BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 2582
Author: Bonta (D), et al.
Amended: 6/11/14 in Senate
Vote: 21
SENATE PUBLIC EMPLOYMENT & RETIREMENT COMM : 5-0, 6/9/14
AYES: Torres, Walters, Block, Evans, Gaines
SENATE APPROPRIATIONS COMMITTEE : 7-0, 6/23/14
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 73-0, 5/8/14 (Consent) - See last page for vote
SUBJECT : Public Employees Medical and Hospital Care Act
SOURCE : Bay Area Rapid Transit District
DIGEST : This bill authorizes the Bay Area Rapid Transit
District (BART) to establish a vesting requirement for
post-retirement health benefits coverage that is different than
what is allowed under current law for contracting agencies and
which has been bargained with BART's employee representatives.
BART's health insurance employer contribution for annuitants
with 10 years of credited service would be 50% of that provided
to active employees. The employer contribution would increase
incrementally by 10% for each credited year of service, reaching
100% if the annuitant attained 15 years of credited service.
Annuitants who retire for disability and have at least five
years of BART service would receive 100% of BART's employer
contribution for active employees. Specifies that these
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provisions apply only to those retiring on or after this bill's
effective date.
ANALYSIS : Existing law:
1.Establishes the Public Employees' Medical and Hospital Care
Act (PEMHCA), administered by the California Public Employees'
Retirement System (CalPERS), to provide health coverage for
employees and annuitants of the state of California, and the
California State University.
2.Allows a school or local agency employer to contract with
CalPERS for PEMHCA and requires the employee or annuitant
contribution, when added to the employer contribution, to
cover the total cost of the PEMHCA coverage premium.
3.Defines an annuitant as one who, among other requirements,
retires from the system within 120 days of separation from
public employment.
4.Does not allow contracting employers to provide PEMHCA
coverage to active employees without also covering retired
annuitants. However, with respect to the employer
contribution for annuitants, provides specified options
available to the contracting agency, including:
A. An equal employer contribution amount for both active
employees and annuitants. Under this option, an employee
who retires and meets the definition of annuitant becomes
100% vested and receives an employer contribution amount
equal to what the active employees receive; or
B. For a contracting agency that joins PEMHCA on or after
January 1, 1986, the option to pay a lesser employer
contribution amount for annuitants than for active
employees as long as the agency increases its contribution
for annuitants each year until it equals the agency's
contributions for active employees as specified; or
C. A pre-set "vesting schedule" based on an employee's
credited years of service to determine a set percentage of
the employer contribution amount for annuitants. Under
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this option, an annuitant must have at least 10 years of
CalPERS credited service to qualify for 50% of the employer
contribution and would receive an additional 5% for each
additional year of credited service for a total of 100%
with 20 years of credited service. At least 5 years must
be with the employer providing PEMHCA.
D. Allows under the 10-20 year vesting schedule, an
employer contribution of 100% if the annuitant retired for
disability or if the annuitant had 20 years of service,
regardless of the length of separation from service prior
to retirement.
1.Provides specified and individual variations to the above
options and requirements under separate statutes specific to
the City of Carson, the City of San Diego, school employers,
Alameda County Transportation Improvement Authority, and
Mariposa County. These statutes are subject to collective
bargaining agreements.
This bill:
1.Authorizes BART to make contributions for postretirement
health benefits for the districts' unrepresented employees,
including members of the district board of directors to the
extent that they are eligible under existing law, and for any
unit of employees whose terms and conditions of employment are
determined through collective bargaining. The employer
contributions will be based on the following:
A. Credited years of service worked with BART;
B. A collectively bargained agreement with all represented
employees regarding post-employment health coverage; and,
C. For unrepresented employees, including directors if
eligible, criteria and schedules as provided to the
represented employees through a collectively bargained
agreement.
1.Requires the agreement to provide an employer contribution of
50% after 10 years of credited service, increasing
incrementally to 100% after 15 years of credited service. All
service must be with BART.
2.Requires any agreement for providing an employer contribution
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for retiree healthcare to also provide full employer
contributions for those employees who retire for disability
with at least five years of service with BART.
3.Specifies that these provisions only apply to BART employees
first hired on or after January 1, 2014, and to directors who
first serve as director on or after January 1, 2014.
4.Specifies that these provisions only apply to represented
employees if the agreement is expressly incorporated into a
memorandum of understanding, as specified.
5.Specifies that these provisions do not apply to employees who
retire prior to the effective date of the bargaining
agreement, and, in the event the bargaining agreement
establishes a retroactive effective date, these provisions
will only apply to prospective retirements occurring on or
after the effective date of this bill.
6.Requires BART to provide CalPERS with notification of each
agreement or personnel action applying these new requirements,
and any additional information necessary to implement the
proposed change.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Minor administrative costs of CalPERS (Special Fund).
Potentially significant future savings to BART (Local Fund).
SUPPORT : (Verified 6/23/14)
Bay Area Rapid Transit District (source)
ARGUMENTS IN SUPPORT : According to BART, this bill will
"authorize a new vesting schedule for retiree lifetime
healthcare benefits that was negotiated between BART and our
employee organizations last fall? The new schedule will provide
cost savings to BART of over $13.8 million over the next 30
years."
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ASSEMBLY FLOOR : 73-0, 5/8/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Grove, Hagman, Harkey, Roger Hernández, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
Pérez
NO VOTE RECORDED: Eggman, Gorell, Gray, Hall, Mansoor, V.
Manuel Pérez, Vacancy
JL:nl 6/24/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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