BILL ANALYSIS Ó
SB 99
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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