CSAC Calls Upon Senators Boxer and Feinstein to Support Early Retiree Reinsurance Program

CSAC has sent a letter to Senators Barbara Boxer and Dianne Feinstein, requesting their co-sponsorship of legislation that would provide additional funding for the Early Retiree Reinsurance Program (ERRP).

Established in 2010 by the Patient Protection and Affordable Care Act (PPACA), ERRP offers financial assistance to health plan sponsors that provide early retirees (those aged 55-64 years and therefore ineligible for Medicare) and their families with health coverage. Administered by the Department of Health and Human Services (HHS), ERRP was appropriated with $5 billion in funding, which must be used by health plan sponsors to lower plan participants’ costs, reduce plan sponsors’ cost of providing coverage, or both. Applicants for funding receive reinsurance of high-cost claims for retirees and their families.

While ERRP was not scheduled to end until January 1, 2014, HHS received an overabundance of applications and stopped accepting them in May of this year. The California Public Employees’ Retirement System (CalPERS) applied for funding on behalf of contracting counties and received $100 million for its retiree health benefits program.

Legislation to appropriate an additional $5 billion in funding for ERRP, Senate Bill 1088, is being authored by Senator John Kerry and will ensure that health plan sponsors, including those which have already received ERRP funding, will be able to apply for financial assistance in providing retired employees with health care. The bill is awaiting action in the Senate Health, Education, Labor, and Pensions Committee.

Bill Introduced to Reform Public Pensions

SCA 13, by Senator Anthony Cannella, was introduced on June 28 and seeks to place pension reform provisions into the state Constitution. Among other things, SCA 13 would:

• Provide that the public employer retains the right to change unearned retirement benefits for existing employees’ future service.
• Permit public employers to offer employees hired on or after January 1, 2012 a defined benefit plan only if it is part of a hybrid plan. The bill would also require the costs of such a hybrid plan to be equally shared by the employer and employee.
• Provide that any benefits provided under a defined benefit plan must be based on the employee’s annual base pay averaged over five years.
• Increase employee contribution rates for members of defined benefit plans by at least an additional five percent of current salary until the pension fund of the plan is 90 percent funded.
• Prohibit an employer from paying the employee contribution to a defined benefit plan for any employee.
• Eliminate the option to purchase airtime.
• Prohibit a person from being employed by, or providing personal services as a contractor for, a public employer while he or she is receiving pension payments from a public retirement system (also known as “double dipping”).
• Require that a public employee who is convicted of any felony for conduct arising out of his or her office or employment forfeits the rights and benefits to which he or she is entitled in any public retirement system in which he or she is a member.
• Require public employees to pay an increased amount for health care benefits and require a public employee hired on and after July 1, 2012, to contribute to the cost of postretirement health care benefits.
• Prohibit employees hired on and after July 1, 2012, from being eligible for full postretirement healthcare benefits until the employee has 25 years of service.
• Require two-thirds of the members of the retirement board of a public pension or retirement system to have expertise in the financial, legal, accounting, or health care fields and prohibit them from being members of that system or from having immediate family members who are members of that system.

SCA 13 is currently awaiting assignment to a Senate policy committee.

Collective Bargaining

SB 857 (Lieu) – Oppose
As Amended June 13, 2011

SB 857, by Senator Ted Lieu, will remove the authority of the Public Employment Relations Board (PERB) to award damages such as costs, expenses, and/or revenue losses resulting from an unlawful strike. Existing law provides PERB with the authority to investigate unfair labor practice charges and determine if those charges are justified; PERB is then able to assess any resulting damages.

This legislation is in response to a case decided by PERB in early 2010 (California Nurses Association v. Regents of the University of California [PERB Decision 2094-H]), which clarified that employee organizations may strike, but if a strike is called prior to completing impasse procedure, it is an unfair labor practice. PERB ruled in the case that such action can lead to the union being subject to damages incurred by the employer as a result of the premature strike and specified that only direct strike-related damages may be awarded (i.e., the cost of replacement workers or lost income). Additionally, PERB stated that any money the employer saves as a result of the strike must offset incurred damages.

Failure by the Legislature and appellate courts to overturn the decision prompted the introduction of SB 857, which is currently waiting to be heard on the Assembly Floor.