BILL ANALYSIS
AB 964
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Date of Hearing: April 2, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 964 (Committee on P.E.R. & S.S) - As Amended: March 23,
2009
Policy Committee: P.E.R. &
S.S.Vote: 4-2
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides legislative approval for the memorandum of
understanding (MOU) between the State and bargaining units
represented by SEIU Local 1000. The economic provisions of this
agreement will take effect for the period of February 1, 2009
through June 30, 2010.
FISCAL EFFECT
The following table shows:
1)Compared to the prior SEIU labor contract, the current MOU
will result in net savings of $458 million - $212 million to
the GF and $246 million to other funds.
2)Compared to the amount scored in the 2009-10 budget package,
the MOU will result in a net cost increase of $52 million -
$25 million to the GF and $27 million to other funds.
Estimated Impact of Local 1000 MOU
2008-09 and 2009-10 Combined (millions of dollars)
----------------------------------------------------
| | General | | |
|Provision | Fund | Other | Total |
| | | Funds | |
|-------------------+----------+----------+----------|
| 4.6% pay | -$173| -$206| -$379|
|cut/furlough \a | | | |
|-------------------+----------+----------+----------|
| Leave & overtime | -7| -3| -10|
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|\a | | | |
|-------------------+----------+----------+----------|
| Health | +23| +27| +50|
|contributions\b | | | |
|-------------------+----------+----------+----------|
| Other \b | +2| +1| +2|
|-------------------+----------+----------+----------|
| Subtotal, MOU | -$156| -$181| -$337|
|Contract | | | |
|-------------------+----------+----------+----------|
| 4.6% cut to | -56| -65| -121|
|excluded | | | |
|employees' pay \a | | | |
|-------------------+----------+----------+----------|
|Net impact - | -$212| -$246| -$458|
|compared to prior | | | |
|MOU | | | |
|-------------------+----------+----------+----------|
|Net impact - | +$25| +$27|+52 |
|compared to | | | |
|2009-10 budget | | | |
|totals. | | | |
----------------------------------------------------
a\ Assumed in 2009-10 budget totals. (The savings displayed in
Control Section 3.9 of the 2009-10 Budget Act assume reductions
from two, rather than one, furlough day per month. However, the
administration backed out the extra furlough day for SEIU Local
1000 members in its display of expenditure totals in the
chaptered budget.)
b\ Not assumed in 2009-10 budget totals.
SUMMARY (Continued)
The MOU approved by this bill contains the following key
provisions:
1)One day per month furlough . The self-directed program will run
from February 1, 2009 through June 30, 2010, resulting in a
reduction in take home pay of 4.62% for most employees.
Employees will be required to use the credits by July 1, 2012
and will receive no cash value for unused credits. The extra
furlough days taken beginning in February pursuant to the
governor's executive order will count toward the 17 furlough
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days contained in this agreement. The furloughs will not have
a negative impact on employees' retirement benefits.
2)Sick leave and overtime. Under the explicit terms of the MOU,
sick leave hours will not count toward hours worked in the
calculation of overtime pay. The MOU also contains language
stating that laws enacted by the Legislature excluding any
type of leave (including vacation and bereavement leave) from
the determination of hours worked in a work week shall take
precedent over the MOU. Subsequent to this tentative
agreement, the Legislature passed and the governor signed a
2009-10 budget trailer bill (SB 3X 8, Chapter 4, 2009) that
prohibits all leave taken during a work week (including
vacation and bereavement leave) from counting toward overtime.
Given this development, the Department of Personnel
Administration (DPA) indicates it will allow only hours
actually worked to count toward overtime.
3)State holidays. Effective March 1, 2009, the February 12 and
Columbus Day holidays will be eliminated. In place of these
holidays, employees will receive two personal holidays, which
can be used at their discretion. (The state saves money from
this provision because it no longer has to pay overtime to
workers who are on duty during holiday periods.)
4)Health contributions. The MOU makes two key changes with
respect to health benefit contributions:
a) Employees in BU 3 (professional educators and
librarians) will receive health benefits under the State's
"80-80" formula beginning the February 2009 pay period.
This benefit is currently provided to the other eight
bargaining units represented by SEIU. Under the "80-80"
formula, the employer contribution for single-party
coverage is 80% of that year's weighted average premium of
the four plans with the highest employee enrollment, and
80% of the weighted average cost for dependent coverage.
b) The state will raise its contribution to cover 100% of
the 2009 increase in premiums charged by Blue Shield
Access, Blue Shield Net Value, and Kaiser HMO (other
insurers did not raise premiums in 2009). A similar
increase will be provided in 2010 for employees enrolled in
plans that have premium increases in that year.
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5)Compensation for seasonal clerks . Effective April 1, 2009, the
hourly pay rate for the seasonal clerk classification will
increase $0.50 per hour.
6)Layoffs . From February 1, 2009 through June 30, 2010 layoffs
will be limited to departmental closures of programs,
facilities or offices. Employees may be required to accept
jobs in other departments. They will be assured of retaining
their state employment in positions that are within 50 miles
of current employment and 10% of current pay. An employee who
is offered a job placement and rejects it could be subject to
layoff.
7)Reopening . In the event that another BU enters into agreement
that provides an economic package of greater value than this
agreement, SEIU may reopen negotiations on related economic
provisions of in its MOU.
8)Other changes include an increase in per diem rates and $1
million in funding for the establishment of a continuing
education and professional development institute. This money
will become available after the development of trust documents
meeting federal and state requirements, but no earlier than
July 1, 2009.
9)Related management employees . According to DPA, related state
managers (those classified as excluded and exempt employees)
will be subject to the one day per month self-directed
furlough and related decrease in pay, effective February 1,
2009. They will receive the increased meal and incidental
reimbursement rate provided to SEIU members. They will not,
however, receive the increase in health care contributions.
(Exempt and excluded employees are currently subject to a
"85/15" formula, compared to the "80/20" formula applying to
rank-and-file members). Excluded and exempt employees affected
by these provisions include employees that manage workers
represented by SEIU Local 1000 and employees of the Department
of Finance, DPA, the Legislative Counsel Bureau, and the
Bureau of State Audits (BSA).
COMMENTS
1)Background . With the passage of the Dills Act in 1977, the
Legislature authorized collective bargaining between unions
representing rank-and-file state employees and the
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administration. Currently about 200,000 state employees belong
to 21 bargaining units. The key provisions of MOUs must be
ratified by the Legislature and bargaining unit members in
order to take effect. In addition, the funding of the MOUs'
economic provisions (such as pay and health contributions) is
contingent on legislative appropriations each year. The
previous contract between bargaining units represented by SEIU
Local 1000 and the state expired on June 30, 2008.
2)Purpose . This bill provides legislative approval for the
contract between the state and the largest state union. SEIU
Local 1000 represents nine bargaining units comprising about
half of the unionized state workforce. These units include: BU
1 (administrative, financial, and staff services; BU 3
(professional educators and librarians); BU 4 (office and
allied); BU 11 (engineering and scientific technician; BU 14
(office and allied; BU 15 (allied services); BU 17
(registered nurses); BU 20 (medical and social services); and
BU 21 ( education consultants and library). The current
contract, if approved, will expire on June 30, 2010 for almost
all workers represented by local 1000.
3)Dispute . SEIU objects to DPA's assertion that all leave is
excluded from the calculation of overtime hours. Citing
language in SB 3X 8, SEIU contents that the exclusion only
applies to sick leave, and that other forms of leave can be
counted. SEIU has the option of challenging DPA's
interpretation through arbitration and the courts.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081