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SB-131 State public employment: memorandum of understanding: approval.(2017-2018)

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Date Published: 04/26/2017 04:00 AM
SB131:v97#DOCUMENT

Enrolled  April 25, 2017
Passed  IN  Senate  April 17, 2017
Passed  IN  Assembly  April 24, 2017
Amended  IN  Senate  April 05, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 131


Introduced by Committee on Budget and Fiscal Review

January 11, 2017


An act to amend Sections 19829.9845, 19829.9846, 19829.9847, 22871.3, 22879, and 22944.5 of, and to add Sections 20683.4, 20683.5, 22874.5, and 22958.1.5 to, the Government Code, relating to state public employment, and making an appropriation therefor, to take effect immediately, bill related to the budget.


LEGISLATIVE COUNSEL'S DIGEST


SB 131, Committee on Budget and Fiscal Review. State public employment: memorandum of understanding: approval.
(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 memorandum of understanding entered into between the state employer and State Bargaining Unit 16, Physicians, Dentists, and Podiatrists.
This bill would provide that provisions of the memorandum of understanding 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 and State Bargaining Unit 16 to meet and confer to renegotiate the affected provisions if funds for those provisions are not specifically appropriated by the Legislature. The bill would require that the provisions of this memorandum of understanding 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 the memorandum of understanding described above if the Budget Act is not enacted on or before July 1 in the 2017–18, 2018–19, or 2019–20 fiscal year, as specified.
(2) The Public Employees’ Retirement Law (PERL) creates the Public Employees’ Retirement System for the purpose of providing pension and other benefits to public employees, which are funded by employee and employer contributions and investment returns. PERL prescribes different normal rates for employee contributions depending on bargaining unit, employer, and inclusion of service in the federal Social Security system, among other factors.
This bill, on and after July 1, 2017, would adjust the normal rate of contribution for specified employees of State Bargaining Unit 16 to 50% of the normal cost rate rounded to the nearest quarter 1%, as specified, if certain conditions occur. The bill would authorize the Director of the Department of Human Resources to exercise his or her 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.
(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 requires the employer contribution for an employee or annuitant who is in the employment of or retired from state service to be adjusted by the Legislature in the annual Budget Act, as specified. PEMHCA prescribes different ways of calculating the employer contributions for employees and annuitants depending on date of hire, years of service, and bargaining unit.
This bill, for state employees who are first employed and become members of the retirement system on or after April 1, 2017, as specified, and are represented by, or related to, State Bargaining Unit 16, would limit the employer contribution for annuitants to 80% of the weighted average of the health benefit plan premiums for an active employee enrolled for self alone, during the benefit year to which the formula is applied, for the 4 health benefit plans with the largest state civil service enrollment, as specified. The bill would similarly limit the employer contribution for an enrolled family member of an annuitant to 80% of the weighted average of the additional premiums required for enrollment of those family members during the benefit year to which the formula is applied and would provide the same limit on employer contributions for annuitants enrolled in Medicare health benefit plans.
This bill would prohibit state employees who are first employed and become members of the retirement system on or after April 1, 2017, as specified, and are represented by, or related to, State Bargaining Unit 16, from receiving any portion of the employer contribution payable for annuitants unless the person is credited with at least 15 years of state service at the time of retirement. The bill would prescribe the percentage of the employer contribution payable for postretirement health benefits for these employees based on the number of completed years of credited state service at retirement, with 50% after 15 credited years of service and 100% after 25 or more years of service.
(4) PEMHCA generally requires that an employee or annuitant who is enrolled in, or whose family member is enrolled in, a Medicare health benefit plan be paid the amount of the Medicare Part B premiums, as specified, and prohibits this payment from exceeding the difference between the maximum employer contribution and the amount contributed by the employer toward the cost of premiums for the health benefit plan in which the employee or annuitant and his or her family members are enrolled. Existing law excepts from this requirement state employees who are first employed and become members of the retirement system on or after specified dates and are represented by, or related to, specified state bargaining units.
This bill would also except from the requirement described above state employees who are first employed and become members of the retirement system on or after April 1, 2017, as specified, and are represented by, or related to, the State Bargaining Unit 16.
(5) PEMHCA establishes the Public Employees’ Contingency Reserve Fund for the purpose of funding health benefits and funding administrative expenses. 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. PEMHCA defines “prefunding” for these purposes. Existing law requires the state and employees of State Bargaining Unit 2, 7, 9, 10, or 12 to prefund retiree health care with the goal of reaching a 50% cost sharing of normal costs by July 1, 2019, and prescribes schedules of contribution percentages in this regard. For the state and employees of State Bargaining Unit 6, the date for reaching the goal is July 1, 2018.
This bill would require the state and employees of State Bargaining Unit 16 to prefund retiree health care with the goal of reaching a 50% cost sharing of normal costs by July 1, 2018. The bill would prescribe a schedule of contribution percentages in this regard for the affected bargaining unit, with the contributions to be deposited in the Annuitants’ Health Care Coverage Fund. By depositing new revenue in a continuously appropriated fund, this bill would make an appropriation.
(6) Existing law, the State Employees’ Dental Care Act, authorizes the state to enter into contracts, upon negotiations with employee organizations, with carriers for dental care plans for employees, annuitants, and eligible family members. Existing law permits these plans to include premiums to be paid by employees and annuitants and also authorizes the plans to be self-funded if an employer determines it to be cost effective. Existing law prohibits specified employees from receiving an employer contribution for these benefits for annuitants unless the person is credited with 10 or more years of state service or for other specified employees unless the person is credited with 15 or more years of state service.
This bill would prohibit state employees, as specified, who are first employed and become members of the retirement system on or after April 1, 2017, as specified, and are represented by, or related to, State Bargaining Unit 16, from receiving an employer contribution for dental benefits, as described above, for annuitants unless the person is credited with 15 or more years of state service. The bill would prescribe the percentage of the employer contribution payable for these dental benefits for these employees based on the number of completed years of credited state service at retirement, with 50% after 15 credited years of service and 100% after 25 or more years of service.
(7) This bill would become operative only if SB 496 is enacted and becomes operative.
This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.
Vote: MAJORITY   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares that the purpose of this act is to approve the agreement entered into by the state employer and State Bargaining Unit 16 pursuant to Section 3517.5 of the Government Code.

SEC. 2.

 The provisions of the memorandum of understanding prepared pursuant to Section 3517.5 of the Government Code and entered into by the state employer and State Bargaining Unit 16, dated February 28, 2017, and that require the expenditure of funds, are hereby approved for the purposes of subdivision (b) of Section 3517.6 of the Government Code.

SEC. 3.

 The provisions of the memorandum of understanding approved in Section 2 of this act that require the expenditure of funds shall not take effect unless funds for these provisions are specifically appropriated by the Legislature. If funds for these provisions are not specifically appropriated by the Legislature, either the state employer or the affected employee organization may reopen negotiations on all or part of the memorandum of understanding.

SEC. 4.

 Notwithstanding Section 3517.6 of the Government Code, the provisions of the memorandum of understanding included in Section 2 of this act that require the expenditure of funds shall become effective even if the provisions of the memorandum of understanding are approved by the Legislature in legislation other than the annual Budget Act.

SEC. 5.

 Section 19829.9845 of the Government Code is amended to read:

19829.9845.
 (a) Notwithstanding Section 13340, for the 2017–18 fiscal year, if the Budget Act of 2017 is not enacted by July 1, 2017, for the memoranda of understanding entered into between the state employer and State Bargaining Unit 2 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 7 (effective July 2, 2016, to July 1, 2019, inclusive), State Bargaining Unit 12 (effective July 1, 2015, to July 1, 2020, inclusive), State Bargaining Unit 13 (effective July 2, 2016, to June 30, 2019, inclusive), State Bargaining Unit 18 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 (each effective July 2, 2016, to January 1, 2020, inclusive), State Bargaining Unit 16 (effective July 1, 2016, to July 1, 2020, inclusive), State Bargaining Unit 19 (effective July 1, 2016, to July 1, 2020, inclusive), and State Bargaining Unit 8 (effective January 1, 2017, to July 1, 2021, inclusive), there is hereby continuously appropriated to the Controller from the General Fund, unallocated special funds, including, but not limited to, 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 the above memoranda of understanding until the Budget Act of 2017 is enacted. The Controller may expend an amount no greater than necessary to enable the Controller to compensate state employees covered by the above memoranda of understanding for work performed between July 1, 2017, of the 2017–18 fiscal year and the enactment of the Budget Act of 2017.
(b) If the memoranda of understanding entered into between the state employer and State Bargaining Unit 2 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 7 (effective July 2, 2016, to July 1, 2019, inclusive), State Bargaining Unit 12 (effective July 1, 2015, to July 1, 2020, inclusive), State Bargaining Unit 13 (effective July 2, 2016, to June 30, 2019, inclusive), State Bargaining Unit 18 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 (each effective July 2, 2016, to January 1, 2020, inclusive), State Bargaining Unit 16 (effective July 1, 2016, to July 1, 2020, inclusive), State Bargaining Unit 19 (effective July 1, 2016, to July 1, 2020, inclusive), and State Bargaining Unit 8 (effective January 1, 2017, to July 1, 2021, inclusive) are in effect and approved by the Legislature, the compensation and contribution for employee benefits for state employees represented by these bargaining units shall be at a rate consistent with the applicable memorandum of understanding referenced above.
(c) Expenditures related to any warrant drawn pursuant to subdivision (a) are not augmentations to the expenditure authority of a department. Upon the enactment of the Budget Act of 2017, these expenditures shall be subsumed by the expenditure authority approved in the Budget Act of 2017 for each affected department.
(d) This section shall only apply to an employee covered by the terms of the State Bargaining Unit 2 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 7 (effective July 2, 2016, to July 1, 2019, inclusive), State Bargaining Unit 12 (effective July 1, 2015, to July 1, 2020, inclusive), State Bargaining Unit 13 (effective July 2, 2016, to June 30, 2019, inclusive), State Bargaining Unit 18 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 (each effective July 2, 2016, to January 1, 2020, inclusive), State Bargaining Unit 16 (effective July 1, 2016, to July 1, 2020, inclusive), State Bargaining Unit 19 (effective July 1, 2016, to July 1, 2020, inclusive), or State Bargaining Unit 8 (effective January 1, 2017, to July 1, 2021, inclusive) memorandum of understanding. Notwithstanding Section 3517.8, this section shall not apply after the term of the applicable memorandum of understanding has expired. For purposes of this section, the memorandum of understanding for State Bargaining Unit 13 expires on June 30, 2019, the memoranda of understanding for State Bargaining Units 2, 7, and 18 expire on July 1, 2019, the memoranda of understanding for State Bargaining Units 1, 3, 4, 11, 14, 15, 17, 20, and 21 expire on January 1, 2020, the memoranda of understanding for State Bargaining Units 12, 16, and 19 expire on July 1, 2020, and the memorandum of understanding for State Bargaining Unit 8 expires on July 1, 2021.

SEC. 6.

 Section 19829.9846 of the Government Code is amended to read:

19829.9846.
 (a) Notwithstanding Section 13340, for the 2018–19 fiscal year, if the Budget Act of 2018 is not enacted by July 1, 2018, for the memoranda of understanding entered into between the state employer and State Bargaining Unit 2 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 7 (effective July 2, 2016, to July 1, 2019, inclusive), State Bargaining Unit 12 (effective July 1, 2015, to July 1, 2020, inclusive), State Bargaining Unit 13 (effective July 2, 2016, to June 30, 2019, inclusive), State Bargaining Unit 18 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 (each effective July 2, 2016, to January 1, 2020, inclusive), State Bargaining Unit 16 (effective July 1, 2016, to July 1, 2020, inclusive), State Bargaining Unit 19 (effective July 1, 2016, to July 1, 2020, inclusive), and State Bargaining Unit 8 (effective January 1, 2017, to July 1, 2021, inclusive), there is hereby continuously appropriated to the Controller from the General Fund, unallocated special funds, including, but not limited to, 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 the above memoranda of understanding until the Budget Act of 2018 is enacted. The Controller may expend an amount no greater than necessary to enable the Controller to compensate state employees covered by the above memoranda of understanding for work performed between July 1, 2018, of the 2018–19 fiscal year and the enactment of the Budget Act of 2018.
(b) If the memoranda of understanding entered into between the state employer and State Bargaining Unit 2 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 7 (effective July 2, 2016, to July 1, 2019, inclusive), State Bargaining Unit 12 (effective July 1, 2015, to July 1, 2020, inclusive), State Bargaining Unit 13 (effective July 2, 2016, to June 30, 2019, inclusive), State Bargaining Unit 18 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 (each effective July 2, 2016, to January 1, 2020, inclusive), State Bargaining Unit 16 (effective July 1, 2016, to July 1, 2020, inclusive), State Bargaining Unit 19 (effective July 1, 2016, to July 1, 2020, inclusive), and State Bargaining Unit 8 (effective January 1, 2017, to July 1, 2021, inclusive) are in effect and approved by the Legislature, the compensation and contribution for employee benefits for state employees represented by these bargaining units shall be at a rate consistent with the applicable memorandum of understanding referenced above.
(c) Expenditures related to any warrant drawn pursuant to subdivision (a) are not augmentations to the expenditure authority of a department. Upon the enactment of the Budget Act of 2018, these expenditures shall be subsumed by the expenditure authority approved in the Budget Act of 2018 for each affected department.
(d) This section shall only apply to an employee covered by the terms of the State Bargaining Unit 2 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 7 (effective July 2, 2016, to July 1, 2019, inclusive), State Bargaining Unit 12 (effective July 1, 2015, to July 1, 2020, inclusive), State Bargaining Unit 13 (effective July 2, 2016, to June 30, 2019, inclusive), State Bargaining Unit 18 (effective July 1, 2016, to July 1, 2019, inclusive), State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 (each effective July 2, 2016, to January 1, 2020, inclusive), State Bargaining Unit 16 (effective July 1, 2016, to July 1, 2020, inclusive), State Bargaining Unit 19 (effective July 1, 2016, to July 1, 2020, inclusive), or State Bargaining Unit 8 (effective January 1, 2017, to July 1, 2021, inclusive) memorandum of understanding. Notwithstanding Section 3517.8, this section shall not apply after the term of the applicable memorandum of understanding has expired. For purposes of this section, the memorandum of understanding for State Bargaining Unit 13 expires on June 30, 2019, the memoranda of understanding for State Bargaining Units 2, 7, and 18 expire on July 1, 2019, the memoranda of understanding for State Bargaining Units 1, 3, 4, 11, 14, 15, 17, 20, and 21 expire on January 1, 2020, the memoranda of understanding for State Bargaining Units 12, 16, and 19 expire on July 1, 2020, and the memorandum of understanding for State Bargaining Unit 8 expires on July 1, 2021.

SEC. 7.

 Section 19829.9847 of the Government Code is amended to read:

19829.9847.
 (a) Notwithstanding Section 13340, for the 2019–20 fiscal year, if the Budget Act of 2019 is not enacted by July 1, 2019, for the memoranda of understanding entered into between the state employer and State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 (each effective July 2, 2016, to January 1, 2020, inclusive), State Bargaining Unit 12 (effective July 1, 2015, to July 1, 2020, inclusive), State Bargaining Unit 16 (effective July 1, 2016, to July 1, 2020, inclusive), State Bargaining Unit 19 (effective July 1, 2016, to July 1, 2020, inclusive), and State Bargaining Unit 8 (effective January 1, 2017, to July 1, 2021, inclusive), there is hereby continuously appropriated to the Controller from the General Fund, unallocated special funds, including, but not limited to, 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 the above memoranda of understanding until the Budget Act of 2019 is enacted. The Controller may expend an amount no greater than necessary to enable the Controller to compensate state employees covered by the above memoranda of understanding for work performed between July 1, 2019, of the 2019–20 fiscal year and the enactment of the Budget Act of 2019.
(b) If the memoranda of understanding entered into between the state employer and State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 (each effective July 2, 2016, to January 1, 2020, inclusive), State Bargaining Unit 12 (effective July 1, 2015, to July 1, 2020, inclusive), State Bargaining Unit 16 (effective July 1, 2016, to July 1, 2020, inclusive), State Bargaining Unit 19 (effective July 1, 2016, to July 1, 2020, inclusive), and State Bargaining Unit 8 (effective January 1, 2017, to July 1, 2021, inclusive) are in effect and approved by the Legislature, the compensation and contribution for employee benefits for state employees represented by these bargaining units shall be at a rate consistent with the applicable memorandum of understanding referenced above.
(c) Expenditures related to any warrant drawn pursuant to subdivision (a) are not augmentations to the expenditure authority of a department. Upon the enactment of the Budget Act of 2019, these expenditures shall be subsumed by the expenditure authority approved in the Budget Act of 2019 for each affected department.
(d) This section shall only apply to an employee covered by the terms of the State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 (each effective July 2, 2016, to January 1, 2020, inclusive), State Bargaining Unit 12 (effective July 1, 2015, to July 1, 2020, inclusive), State Bargaining Unit 16 (effective July 1, 2016, to July 1, 2020, inclusive), State Bargaining Unit 19 (effective July 1, 2016, to July 1, 2020, inclusive), or State Bargaining Unit 8 (effective January 1, 2017, to July 1, 2021, inclusive) memorandum of understanding. Notwithstanding Section 3517.8, this section shall not apply after the term of the applicable memorandum of understanding has expired. For purposes of this section, the memoranda of understanding for State Bargaining Units 1, 3, 4, 11, 14, 15, 17, 20, and 21 expire on January 1, 2020, the memoranda of understanding for State Bargaining Units 12, 16, and 19 expire on July 1, 2020, and the memorandum of understanding for State Bargaining Unit 8 expires on July 1, 2021.

SEC. 8.

 Section 20683.4 is added to the Government Code, to read:

20683.4.
 (a) Notwithstanding Sections 20677.4 and 20677.6, effective July 1, 2017, the normal rate of contribution for state miscellaneous or state industrial members who are represented by State Bargaining Unit 16 shall be adjusted in accordance with this section when both of the following occur:
(1) The total normal cost rate for the category in effect for the 2016–17 fiscal year has increased by at least 1 percent.
(2) Fifty percent of the new normal cost rate, rounded to the nearest one-quarter of 1 percent, is greater than the normal contribution rate established in Section 20677.6.
(b) On the July 1 of the fiscal year that the board determines that the requirements of paragraphs (1) and (2) of subdivision (a) have been met, the normal rate of contribution for state miscellaneous or state industrial members who are represented by State Bargaining Unit 16 shall be adjusted to 50 percent of the normal cost rate rounded to the nearest one-quarter of 1 percent.
(c) Once established, the normal rate of contribution shall not be adjusted on account of a change to the normal cost rate unless the normal cost rate increases or decreases by more than 1 percent of payroll above or below the normal cost rate in effect at the time the normal rate of contribution is first established or, if later, the normal cost rate in effect at the time of the last adjustment to the normal rate of contribution under this subdivision.
(d) The normal rate of contribution established pursuant to this section shall be applied to the compensation in excess of three hundred seventeen dollars ($317) per month paid to a member whose service is not included in the federal system or in excess of five hundred thirteen dollars ($513) for one whose service is included in the federal system.
(e) Consistent with the normal rate of contribution for all members identified in this subdivision, the Director of the Department of Human Resources may exercise his or her discretion to establish the normal rate of contribution for a related state employee who is excepted from the definition of “state employee” in subdivision (c) of Section 3513, and an officer or employee of the executive branch of state government who is not a member of the civil service.
(f) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if the provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless and until approved by the Legislature in the annual Budget Act.

SEC. 9.

 Section 20683.5 is added to the Government Code, to read:

20683.5.
 (a) Notwithstanding Sections 20683 and 20677.9, effective July 1, 2017, the normal rate of contribution for state safety members who are represented by State Bargaining Unit 16 shall be adjusted in accordance with this section when both of the following occur:
(1) The total normal cost rate for the category in effect for the 2016–17 fiscal year has increased by at least 1 percent.
(2) Fifty percent of the new normal cost rate, rounded to the nearest one-quarter of 1 percent, is greater than the normal contribution rate established in Section 20677.9.
(b) On the July 1 of the fiscal year that the board determines that the requirements of paragraphs (1) and (2) of subdivision (a) have been met, the normal rate of contribution for state safety members who are represented by State Bargaining Unit 16 shall be adjusted to 50 percent of the normal cost rate rounded to the nearest quarter of 1 percent.
(c) Once established, the normal rate of contribution shall not be adjusted on account of a change to the normal cost rate unless the normal cost rate increases or decreases by more than 1 percent of payroll above or below the normal cost rate in effect at the time the normal rate of contribution is first established or, if later, the normal cost rate in effect at the time of the last adjustment to the normal rate of contribution under this subdivision.
(d) The normal rate of contribution established pursuant to this section shall be applied to the compensation in excess of three hundred seventeen dollars ($317) per month paid to a member whose service is not included in the federal system or in excess of five hundred thirteen dollars ($513) for one whose service is included in the federal system.
(e) Consistent with the normal rate of contribution for all members identified in this subdivision, the Director of the Department of Human Resources may exercise his or her discretion to establish the normal rate of contribution for a related state employee who is excepted from the definition of “state employee” in subdivision (c) of Section 3513, and an officer or employee of the executive branch of state government who is not a member of the civil service.
(f) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if the provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless and until approved by the Legislature in the annual Budget Act.

SEC. 10.

 Section 22871.3 of the Government Code is amended to read:

22871.3.
 (a) The employer contribution for each annuitant enrolled in a basic plan shall be an amount equal to 80 percent of the weighted average of the health benefit plan premiums for an employee or annuitant enrolled for self-alone, during the benefit year to which the formula is applied, for the four health benefit plans that had the largest active state civil service enrollment, excluding family members, during the previous benefit year. For each annuitant with enrolled family members, the employer contribution shall be an amount equal to 80 percent of the weighted average of the additional premiums required for enrollment of those family members, during the benefit year to which the formula is applied, in the four health benefit plans that had the largest active state civil service enrollment, excluding family members, during the previous benefit year.
(b) The employer contribution for each annuitant enrolled in a Medicare health benefit plan in accordance with Section 22844 shall be an amount equal to 80 percent of the weighted average of the health benefit plan premiums for an annuitant enrolled in a Medicare health benefit plan for self-alone, during the benefit year to which the formula is applied, for the four Medicare health benefit plans that had the largest state annuitant enrollment, excluding family members, during the previous benefit year. For each annuitant with enrolled family members, the employer contribution shall be an amount equal to 80 percent of the weighted average of the additional premiums required for enrollment of those family members, during the benefit year to which the formula is applied, in the four Medicare health benefit plans that had the largest state annuitant enrollment, excluding family members, during the previous benefit year. If the annuitant is eligible for Medicare Part A, with or without cost, and Medicare Part B, regardless of whether the annuitant is actually enrolled in Medicare Part A or Part B, the employer contribution shall not exceed the amount calculated under this subdivision.
(c) This section applies to:
(1) A state employee who is first employed by the state and becomes a state member of the system on or after January 1, 2016, and who is represented by State Bargaining Unit 9 or 10.
(2) A state employee related to State Bargaining Unit 9 or 10 who is excepted from the definition of “state employee” in subdivision (c) of Section 3513 and first employed by the state and becomes a state member of the system on or after January 1, 2016.
(3) A state employee represented by State Bargaining Unit 1, 2, 3, 4, 6, 7, 8, 11, 12, 13, 14, 15, 17, 18, 19, 20, or 21 who is first employed by the state and becomes a state member of the system on or after January 1, 2017.
(4) A state employee related to State Bargaining Unit 1, 2, 3, 4, 6, 7, 8, 11, 12, 13, 14, 15, 17, 18, 19, 20, or 21 who is excepted from the definition of “state employee” in subdivision (c) of Section 3513 and first employed by the state and becomes a state member of the system on or after January 1, 2017.
(5) A judicial branch employee who is first employed by the state and becomes a state member of the system on or after January 1, 2017. This paragraph does not apply to a judge who is subject to Chapter 11 (commencing with Section 75000) or Chapter 11.5 (commencing with Section 75500) of Title 8.
(6) A state employee represented by State Bargaining Unit 16 who is first employed by the state and becomes a state member of the system on or after April 1, 2017.
(7) A state employee related to State Bargaining Unit 16 who is excepted from the definition of “state employee” in subdivision (c) of Section 3513 and first employed by the state and becomes a state member of the system on or after April 1, 2017.
(d) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5 or Chapter 12 (commencing with Section 3560) of Division 4 of Title 1, the memorandum of understanding shall be controlling without further legislative action, except that if those provisions require the expenditure of funds, the provisions may not become effective unless approved by the Legislature.

SEC. 11.

 Section 22874.5 is added to the Government Code, to read:

22874.5.
 (a) Notwithstanding Sections 22870, 22871, 22873, and 22874, a state employee, defined by subdivision (c) of Section 3513, who is first employed by the state and becomes a state member of the system on or after April 1, 2017, and who is represented by State Bargaining Unit 16 shall not receive any portion of the employer contribution payable for annuitants unless the person is credited with 15 years of state service at the time of retirement.
(b) The percentage of the employer contribution payable for postretirement health benefits for an employee subject to this section shall be based on the completed years of credited state service at retirement as shown in the following table:
Credited Years of ServicePercentage of Employer Contribution
15 ........................ 50
16. ........................ 55
17 ........................ 60
18 ........................ 65
19 ........................ 70
20 ........................ 75
21 ........................ 80
22 ........................ 85
23 ........................ 90
24 ........................ 95
25 or more ........................ 100
(c) This section shall apply only to state employees who retire from service. For purposes of this section, “state service” means service rendered as an employee of the state or an appointed or elected officer of the state for compensation.
(d) This section does not apply to:
(1) Former state employees previously employed before April 1, 2017, who return to state employment on or after April 1, 2017.
(2) State employees hired prior to April 1, 2017, who become subject to representation by State Bargaining Unit 16 on or after April 1, 2017.
(3) State employees on an approved leave of absence employed before April 1, 2017, who return to active employment on or after April 1, 2017.
(4) State employees hired after April 1, 2017, who are first represented by a state bargaining unit other than Bargaining Unit 16, who later become represented by State Bargaining Unit 16.
(e) Notwithstanding Section 22875, this section shall also apply to a related state employee who is excepted from the definition of “state employee” in subdivision (c) of Section 3513 and is first employed by the state and becomes a state member of the system on or after April 1, 2017.

SEC. 12.

 Section 22879 of the Government Code is amended to read:

22879.
 (a) The board shall pay monthly to an employee or annuitant who is enrolled in, or whose family member is enrolled in, a Medicare health benefit plan under this part the amount of the Medicare Part B premiums, exclusive of penalties, except as provided in Section 22831. This payment may not exceed the difference between the maximum employer contribution and the amount contributed by the employer toward the cost of premiums for the health benefit plan in which the employee or annuitant and his or her family members are enrolled. No payment may be made in any month if the difference is less than one dollar ($1).
(b) This section shall be applicable only to state employees, annuitants who retired while state employees, and the family members of those persons.
(c) With respect to an annuitant, the board shall pay to the annuitant the amount required by this section from the same source from which his or her allowance is paid. Those amounts are hereby appropriated monthly from the General Fund to reimburse the board for those payments.
(d) There is hereby appropriated from the appropriate funds the amounts required by this section to be paid to active state employees.
(e) This section does not apply to:
(1) A state employee who is first employed by the state and becomes a state member of the system on or after January 1, 2016, and who is represented by State Bargaining Unit 9 or 10.
(2) A state employee related to State Bargaining Unit 9 or 10 who is excepted from the definition of “state employee” in subdivision (c) of Section 3513 and is first employed by the state and becomes a state member of the system on or after January 1, 2016.
(3) A state employee who is first employed by the state and becomes a state member of the system on or after January 1, 2017, and who is represented by State Bargaining Unit 1, 2, 3, 4, 6, 7, 8, 11, 12, 13, 14, 15, 17, 18, 19, 20, or 21.
(4) A state employee related to State Bargaining Unit 1, 2, 3, 4, 6, 7, 8, 11, 12, 13, 14, 15, 17, 18, 19, 20, or 21 who is excepted from the definition of “state employee” in subdivision (c) of Section 3513 and is first employed by the state and becomes a state member of the system on or after January 1, 2017.
(5) A judicial branch employee who is first employed by the state and becomes a state member of the system on or after January 1, 2017. This paragraph does not apply to a judge who is subject to Chapter 11 (commencing with Section 75000) or Chapter 11.5 (commencing with Section 75500) of Title 8.
(6) A state employee who is first employed by the state and becomes a state member of the system on or after April 1, 2017, and who is represented by State Bargaining Unit 16.
(7) A state employee related to State Bargaining Unit 16 who is excepted from the definition of “state employee” in subdivision (c) of Section 3513 and is first employed by the state and becomes a state member of the system on or after April 1, 2017.

SEC. 13.

 Section 22944.5 of the Government Code is amended to read:

22944.5.
 (a) (1) The state and employees in State Bargaining Unit 2, 7, 8, 9, 10, 13, 18, or 19 shall prefund retiree health care, with the goal of reaching a 50-percent cost sharing of actuarially determined normal costs for both employer and employees by July 1, 2019.
(2) The state and employees in State Bargaining Units 6 and 16 shall prefund retiree health care, with the goal of reaching a 50-percent cost sharing of actuarially determined normal costs for both employer and employees by July 1, 2018.
(3) The state and employees in the judicial branch shall prefund retiree health care, with the goal of reaching a 50-percent cost sharing of actuarially determined normal costs for both employer and employees by July 1, 2017.
(4) The state and employees in State Bargaining Unit 1, 3, 4, 11, 12, 14, 15, 17, 20, or 21 shall prefund retiree health care, with the goal of reaching a 50-percent cost sharing of actuarially determined normal costs for both employer and employees by July 1, 2020.
(b) (1) The employees in State Bargaining Unit 9 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 0.5 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 0.5 percent for a total employee contribution of 1.0 percent of pensionable compensation.
(C) Effective July 1, 2019, an additional 1.0 percent for a total employee contribution of 2.0 percent of pensionable compensation.
(2) The employees in State Bargaining Unit 10 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 0.7 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 0.7 percent for a total employee contribution of 1.4 percent of pensionable compensation.
(C) Effective July 1, 2019, an additional 1.4 percent for a total employee contribution of 2.8 percent of pensionable compensation.
(3) The employees in State Bargaining Unit 6 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2016, 1.3 percent of pensionable compensation.
(B) Effective July 1, 2017, an additional 1.3 percent for a total employee contribution of 2.6 percent of pensionable compensation.
(C) Effective July 1, 2018, an additional 1.4 percent for a total employee contribution of 4.0 percent of pensionable compensation.
(4) The state employees in the judicial branch shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2016, 1.5 percent of pensionable compensation.
(B) Effective July 1, 2017, up to an additional 1.5 percent for a total employee contribution of up to 3.0 percent of pensionable compensation. The additional amount shall be determined by the Director of Finance no later than April 1, 2017, based on the actuarially determined normal costs identified in the state valuation.
(C) This paragraph does not apply to a judge who is subject to Chapter 11 (commencing with Section 75000) or Chapter 11.5 (commencing with Section 75500) of Title 8.
(5) The employees in State Bargaining Unit 12 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 1.5 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 1.0 percent for a total employee contribution of 2.5 percent of pensionable compensation.
(C) Effective July 1, 2019, an additional 1.0 percent for a total employee contribution of 3.5 percent of pensionable compensation.
(D) Effective July 1, 2020, an additional 1.1 percent for a total employee contribution of 4.6 percent of pensionable compensation.
(6) The employees in State Bargaining Unit 2 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 0.7 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 0.6 percent for a total employee contribution of 1.3 percent of pensionable compensation.
(C) Effective July 1, 2019, an additional 0.7 percent for a total employee contribution of 2.0 percent of pensionable compensation.
(7) The employees in State Bargaining Unit 7 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 1.3 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 1.4 percent for a total employee contribution of 2.7 percent of pensionable compensation.
(C) Effective July 1, 2019, an additional 1.3 percent for a total employee contribution of 4.0 percent of pensionable compensation.
(8) The employees in State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2018, 1.2 percent of pensionable compensation.
(B) Effective July 1, 2019, an additional 1.1 percent for a total employee contribution of 2.3 percent of pensionable compensation.
(C) Effective July 1, 2020, an additional 1.2 percent for a total employee contribution of 3.5 percent of pensionable compensation.
(9) The employees in State Bargaining Unit 8 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 1.5 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 1.5 percent for a total employee contribution of 3.0 percent of pensionable compensation.
(C) Effective July 1, 2019, an additional 1.4 percent for a total employee contribution of 4.4 percent of pensionable compensation.
(10) The employees in State Bargaining Unit 13 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 1.3 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 1.3 percent for a total employee contribution of 2.6 percent of pensionable compensation.
(C) Effective July 1, 2019, an additional 1.3 percent for a total employee contribution of 3.9 percent of pensionable compensation.
(11) The employees in State Bargaining Unit 18 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 1.3 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 1.3 percent for a total employee contribution of 2.6 percent of pensionable compensation.
(C) Effective July 1, 2019, an additional 1.4 percent for a total employee contribution of 4.0 percent of pensionable compensation.
(12) The employees in State Bargaining Unit 19 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 1.0 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 1.0 percent for a total employee contribution of 2.0 percent of pensionable compensation.
(C) Effective July 1, 2019, an additional 1.0 percent for a total employee contribution of 3.0 percent of pensionable compensation.
(13) The employees in State Bargaining Unit 16 shall make contributions to prefund retiree health care based on the following schedule, and the state shall make a matching contribution:
(A) Effective July 1, 2017, 1 percent of pensionable compensation.
(B) Effective July 1, 2018, an additional 0.4 percent for a total employee contribution of 1.4 percent of pensionable compensation.
(c) This section only applies to employees who are eligible for health benefits, including permanent intermittent employees.
(d) Contributions paid pursuant to this section shall be deposited in the Annuitants’ Health Care Coverage Fund and shall not be refundable under any circumstances to an employee or his or her beneficiary or survivor.
(e) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if those provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.
(f) This section shall also apply to a state employee related to a bargaining unit described in subdivision (a) who is excepted from the definition of “state employee” in subdivision (c) of Section 3513.

SEC. 14.

 Section 22958.1.5 is added to the Government Code, to read:

22958.1.5.
 (a) Notwithstanding Sections 22953, 22957, and 22958, the following employees shall not receive any portion of the employer contribution payable for annuitants unless the person is credited with 15 or more years of state service, as defined by this section, at the time of retirement:
(1) A state employee, as defined by subdivision (c) of Section 3513, who is first employed by the state and becomes a state member of the system on or after April 1, 2017, and is represented by State Bargaining Unit 16.
(2) A state employee related to State Bargaining Unit 16 who is excepted from the definition of “state employee” in subdivision (c) of Section 3513 and is first employed by the state and becomes a state member of the system on or after April 1, 2017.
(b) The percentage of the employer contribution payable for postretirement dental care benefits for an employee subject to this section shall be based on the funding provision of the plan and the completed years of credited state service at retirement as shown in the following table:
Credited Years of ServicePercentage of Employer Contribution
15 ........................ 50
16. ........................ 55
17 ........................ 60
18 ........................ 65
19 ........................ 70
20 ........................ 75
21 ........................ 80
22 ........................ 85
23 ........................ 90
24 ........................ 95
25 or more ........................ 100
(c) This section shall apply only to state employees who retire from service. For purposes of this section, “state service” means service rendered as an employee of the state or an appointed or elected officer of the state for compensation.
(d) This section does not apply to:
(1) Former state employees previously employed prior to April 1, 2017, who return to state employment on or after April 1, 2017.
(2) State employees hired prior to April 1, 2017, who become subject to representation by State Bargaining Unit 16 on or after April 1, 2017.
(3) State employees on an approved leave of absence employed before January 1, 2017, who return to active employment on or after April 1, 2017.
(4) State employees hired after April 1, 2017, who are first represented by a state bargaining unit other than Bargaining Unit 16, who later become represented by State Bargaining Unit 16.
(e) In those cases where the state has assumed from a public agency a function and the related personnel, service rendered by that personnel for compensation as employees or appointed or elected officers of that public agency may not be credited as state service for the purposes of this section unless the former employer has paid or agreed to pay the state the amount actuarially determined to equal the cost for any employee dental benefits that were vested at the time that the function and the related personnel were assumed by the state, and the Department of Finance finds that the contract contains a benefit factor sufficient to reimburse the state for the amount necessary to fully compensate for the postretirement dental benefit costs of those personnel. For noncontracting public agencies, the state agency that has assumed the function shall certify the completed years of public agency service to be credited to the employee as state service credit under this section.

SEC. 15.

 This act shall become operative only if Senate Bill 496 of the 2017–18 Regular Session is enacted and becomes operative.

SEC. 16.

 This act is a bill providing for appropriations related to the Budget Bill within the meaning of subdivision (e) of Section 12 of Article IV of the California Constitution, has been identified as related to the budget in the Budget Bill, and shall take effect immediately.