BILL ANALYSIS
AB 1592
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 1592 (Buchanan)
As Amended August 4, 2010
2/3 vote. Urgency
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|ASSEMBLY: | |(June 2, 2010) |SENATE: |31-1 |(August 18, 2010) |
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(vote not relevant)
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|COMMITTEE VOTE: |5-1 |(August 19, 2010) |RECOMMENDATION: |Concur |
| | | | | |
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Original Committee Reference: P.E.,R.& S.S.
SUMMARY : Ratifies the provisions of a memorandum of understanding
(MOU) between the state and the following three state bargaining
units (BUs): BU 8 (Firefighters), represented exclusively by the
California Department of Forestry Firefighters; BU 16 (Physicians,
Dentists and Podiatrists), represented exclusively by the Union of
American Physicians and Dentists; and, BU 19 (Health and Social
Services/Professional), represented exclusively by the American
Federation of State, County and Municipal Employees.
The Senate amendments delete the Assembly version of the bill, and
instead:
1)Provide legislative ratification for MOUs agreed to between the
State and state BUs 8, 16, and 19.
2)Require new employees, as specified, to receive lower pension
benefits than current employees.
3)Require new employees, as specified, to receive a retirement
benefit based on the highest averaged three years of compensation,
instead of the highest one year.
4)Require all employees covered by the agreements to pay 10 or 11%
of compensation in employee contributions to fund retirement
benefits.
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5)Require that compensation for employees covered by these
agreements will be continuously appropriated in the event of a
late Budget.
6)Include statutory changes that apply to these BUs and also state
BUs 5, 12, and 18, which MOUs are to be ratified in AB 846
(Correa), and makes this bill operative only if AB 846 is also
passed.
EXISTING LAW :
1)Requires, under the State Employee-Employer Relations Act (Dills
Act), collective bargaining agreements (MOUs) that are negotiated
between the state and exclusive representatives of each of the 21
state BUs be ratified by the Legislature.
2)Establishes five separate retirement classes for state employees:
State Miscellaneous and Industrial (which receive substantially
the same benefits), State Safety, State Peace Officer/Firefighter,
and State Patrol.
3)Specifies that if the provisions of certain statutes are in
conflict with a MOU, the terms of the MOU are prevailing.
4)Requires the Legislative Analyst's Office to analyze all state
MOUs and to provide analyses of the MOUs and their fiscal impact
to the Legislature within 10 days of receipt of the MOUs from the
Department of Personnel Administration (DPA).
AS PASSED BY THE ASSEMBLY, this bill was a spot bill intended be
used to approve the final collective bargaining agreement reached
this year between the state and BU 19.
FISCAL EFFECT : DPA has submitted the following cost and savings
estimates (in millions) for fiscal year 2010-11:
-----------------------------------------------------------
| Bargaining | Estimated Savings | Estimated Costs |
| Unit | | |
-----------------------------------------------------------
|--------------+---------+-----------+----------+----------|
| |Gen Fund |Other Fund |Gen Fund |Other |
| | | | |Fund |
|--------------+---------+-----------+----------+----------|
| | | | | |
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|--------------+---------+-----------+----------+----------|
|8 |$3.5 |$4.6 |$0 |$0 |
|--------------+---------+-----------+----------+----------|
| | | | | |
|--------------+---------+-----------+----------+----------|
|16 |$26.7 |$3.6 |$1.7 |$0.1 |
|--------------+---------+-----------+----------+----------|
| | | | | |
|--------------+---------+-----------+----------+----------|
|19 |$23.8 |$8.6 |$1.5 |$0.2 |
| | | | | |
----------------------------------------------------------
COMMENTS : The terms and conditions of the MOUs are summarized in
the chart below:
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|Retirement |2010 Tentative |Current Requirements |
|Class and BU |Agreements | |
|---------------+------------------------+-----------------------|
|Miscellaneous |2% at age 60 for new |2% at age 55 |
|Employees |hires | |
|(BUs 5, 8, 12, | | |
|16, 18,19) | | |
| | | |
|Retirement | | |
|Formula | | |
|---------------+------------------------+-----------------------|
|Member |10% of pay after first |5% of pay after first |
|Contribution |$513 |$513 |
|to PERS | | |
|(BUs 5, 8, 12, | | |
|16, 18,19) | | |
|---------------+------------------------+-----------------------|
|Employer |80%/80% for employees |No statutory formula |
|Health |and dependents |for these BUs (most |
|Contribution | |other BUs have |
|(BUs 12, 18) | |statutory |
| | |formulas-either 85/80 |
| | |or 80/80) |
|---------------+------------------------+-----------------------|
|Employee |.5% of base salary |No contribution |
|Contribution | |currently |
|to prefund | | |
|Retiree Health | | |
|(BU 12, 16) | | |
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|---------------+------------------------+-----------------------|
|Vesting for |New hires vest for 50% |50% after 10 years, |
|Retiree Health |after 15 years, |increasing 5%/annually |
|(BU 12) |increasing 5%/annually |to 100% after 20 years |
| |to 100% after 25 years | |
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|Final |BUs 12, 16, 18, 19: No change; new hires at |
|Compensation |highest three years since 2006 |
|Calculation |BUs 5 and 8: New hires go to highest three |
|for New Hires |years |
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|Personal Leave |Duration=12 months: Reduces pay by approx. |
|Program |4.8% in exchange for one day off per month. |
|(BUs 12, 16, |Time off has no cash value and can be used for |
|18, 19) |vacation or sick leave. |
| | |
|---------------+------------------------------------------------|
|Pay Increase |5% increase to top step of relevant classes, |
|(BUs 5, 8, 12, |effective 1/1/2012: Allows employees who are |
|16, 18, 19) |topped out (i.e., no longer receive annual |
| |merit salary increases) to receive a 5% |
| |increase. |
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|State Safety |2% at age 55 increasing |2.5% at age 55 |
|Employees |to 2.5% at age 60 | |
|(BUs 12, 16, | | |
|18, 19) | | |
| | | |
|Retirement | | |
|Formula for | | |
|New Hires | | |
|---------------+------------------------+-----------------------|
|Member |11% of pay after first |6% of pay after first |
|Contribution |$513 |$513 |
|to PERS | | |
----------------------------------------------------------------
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|Final |No change: New hires at highest 3 years since |
|Compensation |2006 |
|for New Hires | |
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|Employer |80%/80% for employees |No statutory formula |
|Health |and dependents |for these BUs (most |
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|Contribution | |other BUs have |
|(BUs 12, 18) | |statutory |
| | |formulas-either 85/80 |
| | |or 80/80) |
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|Employee |.5% of base salary |No contribution |
|contribution | |currently |
|to prefund | | |
|Retiree Health | | |
|(BU 12, 16) | | |
|---------------+------------------------+-----------------------|
|Vesting for |New hires vest for 50% |50% after 10 years, |
|Retiree Health |after 15 years, |increasing 5%/annually |
|(BU 12) |increasing 5%/annually |to 100% after 20 years |
| |to 100% after 25 years | |
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|Personal Leave |Duration=12 months: Reduces pay by approx. |
|Program |4.8% in exchange for 1 day off per month. Time |
|(BUs 12, 16, |off has no cash value and can be used for |
|18, 19) |vacation or sick leave. |
| | |
|---------------+------------------------------------------------|
|Pay Increase |5% increase to top step of relevant classes, |
|(BUs 12, 16, |effective 1/1/2012: Allows employees who are |
|18, 19) |topped out (i.e., no longer receive annual |
| |merit salary increases) to receive a 5% |
| |increase. |
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|Firefighters |3% at age 55 |3% at age 50 |
|(BU 8) | | |
| | | |
|Retirement | | |
|Formula for | | |
|New Hires | | |
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|Member |10% of pay after first |8% of pay after first |
|Contribution |$238 |$238 |
|to PERS | | |
|---------------+------------------------+-----------------------|
|Final |Three Highest Years |One Highest Year |
|Compensation | | |
|Calculation | | |
|for New Hires | | |
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|Pay Increase |4% increase to top step of relevant employee |
| |classes, effective 1/1/2012: Allows employees |
| |who are topped out (i.e., no longer receive |
| |annual merit salary increases) to receive a 4% |
| |increase. |
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|Patrol (BU 5) |3% at age 55 |3% at age 50 |
| | | |
|Retirement | | |
|Formula for | | |
|New Hires | | |
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|Member |10% of pay after first |8% of pay after first |
|Contribution |$863 |$863 |
|to PERS | | |
|---------------+------------------------+-----------------------|
|Final |Three Highest Years |One Highest Year |
|Compensation | | |
|Calculation | | |
|for New Hires | | |
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|Pay Increase |2% increase to top step of relevant employee |
| |classes, effective 1/1/2012: Allows employees |
| |who are topped out (i.e., no longer receive |
| |annual merit salary increases) to receive a 2% |
| |increase. |
|---------------+------------------------------------------------|
|Other |Redirection of current 2% member contribution |
|Provisions |to retiree health pre-funding. This |
| |contribution shall be paid instead as employee |
| |contributions to pension until July 2013, at |
| |which time the retiree health pre-funding |
| |employee contributions shall resume. |
| | |
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In addition, the contracts contain the following agreed upon
elements:
1)No Furlough Program for the duration of the contracts. (This
provision is not included in the MOUs for BU 12 or BU 16.)
2)Continuous appropriation of wages in the event of a late Budget.
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3)Requirements to reopen negotiations if any other state BU enters
into a contract that does not include pension reforms and provides
a greater value than that provided to these BUs. (This provision
is not included in the MOUs for BU 12 or BU 16.)
4)Agreements to delete two state holidays from the contracts (which
were already deleted in law as of February 2009): Lincoln's
Birthday and Columbus Day.
5)Premium pay (i.e., time and a half) for the following holidays:
January 1st, last Monday in May, July 4th, first Monday in
September, Thanksgiving, and Christmas.
6)Agreements by BUs to not oppose legislation requiring the
California Public Employees' Retirement System to use supportable
assumptions and data that will be evaluated by another party
agreeable to DPA and the BUs.
Contract Duration:
BU 8: Three years - July 1, 2010 to July 1, 2013
BUs 16 and 19: Two years - July 1, 2010 to July 1, 2012
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957 FN: 0006389