BILL ANALYSIS Ó
SB 834
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Date of Hearing: August 31, 2016
ASSEMBLY COMMITTEE ON BUDGET
Philip Ting, Chair
SB
834 (Committee on Budget and Fiscal Review) - As Amended August
29, 2016
SENATE VOTE: 25-11
SUBJECT: State employment: memorandum of understanding:
Bargaining Unit 2
SUMMARY: Provides legislative ratification of the memorandum of
understanding (MOU) agreed to by the state and bargaining unit
(BU) 2, California Attorneys, Administrative Law Judges and
Hearing Officers in State Employment (CASE). Additionally,
amends the definition of State Peace officer / firefighter
member to mean the Sergeant-at-Arms of each house of the
Legislature who has been designated as peace officers in
subdivision (a) of Section 830.36 of the Penal Code, excluding
the Chief Sergeant-at-Arms of the Senate.
EXISTING LAW:
1) Establishes the Ralph C. Dills Act, which requires the
state to collectively bargain with the exclusive
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representatives of employee groups (i.e. bargaining units)
regarding 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 with state
employees.
3) Requires that any MOU between the state and an exclusive
representative must be ratified by the Legislature.
4) Establishes the California Public Employees' Retirement
System (CalPERS), which administers health and retirement
benefits for state employees.
5) Requires the Legislative Analyst's Office (LAO) to
analyze all state MOUs and to provide analyses of an MOU
and its fiscal impact to the Legislature within 10 days of
receipt of an MOU from CalHR.
6) Provides that fully vested state retirees (e.g., 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 applied. This is referred to as
the 100/90 formula.
7) Requires the Medicare-eligible retirees enroll in
Medicare and chose Medicare-coordinated health plan. Since
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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 Medicare Part B reimbursement in
full or in part depends upon the cost of that retiree's
health plan.
8) 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, with an additional 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 five or 10
year vesting for full coverage of the 100/90 formula.
9) Provides that retirees who were covered in certain
bargaining units while actively employed will receive an
employer retiree health contribution based on the 80/80
formula (i.e. 80% of the weighted average premium of the
four health plans most highly utilized by all members).
10) Provides that all employer contribution for active state
employee health care shall be determined through collective
bargaining.
FISCAL EFFECT: Appropriates $32,558,000 for BU 2 for 2016-17.
COMMENTS: The following information summarizing the general
provision of the MOU was provided by CalHR:
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Number of Employees: The BU 2 agreement affects approximately
3,890 full-time equivalents.
Health Benefits:
1) Employer Contribution for Active State Employees
a. The state's monthly consolidated benefit
contribution for each employee shall continue to be a
flat dollar amount equal to 80 percent of the weighted
average of the basic health benefit plan premiums of
the four largest enrolled basic health plans. For each
employee with enrolled family members, the employer
shall continue to contribute an additional flat dollar
amount equal to 80 percent of the weighted average of
the additional premiums. The flat dollar amounts shall
be adjusted as appropriate pursuant to the formulas on
January 1, 2017, January 1, 2018, and January 1, 2019.
2) Employer Contribution for Future Retirees
a. Employees first hired on or after January 1,
2017, will receive an employer contribution for
retiree health benefits based on an "80/80" formula.
Retirees and their dependents enrolled in a basic
health benefit plan will receive an employer
contribution equal to 80 percent of the weighted
average premium of the four largest basic health
benefit plans based on state active employee
enrollment. Retirees and their dependents enrolled in
a Medicare health benefit plan will receive an
employer contribution equal to 80 percent of the
weighted average premium of the four largest Medicare
health benefit plans based on state retiree
enrollment.
3) Prefunding of Other Post-Employment Benefits
a. The state and Bargaining Unit (Unit) 2 members
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will prefund retiree healthcare with the goal of
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 0.6 percent for a total of 1.3 percent
of pensionable compensation.
iii. Effective July 1, 2019, an
additional 0.7 percent for a total of 2.0 percent
of pensionable compensation.
4) Post-Employment Health and Dental Vesting Schedule
a. All employees first employed by the state on
or after January 1, 2017, will be subject to an
extended vesting schedule providing 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 100
percent vested at 25 years of state service.
5) Medicare Part B Supplemental Benefit
a. All employees first hired on or after January
1, 2017, will no longer be eligible to use the
employer contribution for a retiree health benefit
plan for Medicare Part B premiums.
Compensation:
1) General Salary Increase (GSI)
a. Effective the first day of the pay period
following ratification, Unit 2 employees shall
receive a 5 percent (5%) GSI.
b. Effective July 1, 2017, Unit 2 employees
shall receive a 5 percent (5%) GSI.
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c. Effective July 1, 2018, Unit 2 employees
shall receive a 4 percent (4%) GSI.
Miscellaneous:
1) Prohibits the implementation of a furlough program or a
mandatory Personal Leave Program during the first year of
the agreement. Any furlough during the second or third year
must be authorized pursuant to an act of the Legislature
(Article 9.21).
2) Effective May 1, 2017, and depending on the availability
of departmental funds, the amount of leave that can be
cashed out each year shall increase from 20 hours to 80
hours (Article 9.23).
3) Removes the requirement that a new employee must work
two years before receiving the full employer health
contribution for dependents (Article 11.1).
4) Effective the first day of the pay period following
ratification, the lodging reimbursement rate shall increase
from $150 to $250 for San Francisco (Article 12.1).
5) Incorporates the Wounded Warriors Transitional Leave Act
(Chap. 794, Stat. of 2015), which provides up to 96 hours
of additional sick leave for an employee hired on or after
January 1, 2016, who is a military veteran with a
service-connected disability rated 30 percent (New
Article).
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Duration: July 1, 2016 through July 1, 2019
REGISTERED SUPPORT / OPPOSITION: None on file.
Analysis Prepared by:Genevieve Morelos / BUDGET / (916)
319-2099