Pensions, Strikes, and Increased Costs – Oh My!
September 5, 2019
A number of controversial employee relations bills are still pending in the Legislature that together would substantially increase costs for public agencies. On behalf of all 58 counties, CSAC continues to communicate outstanding concerns with two bills in particular.
AB 1066, by Assembly Member Lorena Gonzalez, would allow employees who are involved in a trade dispute to collect unemployment benefits after three weeks, thus requiring employers to fund ongoing labor disputes.
Under existing law, unemployment insurance payments are intended to assist employees who, through no fault of their own, are forced to leave their employment. Local agencies fund these payments via an Unemployment Insurance Reserve Account (UI Account).
In the event of a strike that lasts over three weeks, AB 1066 would allow all striking workers to claim UI benefits for up to 26 weeks. In this scenario, counties and other local agencies would experience simultaneous claims that would significantly increase UI costs. The Assembly Appropriations Committee estimates the fiscal impact of this bill could be as high as $6 million to California’s public employers annually.
CSAC, in partnership with a coalition of local government associations, opposes this bill because its passage would likely result in the erosion of good faith negotiations at the bargaining table, increased lengths of impasse, higher costs associated with protracted PERB proceedings, and compromised long-term solvency of the UI system.
AB 1066 is currently pending on the Senate Floor. If passed, it would move back to the Assembly for concurrence.
CSAC also opposes SB 266, by Senator Connie Leyva. This bill would require counties and other public agencies to directly pay retirees the pension
Under existing law, when CalPERS disallows a benefit for an employee or retiree, both the employer and the employee stop making payments on that benefit and past contributions are returned to whoever paid them.
Under SB 266, in the case of a retiree that received a disallowed benefit, a county would be required to reimburse CalPERS for the overpayment and pay the entire benefit from its own funds indefinitely – even if CalPERS had previously determined that the benefit was allowable.
If this bill is enacted, the only means for employers to avoid the risk of these kinds of liabilities will be to limit the types of compensation offered to those items whose pensionability is beyond question (i.e., base salary) – an undesirable result for all concerned.
SB 266 has received very few ‘no’ votes as it has moved through the legislative process. The bill is pending on the Assembly Floor. If it passes, it will move to the Senate for concurrence.