
          website.  


          COMMENTS:  


           MOUs:  The following information summarizing the general  
          provisions of the MOUs was provided by CalHR:


          Number of Employees:


          The BU 9 agreement affects approximately 10,815 full-time  
          equivalents.  


          The BU 10 agreement affects approximately 2,861 full-time  
          equivalents.  


          Retiree Health Benefit Reforms:


             1)   Prefunding of Other Post-Employment Benefit:   
               Applicability to all BU 9 and BU 10 employees, including  
               related excluded and exempt








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                  a.        The State and all Unit 9 members will prefund  
                    retiree healthcare with the goal of each 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: 
                        i.             Effective July 1, 2017, 0.5 percent  
                         of pensionable compensation. 
                        ii.            Effective July 1, 2018, an  
                         additional 0.5 percent for a total of 1.0 percent  
                         of pensionable compensation. 
                        iii.           Effective July 1, 2019, an  
                         additional1.0 percent for a total of 2.0 percent  
                         of pensionable compensation. 

                  b.        The State and all Unit 10 members will prefund  
                    retiree healthcare with the goal of each 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: 
                        i.             Effective July 1, 2017, 0.7 percent  
                         of pensionable compensation. 
                        ii.            Effective July 1, 2018, an  
                         additional 0.7 percent for a total of 1.4 percent  
                         of pensionable compensation. 
                        iii.           Effective July 1, 2019, an  
                         additional 1.4 percent for a total of 2.8 percent  
                         of pensionable compensation

             2)   All employees eligible for health care benefits shall  
               contribute in proportion to their working time-base.

             3)   Any contributions made by the employee shall not be  
               recoverable under any circumstances by the employee or the  
               employee's beneficiary or survivor (e.g., if the employee  
               should retire, die, or separate from service before  
               becoming eligible for a health care benefit).








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             4)   Employer Contribution for Future Retirees' Health Care:  
               80/80 Formula Applicability to all new BU 9 and BU 10  
               employees first hired on or after January 1, 2016,  
               including related excluded and exempt.  

                  a.        For non-Medicare-eligible retirees, the  
                    employer contribution for retiree health benefits  
                    shall not exceed 80 percent of the weighted average  
                    premiums of the four health benefit plans most highly  
                    utilized by active state employees.

                    The employer contribution for a non-Medicare-eligible  
                    retiree's dependent shall be no more than 80 percent  
                    of the weighted average of the additional premiums  
                    required for enrollment of those family members during  
                    the benefit year in which the formula is applied.

                  b.        For Medicare-eligible retirees, the employer  
                    contribution for retiree health benefits shall not  
                    exceed 80 percent of the weighted average premiums of  
                    the four  Medicare-coordinated plans  most highly  
                    utilized by Medicare eligible retirees.

                    The employer contribution for a Medicare -eligible  
                    retiree's dependent shall be no more than 80 percent  
                    of the weighted average of the additional premiums  
                    required for enrollment of those family members during  
                    the benefit year in which the formula is applied.

                    The contribution for a Medicare-eligible retiree shall  
                    not exceed the formula whether or not the individual  
                    actually is enrolled in Medicare.

                  c.        A retiree shall not be able to use any portion  
                    of the employer's retiree health care contribution  
                    toward the payment of Medicare Part B premiums.








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             5)   Post-Employment Health Benefit Vesting Schedule 

                  a.        Applicability to all new BU 9 and BU 10  
                    employees first hired on or after January 1, 2016,  
                    including related excluded and exempt  

                  b.        All BU 9 and BU 10 employees first hired into  
                    state employment on or after January 1, 2016, will be  
                    subject to an extended vesting schedule for retiree  
                    health benefits.



                  c.        A BU 9 and BU 10 retiree will receive 50  
                    percent of the employer contribution upon completion  
                    of 15 years of state service, increasing 5 percent for  
                    each additional year of service, until the employee is  
                    vested for 100 percent of the employee contribution  
                    after 25 years of state service. 

          Compensation BU 9:

             1)   General Salary Increases (GSI)
                  a.        Effective July 1, 2016, all Unit 9 represented  
                    classifications shall receive five percent (5%) GSI.  
                  b.        Effective July 1, 2017, all Unit 9 represented  
                    classifications shall receive a two percent (2%) GSI.  
                    (This GSI offsets the increased contributions  
                    employees will be making toward retiree healthcare  
                    prefunding)





             2)   First Night (Evening) Shift Differential: BU 9 
                  a.        Effective July 1, 2016, the first night  
                    (evening) shift pay differential shall increase from  








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                    $0.80 per hour to $1.80 per hour for employees when  
                    four or more hours of the regularly scheduled work  
                    shift falls between 6 p.m. and midnight



             3)   Second Night (Night) Shift Differential : BU 9
                  a.        Effective July 1, 2016, the second night  
                    (night) shift pay differential shall increase from  
                    $1.00 per hour to $2.00 per hour for employees where  
                    four or more hours of the regularly scheduled work  
                    shift falls between midnight and 6 a.m.



             4)   Employer Contribution: BU 9:  The employer contribution  
               for active member health care increases to maintain the  
               statutorily required 80/80 formula. The increases are as  
               follows:
                  a.        $526 increasing to $557 for an individual
                  b.        $1023 increasing to $1083 for an individual  
                    and one dependent


                  c.        $1319 increasing to $1401 for an individual  
                    and 2 or more dependents



             5)   Employer contribution for dental care for BU 9 drops as  
               follows:
                  a.        $40.71 dropping to $36.64 for an individual
                  b.        $72.36 dropping to $63.97 for an individual  
                    and one dependent
                  c.        $105.36 dropping to $92.46 for an individual  
                    and 2 or more dependents











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          Compensation BU 10:
             1)   General Salary Increases (GSI)
                  a.        BU 10 employees will receive a five percent 5%  
                    GSI on July 1, 2016, July 1, 2017, and July 1, 2018,  
                    for a total of 15% over three years.



             2)   Pay Differentials: BU 10
                  a.        Effective July 1, 2016, Staff Specialist  
                    Compensation Differential Pay is extended for up to  
                    nine additional state scientists per department.  
                    Employees who are designated as a "primary state  
                    titled scientist" will receive a one-step (i.e., 5%)  
                    salary increase. 



             3)   Employer Contribution: BU 10:  The employer contribution  
               for active member health care increases to maintain the  
               statutorily required 80/80 formula. The increases are as  
               follows:
                  a.        $526 increasing to $557 for an individual
                  b.        $1023 increasing to $1083 for an individual  
                    and one dependent


                  c.        $1319 increasing to $1401 for an individual  
                    and 2 or more dependents



             4)   Employer contribution for dental care for BU 10 drops as  
               follows:
                  a.        $40.71 dropping to $36.64 for an individual
                  b.        $72.36 dropping to $63.97 for an individual  
                    and one dependent
                  c.        $105.36 dropping to $92.46 for an individual  
                    and 2 or more dependents








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          Miscellaneous BU 9 and 10:

             1)   Business and Travel
                  a.        Effective July 1, 2016, the state agrees to  
                    increase lodging rate for Alameda, San Mateo, and  
                    Santa Clara counties from $125 to $140
                  b.        Private Aircraft Mileage Reimbursement Rate:   
                    Effective  July 1, 2016, the state agrees to increase  
                    the reimbursement rate from $0.50 to $1.29.





             2)   Time off for Organ and Bone Marrow Donation
                  a.        Employees will be allowed up to 30 days of  
                    paid leave for organ donation and 5 days of paid leave  
                    for bone marrow donation.  Employees must exhaust  
                    their own accrued sick leave before using the benefit.



             3)   Furlough/Mandatory Personal Leave Program Protection
                  a.        The state agrees to not implement a furlough  
                    program or a mandatory Personal Leave Program during  
                    the first two years of the agreement.  Any furlough  
                    during the third year must be authorized pursuant to  
                    an act of the Legislature.



             4)   80-Hour Vacation/Annual Leave Cash Out
                  a.        Effective June 1, 2016, and depending on the  
                    availability of departmental funds, the state agrees  
                    to permit cash out of leave up to 80 hours per year.  
                  b.        The agreement also establishes a joint  
                    labor-management committee to provide recommendations  
                    on reducing excessive leave balances.  








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          Duration:


          BU 9 - Three years - July 2, 2015 to June 30, 2018


          BU 10 - Three years - July 2, 2015 to July 1, 2018


           Civil Service Improvement Comments: 


              1)   According to the Department of Finance, this trailer  
               bill includes the first round of Civil Service Improvement  
               proposals aimed at simplifying the state's outdated  
               processes.  These specific proposals will make modest  
               improvements to streamline the state's existing hiring  
               process and broaden the pool of eligible candidates for  
               Rank and File or Managerial appointments within state civil  
               service.  Additionally, this proposal will increase state  
               resource transparency by requiring the Department of  
               Finance to make all budgetary requests available  
               electronically on its website.  






















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          REGISTERED SUPPORT / OPPOSITION:




          Support


          None on file 




          Opposition


          None on file 
                                                                    



          Analysis Prepared by:Genevieve Morelos / BUDGET  
          /916-319-2099