BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  August 10, 2016


                            ASSEMBLY COMMITTEE ON BUDGET


                                 Philip Ting, Chair


          SB  
          857 (Committee on Budget and Fiscal Review) - As Amended August  
          8, 2016


          SENATE VOTE:  25-11


          SUBJECT:  Budget Act of 2016


          SUMMARY:  Makes necessary statutory and technical changes to  
          implement the Budget Act of 2016 related to Civil Service  
          improvement provisions. Specifically, this bill:  


             1)   Provides legislative ratification of the memoranda of  
               understanding (MOU) agreed to by the state and bargaining  
               unit (BU) 7, Protective Services and Public Safety,  
               represented exclusively by California Statewide Law  
               Enforcement Association (CSLEA).



          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  








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                 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 is applied. This is  








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                 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 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 5  
                 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).











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            10)    Provides that the employer contribution for active  
                 state employee health care shall be determined through  
                 collective bargaining. 



          FISCAL EFFECT:  Appropriates $38.6 million for State BU 7 for  
          expenditure in 2016-17, in augmentation of the funds  
          appropriated under the Employee Compensation items of the 2016  
          Budget Act.


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


          Number of Employees: The BU 7 agreement affects approximately  
          7,204 full-time equivalents.


          HEALTH BENEFITS


          1)Employer Contribution for Active State Employees

             a)   The state's monthly health consolidated 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  








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               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  
               enrollment.

          3)Prefunding of Other Post-Employment Benefits

             a)   The state and BU 7 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, 1.3% for a total of 1.9% of  
                 pensionable compensation.

               ii)    Effective July 1, 2018, an additional 1.4% for a  
                 total of 2.7% of pensionable compensation.

               iii)   Effective July 1, 2019, an additional 1.3% for a  
                 total of 4.0% 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








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             a)   All employees first hired on or after January 1, 2017,  
               will no longer be eligible to use the employer contribution  
               for retiree health benefits for Medicare Part B premiums.



          COMPENSATION


          1)General Salary Increase (GSI)

             a)   Effective July 1, 2016, BU 7 employees shall receive a  
               3% GSI.

             b)   Effective July 1, 2017, BU 7 employees shall receive a  
               3% GSI.

             c)   Effective July 1, 2018, BU 7 employees shall receive a  
               2% GSI.



          2)Special Salary Adjustments

             a)   Effective July 1, 2016 BU 7 employees in the Public  
               Safety Dispatcher, Public Safety Operator, and  
               Communications Operator classifications shall receive a  
               special salary adjustment of 5%.

             b)   Effective July 1, 2016, BU 7 employees in the Motor  
               Carrier Specialist I classifications shall receive a  
               special salary adjustment of 3%.

             c)   Effective July 1, 2016, BU 7 employees in the State Park  
               Peace Officer (Ranger and Lifeguard) classifications shall  
               receive a special salary adjustment of 5%.

             d)   Effective July 1, 2016, BU 7 employees in specified  








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               investigator classifications shall receive a special salary  
               adjustment of 5%.

             e)   Effective July 1, 2016, BU 7 employees in the Agent,  
               Alcoholic Beverage Control classification shall receive a  
               special salary adjustment.

             f)   Effective July 1, 2016, BU 7 employees in the  
               Coordinator (Fire and Rescue Services, and Law Enforcement)  
               classifications shall receive a special salary adjustment.

          3)Longevity Peace Officer Pay Differential

             a)   Effective the first day of the pay period following  
               ratification, each step of the Longevity Pay Differential  
               for peace officers shall be increased by 1%.

          4)Education Incentive Pay

             a)   Effective the first day of the pay period following  
               ratification, the monthly education incentive pay shall  
               increase from $50 to $75 for an Associate of Arts or  
               Associate of Science Degree and from $100 to $125 for a  
               Bachelor of Arts or Bachelor of Science Degree.

          5)Uniform Allowance

             a)   Effective the first day of the pay period following  
               ratification, the uniform replacement allowance shall be  
               increased as follows:

               i)     From $640 to $950 for full-time employees in  
                 specified classifications;

               ii)    From $540 to $640 for less than full-time employees  
                 in specified classifications;

               iii)   From $20 to $55 for specified Lifeguards;









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               iv)    From $385 to $950 for Oil Spill Prevention  
                 Specialist;

               v)     From $450 to $950 for Communications Operators  
                 employed at the Department of Forestry and Fire  
                 Protection.

             b)   Effective the first day of the pay period following  
               ratification, specified employees shall receive a uniform  
               maintenance and cleaning allowance of $25 per month.

             c)   Effective the first day of the pay period following  
               ratification, employees in the Motor Carrier Specialist I  
               and School Pupil Transportation Safety Coordinator  
               classifications shall receive an annual boot reimbursement  
               of $150.

          MISCELLANEOUS


          1)The maximum amount of leave that can be deducted from each  
            employee for the Union Release Time Bank shall increase from  
            1.5 hours to 2 hours.

          2)Effective May 1, 2017, and depending on the availability of  
            department funds, the amount of leave that can be cashed out  
            each year shall increase from 20 hours to 80 hours.

          3)Incorporates the Wounded Warriors Transitional Leave Act,  
            which provides up to 96 hours of additional sick leave for  
            employees hired after January 1, 2016, who is a military  
            veteran with a service connected disability rated 30%.

          4)Allows an employee to transfer up to three months of leave  
            credits to a family member under certain conditions.

          5)Removes the requirement that a new employee must work two  
            years before receiving the full employer health contribution.









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          6)Effective the first day of the pay period following  
            ratification, the lodging reimbursement rates shall increase  
            from $125 to $140 for Alameda, San Mateo, and Santa Clara  
            Counties and from $150 to $250 for San Francisco.

          7)Effective the first day of the pay period following  
            ratification, the Overtime Meal Allowance shall increase from  
            $7.50 to $8.00.

          8)Requires the state to provide specified items of protective  
            equipment based on an employee's classification and place of  
            employment.

          9)Effective the first day of the pay period following  
            ratification, physical fitness pay shall be included in  
            regular base pay.

          10)Extends the amount of time between voluntary transfers from  
            12 months to 24 months for Special Agents and Special Agent  
            Supervisors at the Department of Justice.

          11)Requires Special Agents and Special Agent Supervisors at the  
            Department of Justice who reinstate or are hired from a  
            reemployment list to work 24 months before requesting a  
            voluntary transfer.









          DURATION


          1)July 1, 2015 through July 1, 2019.









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          REGISTERED SUPPORT / OPPOSITION:





          None on file.




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