BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1625 (J. Perez)
Hearing Date: 10/07/2010 Amended: As Proposed
Consultant: Maureen Ortiz Policy Vote: PE&R
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BILL SUMMARY: AB 1625, an urgency measure, ratifies the
Memoranda of Understanding between the State and Bargaining Unit
1 (Administrative, Financial and Staff Services), Unit 3
(Professional Educators and Librarians), Unit 4 (Office and
Allied), Unit 11 (Engineering and Scientific Technicians), Unit
14 (Printing Trades), Unit 15 (Allied Services Workers), Unit 17
(Registered Nurses), Unit 20 (Medical and Social Services), and
Unit 21 (Educational Consultants and Librarians). All of these
bargaining units are represented by SEIU Local 1000. AB 1625
provides corresponding increases in employee contributions to
retirement benefits for exempt and excluded non-represented
employees.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Personal leave program ($73,993)
($36,997) $0 General
($102,495)
($51,248) $0 Specials
Employee pension contrib. ($32,021) ($49,583)
($50,359) General
($43,161)
($66,834) ($67,879) Specials
Holiday premium $2,408 $3,611
$3,611 General
$682
$1,022 $1,022 Special
Health benefits $871 $1,921
$2,831 General
$123 $272
$401 Special
Employee pension contrib.
for excluded employees: --------unknown, multi million
in savings------ Various
Estimate net costs/savings ($247,586)
($197,836)($110,373)
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STAFF COMMENTS:
According to the Department of Personnel Administration,
ratification of this contract will result in first year savings
of $382.6 million ($164 million General Fund). Those savings
include approximately $154 million ($61 million General Fund)
which are a result of the existing 3 day per month furlough
program for the months of August through October 2010. There
will be future annual costs of approximately $172 million ($72
million General Fund) beginning July 1, 2013 associated with 3%
increase in the maximum pay rate for those employees who are at
the top step of their pay scales.
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AB 1625 (J. Perez)
AB 1625 also provides for an increase in the employee
contribution for retirement benefits for exempt and excluded
employees, including employees of the executive branch who are
not members of the civil service system. The corresponding
savings to the state as a result of the increase in the
employees' contribution has not been identified as of the
writing of this analysis, but will likely exceed several hundred
million dollars per year.
In addition, there will be potentially millions of dollars in
savings in future years as new state employees are hired after
the implementation date of this legislation and will be subject
to a significantly lesser retirement benefit formula. Those
savings, however, have not been actuarially identified at this
time, and will not be realized to the state until those affected
new employees retire. The contracts being ratified for Units 1,
3, 4, 11,
14, 15, 17, 20 and 21 will increase the employee's retirement
contribution by 3% which will ultimately result in a
corresponding reduction in the state rate. According to
CalPERS, if all state employees were required to contribute an
additional 5% toward the pension fund, the potential savings to
the General Fund in FY 2010-11 would be approximately $500
million. The actual savings will be lower than that estimate
since the nine bargaining units ratified by this legislation
require an additional 3% employee contribution rather than an
increase of 5%.
There are approximately 87,783 full time equivalents in the nine
bargaining units represented by SEIU. The terms of this
contract are effective July 1, 2010 through July 1, 2013.
Provisions in this agreement include the following:
RETIREMENT
Benefit Formula Calculation
Effective the pay period following ratification, all
Miscellaneous and Industrial First Tier members first employed
by the state will be subject to a retirement formula of 2% at
age 60 (from current 2% at 55). All State Safety members first
employed by the state will be subject to a formula of 2% at age
55 (from the current 2.5% at 55).
Employee Pension Contribution
Effective the pay period following ratification, all
Miscellaneous and Industrial First Tier members will have their
pension contribution increased from 5% to 8% of monthly
compensation over $513. State Safety members will have their
contribution increased from 6% to 9% of monthly compensation
over $317.
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AB 1625 (J. Perez)
COMPENSATION
Adjusted Pay Ranges
Effective July 1, 2013 all represented classifications
(excluding Seasonal Clerks and BU 3 classifications in CDCR who
work an academic calendar) will be adjusted by increasing the
maximum step of the pay range by 3%. This increase will only
apply to employees who reach the top step of the pay range.
Effective July 1, 2013, BU 3 members at CDCR who are at the top
step of the salary range will receive a 3% salary differential.
Seasonal Clerk classifications will have 50 cents added to each
salary rate.
Personal Leave Program
Effective the pay period following ratification all members of
Units 1, 3, 4, 11, 14, 15, 17, 20 and 21 will receive one
personal leave day per month for twelve months and will realize
a corresponding reduction in salary equivalent to 4.6% of pay.
HEALTH BENEFITS
Employer Contribution
The state's contribution for health insurance for Units 1, 4,
11, 14, 15, 17, 20 and 21 shall be equal to eighty percent of
the weighted average of the premiums for the four basic health
benefit plans with the largest enrollment (known as the 80/80
formula). The state's contribution for health insurance for
members of Unit 3 will be set a dollar amount that equals the
80/80 formula.
MISCELLANEOUS
- The State agrees not to implement a new furlough program for
Units 1, 3, 4, 11, 14, 15, 17, 20 and 21 employees during the
twelve months following ratification of this agreement.
- The State and SEIU Local 1000 agree to delete Lincoln's
Birthday and Columbus Day as recognized holidays.
- Employees that work on New Year's Day, Memorial Day, July
4th, Labor Day, Thanksgiving Day or Christmas will receive one
and one-half times the employee's regular rate of pay and up to
eight hours of holiday credit.
- The state agrees to the continuous appropriation of funds to
cover the compensation and employee benefits in the event that
the FY 2011-12 state budget is not enacted by July 1, 2011.
Additionally, the state agrees to the continuous appropriation
of funds to
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AB 1625 (J. Perez)
cover the economic terms of this agreement in the event that the
state budget is not enacted by July 1 of each year during the
contract period.
The Ralph C. Dills Act requires that the economic provisions of
collective bargaining agreements that are negotiated between the
state and bargaining units must be ratified by the Legislature.
Staff notes that the nine agreements ratified by AB 1625 were
reached on October 7, 2010 and were presented to the Legislature
at that time.
Pursuant to Chapter 499, Statutes of 2005 (SB 621, Speier), the
Legislative Analyst's Office is required to prepare and
distribute an analysis of this MOU within 10 days after it is
presented to the Legislature. Additionally, Senate Rule 29.4
requires the final version of an MOU to be available to the
Legislature for 7 legislative days before the Senate may act on
the MOU.