CA AB 138

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Description

(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. Existing law requires the Department of Human Resources to provide a memorandum of understanding to the Legislative Analyst, who then has 10 calendar days from the date the tentative agreement is received to issue a fiscal analysis to the Legislature. Existing law prohibits the memorandum of understanding from being subject to legislative determination until either the Legislative Analyst has presented a fiscal analysis of the memorandum of understanding or until 10 calendar days have elapsed since the memorandum was received by the Legislative Analyst. This bill, notwithstanding the above-described statutory provisions, would approve provisions of the agreements entered into by the state employer and specified state bargaining units. The bill would provide that the provisions of the agreements that require the expenditure of funds will not take effect unless funds for these provisions are specifically appropriated by the Legislature. The bill would authorize the state employer or the bargaining units to reopen negotiations if funds for these provisions are not specifically appropriated by the Legislature. The bill would require the provisions of the agreement that require the expenditure of funds to become effective even if the provisions are approved by the Legislature in legislation other than the annual Budget Act. By approving provisions of the agreements that require the expenditure of funds, this bill would make an appropriation. (2) Existing law, for the 2026–27 fiscal year, continuously appropriates 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 and compensation and employee benefits to state employees covered by specified memoranda of understanding if the Budget Act of 2026 is not enacted by July 1, 2026. This bill would additionally include the memoranda of understanding for State Bargaining Unit 2 (effective July 1, 2025, to June 30, 2028, inclusive) , State Bargaining Unit 7 (effective July 1, 2023, to June 30, 2027, inclusive) , State Bargaining Unit 13 (effective July 1, 2025, to June 30, 2027, inclusive) , State Bargaining Unit 16 (effective July 1, 2025, to July 1, 2028, inclusive) , and State Bargaining Unit 19 (effective July 1, 2025, to June 30, 2028, inclusive) . Existing law, for the 2027–28 fiscal year, continuously appropriates 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 and compensation and employee benefits to state employees covered by specified memoranda of understanding if the Budget Act of 2027 is not enacted by July 1, 2027. This bill would additionally include the memoranda of understanding for State Bargaining Unit 2 (effective July 1, 2025, to June 30, 2028, inclusive) , State Bargaining Unit 16 (effective July 1, 2025, to July 1, 2028, inclusive) , and State Bargaining Unit 19 (effective July 1, 2025, to June 30, 2028, inclusive) . Existing law, for the 2028-29 fiscal year, continuously appropriates 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 and compensation and employee benefits to state employees covered by the memorandum of understanding for State Bargaining Unit 6, if the Budget Act of 2028 is not enacted by July 1, 2028. This bill would additionally include the memorandum of understanding for State Bargaining Unit 16 (effective July 1, 2025, to July 1, 2028, inclusive) . (3) Existing law states that it is the policy of the state that the workweek of the state employee shall be 40 hours, and the workday of state employees 8 hours, except that workweeks and workdays of a different number of hours may be established in order to meet the varying needs of the different state agencies. Existing law also requires state employees in Bargaining Units 6, 9, and 12, except as specified, from July 1, 2025, to June 30, 2027, inclusive, to participate in the Personal Leave Program 2025 (PLP 2025) , either as required by an applicable memorandum of understanding reached or by the direction of the department for excluded employees, under which each employee receives a reduction in pay not greater than 3% in exchange for a specified number of hours per month of PLP 2025 leave credits. This bill would also require state employees in Bargaining Units 1, 2, 3, 4, 5, 7, 11, 13, 14, 15, 16, 17, 19, 20, and 21 to participate in the PLP 2025, for the period from July 1, 2025, to June 30, 2027, inclusive, either as required by an applicable memorandum of understanding or by the direction of the department for excluded employees. Under the program, in exchange for a reduction in pay not greater than certain listed amounts, those employees would receive monthly PLP 2025 leave credits, subject to certain exclusions. The bill would make other related and conforming changes to these provisions. (4) The Public Employees' Retirement Law (PERL) creates the Public Employees' Retirement System for the purpose of providing public employees pension and other benefits, which are funded by employee and employer contributions and investment returns. Contributions and investment returns are deposited in the Public Employees' Retirement Fund, which is continuously appropriated for the payment of benefits and administration of the system. PERL vests management and control of PERS in its board of administration. PERL and labor agreements prescribe different normal rates of contribution for employees depending on bargaining unit, employer, and inclusion of service in the federal social security system, among other factors. Under PERL, effective July 1, 2023, the normal contribution rates for state miscellaneous or state industrial members who are represented by State Bargaining Unit 2 are adjusted in accordance with specified procedures based on increases or decreases in normal cost rates, as determined by the board. This bill would change the above-described effective date to July 1, 2027. The bill would also provide that, effective July 1, 2025, to June 30, 2027, inclusive, specified employee contributions for state miscellaneous and industrial members represented by State Bargaining Unit 2 will remain in place. Existing law adjusts the normal contribution rate for state miscellaneous and industrial members who are represented by State Bargaining Unit 12 in accordance with certain procedures. Under existing law, effective July 1, 2026, certain employee contribution rates are to remain in effect for those members unless the board makes certain determinations regarding cost rate increases or decreases. This bill would suspend increases to those employee retirement contributions effective July 1, 2025, to June 30, 2027, inclusive. Under existing law, effective July 1, 2026, the normal rate of contribution for state safety members who are represented by State Bargaining Unit 12 is to remain in effect unless the board determines that certain total normal cost rates have increased or decreased, as prescribed. This bill would suspend increases to those employee retirement contributions effective July 1, 2025, to June 30, 2027, inclusive. Existing law establishes that, effective July 1, 2026, the employee contribution rates for state miscellaneous, state industrial, and state safety members who are represented by State Bargaining Unit 19 shall remain in effect unless the board determines that specified conditions have been met regarding increases or decreases in normal cost rates. This bill would revise the above-described effective date for those provisions to July 1, 2027. Existing law, effective July 1, 2023, requires an adjustment in the normal contribution rates for state safety members represented by State Bargaining Unit 2 when specified conditions occur regarding normal cost rate increases or decreases, as determined by the board. This bill would revise the effective date of the above provision to July 1, 2027. The bill would also require the employee contribution for state safety members represented by State Bargaining Unit 2 to remain at 11.5% from July 1, 2025, to June 30, 2027, inclusive. (5) 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 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 requires employees in specified state bargaining units to prefund retiree health care and the state to make a matching contribution. PEMHCA suspends employer's and employees' monthly contributions for prefunding other postemployment benefits for the 2025–26 and 2026–2027 fiscal years for specified state bargaining units, including State Bargaining Unit 6. This bill would suspend the employee and employer monthly contributions for prefunding other post employment benefits for other employees in specified bargaining units for the 2025-26 and 2026-27 fiscal years, including State Bargaining Units 1, 2, 3, 4, 5, 7, 13, 14, 15, 16, 17, 19, 20, and 21. The bill would establish the percentage of pensionable compensation to be contributed for prefunding those benefits commencing July 1, 2027, and for each year thereafter, as prescribed. The bill would make other related changes to these provisions. (6) The Budget Act of 2025 makes various appropriations for the purpose of employee compensation. This bill would provide for the reduction of specified Budget Act item appropriations pursuant to agreements reached between the state employer and State Bargaining Units 1, 2, 3, 4, 5, 7, 8, 11, 13, 14, 15, 16, 17, 18, 19, 20, and 21 in accordance with a specified schedule. The Budget Act of 2025 also states that it is the expectation of the Legislature that all state employee bargaining units meet and confer in good faith with the Governor or the Governor's representative on or before July 1, 2025, to achieve savings through the collective bargaining process for represented employees and existing authority for the administration to adjust compensation for nonrepresented employees. This bill would provide that the reductions achieved through the PLP 2025 do not apply to employees of specified state entities. (7) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.