BILL ANALYSIS Ó
AB 2582
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2582 (Bonta)
As Amended June 11, 2014
Majority vote
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|ASSEMBLY: |73-0 |(May 8, 2014) |SENATE: |35-0 |(July 3, 2014) |
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Original Committee Reference: P.E., R. & S.S.
SUMMARY : Provides the San Francisco Bay Area Rapid Transit
District (BART) with the ability to establish a vesting
requirement for postretirement health benefits coverage that is
different than what is allowed under current law for contracting
agencies. Specifically, this bill :
1)Allows BART to make contributions for postretirement health
benefits for members of the district board of directors, the
districts' unrepresented employees, and for any unit of
employees whose terms and conditions of employment are
determined through collective bargaining, based on the
following:
a) Years of service worked with BART;
b) Agreement regarding postemployment health coverage with
all represented employees through collective bargaining;
and,
c) Contributions for postretirement health benefits for
unrepresented employees must conform to eligibility
criteria and schedules in approved bargaining agreements
for represented employees.
2)Requires the agreement to provide an employer contribution of
50% after 10 years of service, increasing incrementally to
100% after 15 years of credited service.
3)Requires any agreement reached from providing an employer
contribution for retiree healthcare to provide full employer
contributions for those employees who retire for disability
with at least five years of service.
4)Specifies that these provisions only apply to BART employees
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first hired on or after January 1, 2014, and to directors who
first serve as director on or after January 1, 2014.
5)Specifies that these provisions only apply to represented
employees if the agreement is expressly incorporated into a
memorandum of understanding, as specified.
6)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 retirements occurring on or after the
effective date of the bill.
7)Requires BART to provide the California Public Employees
Retirement System (CalPERS) with notification of each
agreement or personnel action applying these new requirements,
and any additional information necessary to implement the
proposed change.
The Senate amendments :
1)Delete a provision that stated the bill is intended to have
retroactive effect and application to January 1, 2014.
2)Clarify that the provisions of the bill only apply to
retirements occurring on or after the effective date of the
bill.
EXISTING LAW establishes the Public Employees' Medical and
Hospital Care Act (PEMHCA) under the administration of CalPERS.
If a contracting agency elects to cover their employees for
health care under PEMHCA, they have the following options to
choose from in determining contribution amount for annuitants:
1)A contracting agency could opt to make the employer
contribution amount equal 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.
2)A contracting agency that joins PEMHCA on or after January 1,
1986, has the option to pay a lesser employer contribution
amount for annuitants than for active employees as long as the
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agency increases its contribution for annuitants each year
until it equals the agency's contributions for active
employees. Based on the formula, it may take 20 years for the
lesser contribution amount to equal the active employee
contribution amount. Under this option, an employee who
retires and meets the definition of annuitant becomes 100%
vested and receives an employer contribution amount equal to
the lesser contribution amount.
3)A contracting agency has the option to establish a pre-set
"vesting schedule" of specific percentages based on an
employee's credited years of service to determine the employer
contribution amount for annuitants. Under this option, an
employee would have to work at least 10 years to qualify for
an employee contribution and would have to work 20 years to
become 100% vested.
FISCAL EFFECT : According to the Senate Appropriations
Committee, minor administrative costs to CalPERS (Special Fund)
and potentially significant future savings to BART (Local Fund).
COMMENTS : According to the author, this bill will authorize
implementation of new labor contract provisions related to
vesting of healthcare benefits for BART retirees. This
Collective Bargaining Agreement (CBA) was reached by BART labor
and management representatives in the fall of 2013 and has since
been ratified by all parties.
Under the prior CBA, BART provided a 100% employer contribution
to retiree healthcare costs after five years of service. Under
the CBA signed in 2013, the new vesting schedule provides for an
employer contribution of 50% after 10 years of service,
increasing incrementally to 100% after 15 years of credited
service. The CBA covers employees first hired after January 1,
2014.
According to the author, this modification to the vesting
schedule for retiree healthcare benefits is estimated to save
BART $13.8 million over the next 30 years.
This bill is similar to AB 2053 (Allen) of 2012, which would
have provided BART with the ability to establish a vesting
requirement for postretirement health benefits coverage that is
different than what is allowed under current law for contracting
agencies. In his veto message, the Governor stated, in part,
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"The labor contracts for BART's five bargaining units expire
next year, so negotiations for new contracts will start soon if
not already. The vesting period for health benefits is a matter
that should be negotiated in the new contracts. This bill
removes the vesting period from negotiations."
AB 1144 (Hall), Chapter 244, Statutes of 2013, established, for
the City of Carson, a specific vesting schedule and employer
contribution amount for annuitant health care premiums under
PEMHCA.
AB 2510 (Fletcher), Chapter 600, Statutes of 2010, provided the
City of San Diego with the ability to establish a vesting
requirement for post-retirement health benefits coverage that is
different than what is allowed under current law for contracting
agencies.
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0004079