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36. Retirement Benefits
Retirement benefit formulas and contribution rates for State employees are specified in the
Government Code as summarized below. No provision of this article shall be deemed
greivable or arbitrable under the grievance and arbitration procedure, except any claim of
clerical error concerning an employee’s retirement benefit shall be grievable up to CalHR’s
level.
a. Patrol Member Tier A Retirement Formula (3% at age 50), Patrol Member Tier B
Retirement Formula (3% at age 55), and Public Employees’ Pension Reform Act
(PEPRA) Retirement Formula (2.7% at age 57)
- (1) Patrol members first employed by the State prior to October 31, 2010 are subject to the Patrol Member Tier A Retirement Formula.
- (2) Patrol Members first employed by the State on and after October 31, 2010, and prior to January 1, 2013, and qualify for membership are subject to the Patrol
Member Tier B Retirement Formula, as provided in Government Code Section 21363.1. The Patrol Member Tier B Retirement Formula does not apply to:
- Former state employees who return to state employment on or after October 31, 2010.
- State employees hired prior to October 31, 2010 who were subject to the Alternate Retirement Program (ARP)
- State employees hired prior to October 31, 2010 who become subject to representation by State Bargaining Unit 5 on or after October 31, 2010.
- State employees on approved leave of absence who return to active employment on or after October 31, 2010.
- Persons who are already members or annuitants of the California Public Employees Retirement System as a state employee prior to October 31, 2010.
- Members of Cadet Training Class (CTC)-III-10 and CTC-IV-10, as designated by CHP. Patrol members subject to the above categories are subject to the Patrol Member Tier A Retirement Formula as provided in Government Code Section 21362.2.
- (3) Employees who are brought into CalPERS membership for the first time on or after January 1, 2013 and who are not eligible for reciprocity with another California public employer as provided in Government Code Section 7522.02(c) shall be subject to the “PEPRA Retirement Formula.” As such, the PEPRA changes to retirement formulas and pensionable compensation caps apply only to new CalPERS members subject to PEPRA as defined under PEPRA laws.
- (4) The table below lists the factors for Patrol Member Tier A, Patrol Member Tier B, and PEPRA Retirement Formulas.
[SEE END OF SECTION NOTES (1) FOR FULL TABLE]
b. Retirement Cap
The State and the CAHP agree that the limitation on service retirement benefits shall
be 90% of final compensation for patrol members who retire directly from state
employment on or after January 1, 2000, as provided in Government Code Section
21362 and 21362.2.
c. Employee Retirement Contribution
- (1) Effective July 1, 2010, the Patrol Member normal rate of contribution shall be eight percent (8%) as identified in Government Code Section 20681 on monthly reportable income in excess of $863. In addition, the funds pursuant to Section 22944.3 (OPEB) will be redirected as an employee contribution toward retirement effective with the September pay period (October 1 warrant). This additional contribution shall offset the State’s contribution beginning with the September pay period (October 1 warrant).
- (2) Effective July 1, 2013, the Patrol Member normal rate of contribution shall be ten percent (10%) of monthly reportable income in excess of $863.
- (3) Effective July 1, 2014, the Patrol Member normal rate of contribution shall be ten percent (10%) of monthly reportable income in excess of $863.
- (4) Effective the pay period upon ratification of the MOU, any amount that exceeds three percent (3%) and would otherwise be used to permanently increase compensation pursuant to Government Code section 19827, effective July 1, 2019, shall instead be temporarily redirected as an employer contribution toward retirement. The adjusted Patrol Member normal rate of contribution shall continue to be a percentage of monthly reportable income in excess of $863. Upon expiration of this agreement, any increase determined under the survey methodology that was in excess of three percent (3%) and redirected as a result of this provision, shall be redirected back as a salary increase.
- (5) If an amount is redirected pursuant to 37.c.(4), the increased contribution shall be accounted for in the same manner as it would for an increase to the base salary for patrol members in the survey methodology established by Government Code section 19827.
- (6) Effective July 1, 2020, the employee contribution rates described in 37.c.(3) of this section for Patrol Member Tier A, Patrol Member Tier B and PEPRA Retirement Formulas shall remain in effect up until the time that CalPERS has determined that (a) the total normal cost rate for the 2016-17 fiscal year has increased or decreased by 1 percent, and (b) 50 percent of that normal cost rate, rounded to the nearest quarter of 1 percent, is greater or less than the employee contribution rate described in 37.c.(3) of this section. On July of the fiscal year after CalPERS determines (a) and (b) above have been met, the employee contribution rate for Patrol members shall be adjusted to 50 percent of the normal cost rate rounded to the nearest quarter of one percent. Each year thereafter, it shall only be adjusted if CalPERS determines the total normal cost rate increases or decreases by more than 1 percent of payroll above the total normal cost rate in effect at the time the employee contribution rate was last adjusted. Furthermore, the increase or decrease to the employee contribution in any given fiscal year shall not exceed 1 percent per year. Employee contributions will continue to be a percentage of pensionable compensation in excess of $863.
- (7) If an amount is redirected to 37.c.(4), the increased contribution amount shall be accounted for in the same manner as it would for an increase to the base salary for patrol members in the survey methodology established by Government Code section 19827. Changes pursuant to this section to the employee share or retirement shall take effect for patrol members in the survey methodology established by Government Code section 19827, commencing July 1, 2020.
d. Final Compensation
- (1) The parties mutually agree to continue to calculate final compensation for Patrol Members consistent with the provisions of Government Code section 20035.
- (2) Pursuant to Government Code section 20035, final compensation for an employee who is employed by the State for the first time and becomes a member of CalPERS prior to October 31, 2010, as well as exceptions noted in 37.a.(2), is based on the highest average monthly pay rate during twelve (12) consecutive months of employment.
- (3) Pursuant to Government Code section 20037.14, final compensation for an employee who is employed by the State for the first time and becomes a member of CalPERS on and after October 31, 2010, is based on the highest average annual pensionable compensation earned by the member during a period of thirty-six (36) consecutive months of employment.
e. CHP Cadet Miscellaneous Tier A Retirement Formula (2% at age 55), Miscellaneous
Tier B Retirement Formula (2% at age 60), and PEPRA Retirement Formula (2% at
age 62)
- (1) CHP Cadets first employed by the State prior to October 31, 2010 are subject to the Miscellaneous Tier A Retirement Formula.
- (2) CHP Cadets first employed by the State on or after October 31, 2010 and prior to January 1, 2013 and qualify for membership are subject to the Miscellaneous Tier B Retirement Formula as provided in Government Code Section 21353. The Miscellaneous Tier B Retirement Formula does not apply to:
- Former state employees who return to state employment on or after October31, 2010.
- State employees hired prior to October 31, 2010 who were subject to the Alternate Retirement Program (ARP).
- State employees hired prior to October 31, 2010 who become subject to representation by State Bargaining Unit 5 on or after October 31, 2010.
- State employees on approved leave of absence who return to active employment on or after October 31, 2010
- Persons who are already members or annuitants of the California Public Employees Retirement System as a state employee prior to October 31, 2010.
- Members of Cadet Training Class (CTC)-III-10 and CTC-IV-10, as designated by CHP. CHP Cadets subject to the above categories are subject to the Miscellaneous Tier A Retirement Formula as provided in Government Code Section 21354.1.
- (3) Employees who are brought into CalPERS membership for the first time on or after January 1, 2013, and who are not eligible for reciprocity with another California public employer as provided in Government Code section 7522.02(c) shall be subject to the “PEPRA Retirement Formula.” As such, the PEPRA changes to retirement formulas and pensionable caps apply only to new CalPERS members subject to PEPRA as defined under PEPRA laws.
- (4) The table below lists the age/benefit factors for Miscellaneous Tier A, Miscellaneous Tier B, and PEPRA Retirement Formulas:
[SEE END OF SECTION NOTES (2) FOR FULL TABLE]
- (5) Employee Retirement Contribution
- (a) As stated in Government Code section 20682, effective with the beginning of the September 2010 pay period, miscellaneous and industrial members in the Miscellaneous Tier A Retirement Formula or the Alternate Retirement Plan (ARP) subject to social security shall contribution (8%) of monthly compensation in excess of five hundred thirteen dollars ($513) for retirement.
- (b) Miscellaneous and industrial members in Miscellaneous Tier A Retirement Formula or the ARP not subject to social security shall contribute nine percent (9%) of monthly compensation in excess of three hundred seventeen dollars ($317) for retirement.
- (c) Effective the following pay period upon ratification of the MOU, the employee contribution described in (5)a. and (5)b. above for Miscellaneous Tier A, Miscellaneous Tier B, and PEPRA Retirement Formulas shall remain in effect up until the time that CalPERS has determined that (a) the total normal cost rate for the 2016-17 fiscal year has increased or decreased by 1 percent, and (b) 50 percent of that normal cost rate, rounded to the nearest quarter of 1 percent, is greater or less than the employee contribution rate described in (5)a. and (5)b. above, respectively. On July 1 of the fiscal year after CalPERS determines (a) and (b) above have been met, the employee contribution rate for miscellaneous and industrial members shall be adjusted to 50 percent of the normal cost rate rounded to the nearest quarter of one percent. Each year thereafter, it shall only be adjusted if CalPERS determines the total normal cost rate increases or decreases by more than 1 percent of payroll above the total normal cost rate in effect at the time the employee contribution rate was last adjusted. Furthermore, the increase or decrease to the employee contribution in any give fiscal year shall not exceed 1 percent per year. Employee contributions will continue to be a percentage of pensionable compensation in excess of $513 for retirement if subject to social security or in excess of $317 for retirement if not subject to social security.
- (6) Final Compensation
- (a) Pursuant to Government Code section 20035, final compensation for an employee who is employed by the State for the first time and becomes a member of CalPERS prior to October 30, 2010, is based on the highest average monthly pay rate during twelve (12) consecutive months of employment.
- (b) Pursuant to Government Code section 20037.14, final compensation for an employee who is employed by the State for the first time and becomes a member of CalPERS on and after October 31, 2010 is based on the highest average annual pensionable compensation earned by a member during a period of thirty-six (36) consecutive months of employment.
f. Defined Contribution Plans
- 1. The State of California administers two (2) voluntary defined contribution plans under Sections 457(b) and 401(k) of the Internal Revenue Code. Employees in Bargaining Unit 5 are eligible to be included in these defined contribution plans.
- 2. To the extent permitted by federal and state law, effective January 1, 2002, (or no later than four months following ratification of this agreement by both parties) employees who separate from state service who are otherwise eligible to cash out their vacation and/or annual leave, PLP, furlough, holiday, CTO and any other compensable leave credits may ask the State to tax defer and transfer a designated monthly amount from their cash payment into their existing 457(b) and/or 401(k) plan offered through the State’s Savings Plus Program (SPP).
- 3. If an employee does not have an existing 457(b) and/or 401(k) plan account, he/she must enroll in the SPP and become a participant in one or both plans prior to his/her date of separation.
- 4. Such transfers are subject to and contingent upon all statutes, law, rules and regulations authorizing such transfers including those governing the amount of annual deferrals.
- 5. Employees electing to make such a transfer shall bear full tax liability, if any, ofthe leave transferred that exceeds the annual limits (e.g., “over-defers”).
- 6. Implementation, continuation and administration of the defined contribution plans is expressly subject to and contingent upon compliance with the SPP’s governing plan document (which may at the State’s discretion be amended from time to time), and applicable federal and state laws, rules and regulations.
- 7. Disputes arising under this section of the MOU shall not be subject to the grievance and arbitration provision of this agreement.
g. Public Employees’ Pension Reform Act of 2013 (PEPRA)
- 1. PEPRA Definition of “Pensionable Compensation” Retirement: benefits for employees subject to PEPRA are based upon the highest average pensionable compensation during a thirty-six (36) month period. Pensionable compensation shall not exceed the applicable percentage of the contribution and benefit base specified in Title 24 of the United States Code Section 430(b). The 2013 limits are $113,700 for members subject to Social Security and $136,440 for members not subject to Social Security. The limit shall be adjusted annually based on changes to the Consumer Price Index for all Urban Consumers. As a result, the current limits for 2019 are $124,180 for members subject to Social Security and $149,016 for members not subject to Social Security.
- 2. Equal Sharing of Normal Cost: As stated in Government Code Sections 7522.30 and 20683.2, equal sharing between the State employer and State employees of the normal cost of the defined benefits plans shall be the standard for all plans and employees. It shall be the standard that all employees pay at least fifty percent (50%) of the normal cost and the State employer shall not pay any of the required employee contributions. “Normal cost” is determined annually be CalPERS.
37. Supplemental Pension Funding
The State and Bargaining Unit 5 recognize the importance of maintaining the retirement
benefits promised to employees and improving the current funded status of the Patrol
Member Retirement plan. With the goal of paying down the unfunded liability associated
with this retirement plan, maximizing savings in the long run, and improving the plan’s
funded status, the State and Bargaining Unit 5 hereby agree to share in the responsibility
toward maximizing efforts to improve the plan’s funded status. Furthermore, both parties
agree that the foregoing provision is implemented as a funding policy and commitment
intended to achieve these goals and begin offsetting the future financial liability for
retirement benefits for Patrol members. Specifically, the funding policy established during
the duration of this agreement requires both parties to make contributions in excess of the
actuarially determined contributions specifically to the Patrol Member Retirement plan during
the term of this agreement, as follows:
a. Bargaining Unit 5 Commitment
Effective the pay period following ratification of the MOU, Bargaining Unit 5 agrees that
any amount that exceeds three percent (3%) and would otherwise be used to
permanently increase compensation pursuant to section 19827, effective July 1, 2019,
shall instead be temporarily redirected as an employer contribution toward retirement.
The adjusted Patrol Member normal rate of contribution shall continue to be a
percentage of the monthly reportable income in excess of $863, which aligns with
section 36 (Retirement Benefits) of this agreement. The State shall take credit for these
retirement contributions in the survey methodology established by section 19827 in the
same manner as it would for an increase to the base salary for patrol members. Upon
expiration of this agreement, any increase determined under the survey methodology
that was in excess of three percent (3%) and redirected as a result of this provision, shall
be redirected back as a salary increase.
b. State Commitment
Effective the pay period following ratification of the MOU, the State agrees to dedicate $25
million in Motor Vehicle Account (MVA) funds annually over four years beginning in fiscal
year 2019-20 to make supplemental pension payments towards the Patrol Member
Retirement plan, for a total of $100 million from the MVA.
However, the $25 million payments from the MVA in the final two years (fiscal years
2021-22 and 2022-23) shall be subject to the following conditions:
- If projected state revenues at the 2021-22 May Revision to the Governor’s Budget are insufficient to fully fund existing statutory and constitutional obligations, existing fiscal policy, and the costs of providing the aforementioned supplemental pension payments, as specified above, in the sole discretion of the Director of the Department of Finance, the $25 million supplemental payment for 2021-22 and 2022-23 shall be deferred to the respective next fiscal years.
- If the $25 million 2021-22 supplemental payment is made and projected state revenues at the 2022-23 May Revision to the Governor’s Budget are insufficient to fully fund existing statutory and constitutional obligations, existing fiscal policy, and the costs of providing the aforementioned supplemental pension payments, as specified above, in the sole discretion of the Director of the Department of Finance the $25 million 2022-23 supplemental payment will be deferred to the next fiscal year. During the 2020-21 fiscal year, the State agrees to recast the $3 billion under Chapter 33, Statutes of 2019 (SB 90), and direct $243 million General Fund of the total $3 billion General Fund supplemental payment to CalPERS in the multi-year under SB 90, based on the proportion of the Patrol Member Retirement plan’s unfunded liability, for the purpose of reducing the plans’ unfunded actuarial obligation. The Department of Finance shall provide the Controller the schedule necessary to establish the timing of the transfer to be used for the purpose of reducing the unfunded actuarial obligation associated with the plan.
c. Maintain Baseline Employer Contributions
As it is a priority for both parties to increase the funded status of the Patrol Member
Retirement plan rather than producing contribution savings, during the term of this
agreement, the supplemental pension payments shall be applied in a manner that does
not decrease the employer contribution. As part of the State’s commitment to
Bargaining Unit 5 and the agreed upon funding policy, beginning in 2020-21, the State
will work with CalPERS to determine the baseline contributions that would have been
necessary if the supplemental payments had not been made to maximize the impact of
this funding policy and accelerate the funded status of the plan. The State and
Bargaining Unit 5 will reevaluate existing fiscal policy to determine the efficacy of
maintaining commitments outlined in this agreement and to further the funding policy.
d. Reopener
The State and Bargaining Unit 5 agree that if projected state revenues are insufficient to
fully fund existing statutory and constitutional obligations, existing fiscal policy, and the
costs of providing compensation pursuant to section 19827, effective on July 1, 2021
and July 1, 2022, in the sole discretion of the Director of the Department of Finance, this
provision shall be reopened and the parties will meet and confer.
e. Non-recoverable
Supplemental pension contributions paid pursuant to this agreement shall not be
recoverable under any circumstances to an employee or his/her beneficiary or survivor.
f. Legislation
The parties agree to support any legislation necessary to facilitate and implement the
funding policy agreed to during the term of this agreement to address the funded status of
the CHP plan.
38. Employer-Paid Employee Retirement Contributions
The State and the Union agree to continue the January 28, 1985 agreement regarding the
Internal Revenue Service ruling permitting CalPERS contributions to be excluded from taxable
salary for the duration of this contract. This includes an agreement that may be reached for the
employer to pay employee retirement contributions.
In accordance with that Executive Order and with the Internal Revenue Service guidance
under Revenue Ruling 2006-43, this formalizes the implementation of section 414(h)(2) with
regard to employee contributions to CalPERS that are made by the employer on behalf of its
employees. For this purpose, “employee contributions” means those contributions that are
deducted from employees’ salary and credited to individual employees’ accounts under
CalPERS. This Section specifically covers employee contributions made on behalf of
employees covered by the collective bargaining agreement to which the Section relates.
a. Pick-up of Employee Contributions
In accordance with section 414(h)(2) of the Internal Revenue Code (IRC), the
employer may “pick up” the employee contributions under the following terms and
conditions:
- The contributions made by the employer to CalPERS, although designated as employee contributions, are being paid by the employer in lieu of contributions by the employees who are members of CalPERS.
- Employees do not have the option of choosing to receive the contributed amounts directly instead of having them paid by the employer to CalPERS.
- The employer is paying to CalPERS the contribution designated as employee contributions from the same source of funds as used in paying salary; and
- The amount of the contributions designated as employee contributions and paid by the employer to CalPERS on behalf of an employee is the entire contribution required of the employee under CalPERS.
b. Tax Characterization of Picked-Up Employee Contributions
All employee contributions picked up by the employer in accordance with
Section 414(h)(2) of the Internal Revenue Code are, for tax purposes, treated as
employer contributions and therefore, are not includable in employees’ taxable
income until distributed from CalPERS. This Section formalizes the employer’s
continuing characterization of employee contributions as employer contributions
under section 414(h)(2). Accordingly, employee contributions covered by this
Article will continue to be excluded from employees’ taxable income under
IRC section 414(h)(2).
c. Wage Adjustment
Notwithstanding anything to the contrary, employees’ salary will be reduced by
the amount of employee contributions that are made by the Employer in
accordance with the terms of this Section.
d. Limitations to Operability
This Section will be operative only as long as the employer pick-up of employee
contributions continues to be excludable from employees’ taxable income under
the Internal Revenue Code.
e. No Arbitration
The parties agree that nothing in this Section will be subject to the grievance and
arbitration procedures set out in the collective bargaining agreement to which the
Section applies.
39. Pre-Retirement Alternate Death Benefit
a. Notwithstanding any other provision of this article requiring attainment of the
minimum age for voluntary service retirement to the member in his or her last
employment preceding death, upon the death of a state member on or after January
1, 1993, who is credited with 20 years or more of state service, the surviving spouse,
or eligible children if there is no surviving spouse, may receive a monthly allowance
in lieu of the basic death benefit. The board shall notify the eligible survivor, as
defined in Section 21546, of this alternate death benefit. The board shall calculate
the monthly allowance that shall be payable as follows:
- (1) To the member's surviving spouse, an amount equal to the amount the member would have received if the member had retired for service at minimum retirement age on the date of death and had elected optional settlement 2 and Section 21459.
- (2) If the member made a specific beneficiary designation under Section 21490, the monthly allowance shall be based only on that portion of the amount the member would have received described in paragraph (1) that would have been derived from the nonmember spouse's community property interest in the member's contributions and service credit.
- (3) If there is no surviving spouse or the spouse dies before all of the children of the deceased member attain the age of 18 years, to the surviving children, under the age of 18 years, collectively, an amount equal to one-half of, and derived from the same source as, the unmodified allowance the member would have received if he or she had retired for service at minimum retirement age on the date of death. No child shall receive any allowance after marrying or attaining the age of 18 years. As used in this paragraph, "surviving children" includes a posthumously born child or children of the member.
b. This section shall only apply to members employed in state bargaining units for
which a memorandum of understanding has been agreed to by the state employer
and the recognized employee organization to become subject to this section,
members who are excluded from the definition of state employees in subdivision (c)
of Section 3513, and members employed by the executive branch of government
who are not members of the civil service.
c. For purposes of this section, "state service" means service rendered as a state
employee, as defined in Section 19815. This section shall not apply to any
contracting agency nor to the employees of any contracting agency.
d. For purposes of this section, "state service" includes service to the state for which
the member, pursuant to Section 20281.5, did not receive credit.
e. The State and Unit 5 agree to become subject to the terms of this statute retroactive
to December 30, 2005.
40. Traumatic Disability Retirement Benefit
The State and the CAHP agree to implement a traumatic disability retirement benefit for
employees under age 50 as follows:
a. Upon retirement of a patrol member for industrial disability as the result of a single
event which results in serious bodily injury, the member shall receive the higher of
the allowance provided by Section 21406, or, the disability allowance otherwise
provided by this Section equal to 3 percent of his or her final compensation multiplied
by the number of years of patrol service credited to him or her plus an annuity
purchased with his or her accumulated additional contributions, if any. This section
will not apply to a disability which manifests more that six months after the effective
date for the industrial disability retirement. This section does not entitle the member
to an industrial disability retirement if the member would not otherwise be eligible for
an industrial disability retirement.
b. This section will apply only to serious physical injuries. This section shall not be
applied to disabilities that are the result of:
- (1) Cumulative trauma;
- (2) Cumulative injuries such as heart conditions, stroke, stress, anxiety, or diabetes;
- (3) Presumptive injuries or illnesses as defined in the Labor Code;
- (4) Stress related disabilities; or
- (5) Physical disability having mental origin.
c. If a patrol member has other service credit as a state peace officer/firefighter
member, state safety member, local safety member, State miscellaneous, State
industrial or local miscellaneous member under this system, the cumulative benefit
under this Section, including an annuity purchased with his or her accumulated
contributions, shall not exceed 90 percent of final compensation.
d. For purposes of this section, “serious bodily injury” includes the following:
- (1) Total loss of sight in one or both eyes;
- (2) Total loss of hearing in both ears;
- (3) Amputation or total loss of function in a hand, arm, foot or leg;
- (4) A spinal cord injury resulting in paralysis which causes the complete loss of function in a hand, arm, foot, or leg;
- (5) Physical injury to the brain resulting in serious cognitive disorders or paralysis which causes the complete loss of function in a hand, arm, foot or leg;
- (6) Injury to a major internal organ which substantially limits one or more “major life activities.” Major life activities are functions such as caring for oneself, performing manual tasks, walking, seeing, hearing, breathing, learning, and performing substantial gainful employment;
- (7) A serious physical injury which does not appear above but results in the inability to perform substantial gainful employment.
e. This section shall only apply to patrol members employed in a state bargaining unit
for which a memorandum of understanding has been agreed to by the State
employer and the recognized employee organization to become subject to this
section, patrol members who are excluded from the definition of state employees in
subdivision (c) of Section 3513, and patrol members employed by the executive
branch of government who are not members of the civil service.
f. In the event of a dispute regarding the applicability of this section, the board shall
proceed with retirement under any other section that may apply and with the
payment of any benefits that are payable under any other section when this section
does not apply. If the board subsequently determines that this section applies, an
amount equal to the benefits paid shall be deducted from the benefits payable under
this section because of the determination.
41. Prefunding Of Other Post-Employment Benefits (OPEB)
The State and Bargaining Unit 5 hereby agree to share in the responsibility toward the
prefunding of post-retirement health benefits for members of Bargaining Unit 5 and
agree that the foregoing concepts will be implemented as a means to begin to offset the
future financial liability for health benefits for retired members. As a result of prior
agreements, the State and Bargaining Unit 5 members agreed to make prefunding
contributions, which included redirecting contributions and forgoing compensation
increases calculated pursuant to Government Code section 19827 in exchange for
increased OPEB contributions. Below are the key features of those agreements:
a. Beginning July 1, 2009, the State began contributing 0.5 percent of base salary towards
prefunding of retiree health benefits in lieu of a statutory salary increase and beginning
January 1, 2010, Bargaining Unit 5 members began contributing 0.5 percent of base
salary, for a total of 1.0 percent.
b. In fiscal year 2010-11, 1.0 percent of a statutory salary increase was redirected to
prefund OPEB and paid for the by the State for a total of 2.0 percent of base salary
which was comprised of 1.5 percent of statutory salary increases redirected to prefund
OPEB, paid for by the employer, and an employee contribution of 0.5 percent. However,
the MOU was amended to temporarily suspend all OPEB prefunding contributions and
instead redirected the 2.0 percent to pension contributions until June 30, 2014.
c. Pursuant to the MOU, on July 1, 2013, the State began making prefunding contributions
in the amount of 2.0 percent as a “match” to the 2.0 percent being redirected towards
pension contributions. Additionally, 1.9 percent of a statutory salary increase was
redirected to prefund OPEB and paid for by the State. In total, 3.9 percent of base
salary was contributed, which was comprised of a State match contribution of 2.0
percent and 1.9 percent of statutory salary increases redirected to prefund OPEB paid
for by the employer, toward prefunding of retiree health benefits in fiscal year 2013-14.
d. Effective July 1, 2014, the 2.0 percent being redirected to pension contributions was
reverted back to OPEB contributions, increasing the statutory salary increases
redirected to prefund OPEB paid for by the employer to 3.4 percent and resuming
Bargaining Unit 5 member contributions of 0.5 percent. When including the 2.0 percent
match to the aforementioned percentages, a total of 5.9 percent of base salary was
contributed toward prefunding of retiree health benefits in fiscal year 2014-15.
e. Effective July 1, 2015, the State’s contribution match increased by 1.9 percent for a total
State match contribution of 3.9 percent, 3.4 percent of statutory salary increases
redirected to prefund OPEB paid for by the employer and employee contribution of 0.5
percent, for a total of 7.8 percent of base salary. This contribution level will continue until
July 1, 2019.
f. Beginning July 1, 2020, with the goal of reaching a fifty percent (50%) cost sharing of
actuarially determined normal costs, the amount of employee and employer
contributions required to prefund retiree healthcare shall equal the following percentages
of pensionable compensation, which takes into consideration prior statutory salary
compensation redirections and matching employer contributions:
- (1) July 1, 2020: 0.0 percent for employees, 3.4 percent of statutory salary increases redirected to prefund OPEB paid for by the employer, and 3.4 percent for the employer, for a total of 6.8 percent.
- (2) After July 1, 2020, the contribution percentages described in paragraph (1) above shall be adjusted based on actuarially determined total normal costs. Adjustments to both the employer and employee contribution percentages will occur if the actuarially determined total normal costs increase or decrease by more than half a percent from the total normal cost contribution percentages in effect at the time. If it is determined that an adjustment to the contribution rate is necessary, commencing no sooner than July 1, 2021, and on July 1 each fiscal year thereafter, the employer and employee contribution percentages will be increased or decreased to maintain a 50 percent cost sharing of actuarially determined total normal costs. The statutory salary increases redirected to prefund OPEB paid for the by the employer shall count towards the employee contribution percentage when determining the 50 percent cost sharing of actuarially determined normal costs. Furthermore, the increase or decrease to the employer or employee contribution in any given fiscal year shall not exceed 0.5 percent per year.
g. Employees Subject to Other Post Employment Benefit (OPEB) Prefunding
All bargaining unit members who are eligible for health benefits must contribute,
including permanent intermittent employees. Bargaining unit members whose
appointment tenure and/or time base make them ineligible for health benefits, such as
seasonal, temporary, and employees whose time base is less than half-time do not
contribute. Bargaining unit members not subject to OPEB prefunding shall begin
contributing upon attaining eligibility for health benefits. New hires and employees
transferring into Bargaining Unit 5 shall begin contributing immediately, unless they are
not subject, as set forth above.
h. Withholding of Contributions
Contributions shall be withheld from employee salary on a pre-tax basis, except for
employees receiving disability benefits that require contributions to be withheld post-tax,
as determined by the State Controller’s Office. Employees with an appointment subject
to OPEB prefunding and an additional appointment not subject to OPEB prefunding shall
have contributions withheld only from the appointment subject to OPEB prefunding.
i. Contributions will be deposited in the designated sub-account for Bargaining Unit 5 of
the Annuitant’s Health Care Coverage Fund for the purpose of providing retiree health
benefits to state annuitants and dependents associated with Bargaining Unit 5. As
defined in Government Code section 22940, a designated sub-account is a “separate
account maintained within the fund to identify prefunding contributions and assets
attributable to a specified state collective bargaining unit or other state entity for the
purpose of providing benefits to state annuitants and dependents associated with a
specified collective bargaining unit or other state entity.”
j. The costs for administering payroll deductions and asset management shall be deducted
from the contributions and/or account balance.
k. The parties agree to support any legislation necessary to facilitate and implement
prefunding of retiree health care obligations.
l. Contributions paid pursuant to this section shall be used exclusively for the cost of
providing post employment health care to eligible enrolled patrol member annuitants and
their eligible enrolled dependents, beneficiaries and survivors.
m. Contributions paid pursuant to this section shall not be refundable or recoverable under
any circumstances to a patrol member or his or her beneficiary or survivor.
n. 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.
o. For purposes of this section, “patrol member” has the same meaning as in Government
Code Section 20390. This section shall not apply to an employee of a county.
42. Post-Retirement Health and Dental Benefit Vesting
a. Employees hired prior to January 1, 2020, follow the vesting schedule outlined and
identified in Government Code section 22874.
b. The following vesting schedule shall apply to state employees in Bargaining Unit 5 first
employed by the State on or after January 1, 2020.
c. The portion of the employer contribution toward post-retirement health and dental
benefits will be based on credited years of service at retirement per the following chart
entitled “Health and Dental Benefits Vesting.” The minimum number of years of state
service at retirement to establish eligibility for any portion of the employee contribution will
be 15 years. This section will apply only to State employees who were under service
retirement.
d. State employees as defined in a. above who become Bargaining Unit 5 employees on or
after January 1, 2020, shall not receive any portion of the employer’s contribution payable
for post-retirement health and dental benefits unless those employees are credited with
15 years of State service as defined by law.
e. The percentage of employer contribution payable for post-retirement health and dental
benefits for an employee subject to this section is based on the member’s completed
years of credited State service at service retirement as shown in the following table:
[SEE END OF SECTION NOTES (3) FOR FULL TABLE]
f. This section shall apply only to State employees who retire for service.
g. Benefits provided an employee by this section shall be applicable to all future State service
h. For the purposes of this section, State service shall mean service rendered as an
employee or officer (employed, appointed or elected) of the State for compensation.
i. The parties agree to support any legislation necessary to facilitate post-retirement health
and dental vesting, as identified in Government Code sections 22874, 22958, or any
other applicable section of the Government Code.
43. Employer Contribution for Retiree Health Benefits
a. The employer contribution for each annuitant enrolled in a basic plan shall not exceed
eighty (80) percent of the weighted average of the Basic health benefit plan premiums for an
employee or annuitant enrolled for self-alone, during the benefit year to which the formula is
applied. For each employee or annuitant with enrolled family members, the employer
contribution shall not exceed 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.
- (1) “Weighted average of the health plan premiums” as used in this section shall consist of the four Basic health benefit plans that had the largest enrollment of active state employees, excluding family members, during the previous benefit year.
- (2) This section shall apply to all employees and annuitants first hired on or after January 1, 2020.
b. The employer contribution for an annuitant enrolled in a Medicare Supplemental Plan in
accordance with Government Code section 22844 shall not exceed 80 percent of the weighted
average of the health benefit premiums for an annuitant enrolled in Medicare Supplemental Plan
for self-alone, during the benefit year to which the formula is applied. For each employee or
annuitant with enrolled family members, the employer contribution shall not exceed 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.
- (1) “Weighted average of the health benefit plan premiums” as used in this section shall consist of the four Medicare Supplemental Plans that had the largest enrollment of state annuitants, excluding family members, during the previous benefit year.
- (2) The employer contribution shall not exceed the amount calculated under this section if the employee or annuitant is eligible for Medicare Part A, with our without cost, and Medicare Part B, regardless of whether the employee or annuitant is actually enrolled in Medicare Part A or Part B.
- (3) This section shall apply to all employees and annuitants first hired on or afterJanuary 1, 2020.
c. State employees and annuitants of Bargaining Unit 5 hired on or after January 1, 2020
shall be ineligible to receive any portion of the employer’s contribution for annuitants toward
Medicare Part B premiums, as defined in Government Code section 22879.
d. This section does not apply to:
- (1) State employees previously employed before January 1, 2020, who return to state employment on or after January 1, 2020; and
- (2) State employees on an approved leave of absence employed before January 1, 2020, who return to active employment on our after January 1, 2020.
e. The parties agree to support any legislation necessary to facilitate and implement this
provision.[2]
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