State employees: memorandum of understanding.

(1) Existing law provides that if any provision of a memorandum of understanding reached between the state employer and a recognized employee organization representing state civil service employees requires the expenditure of funds, those provisions of the memorandum of understanding shall not become effective unless approved by the Legislature in the annual Budget Act. This bill would approve provisions that require the expenditure of funds for memoranda of understanding entered into between the state employer and State Bargaining Units 8, 16, and 19 and would provide that the provisions of any memorandum of understanding 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. The bill would provide that provisions of the memoranda of understanding approved by this bill that require the expenditure of funds will not take effect unless funds for these provisions are specifically appropriated by the Legislature, and would authorize the state employer and the affected employee organizations to reopen negotiations on all or part of the memorandum of understanding if the memorandum of understanding that requires the expenditure of funds is not approved by the Legislature. This bill would, with respect to salaries that are continuously appropriated prior to the enactment of the annual Budget Act, require the Director of Finance to reduce the necessary items for the payment of salaries from specified funds scheduled in that Budget Act to reflect the salaries paid prior to the enactment of the annual Budget Act. (2) Existing law establishes an alternate retirement program and provides that state employees, as defined, who become new members of the Public Employees' Retirement System (PERS) during their first 24 months of employment, do not make contributions to the system or receive service credit for their service, and the state employer shall not make contributions on their behalf. These members are instead required to contribute either 5% or 6% of their monthly compensation, as specified, to the alternate retirement program, administered by the Department of Personnel Administration, and these contributions cease when the state employees begin making their own contributions to PERS. This bill would require all state employees participating in the alternate retirement system to contribute an amount equal to the same amount that employees in the same employment classifications in the same state bargaining units are required to contribute to PERS. (3) The Public Employees' Retirement Law (PERL) provides a comprehensive set of rights and benefits based upon age, service credit, and final compensation. Existing law defines final compensation variously for different member classifications and bargaining units and, in this regard, defines final compensation for a state member for the purpose of calculating retirement benefits as the highest annual average compensation earnable by the member during a designated 12-month or 36-month period, depending upon the bargaining unit and classification of that employee. Currently the final compensation for members hired on or after July 1, 2006, who are represented by State Bargaining Units 12, 16, 18, and 19, means the final compensation earnable by the member during a designated 36-month period. This bill would provide that final compensation for a person who becomes a state member, as specified, on or after October 31, 2010, and who is represented by State Bargaining Units 5 and 8, means the highest annual average compensation earnable by the member during a designated 36-month period. (4) PERL provides that the contribution rate for state miscellaneous members and specified state safety members is 5% or 6% of the compensation in excess of $513. Existing law provides that the contribution rate for specified state firefighters is 8% of compensation in excess of $238 per month. Existing law provides that the contribution rate for specified state safety patrol members is 8% of the compensation in excess of $863 per month. This bill would increase the contributions rates by 5% for state miscellaneous members of State Bargaining Units 5, 8, 12, 16, 18, and 19 and state safety members of State Bargaining Units 12, 16, 18, and 19, and by 2% for state firefighter members of State Bargaining Unit 8 and state patrol members of State Bargaining Unit 5. By increasing member contributions into a continuously appropriated fund, this bill would make an appropriation. (5) PERL establishes various retirement formulas that apply to specified membership categories. Under PERL, state miscellaneous members are generally subject to a retirement formula commonly known as 2% at 55, which, if the member retires at 55 years of age, yields a benefit equal to 2% of the member's final compensation multiplied by the member's years of service credit, as specified. Under PERL, patrol members and specified state peace officer/firefighter members are generally subject to a 3% at 50 retirement formula. Under PERL, state safety members are generally subject to a 2.5% at 55 retirement formula. This bill would provide that state miscellaneous members who are first employed on and after the date the act takes effect, are subject to a 2% at 60 retirement formula. The bill would also provide that patrol members and firefighter members in State Bargaining Units 5 and 8 who are first employed on and after October 31, 2010, are subject to a 3% at 55 retirement formula. (6) The annual Budget Act appropriates specified amounts from the General Fund, unallocated special funds, and unallocated nongovernmental cost funds, for state employee compensation. This bill would, in the event that the annual Budget Act is not enacted prior to July 1 of each year covered by the memoranda of understanding for State Bargaining Units 5, 8, 12, 16, 18, and 19, provide for a continuous appropriation for the amount necessary for the payment of compensation and benefits to members of those bargaining units. (7) This bill would provide that its provisions would not become operative unless SB 846 of the 2009–10 Regular Session is enacted and takes effect on or before January 1, 2011. (8) This bill would declare that it is to take effect immediately as an urgency statute.