SB 919

Bill Subjects

Abstract

(1) The Public Employees' Retirement Law (PERL) provides a defined benefit to members of the Public Employees' Retirement System (PERS) based on age at retirement, service credit, and final compensation, as those terms are defined. Under PERL employees belong to various membership categories, which include state safety members and state miscellaneous members. Safety members of PERS receive a higher level of benefits and make higher contributions than state miscellaneous members. Under existing law, effective July 1, 2004, specified state employee positions in State Bargaining Unit 7 are classified as state safety members of PERS. Certain managerial, supervisory, or confidential positions, as well as specified officers and employees of the executive branch, by virtue of their relation to State Bargaining Unit 7, are also classified as state safety members of PERS. This bill would provide that state employees in State Bargaining Unit 7 first hired on or after the date the act takes effect, in job classifications formerly subject to state safety membership prior to that date, shall be state miscellaneous members of PERS. The bill would provide that these provisions would apply notwithstanding a certain statutory provision or any provision of an expired memorandum of understanding, as specified. (2) PERL defines final compensation variously based on different member classifications, bargaining units, and dates of hire. PERL generally provides for a definition of final compensation based on the highest annual average compensation earnable by the member during a designated 12-month or 36-month period. This bill would provide that final compensation for a person who becomes a state member of the system on or after the date the act takes effect, and who is represented by State Bargaining Unit 6, 8, 9, or as a peace officer/firefighter member of State Bargaining Unit 7, means the highest annual average compensation earnable by the member during a designated 36-month period. This bill would provide that final compensation for a person who becomes a patrol member of the system on or after July 3, 2010, and who is represented by State Bargaining Unit 5, means the highest annual average compensation earnable by the member during a designated 36-month period. The bill would provide that these provisions would apply notwithstanding a certain statutory provision or any provision of an expired memorandum of understanding, as specified. The bill would also apply this definition of final compensation to a state employee who is excepted from the definition of state employee for purposes of state labor relations, as specified, or an officer or employee of the executive branch of state government who is not a member of the civil service, who is employed by the state for the first time and becomes a state member of the system on or after the date the act takes effect. (3) PERL provides that attorneys in the offices of the Attorney General and the State Public Defender are state miscellaneous members of PERS. PERL authorizes state prosecutors and state public defenders, as defined, to be included within the state safety member classification under PERS, if agreed to in a memorandum of understanding, as specified. This bill would repeal the provisions described above that authorize state prosecutors and state public defenders to be included within the state safety member classification pursuant to an agreement in a memorandum of understanding. (4) PERL prescribes contribution rates for state employees who are state miscellaneous, state industrial, state safety members, patrol members, or state peace officer/firefighter members, among others, in amounts based on percentages of monthly compensation. PERL reduces those contributions by excepting from the definition of monthly compensation specified amounts ranging between $238 and $863, based on member classification, among other things. Member contributions are deposited into the Public Employees' Retirement Fund, which is a continuously appropriated trust fund. This bill would increase these contribution rates for specified state miscellaneous members, state industrial members, state safety members, patrol members, or state peace office/firefighter members by eliminating the exceptions from the definition of monthly compensation of specified amounts ranging between $238 and $863, as described above. The bill would apply these provisions notwithstanding a specified statutory provision or any provision of an expired memorandum of understanding, as specified. By increasing member contributions into a continuously appropriated fund, this bill would make an appropriation. (5) PERL establishes various retirement formulas that apply to specified membership categories. Under PERL, state miscellaneous members, state industrial members, and school members of the First Tier, are generally subject to a retirement formula commonly known as 2% at 55, which, if the member retires at 55 years of age, yields a benefit equal to 2% of the member's final compensation multiplied by the member's years of service credit, as specified. Under PERL state miscellaneous and state industrial members of the Second Tier are generally subject to a retirement formula commonly known as 1.25. Under PERL, patrol members and specified state peace officer/firefighter members are generally subject to a retirement formula commonly known as 3% at 50, while other state peace officer/firefighter members are subject to a 3% at 55 retirement formula. Under PERL, state safety members are generally subject to a 2.5% at 55 retirement formula. This bill would provide that state miscellaneous members, state industrial members, and school members, of the First Tier, who are first employed on and after the date the act takes effect, are subject to a 2% at 65 retirement formula. This bill would provide that state miscellaneous and state industrial members, of the Second Tier, who are first employed after the date the act takes effect are subject to a 0.5% at 65 retirement formula. The bill would provide that patrol members who are first employed on and after July 3, 2010, and state peace officer/firefighter members in State Bargaining Unit 6, 7, or 8 who are first employed on and after the date the act takes effect, are subject to a 2.7% at 57 retirement formula. The bill would provide state peace officer/firefighter members who are first employed on and after the date the act takes effect, who are employed by the schools, the California State University, or the legislative or judicial branch of government, are subject to a 2.5% at 57 retirement formula. The bill would provide that state safety members who are first employed on and after the date the act takes effect, are subject to a 2% at 62 retirement formula. The bill would provide that these provisions would apply notwithstanding a certain statutory provision or any provision of an expired memorandum of understanding, as specified. (6) The Public Employees' Medical and Hospital Care Act (PEMHCA) , which is administered by the Board of Administration of the Public Employees' Retirement System, permits an employee or annuitant to enroll in a health benefit plan approved or maintained by the board, as specified. PEMHCA permits the board, without compliance with any provision of law relating to competitive bidding, to enter into contracts with carriers offering health care benefit plans or with entities offering services relating to the administration of health benefit plans. Existing law provides for a monthly appropriation from the General Fund of amounts necessary for the administration of the act and other specified employer contributions. This bill would provide that, on and after the date the act takes effect, another unnamed entity of the state that is authorized by statute is within the definition of the term "board" for the purposes of administrating the PEMHCA. By providing that General Fund moneys that are appropriated monthly may be spent by this additional administrative body, this bill would make an appropriation. The bill would also allow the board, as it would be defined, without compliance with any provision of law relating to competitive bidding, to provide self-funded plans by contracting with entities offering services relating to the administration of health benefit plans. By permitting General Fund moneys appropriated monthly to be spent for a new purpose, this bill would make an appropriation. The bill would permit plan designs and premiums to vary in different areas of the state. (7) PEMHCA requires the state and each employee or annuitant to contribute a portion of the cost of providing the benefit coverage afforded under the approved health benefit plan in which the employee or annuitant is enrolled. Existing law provides that a represented state employee first hired on or after January 1, 1989, shall not be vested for the full employer contribution payable for annuitants unless he or she has 20 years of credited state service, as defined, at the time of retirement, as specified. The employer contribution payable for annuitants with at least 10 years of credited service but less than 20 years of service is prorated based on credited state service at the time of retirement. This bill would, notwithstanding those provisions, prohibit a state, California State University, legislative, or judicial branch employee first hired on or after the date the act takes effect, from receiving any portion of the employer contribution payable for annuitants unless he or she is credited with 25 years of state service, as defined, at the time of retirement. The bill would provide that the employer contribution for these employees who become annuitants or a survivor of that person, be adjusted in the annual Budget Act. The bill would require that those adjustments be based on the principle that the employer contribution for each annuitant shall be the same as the highest employer contribution paid for an active state employee. (8) PEMHCA authorizes a contracting agency, as specified, to elect to become subject to the act, along with the agency's employees and annuitants. Existing law establishes certain minimum rates for contracting employer contributions in this regard and requires that the employer contribution be equal for both employees and annuitants. This bill would permit a contracting agency of PEMHCA and the exclusive representative of employees of that agency to agree through collective bargaining that the employer contribution for employee and annuitant health benefits coverage for employees first hired on or after the effective date of a memorandum of understanding may differ from the employer contribution provided to existing employees and annuitants. The bill would provide that these provisions are not subject to labor negotiation impasse procedures. The bill would require a contracting agency that applies a different contribution rate to employees not represented by a bargaining unit to certify that, with regard to those employees, there is not an applicable memorandum of understanding. The bill would provide that an agreement reached in this regard is not valid if it provides an employer contribution for employees with less than 5 years of credited service with the contracting agency. (9) This bill would declare that it is to take effect immediately as an urgency statute.