AB 119

Bill Subjects

Abstract

(1) Existing law provides that a provision of a memorandum of understanding reached between the state employer and a recognized employee organization representing state civil service employees that requires the expenditure of funds does not become effective unless approved by the Legislature in the annual Budget Act. This bill would approve provisions requiring the expenditure of funds in the memoranda of understanding or addenda, or both, entered into between the state employer and State Bargaining Unit 1-Professional, Administrative, Financial, and Staff Services, State Bargaining Unit 3-Professional Educators and Librarians, State Bargaining Unit 4-Office and Allied, State Bargaining Unit 6-Corrections, State Bargaining Unit 9-Professional Engineers, State Bargaining Unit 11-Engineering and Scientific Technicians, State Bargaining Unit 14-Printing and Allied Trades, State Bargaining Unit 15-Allied Services, State Bargaining Unit 17-Registered Nurses, State Bargaining Unit 18-Psychiatric Technicians, State Bargaining Unit 20-Medical and Social Services, and State Bargaining Unit 21-Educational Consultants and Library. The bill would provide that provisions of the memoranda of understanding or addenda, or both, described above and approved by this bill that require the expenditure of funds will not take effect unless funds for those provisions are specifically appropriated by the Legislature. The bill would authorize the state employer or these state bargaining units to reopen negotiations if funds for those provisions are not specifically appropriated by the Legislature. This bill would also ratify and approve provisions requiring the expenditure of funds in the memoranda of understanding or addenda, or both, entered into between the state employer and other state bargaining units no later than June 30, 2020, if the memoranda of understanding or addenda includes savings measures that contribute to meeting the budgeted reductions as specified in the Budget Act of 2020. The bill would provide that provisions of these approved memoranda of understanding or addenda, or both, that require the expenditure of funds will take effect and are deemed to be appropriated by the Legislature. This bill would require the provisions of these memoranda of understanding or addenda, or both, that require the expenditure of funds to become effective even if these provisions are approved by the Legislature in legislation other than the annual Budget Act. The bill would appropriate to the Controller from the General Fund unallocated special funds, including federal funds and unallocated nongovernmental cost funds, and any other fund from which state employees are compensated, the amount necessary for the payment of compensation and employee benefits to state employees covered by specified memoranda of understanding, if the Budget Act is not enacted by July 1, 2020. (2) The Public Employees' Retirement Law (PERL) creates the Public Employees' Retirement System for the purpose of providing public employees pension and other benefits, which are funded by employee and employer contributions and investment returns. Contributions and investment returns are deposited in the Public Employees' Retirement Fund, which is continuously appropriated for the payment of benefits and administration of the system. PERL and labor agreements prescribe different normal rates of contribution for employees depending on bargaining unit, employer, and inclusion of service in the federal social security system, among other factors. Existing law adjusts the normal rate of contribution for specified employees of State Bargaining Unit 9 (BU 9) to 50% of the normal cost rate rounded to the nearest quarter 1%, as specified, if certain conditions occur. After June 30, 2020, the normal rate of contribution returns to the normal contribution rate established in specified provisions of existing law. This bill, on July 1, 2022, or a later date as determined by the provisions of the memorandum of understanding for BU 9, would require the normal rate of contribution to return to the normal contribution rate that was in place on July 1, 2019, for a period of one year. This bill would adjust the normal rates of pension contributions for specified employees of State Bargaining Unit 18 (BU 18) . The bill would require, effective July 1, 2021, the state miscellaneous members or state industrial members contribution rate, or the rate for state safety members, be adjusted when both (a) the normal cost rate for the category in effect for the 2016–17 fiscal year has increased by 1%, and (b) 50% of that normal cost rate, rounded as specified, exceeds the normal established contribution rate, as specified. The bill would provide for adjustments each year thereafter, subject to certain limitations, including that the increase to the employee contribution in any given fiscal year not exceed 1%, and applicable at different compensation thresholds, depending on the member's inclusion in the federal social security system. By increasing employee contributions into a continuously appropriated fund, this bill would make an appropriation. The bill would grant the Director of the Department of Human Resources the discretion to establish the normal rate of contribution for a related state employee or an officer or employee of the executive branch who is not a member of the civil service, consistent with other members identified in these provisions. (3) The Public Employees' Medical and Hospital Care Act (PEMHCA) , which is administered by the Board of Administration of the Public Employees' Retirement System, prescribes methods for calculating the state employer contribution for postemployment health care benefits for eligible retired public employees and their families and for the vesting of these benefits. PEMHCA establishes the Annuitants' Health Care Coverage Fund, which is continuously appropriated, for the purpose of prefunding health care coverage for annuitants, including administrative costs. Existing law specifies the contribution rates that employees in BU 18 are required to make, subject to the state making a matching contribution, based on a specified schedule. This bill would provide, after July 1, 2019, that the employer and employee contribution percentages would be adjusted based on actuarially determined total normal costs, in accordance with certain limits. (4) PEMHCA requires the state and employees in specified State Bargaining Units to prefund retiree health care and other postemployment benefits and provides that if those provisions are in conflict with the provisions of a memorandum of understanding reached pursuant to an agreement with the Governor, as provided, the memorandum of understanding is controlling without further legislative action, except if the provisions of the memorandum of understanding require the expenditure of funds. This bill would also provide that addenda to the memorandum of understanding also control as to those conflicting provisions, except if the conflicting provisions of the memorandum of understanding or addenda require the expenditure of funds. (5) PEMHCA requires the state and employees in specified State Bargaining Units to prefund retiree health care, with the goal of reaching a 50% cost sharing of actuarially determined normal costs for both employer and employees by July 1, 2020. This bill would include employees in State Bargaining Unit 5 - Highway Patrol, in that cost-sharing requirement. (6) PEMHCA requires the employees in state bargaining unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 to make contributions to prefund retiree health care based on the specified schedule, and requires the state to make a matching contribution. Effective July 1, 2020, PEMHCA requires an additional 1.2% for a total employee contribution of 3.5% of pensionable compensation. This bill, for employees in those state bargaining units, would suspend the additional 1.2% required for the employees' monthly contribution for prefunding other postemployment benefits for the 2020–21 and 2021–22 fiscal years while continuing to require the employer's monthly contribution for prefunding those postemployment benefits during those fiscal years. (7) PEMHCA requires the employees in State Bargaining Unit 6 (BU 6) to make contributions to prefund retiree health care based on the specified schedule, and requires the state to make a matching contribution. Effective July 1, 2018, PEMHCA requires an additional 1.4% for a total employee contribution of 4% of pensionable compensation. This bill, for employees in BU 6, would suspend the additional 1.4% required for the employees' monthly contribution for prefunding other postemployment benefits for the 2020–21 and 2021–22 fiscal years while continuing to require the employer's monthly contribution for prefunding those postemployment benefits during those fiscal years. (8) PEMHCA requires the employees in BU 9 to make contributions to prefund retiree health care based on the specified schedule, and requires the state to make a matching contribution. Effective July 1, 2019, PEMHCA requires an additional 1.0% for a total employee contribution of 2% of pensionable compensation This bill, for employees in BU 9, would suspend the additional 1.0% required for the employees' monthly contribution for prefunding other postemployment benefits for the 2020–21 and 2021–22 fiscal years while continuing to require the employer's monthly contribution for prefunding those postemployment benefits during those fiscal years. (9) The bill would appropriate the sum of $270,917,000 for BU 18 for expenditure in augmentation of, and for the purpose of, state employee compensation, in accordance with a specified schedule. (10) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.