BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      SB 99


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          (Without Reference to File)





          SENATE THIRD READING


          SB  
          99 (Committee on Budget and Fiscal Review)


          As Amended  September 10, 2015


          Majority vote. Budget Bill Appropriation Takes Effect  
          Immediately


          SENATE VOTE:  Vote not relevant


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Budget          |27-0 |Weber, Melendez,      |                    |
          |                |     |Travis Allen,         |                    |
          |                |     |Bigelow, Bloom,       |                    |
          |                |     |Bonta, Campos,        |                    |
          |                |     |Chávez, Chiu, Cooper, |                    |
          |                |     |Gordon, Grove, Jones, |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Jones-Sawyer, Kim,    |                    |








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          |                |     |Lackey, McCarty,      |                    |
          |                |     |Mullin, Nazarian,     |                    |
          |                |     |Obernolte, O'Donnell, |                    |
          |                |     |Patterson, Rodriguez, |                    |
          |                |     |Thurmond, Ting, Wilk, |                    |
          |                |     |Williams              |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Budget          |14-9 |Weber, Bigelow,       |Melendez, Travis    |
          |                |     |Bloom, Bonta, Campos, |Allen, Chávez,      |
          |                |     |Chiu, Gordon,         |Jones, Kim, Lackey, |
          |                |     |                      |Obernolte,          |
          |                |     |                      |Patterson, Wilk     |
          |                |     |Jones-Sawyer, Mullin, |                    |
          |                |     |Nazarian, O'Donnell,  |                    |
          |                |     |Rodriguez, Thurmond,  |                    |
          |                |     |Ting                  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          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 










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             b)   BU 10 (Professional Scientists), represented exclusively  
               by the California Association of 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 United States (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 i) not a CEA and ii) 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  
               i) at substantially the same salary level as the last  
               position or ii) at a salary level that is at least two  
               steps lower than that of the CEA position from which he or  
               she is being terminated.  








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             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 Web site 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  
               wages and working conditions, and to define negotiated  
               agreements in MOUs.  


             2)   Establishes the California Department of Human Resources  








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               (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.  


             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  








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               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%  
               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% 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% of the  100/90 formula.  They then add 5% per  
               year of service until, after 20 years, they are vested to  
               receive 100% 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  








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               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 Web  
          site.  


          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
             a)   The State and all Unit 9 members will prefund retiree  
               healthcare with the goal of each reaching 50% 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: 








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               i)     Effective July 1, 2017, 0.5% of pensionable  
                 compensation. 
               ii)    Effective July 1, 2018, an additional 0.5% for a  
                 total of 1% of pensionable compensation. 


               iii)   Effective July 1, 2019, an additional 1% for a total  
                 of 2% of pensionable compensation. 


             b)   The State and all Unit 10 members will prefund retiree  
               healthcare with the goal of each reaching 50% 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% of pensionable  
                 compensation. 
               ii)    Effective July 1, 2018, an additional 0.7% for a  
                 total of 1.4% of pensionable compensation. 


               iii)   Effective July 1, 2019, an additional 1.4% for a  
                 total of 2.8% 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).


          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  








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               contribution for retiree health benefits shall not exceed  
               80% of the weighted average premiums of the four health  
               benefit plans most highly utilized by active state  
               employees.
               i)     The employer contribution for a  
                 non-Medicare-eligible retiree's dependent shall be no  
                 more than 80% 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% of the weighted average premiums of the four  
               Medicare-coordinated plans most highly utilized by Medicare  
               eligible retirees.
               i)     The employer contribution for a Medicare -eligible  
                 retiree's dependent shall be no more than 80% 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.
                    (a)         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.
          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% of the  
               employer contribution upon completion of 15 years of state  
               service, increasing 5% for each additional year of service,  
               until the employee is vested for 100% of the employee  
               contribution after 25 years of state service. 








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          Compensation BU 9:


          1)General Salary Increases (GSI)
             a)   Effective July 1, 2016, all Unit 9 represented  
               classifications shall receive 5% GSI.  
             b)   Effective July 1, 2017, all Unit 9 represented  
               classifications shall receive a 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 $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)   Five hundred twenty six dollars increasing to $557 for  
               an individual
             b)   One thousand twenty three dollars increasing to $1083  
               for an individual and one dependent


             c)   One thousand nineteen dollars increasing to $1401 for an  
               individual and 2 or more dependents









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          5)Employer contribution for dental care for BU 9 drops as  
            follows:
             a)   Forty dollars and seventy one cents dropping to $36.64  
               for an individual
             b)   Seventy two dollars and thirty six cents dropping to  
               $63.97 for an individual and one dependent


             c)   One hundred five dollars and thirty six cents dropping  
               to $92.46 for an individual and 2 or more dependents


          Compensation BU 10:


          1)General Salary Increases (GSI)
             a)   BU 10 employees will receive a 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)   Five hundred twenty six dollars increasing to $557 for  
               an individual
             b)   One thousand twenty three dollars increasing to $1083  
               for an individual and one dependent


             c)   One thousand three hundred nineteen dollars increasing  
               to $1401 for an individual and 2 or more dependents









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          4)Employer contribution for dental care for BU 10 drops as  
            follows:
             a)   Forty dollars and seventy one cents dropping to $36.64  
               for an individual
             b)   Seventy two dollars and thirty six cents dropping to  
               $63.97 for an individual and one dependent


             c)   One hundred five dollars and thirty six cents dropping  
               to $92.46 for an individual and 2 or more dependents


          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 five 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.  








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             b)   The agreement also establishes a joint labor-management  
               committee to provide recommendations on reducing excessive  
                                                                    leave balances.  


          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.  


          Support:  None on file 




          Opposition:  None on file 











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          Analysis Prepared by:                                             
                          Genevieve Morelos / BUDGET /916-319-2099  FN:  
          0002414