BILL ANALYSIS �
SB 151
Page 1
Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 151 (Correa) - As Amended: April 14, 2011
Policy Committee: PERS Vote:
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill:
1)Provides legislative ratification for the memoranda of
understanding (MOU) agreed to by the state and the following
state bargaining units (BUs):
a) BU 2 (Attorneys and Hearing Officers), represented
exclusively by the California Attorneys, Administrative Law
Judges, and Hearing Officers in State Employment (CASE).
b) BU 6 (Corrections), represented exclusively by the
California Correctional Peace Officers Association (CCPOA).
c) BU 7 (Protective Services and Public Safety),
represented exclusively by the California Statewide Law
Enforcement Association.
d) BU 9 (Professional Engineers), represented exclusively
by the Professional Engineers in California Government.
e) BU 10 (Professional Scientific), represented exclusively
by the California Association of Professional Scientists
and 13 (Stationary Engineers).
f) BU 13 (Stationary Engineers), represented exclusively by
the International Union of Operating Engineers (IUOE).
1)This bill also ratifies 13 addenda to MOUs ratified in 2010 in
order to make provisions of those MOUs consistent with the
agreements reached in the six MOUs ratified in this bill.
Additionally, the bill provides a continuous appropriation for
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the payment of employee compensation for the affected units in
the event that the state budget is not enacted by July 1 of
each year covered by the MOU.
2)This bill increases the employee contribution rate to fund
retirement benefits, effective on the first day of the pay
period following legislative ratification.
3)Makes three technical clarifications to previous legislation
enacted in 2010 as follows:
a) AB 1625 (Perez), Chapter 728, Statutes of 2010: Reduces
by 1% the contribution rate for excluded and exempt
employees connected to BU 2. DPA states that the current
rates in statute are incorrect with regard to these
employees, who have always paid the lower amount, as
corrected by this bill.
b) SB 846 (Correa), Chapter 162, Statutes of 2010: This
bill ratified the 2010 MOU agreement between the state and
BU 5 (Highway Patrol), which allows the member
contribution, for a limited time as specified, to be
redirected to the members' retirement contribution. The
amendment included in this bill will allow DPA to apply
that provision to excluded and exempt patrol members of
CalPERS as well.
c) Changes a section number for a continuous appropriation
section added in 2010 so that it is consistent with other
such sections.
FISCAL EFFECT
1)According to DPA the savings (in millions) created by the MOUs
are as follows:
---------------------------------------------------------------
Note: General Fund (GF), other funds (OF)
2)DPA estimates that costs begin to grow in 2012-13 with the
phasing out of the Personal Leave Program (PLP). In 2013-14 a
negotiated increase in the top stop of civil service
classifications, resulting in a pay increase for many of the
employees in these bargaining units, begins and DPA estimates
that the costs in 2013-14 would increase about $170 million.
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3)The savings in the 2010/2011 fiscal year reflect approximately
$450 million from the furlough program, which ended in March
2011. The furlough program is replaced by a one year paid
personal leave (PLP) program.
4)A significant source of the savings is increased employee
contributions of $350 million towards pension costs. The
increase rate for pension contributions is shows in the
following table.
--------------------------------------------------------------
| Retirement Classification | Current | New |
| |Contributi|Contribution|
| | on Rate | Rate (SB |
| | | 321) |
|--------------------------------------+----------+------------|
|BU 2: Miscellaneous & Industrial w/o |6% |9% |
|Social Security | | |
|--------------------------------------+----------+------------|
|BU 2: Miscellaneous & Industrial w/o |7% |10% |
|Social Security | | |
|--------------------------------------+----------+------------|
|BU 2: Safety |7% |10% |
|--------------------------------------+----------+------------|
|BUs 6, 7, 9, 10: Miscellaneous & |5% |8% |
|Industrial w/o Social Security | | |
|--------------------------------------+----------+------------|
|BUs 6, 7, 9, 10: Miscellaneous & |6% |9% |
|Industrial w/o Social Security | | |
|--------------------------------------+----------+------------|
|BUs 7, 9, 10: Safety |6% |9% |
|--------------------------------------+----------+------------|
|BU 6: Peace Officers |8% |11% |
|--------------------------------------+----------+------------|
|BU 7: Peace Officers |8% |10% |
|--------------------------------------+----------+------------|
|BU 13: Miscellaneous & Industrial |5% |10% |
|w/o Social Security | | |
|--------------------------------------+----------+------------|
|BU 13: Miscellaneous & Industrial |6% |11% |
|w/o Social Security | | |
|--------------------------------------+----------+------------|
|BU 13: Safety |6% |11% |
| | | |
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--------------------------------------------------------------
5)Costs related to personal professional days are minimal and
absorbable by the departments according to DPA.
6)The LAO analyses argues that the state is ignoring the
long-term costs of leave days. They report that the cash
value of leave for BU 6 employees, for example, is $600
million. The leave balance can be paid off when an employee
terminates state employment.
7)The LAO analyses notes that there is an erosion of savings for
the current year fiscal budget, which planned for a full year
of furlough for employees in these bargaining units (i.e., 3
days per month/approximately 15% salary reduction). The
agreements result in the furlough program ending as of March
31, thus resulting in a reduction in the anticipated savings
for the final three months of the fiscal year.
8)The LAO also reports that the savings from the MOUs falls
short of the estimates for the 2011-12 budget. They state
that if all 6 are ratified, the state would fall short of its
2011-2012 assumed employee compensation savings by an
estimated $300 million (all funds).
COMMENTS
1)Purpose . According to DPA, one of the bill's sponsors, with
the successful conclusion of negotiations on these last six
agreements, all of the state's 21 bargaining units now have
contract agreements in place or are awaiting ratification by
union members and the Legislature. They argue that with these
in place employees and the administration can face the fiscal
challenges ahead with some degree of certainty in working
conditions and compensation, which have been anything but
certain over the past few years.
2)Background . The Ralph C. Dills Act requires the economic
provisions of collective bargaining agreements that are
negotiated between the state and bargaining units must be
ratified by the Legislature. Staff notes the agreements
ratified by SB 151 were reached beginning on March 8, 2011 and
were presented to the Legislature as each one became
available. Pursuant to Chapter 499, Statutes of 2005 (SB 621,
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Speier) the Legislative Analyst's Office is required to
prepare and distribute an analysis of every 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 seven legislative days before
the Senate may act on the MOU. Both of these legislative
requirements have been met.
3)Specific provisions of the agreements.
a) Retirement Benefit Formula Calculation
Bargaining Unit 2, Unit 6, Unit 7, Unit 9, Unit 10, and Unit
13: Miscellaneous and Industrial members who are first hired
on or after January 15, 2011 will be subject to a retirement
formula of 2% at age 60 (from current 2% at age 55).
Bargaining Unit 2, Unit 7, Unit 9, Unit 10, and Unit 13:
State Safety members who are first hired on or after January
15, 2011 will be subject to a retirement formula of 2% at age
55 (from the current 2.5% at age 55).
Bargaining Unit 6, Unit 7: Peace Officer/Firefighter
Employees (PO/FF) members who are first hired after January
15, 2011 will be subject to the 2.5% at 55 formula.
Bargaining Unit 6, Unit 7, and Unit 9: Newly hired members
employed after January 15, 2011 will have retirement benefits
calculated on the employees' highest consecutive 36 month
salary.
b) Employee Pension Contribution :
Effective First Pay Period After Ratification
Unit 2: Current Miscellaneous and Industrial members shall
have their contribution increased from 6% to 9% of monthly
compensation over $513. State Safety members' contribution
will increase from 7% to 10% of monthly compensation over
$317.
Unit 6: Miscellaneous and Industrial members' pension
contribution will increase from 5% to 8% of compensation over
$513. PO/FF members will have their pension contribution
increased from 8% to 11% of monthly compensation over $863.
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Effective April 1, 2011, the State Peace Officers' and
Firefighters' Defined Contribution Plan (POFF II) will be
terminated. POFF II, established in 1998, requires the State
to contribute 2% of Peace Officer/Fire Fighter employee base
pay into a defined contribution plan.
Unit 7: POFF members shall have their pension contribution
increased from 8% to 10% of compensation over $513; State
safety members' pension contribution will increase from 6% to
9% of compensation over $317. Miscellaneous and Industrial
member contributions will increase from 5% to 8% of monthly
compensation over $513.
Unit 9, Unit 10: Miscellaneous and Industrial members'
retirement contribution will increase from 5% to 8% of monthly
compensation over $513. The state safety member contribution
will increase from 6% to 9% of monthly pay over $317.
Unit 13: Miscellaneous and Industrial members will have their
retirement contribution increased from 5% to 10% of monthly
compensation over $513. The state safety member contribution
will increase from 6% to 11% of compensation over $317.
c) Compensation
Adjusted Pay Ranges-Effective July 1, 2013
Unit 2 and Unit 6: All Peace Officers/Firefighters salaries
shall be adjusted by increasing the maximum step of the pay
range by 4%. This increase will apply only to employees who
reach the top step of the pay range.
Unit 6: Miscellaneous and Industrial members will have the
top salary step increased by 3%.
Unit 7: The maximum step of the pay range for PO/FF members
will be increased by 2%; the maximum step will increase by 3%
for State Safety members and those employees subject to the
Miscellaneous and Industrial retirement category.
Unit 9, Unit 10: The maximum step of all classifications will
increase by 3%.
Unit 13: The maximum step of all represented classification
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will increase by 5%.
d) Personal Leave Program
Effective the pay period following legislative ratification,
the Personal Leave Program (PLP) will apply to all members of
Bargaining Unit 2, Unit 6, Unit 7, Unit 9, Unit 10, and Unit
13. This program reduces pay by approximately 5% in return
for one day off per month during a 12 month period. This
leave time cannot be cashed-out. Members of Unit 10 may
choose to accelerate the PLP days to 2 or 3 per month.
The state agrees not to implement a new furlough program for
Unit 2, Unit 6, Unit 7, Unit 9, Unit 10, or Unit 13 employees
during the twelve full months that the PLP is in effect.
e) Additional 1.73 Hours Leave Per Month
Each Bargaining Unit 2 employee will receive 1.73 hours per
month in leave credit (equivalent to 1% of gross salary per
year) through June 30, 2013. This leave has cash value
similar to vacation leave.
f) Health Benefits
Unit 2, Unit 7: The state's contribution for health
insurance shall set at a dollar amount that equals 80% 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 current amounts of the 80/80 formula are: $482
for employee only, $946 for employee plus one dependent, and
$1,241 for employee plus two or more dependents. The amounts
shall be increased according to the 80/80 formula on January
1, 2012 and January 1, 2013.
Unit 6: The state will contribute one-half the difference
between the 2006 85/80 formula rate and the 2011 80/80 formula
rate as follows: $377 for employee only, $746 for employee
plus one dependent, and $968 for employee plus two or more.
The amounts will be increased equivalent to the 80/80 formula
on January 1, 2012 and January 1, 2013. The state will also
contribute for dental and vision benefits.
Unit 9: The state will contribute an amount based on the
85/80 formula: $460 for employee only, $893 for employee plus
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one dependent, and $1,156 for employee plus two or more. The
state will also contribute for dental and vision benefits.
Unit 10, Unit 13: The state will contribute an amount based
on the 80/80 formula: $433 for employee only, $866 for
employee with one dependent, and $1129 for employee plus two
or more dependents. The state will also contribute for dental
and vision benefits.
g) Personal Development Days
Unit 2 employees shall receive two days per fiscal year for
professional/personal development activities. The days cannot
be accumulated and do not have a cash value. The activities
shall be at the employees' expense and must be used within the
fiscal year they are granted. These days are in addition to
the three professional development days continued from the
prior Unit 2 contract.
Unit 6, Unit 7, Unit 9, Unit 10, and Unit 13 employees will
receive two days of personal development leave per fiscal year
for activities that promote professional and/or personal
growth. The days have no cash value.
h) Miscellaneous Provisions
The state and Unit 2, Unit 6, Unit 7, Unit 9, Unit 10, and
Unit 13 agree to delete Lincoln's Birthday and Columbus Day as
recognized holidays. Additionally, no leave will be counted
toward hours worked for purposes of calculating overtime pay.
Unit 2, Unit 10, and Unit 13 employees at the State
Compensation Insurance Fund are exempted from the Personal
Leave Program for the term of the agreement.
Unit 2, Unit 6, Unit 7, Unit 10, and Unit 13 shall be provided
contract protection in the event that another bargaining unit
enters into an agreement that does not contain pension reform
and provides a greater value, each unit may reopen related
economic provisions of its MOU and meet and confer to discuss
similar or equivalent increases.
Unit 6: Employees will donate one hour of annual leave per
year to fund a Union Release Time Bank.
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Unit 6: Use of leave credits will not be considered as time
worked for purposes of calculating overtime. Employees who
work on a holiday will no longer earn holiday credit, but will
receive two-times their hourly rate for working on a holiday.
The cap is eliminated on the 80 day limit for vacation leave
accrual.
Unit 6: Employees who work at Pelican Bay State Prison, High
Desert State Prison, and the California Correctional Center
will receive $200 per month to address recruitment and
retention problems at those facilities. The stipend will end
when a $6 million cap is expended.
Unit 7: The state removed the Paid Release program which
allowed two union officials time off of work, and instead,
members will contribute one and one-half hours per year toward
a union Release Time Bank.
Unit 7 and employees in Work Week Group 2 of Unit 9, Unit 10,
and Unit 13 who work on January 1, Memorial Day, July 4th,
Labor Day, Thanksgiving Day, or Christmas will receive one and
one-half the regular pay rate, and Unit 7 members will receive
up to eight hours of holiday credit for all hours worked on
the holiday.
Unit 7 employees in state-owned housing will pay increased
rent at the full market value FMV, and utilities will be
reimbursed to the state.
Unit 9, Unit 10: A salary survey will be conducted for
informational purposes only, and a Joint Labor/Management
Committee will be established to discuss and provide
recommendations on HR Modernization projects. Unit 13 will
have a salary survey conducted and the results may be used for
negotiations of future MOUs.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081