BILL ANALYSIS Ó
SB 848
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(Without Reference to File)
SENATE THIRD READING
SB
848 (Committee on Budget and Fiscal Review)
As Amended June 12, 2016
Majority vote. Budget Bill Appropriation Takes Effect
Immediately
SENATE VOTE: 25-11
SUMMARY: Makes necessary statutory and technical changes to
implement the Budget Act of 2016 related to Civil Service
improvement provisions. Additionally, provides legislative
ratification of the memoranda of understanding (MOU) agreed to
by the state and bargaining unit (BU) 12 represented exclusively
by International Union of Operating Engineers (IUOE) and makes
other civil service improvement changes. Specifically, this
bill:
1)Ratifies the MOU agreed to by the state and BU 12.
2)Makes technical changes to Section 19141 of the Government
relating to Civil Service reinstatement to apply only to an
employee in an exempt position who previously had permanent
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status in civil service.
3)Amends the conditions for when an employee who vacates a civil
service position to accept an appointment to an exempt
position shall be reinstated to his or her former position at
the termination provided both conditions occur:
a) He or she accepted the appointment without a break in
the continuity of state service, and
b) Within 10 working days after the effective date of the
termination, he or she makes a written request to the
appointing power to be reinstated to his or her former
position. If an employee accepts an appointment to an
exempt position and seeks reinstatement to his or her
former position more than 10 working days after the
effective date of the termination of the exempt
appointment, Section 19140 shall apply.
4)Applies the extension or new exempt appointment is terminated,
if an employee in an exempt appointment accepts an extension
of the exempt appointment or accepts a new exempt appointment
with no break in the continuity of state service in an exempt
appointment .
5)Amends Section 19141.1 of Government Code related to Civil
Service Improvement reinstatement, to only apply to employees
in an exempt position who have reinstatement rights to their
former positions under Section 19141.
6)States that within four years of the termination of an
appointment in an exempt position, an employee who has
completed a minimum of five years of state service experience
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shall be given an opportunity upon request to obtain civil
service appointment list eligibility by taking a deferred
examination for any class that has a current eligible list and
for which the employee meets the minimum qualifications of the
class.
7)Provides that a candidate appointed through the Limited
Examination and Appointment Program (LEAP) is not required to
serve a probation period, upon successful completion of the
job examination period.
8)States that if an overpayment involves leave credits, the date
of overpayment is the date that the employee receives
compensation in exchange for leave erroneously credited to the
employee. Defines leave hours to be considered exchanged for
compensation in the order they were credited for purposes of
the section.
9)Provides that for the development needs for the state's
workforce, the department shall analyze, design, develop,
implement, and evaluate an integrated development strategy to
continually advance employee skills and improve performance
productivity and service.
10)Makes changes for the supervisorial and career executive
assignments training and leadership programs along with
improved succession planning.
11)Adds that notwithstanding Sections 20677and 20687, on and
after July 1, 2017, the normal rate of contribution for an
employee of the judicial branch who is not subject to Section
7522.30 to do the following:
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a) For a state miscellaneous member:
i) 9% of the compensation in excess of $317 per month
paid to a member whose service is not included in the
federal system
ii) 8% of compensation in excess of $513 per month paid
to a member whose service has been included in the
federal system.
b) For a peace officer/firefighter member, 11% of
compensation in excess of $128.
12)Applies the employer contribution for each annuitant enrolled
in a basic plan and the employer contribution for each
annuitant enrolled in a Medicare health benefit plan to a
judicial branch employee who is first employed by the state
and becomes a state member of the system on or after January
1, 2017. Does not apply to a judge who is subject to Chapter
11 (commencing with Section 75000) or Chapter 11.5 (commencing
with Section 75500) of Title 8.
13)States that a judicial branch employee who is first employed
by the state and becomes a state member of the system on or
after January 1, 2017, shall not receive any portion of the
employer contribution payable to annuitants unless the person
is credited with 15 years of state service.
14)Creates the percentage of the employer contribution payable
for post-retirement health benefits for an employee based on
credited state service at retirement.
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a) Applies this section only to judicial branch employees
who retire for service.
b) Defines state service to mean service rendered as an
employee of the state or an appointed or elected officer of
the state for compensation.
c) Does not apply this section to the following:
i) Former state employees previously employed prior to
January 1, 2017, who return to state employment on or
after January 1, 2017.
ii) State employees on an approved leave of absence
employed before January 1, 2017, who return to active
employment on or after January 1, 2017.
iii) A judge who retires pursuant to Chapter 11
(commencing with Section 75000) or Chapter 11.5
(commencing with Section 75500) of Title 8.
15)Does not apply Section 22780 of the Government code to a
state employee in BU 12, and judicial branch employees, who is
first employed by the state and becomes a state member of the
system on or after January 1, 2017.
16)Requires state employees in BU 12 to prefund retiree health
care, with the goal of reaching a 50% cost sharing of
actuarially determined normal costs for both employer and
employees by July 1, 2019.
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17)Requires the state and state employees in the judicial branch
to prefund retiree health care, with the goal of reaching 50%
cost sharing of actuarially determined normal costs for both
employer and employees by July 1, 2017. The judicial branch
will make the following contributions:
a) Effective July 1, 2016, 1.5% of pensionable
compensation.
b) Effective July 1, 2017, up to an additional 1.5% for a
total employee contribution of up to 3.0% of pensionable
compensation. The additional amount shall be determined by
the Director of Finance no later than April 1, 2017, based
on the actuarially determined normal costs identified in
the state valuation.
c) This paragraph does not apply to a judge who is subject
to Chapter 11 (commencing with Section 75000) or Chapter
11.5 (commencing with Section 75500) of Title 8.
18)Makes changes to judge's salary survey as reported to the
Department of Human Resources to the State Controller.
EXISTING LAW:
1)Establishes the Ralph C. Dills Act, which requires the state
to collectively bargain with the exclusive 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
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(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 is applied. This is referred to as the 100/90
formula.
7)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
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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.
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 year 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 the employer contribution for active state
employee health care shall be determined through collective
bargaining. In its MOU effective 2013 to 2015, BU 12 (IUOE)
agreed to a flat dollar amount, as specified.
FISCAL EFFECT: Appropriates $45,419,000 for State Bargaining
Unit 12.
COMMENTS:
The following information summarizing the general provisions of
the MOU was provided by CalHR:
Number of Employees:
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The BU 12 agreement affects approximately 10,778 full-time
equivalents.
HEALTH BENEFITS
1)Employer Contribution for Active State Employees
a) Effective the pay period following ratification, the
state's monthly health benefit contribution for each
employee shall continue to be a flat dollar amount equal to
80% 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% of the weighted average of the
additional premiums. The flat dollar amounts shall be
increased 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% 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% of the weighted average premium of the four largest
Medicare health benefit plans based on state retiree
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enrollment.
3)Prefunding of Other Post-Employment Benefits
a) The state and BU 12 members will prefund retiree
healthcare with the goal of 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, 1.4% for a total of 1.9% of
pensionable compensation.
ii) Effective July 1, 2018, an additional 1.4% for a
total of 3.3% of pensionable compensation.
iii) Effective July 1, 2019, an additional 1.3% for a
total of 4.06% of pensionable compensation.
4)Post-Employment Health and Dental Benefit 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% of the employer contribution upon
completion of 15 years of state service, increasing 5% for
each additional year of service, until the employee is 100%
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
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for retiree health benefits for Medicare Part B premiums.
COMPENSATION
1)General Salary Increase (GSI)
a) Effective July 1, 2016, BU 12 employees shall receive a
3% GSI.
b) Effective July 1, 2017, BU 12 employees shall receive a
4% GSI.
c) Effective July 1, 2018, BU 12 employees shall receive a
3% GSI.
2)Special Salary Adjustments
a) Effective July 1, 2016 and 2017, BU 12 employees in
specified Heavy Equipment Mechanic classifications shall
receive a special salary adjustment of 5%.
b) Effective July 1, 2016, BU 12 employees in specified
Electrician classifications shall receive a special salary
adjustment of 5%.
c) Effective July 1, 2016, and 2017, BU 12 employees in
specified Telecommunications Technician classifications
shall receive a special salary adjustment of 5%.
3)Uniform Allowance
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a) Increases the uniform reimbursement from $470 to $670
for full time employees that work for the Department of
Parks and Recreation, or the California Department of
Forestry and Fire Protection.
b) Provides an annual footwear allowance of $82 for
specified permanent full-time employees that work for the
Department of Corrections and Rehabilitation (CDCR) or the
California Highway Patrol.
MISCELLANEOUS
1)Leave Cash Out, Additional Sick Leave, Overtime Meal
Allowance, Monthly Payroll Cycle
a) Increases the amount of leave that can be cashed out
annually from 20 hours to 80 hours depending on the
available department funds effective May 1, 2017.
b) Incorporates the Wounded Warriors Transitional Leave Act
to provide up to 96 hours of additional sick leave for
employees hired after January 1, 2016, who are military
veterans and have a service connected disability rated 30%.
c) Increases the Overtime Meal Allowance from $6.00 to
$8.00, effective approximately three months after
ratification, for employees that work for the Department of
Transportation (CalTrans) or CDCR.
d) Converts all CalTrans employees to a monthly payroll
cycle and provides a one-time supplemental payment
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equivalent to the employee's existing semi-monthly gross
salary, not to exceed $1,200 effective approximately three
months after ratification.
DURATION
1)July 1, 2015 through July 1, 2019.
According to CalHR, this bill results in the following costs:
Fiscal Year 2016-17: $37.9 million ($12.4 million General Fund)
Total Incremental Cost: $139.5 million ($44.3 million General
Fund)
Total Budgetary Cost: $396.9 million ($126.5 million General
Fund)
Analysis Prepared by:
Genevieve Morelos / BUDGET / (916) 319-2099 FN:
0003431