BILL ANALYSIS
ACA 17
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Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
ACA 17 (Nestande) - As Introduced: March 25, 2009
Policy Committee: Higher
EducationVote:8-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This measure proposes amending the state Constitution to
prohibit an employee of the University of California (UC) who
receives any financial benefit exceeding $50,000 as part of a
temporary voluntary separation program (VSP) from UC from ever
being employed by, or under contract with, the University,
unless the person returns the entire financial benefit to the
university.
The measure defines temporary VSP as a program offered for not
more than three years that is not part of the employee's regular
compensation or retirement benefits, which is offered to the
employee as an inducement to retire or end UC employment.
FISCAL EFFECT
1)One-time GF costs of about $220,000 to include an analysis of,
and arguments for and against, the measure in the statewide
voter pamphlet.
2)To the extent the limitation on VSPs in this measure would
deter some UC employees from accepting a VSP, savings to UC
from such programs may be reduced. These unrealized savings
are unknown, but could be substantial.
COMMENTS
1)Background . From January through June 2008, UC offered a VSP
to employees at the Office of the President (UCOP) in an
effort to achieve budget reductions in its central
administration while minimizing the need for involuntary
ACA 17
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layoffs. The VSP applied only to UCOP employees, not to
employees at UC campuses, laboratories, medical centers, or
other non-UCOP operations. Subsequent newspaper stories
revealed that 16 of the 155 employees who accepted the VSP
found new positions elsewhere within the UC system. UC
estimates that the VSP will save at least $5 million per year
in spending at UCOP on an ongoing basis after the first year.
2)Purpose . According to the author, this Constitutional
amendment "will prohibit a University of California employee -
who takes a golden handshake in excess of $50,000 - from
thereafter being employed by or entering into a contract with
the university unless the entire sum is returned."
3)Future UC VSP policy : Effective April 6, 2009, UC enacted a
new policy for future VSPs that will require the repayment of
a buyout on a pro rata basis for employees finding new work
elsewhere within UC, as follows: if reemployment is found
between 1-12 months after separation, the entire severance
must be repaid; reemployment within 13-24 months after
separation requires 50% of the severance to be repaid; and
reemployment within 25-36 months after separation requires 25%
repayment. The current VSP will remain unchanged, since it
constitutes a contract with employees who accepted the VSP.
UC indicates that the Berkeley campus is accepting
applications for a VSP pursuant to the new guidelines, and
estimates that if program involved 200 persons, savings to the
campus would be up to $11.6 million.
4)Opposition . UC believes this measure is unnecessary given
that they have instituted the policy described above. UC also
argues that the provisions of ACA 17 "would create significant
disincentives for University employees to even consider
participating in a VSP if they believed they would be unduly
punished financially for choosing to return to the University,
no matter how far in the future that might be."
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081