BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT COMMITTEE AB 1506
Teresa Hughes, Chairwoman Hearing date: 7/10/95
AB 1506 (Kuehl) as amended 5/26/95 FISCAL: yes
PERS: PEMHCA: EMPLOYER CONTRIBUTIONS FOR HEALTH BENEFITS OF
ACTIVE AND RETIRED EMPLOYEES
HISTORY:
Sponsor: Santa Monica Community College District
Mt. San Antonio Community College Distract
Prior legislation: AB 2117 (Johnson)
Ch. 58/Stats 1993
ASSEMBLY VOTES:
P.E.R. & S.S. 4/19/95 6-3
Appropriations 5/03/95 16-0
Asm. Floor 5/18/95 48-21
SUMMARY:
Would authorize the Santa Monica Community College District and
the Mt. San Antonio Community College Districts to establish
their own schedule of employer contributions for post-retirement
health benefit coverage under PEMHCA.
ANALYSIS:
1) Existing law, under the Public Employees Medical and Hospital
Care Act (PEMHCA), provides:
a) that local agencies participating in the PERS-administered
health benefits program (PEMHCA) are required to provide an
employer contribution for active and retired employees,
b) a 5-year vesting requirement that local employees must
meet in order to receive the right to a full employer
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contribution for post-retirement health benefits coverage,
with the full employer contribution for retirees phased in
over a certain period (up to 20 years) when the local agency
first contracts for PEMHCA coverage,
c) a 20-year vesting requirement that state employees first
hired after 1990 must meet in order to receive a full
employer contribution for post-retirement health benefits
coverage, and
d) a 15-year vesting requirement that the North Orange County
Community College District and the Riverside Superintendent
of Schools must meet, to be eligible to receive an employer
contribution for post-retirement health benefits (pursuant to
Chapter 58 of 1990).
2) This bill:
a) provides Santa Monica Community College District (SMCCD)
and Mount San Antonio Community College District (MSACCD) the
ability to establish a vesting requirement for
post-retirement health benefits coverage,
b) does not specify the amount of credited service that an
employee would need to be entitled to the full employer
contribution after retirement; rather it allows the
employer and employee representatives to develop whatever
vesting schedule they choose through the collective
bargaining process as long as the employee has completed 5
years of service with the district before retirement,
c) allows SMCCD and MSACCD, together with their respective
employees' exclusive representative and their respective
nonrepresented employees, to agree that the employer
contribution would be subject to the following requirements:
- the employer contribution shall be based on the former
employee's completed years of service credited with the
contracting agency;
- the employer contribution shall be based on not less than
the number of years of service of the former employee at
retirement for age and service mutually agreed to in the
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applicable memorandum of understanding;
- the employee contribution shall be made according to
eligibility rules negotiated between the contracting agency
and the employee bargaining group; and
- disagreement between the employer and employee
organizations over the employer contribution for retiree
PEMHCA coverage shall not be eligible for treatment under the
impasse provisions for the existing collective bargain laws.
FISCAL EFFECT:
According to PERS, minimal costs, provided that the two agencies
furnish necessary information to PERS.
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COMMENTS:
1) The committee is advised that, while the full employer
contribution for retirees can be phased in for a 20-year period
after the local agency first contracts for PEMHCA coverage, local
agencies are then obliged to provide for full employer
contributions to employees who retire with after a minimum of
five years of service to the employer.
This bill:
a) will allow the two districts to set a different standard
for making the full employer contribution, possibly resulting
in savings to both school districts,
b) expands the precedent set by Chapter 58 of 1990, allowing
agencies to establish their own conditions for providing
post-retirement health benefits, and
c) further reduces the uniformity that now exists in
PEMHCA-participating local agencies' post-retirement employer
contributions and provides flexibility to the two community
college districts in determining the vesting age.
2) SUPPORT:
School Services of California, Inc.
California School Employees Association
3) OPPOSITION:
none to date
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David Felderstein AB 1506
July 7, 1995
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