Existing law establishes the California State University, under the administration of the Trustees of the California State University, as one of the segments of public postsecondary education in this state. The California State University system comprises 23 institutions of higher education. Existing law authorizes the trustees to provide by rule for the government of their appointees and employees, as specified.

This bill, notwithstanding any other law, would require, after completion of the first year in a position, and after completion of each subsequent year thereafter, each support staff employee of the California State University to receive a merit salary intermediate step adjustment of 5% when he or she meets the standards for satisfactory performance of the position, as determined by the employees appropriate administrator pursuant to a uniform employee evaluation process. The bill would provide that, if a provision of the bill is expressly in conflict with a provision of a memorandum of understanding, but is not expressly in conflict with a provision of a collective bargaining agreement, the provision of the memorandum of understanding would prevail. The bill would also provide that, if a provision of the bill is expressly in conflict with a provision of a collective bargaining agreement, or a provision of a collective bargaining agreement and a provision of a memorandum of understanding, the provision of the collective bargaining agreement would prevail.

This bill would provide that, on and after the date that the bill becomes operative, language that effectuates its provisions would automatically be incorporated into any pertinent memorandum of understanding or collective bargaining agreement entered into, or renewed, by the California State University. The bill would further provide that any costs associated with the implementation of the bill that are incurred by the California State University shall be paid for using existing resources of the university.

This bill would make these provisions inoperative on July 1, 2029, and would repeal them as of January 1, 2030.

Existing law establishes the California State University, under the administration of the Trustees of the California State University, as one of the segments of public postsecondary education in this state. The California State University system comprises 23 institutions of higher education. Existing law authorizes the trustees to provide by rule for the government of their appointees and employees, as specified.

This bill, notwithstanding any other law, would require, after completion of the first year in a position, and after completion of each subsequent year thereafter, each support staff employee of the California State University to receive a merit salary intermediate step adjustment of 5% when he or she meets the standards for satisfactory performance of the position, as determined by the employees appropriate administrator. administrator pursuant to a uniform employee evaluation process. The bill would provide that, if a provision of the bill is expressly in conflict with a provision of a memorandum of understanding, but is not expressly in conflict with a provision of a collective bargaining agreement, the provision of the memorandum of understanding would prevail. The bill would also provide that, if a provision of the bill is expressly in conflict with a provision of a collective bargaining agreement, or a provision of a collective bargaining agreement and a provision of a memorandum of understanding, the provision of the collective bargaining agreement would prevail.

Existing law establishes the California State University, under the administration of the Trustees of the California State University, as one of the segments of public postsecondary education in this state. The California State University system comprises 23 institutions of higher education. Existing law authorizes the trustees to provide by rule for the government of their appointees and employees, as specified.

This bill, notwithstanding any other law, would require, after completion of the first year in a position, and after completion of each subsequent year thereafter, each support staff employee of the California State University to receive a merit salary intermediate step adjustment of 5 percent 5% when he or she meets the standards for satisfactory performance of the position, as determined by the employees appropriate administrator. The bill would provide that, if a provision of the bill is in conflict with a provision of a memorandum of understanding, but is not in conflict with a provision of a collective bargaining agreement, the provision of the memorandum of understanding would prevail. The bill would provide that, if a provision of the bill is in conflict with a provision of a collective bargaining agreement, or a provision of a collective bargaining agreement and a provision of a memorandum of understanding, the provision of the collective bargaining agreement would prevail.

Existing law establishes the California State University, under the administration of the Trustees of the California State University, as one of the segments of public postsecondary education in this state. The California State University system comprises 23 institutions of higher education. Existing law authorizes the trustees to provide by rule for the government of their appointees and employees, as specified.

This bill, notwithstanding any other law, would require, after completion of the first year in a position, and after completion of each subsequent year thereafter, each support staff employee of the California State University to receive a merit salary intermediate step adjustment of an unspecified percentage 5 percent when he or she meets the standards for satisfactory performance of the position, as determined by the employees appropriate administrator. The bill would provide that, if a provision of the bill is in conflict with a provision of a memorandum of understanding, the provision of the memorandum of understanding would prevail.

Existing law establishes the California State University, under the administration of the Trustees of the California State University, as one of the segments of public postsecondary education in this state. The California State University system comprises 23 institutions of higher education. Existing law authorizes the trustees to provide by rule for the government of their appointees and employees, as specified.

This bill, notwithstanding any other law, would require, after completion of the first year in a position, and after completion of each subsequent year thereafter, each support staff employee of the California State University to receive a merit salary intermediate step adjustment of an unspecified percentage when he or she meets the standards for satisfactory performance of the position, as determined by the employees appropriate administrator. The bill would provide that, if a provision of the bill is in conflict with a provision of a memorandum of understanding, the provision of the memorandum of understanding would prevail.

GOVERNOR'S VETO

GV Bill Id:AB 1231

Author:(Weber)

As Enrolled Ver:September 6, 2018

2/3 vote

Original Committee Reference: HIGHER ED.

SUMMARY: Requires each nonacademic employee of the California State University (CSU) to receive a 5% merit salary intermediate step adjustment after their year in the position, upon meeting the standards for satisfactory performance in their position.

The Senate amendments:

1. Specify that if a provision of this bill is expressly in conflict with a provision of a memorandum of understanding (MOU), but is not expressly in conflict with a provision of a collective bargaining agreement, the provision of the MOU shall prevail.
2. Specify that if a provision of this bill is expressly in conflict with a provision of a collective bargaining agreement, or a provision of a collective bargaining agreement and a provision of a MOU, the provision of the collective bargaining agreement shall prevail.
3. Specify that on and after the operative date of this bill, language that effectuates the provisions of this section shall automatically be incorporated into any pertinent MOU or collective bargaining agreement entered into, or renewed, by the CSU.
4. Specify that any costs associated with this bill's implementation incurred by the CSU shall be paid for using existing resources of the CSU.
5. Sunset the bill; making the provisions inoperative on July, 2029, and, as of January 1, 2030, repealed.

EXISTING LAW:

1. Establishes the CSU, governed by the Board of Trustees, and provides that the Trustees are responsible for the rule of government of their appointees and employees (Education Code Section 89500, et seq.).
2. Provides that officers and employees of the University of California (UC) and CSU are exempt from civil service (California Constitution, Article VII, Section 4(h)).
3. Establishes the Higher Education Employer-Employee Relations Act (HEERA) to provide a statutory framework to regulate labor relations between UC, CSU, and Hastings College of Law and their employees; provides the Public Employment Relations Board (PERB) authority to enforce HEERA (Government Code Section 3560-3599).

FISCAL EFFECT: According to the Senate Appropriations Committee, according to the CSU, this bill would result in General Fund costs of approximately $71 million in the first year and $75 million thereafter, with ongoing growth in costs as the base amount grows. This estimate assumes an average cost of $15 million for every 1% increase, and would apply to all staff excluding management personnel, executives, and faculty.

COMMENTS: Background. In 1945, the Merit Salary Adjustment (MSA) system was created in statute for state civil service employees. The MSA is a 5% annual salary increase for employees below the maximum step of their salary range. The MSA is contingent on satisfactory job performance and is effective on the employee's anniversary date.

Until the early 1990s, pay increases at CSU mirrored those provided to state civil service employees, thus CSU employees received MSAs. In April 1994, however, during collective bargaining, the CSU Trustees proposed that MSAs be replaced with discretionary performance pay. Labor fought this proposal, but after exhausting the statutory impasse procedures of mediation and fact-finding, the CSU unilaterally withdrew salary steps on April 1, 1996. The MSA was replaced with the Service Salary Increase (SSI), which was set at 2.5%. Unlike MSAs, SSIs are not automatic and are awarded only in years when they are funded.

Purpose. This bill, sponsored by the CSU Employees Union (CSUEU), reinstates MSAs for represented, nonacademic CSU employees. The author notes that CSU is the only state agency that does not have salary step increases for its employees.

As noted above, CSU employees are explicitly exempt from civil service, under the California Constitution, and instead are covered by the HEERA, which provides a framework to regulate labor relations. Salary terms are a negotiated item in collective bargaining agreements and subject to Trustees approval.

CSU/CSUEU agreement. According to CSUEU, there have been multiple attempts to negotiate salary steps with the CSU, all which have been rejected by the CSU.

However, the CSU and CSUEU reached a tentative agreement at the end of October 2017 on a successor contract. The new three-year collective bargaining agreement will run through June 2020. Per the successor collective bargaining agreement, CSUEU-represented employees will receive 3% general salary increases on July 1, 2017 (retroactive), July 1, 2018, and July 1, 2019. Current full-time employees will receive a one-time recognition bonus of $650 on ratification of the successor agreement by the CSU Trustees.

Arguments in support. The California Faculty Association (CFA) and the California School Employees Association (CSEA) point out that the CSU is the only California state agency that does not provide salary steps to its employees. Both CFA and CSEA argue that CSU support staff salaries have become marginalized while CSU management positions have grown and outpaced the salary increases of support staff.

Arguments in opposition. CSU argues that this bill undermines both the collective bargaining process and the Trustees' ability to manage the system's budget, which CSU believes would be particularly problematic in an economic downturn and declining state support to CSU. Additionally, CSU believes that the provisions of this bill prioritize the salary needs of one group of employees above all other budget priorities; and could potentially be applied to more than just employees that are part of the CSUEU bargaining units.

Current CSU Budget Pressures. As noted by the Legislative Analyst's Office in its analysis of the 2017-18 Governor's Budget, CSU currently faces four notable cost pressures: funding collective bargaining agreements already ratified by the Board of Trustees; covering basic cost increases, such as for health care and pensions; funding enrollment growth for more transfer students, as CSU continues to report denying admission to eligible transfer students; and pressure to provide compensation increases to other employee groups, such as CSUEU, with open contracts.

Related legislation. AB 2019 (Santiago) of 2016, which was held on Suspense in the Assembly Appropriations Committee, would have provided an annual MSA of at least 2.65 % for CSU academic employees.

GOVERNOR'S VETO MESSAGE:

This bill would require support staff of the California State University system to receive 5% annual merit salary increases, based on satisfactory performance.

While the bill is laudable in its goals of trying to raise wages and create salary progression for support staff at the CSU, most of whom are within lower paid classifications, collective bargaining should be the tool to effectuate such changes.

I do believe, however, that the CSU should undertake a diligent examination of pay disparities and opportunities for upward mobility for its lowest wage workers.

As I stated in a message to the University of California last year, "As the UC prides itself on being an agent of social mobility for students, it might follow that UC could similarly be an agent of social mobility for lower-wage workers at its campuses." I believe that CSU can and should strive to do the same.

Analysis Prepared by: Jeanice Warden / HIGHER ED. / (916) 319-3960 FN: 0005312

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1231

Author:(Weber)

As Amended Ver:August 17, 2018

Majority vote

Original Committee Reference: HIGHER ED.

SUMMARY: Requires each nonacademic employee of the California State University (CSU) to receive a five percent merit salary intermediate step adjustment after their year in the position, upon meeting the standards for satisfactory performance in their position.

The Senate amendments:

1. Specify that if a provision of this bill is expressly in conflict with a provision of a memorandum of understanding (MOU), but is not expressly in conflict with a provision of a collective bargaining agreement, the provision of the MOU shall prevail.
2. Specify that if a provision of this bill is expressly in conflict with a provision of a collective bargaining agreement, or a provision of a collective bargaining agreement and a provision of a MOU, the provision of the collective bargaining agreement shall prevail.
3. Specify that on and after the operative date of this bill, language that effectuates the provisions of this section shall automatically be incorporated into any pertinent MOU or collective bargaining agreement entered into, or renewed, by the CSU.
4. Specify that any costs associated with this bill’s implementation incurred by the CSU shall be paid for using existing resources of the CSU.
5. Sunset the bill; making the provisions inoperative on July, 2029, and, as of January 1, 2030, repealed.

EXISTING LAW:

1. Establishes the CSU, governed by the Board of Trustees, and provides that the Trustees are responsible for the rule of government of their appointees and employees (Education Code Section 89500, et seq.).
2. Provides that officers and employees of the University of California (UC) and CSU are exempt from civil service (California Constitution, Article VII, Section 4(h)).
3. Establishes the Higher Education Employer-Employee Relations Act (HEERA) to provide a statutory framework to regulate labor relations between UC, CSU, and Hastings College of Law and their employees; provides the Public Employment Relations Board (PERB) authority to enforce HEERA (Government Code Section 3560-3599).

FISCAL EFFECT: According to the Senate Appropriations Committee, according to the CSU, this bill would result in General Fund costs of approximately $71 million in the first year and $75 million thereafter, with ongoing growth in costs as the base amount grows. This estimate assumes an average cost of $15 million for every one percent increase, and would apply to all staff excluding management personnel, executives, and faculty.

COMMENTS: Background. In 1945, the Merit Salary Adjustment (MSA) system was created in statute for state civil service employees. The MSA is a 5% annual salary increase for employees below the maximum step of their salary range. The MSA is contingent on satisfactory job performance and is effective on the employee's anniversary date.

Until the early 1990s, pay increases at CSU mirrored those provided to state civil service employees, thus CSU employees received MSAs. In April 1994, however, during collective bargaining, the CSU Trustees proposed that MSAs be replaced with discretionary performance pay. Labor fought this proposal, but after exhausting the statutory impasse procedures of mediation and fact-finding, the CSU unilaterally withdrew salary steps on April 1, 1996. The MSA was replaced with the Service Salary Increase (SSI), which was set at 2.5%. Unlike MSAs, SSIs are not automatic and are awarded only in years when they are funded.

Purpose. This bill, sponsored by the CSU Employees Union (CSUEU), reinstates MSAs for represented, nonacademic CSU employees. The author notes that CSU is the only state agency that does not have salary step increases for its employees.

As noted above, CSU employees are explicitly exempt from civil service, under the California Constitution, and instead are covered by the HEERA, which provides a framework to regulate labor relations. Salary terms are a negotiated item in collective bargaining agreements and subject to Trustees approval.

CSU/CSUEU agreement. According to CSUEU, there have been multiple attempts to negotiate salary steps with the CSU, all which have been rejected by the CSU.

However, the CSU and CSUEU reached a tentative agreement at the end of October 2017 on a successor contract. The new three-year collective bargaining agreement will run through June 2020. Per the successor collective bargaining agreement, CSUEU-represented employees will receive 3% general salary increases on July 1, 2017 (retroactive), July 1, 2018, and July 1, 2019. Current full-time employees will receive a one-time recognition bonus of $650 on ratification of the successor agreement by the CSU Trustees.

Arguments in support. The California Faculty Association (CFA) and the California School Employees Association (CSEA) point out that the CSU is the only California state agency that does not provide salary steps to its employees. Both CFA and CSEA argue that CSU support staff salaries have become marginalized while CSU management positions have grown and outpaced the salary increases of support staff.

Arguments in opposition. CSU argues that this bill undermines both the collective bargaining process and the Trustees' ability to manage the system's budget, which CSU believes would be particularly problematic in an economic downturn and declining state support to CSU. Additionally, CSU believes that the provisions of this bill prioritize the salary needs of one group of employees above all other budget priorities; and could potentially be applied to more than just employees that are part of the CSUEU bargaining units.

Current CSU Budget Pressures. As noted by the Legislative Analyst's Office in its analysis of the 2017-18 Governor's Budget, CSU currently faces four notable cost pressures: funding collective bargaining agreements already ratified by the Board of Trustees; covering basic cost increases, such as for health care and pensions; funding enrollment growth for more transfer students, as CSU continues to report denying admission to eligible transfer students; and pressure to provide compensation increases to other employee groups, such as CSUEU, with open contracts.

Related legislation. AB 2019 (Santiago) of 2016, which was held on Suspense in the Assembly Appropriations Committee, would have provided an annual MSA of at least 2.65 % for CSU academic employees.

Analysis Prepared by: Jeanice Warden / HIGHER ED. / (916) 319-3960 FN: 0004553

 THIRD READING  

Bill No: AB 1231

Author:

Amended: 8/17/18 in Senate

Vote:

SENATE EDUCATION COMMITTEE: 6-0, 5/9/18

AYES: Allen, Wilk, Galgiani, Leyva, Pan, Vidak

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/16/18

AYES: Portantino, Beall, Bradford, Hill, Wiener

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 54-20, 1/29/18 - See last page for vote

SUBJECT:

SOURCE: California State University Employees Union

Service Employees International Union

DIGEST:

This bill requires each support staff employee of the California State University (CSU) to receive a five percent merit salary intermediate step adjustment after his or her first year in the position, upon meeting the standards for satisfactory performance in their position.

ANALYSIS:

Existing law:

1. Establishes the Higher Education Employer-Employee Relations Act (HEERA) to provide a statutory framework to regulate labor relations at the University of California, CSU, and Hastings College of Law, and their employees. The Public Employment Relations Board has the authority to enforce HEERA.
2. Provides that employees at CSU are explicitly exempt from civil service, and their salary terms are a negotiated item in collective bargaining agreements and subject to approval by the Trustees.

This bill:

1. Requires each support staff employee of the CSU to receive a five percent merit salary intermediate step adjustment after his or her first year in the position, upon meeting the standards for satisfactory performance in their position, pursuant to a uniform employee evaluation process.
2. Specifies that if a provision of this bill is expressly in conflict with a provision of a memorandum of understanding, but is not expressly in conflict with a provision of a collective bargaining agreement, the provision of the memorandum of understanding shall prevail.
3. Specifies that if a provision of this bill is expressly in conflict with a provision of a collective bargaining agreement, or a provision of a collective bargaining agreement and a provision of a memorandum of understanding, the provision of the collective bargaining agreement shall prevail.
4. Specifies that on and after the operative date of this bill, language that effectuates the provisions of this section shall automatically be incorporated into any pertinent memorandum of understanding or collective bargaining agreement entered into, or renewed, by the CSU.
5. Specifies that any costs associated with this bill’s implementation incurred by the CSU shall be paid for using existing resources of the university.
6. Becomes inoperative on July, 2029, and, as of January 1, 2030, is repealed.

Comments

1. Need for the bill. According to the author, “Evidence strongly suggests that the CSU is the only California state agency that does not provide salary steps to its employees. This creates an ‘inversion’ in salaries where new hires are earning more than more experienced employees. Following a 1996 impasse in contract negotiations, the CSU Board of Trustees unilaterally eliminated existing employee salary steps, increases tied to job performance and longevity. Since this change, CSU employee salaries have not progressed through an “open range” salary structure imposed by the CSU to replace salary steps.

“For 20 years, the CSU has been unwilling to reinstate salary steps, despite the failure of the existing salary structure and the inability of employees to earn a fair and equitable wage. A 2017 state audit found that CSU management positions grew at twice the rate of support staff, with a half-billion dollars per year total compensation outpacing salary increases of other employee.”

1. Salary step increases at other state agencies. State law charges the Department of Human Resources (CalHR) with establishing and adjusting salary ranges for each position class in state civil service, with each salary range consisting of minimum and maximum salary limits and intermediate steps within the limits to govern salary adjustments. State law also establishes the merit salary adjustment (MSA), an annual salary increase for employees below the maximum step of their salary range. The MSA is contingent on satisfactory job performance and is effective on the employee’s anniversary date. The amount of each step increase—defined for most represented employees in a Memorandum of Understanding and in CalHR regulations for non-represented employees—is five percent.

While CSU employees are exempt from civil service, they received MSAs consistent with civil service employees until the early 1990s.

1. CSU collective bargaining history and status. In April 1994, during collective bargaining, the CSU Trustees proposed that MSAs be replaced with discretionary performance pay. Labor fought this proposal, but after exhausting the statutory impasse procedures of mediation and fact-finding, the CSU withdrew salary steps on April 1, 1996. The MSA was replaced with the Service Salary Increase (SSI), which was set at 2.5 percent. Unlike MSAs, SSIs are not automatic and are awarded only in years when they are funded.

In October 2017, the CSU and CSU Employees Union (CSUEU) reached a tentative agreement on a successor contract. The new three-year collective bargaining agreement will run through June 2020. CSUEU represented employees will receive three percent general salary increases on July 1, 2017 (retroactive), July 1, 2018, and July 1, 2019. Current full-time employees will receive a one-time recognition bonus of $650 upon ratification of the successor agreement by the CSU Trustees.

1. Wages are within the mandatory scope of the Higher Education Employer-Employee Relations Act. California's HEERA is the law that governs labor relations between public institutions of higher education and their employees. Under HEERA, terms and conditions of employment, such as wages, hours, and working conditions are considered to be within the mandatory scope of bargaining or scope of representation. Matters that are not within the scope of representation include: “consideration of the merits, necessity, or organization of any service, activity, or program established by statute or regulations adopted by the trustees, except for the terms and conditions of employment of employees who may be affected thereby.”

The Public Employer-Employee Relations Board (PERB) is responsible for enforcing HEERA. PERB has issued thousands of decisions regarding what matters are within the scope of HEERA, which generally are those matters that: (a) are reasonably related to wages, hours, or conditions of employment, (b) areas where management and employees are likely to conflict, and (c) areas that would not significantly abridge the employer’s freedom to exercise managerial choices.

1. Audit of CSU management growth and compensation. In stating the need for this bill, the sponsors cite an April 2017 report by the California State Auditor concerning the growth and compensation of CSU management personnel. The report finds that stronger oversight is needed for hiring and compensating management personnel and for monitoring campus budgets. The report specifically cites the following:
   1. Staffing levels and compensation for CSU management personnel have increased at a faster rate than for other employee groups. While staffing levels and compensation for CSU employees have grown over a nine-year period, the number and compensation of management personnel significantly outpaced those of other types of employees.
   2. Campuses do not adequately oversee their budgets, of the six campuses audited none had written policies in place that require periodic comparisons of spending levels to budget limits and only two documented the results for their budget oversight.
   3. State law exempts CSU from many of the budget oversight mechanisms that apply to other state agencies; CSU does not need authorization to establish new employee positions.
   4. CSU has recently granted minimal raises to its executives, but board policy does not cap reimbursements of relocation costs. CSU granted nominal raises to its executives who also receive substantial amounts of other compensation, such as car and housing allowances.

The report also makes the following recommendations:

• 1. The Legislature should require the CSU to submit annual information that demonstrates how its activities meet the state’s goals for students.
  2. The Chancellor’s Office should take action to:
     1. Require that its departments and campuses prepare and maintain written justifications for any proposed new management positions.
     2. Ensure campus create, implement and adhere to written merit evaluation plans for management personnel.
     3. Work with the board to develop, approve, and implement an executive compensation policy that prohibits the use of foundation funds to pay campus presidents and establish caps on the relocation reimbursements it pays to executives as well as require campuses to establish similar caps for nonexecutive staff.

1. CSU response to audit recommendations. In response to the recommendations made by the California State Auditor, the CSU Chancellor’s Office adopted two policies relative to management personnel. The adopted policies require:
   1. Written justifications for both the purpose and the specific number of proposed additional management positions. The justification should include the number of management personnel to be hired for a specific position as well as information about assessments of skills, knowledge and other qualifications outlined in regulations.
   2. The creation and implementation of and adherence to a written merit evaluation plan for management personnel. In addition campuses and the Chancellor’s Office must comply with their written merit evaluation plans and grant raises to management personnel based on merit as evidence by current, documented performance evaluations.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, CSU reports that this bill would result in General Fund costs of approximately $71 million in the first year and $75 million thereafter, with ongoing growth in costs as the base amount grows. This estimate assumes an average cost of $15 million for ever one percent increase, and would apply to all staff excluding management personnel, executives, and faculty.

SUPPORT: (Verified 8/16/18)

California State University Employees Union (co-source)

Service Employees International Union (co-source)

AFSCME, AFL-CIO Local 3299

California Faculty Association

California Federation of Teachers

California Labor Federation

California Nurses Association/National Nurses United

California School Employees Association, AFL-CIO

California Teamsters Public Affairs Council

University Professional and Technical Employees-CWA Local 9119

OPPOSITION: (Verified 8/16/18)

California State University

ARGUMENTS IN SUPPORT: Proponents of this bill argue that salary steps are foundational to public service, and can be found at every state agency, as well as the other public higher education systems. For 20 years, the CSU has been unwilling to reinstate salary steps, despite the failure of the existing salary structure and the inability of employees to earn a fair and equitable wage. As employee salaries have become marginalized, a 2017 state audit showed CSU management positions grew at twice the rate of support staff, with a half-billion dollars per year total compensation that far outpaced the salary increases of other employees.

ARGUMENTS IN OPPOSITION: CSU states that it recently completed its negotiations with the CSUEU and a compensation pool of nine percent over the next three years was agreed to by both parties. The negotiations occurred in good faith and came to a successful agreement, as envisioned by the labor relations act that guides public higher education. This bill is contrary to that act, which was enacted to create a “harmonious and cooperative process” on issues related to wages, hours, and working conditions. Statutorily mandating salary adjustments for one group of employees above all other budget priorities undermines the ability of the board to manage its budget to address other high priority needs of the system.

ASSEMBLY FLOOR: 54-20, 1/29/18

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bonta, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Daly, Eggman, Frazier, Friedman, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Levine, Limón, Low, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Baker, Bigelow, Brough, Choi, Cunningham, Dahle, Fong, Gallagher, Harper, Kiley, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Steinorth, Voepel

NO VOTE RECORDED: Chen, Flora, Waldron

Prepared by:

8/20/18 10:40:13

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 1231 (Weber) - Public postsecondary education: California State University: support staff employees: merit salary adjustments

Bill Summary:

This bill requires each support staff employee of the California State University (CSU) to receive a five percent merit salary intermediate step adjustment after his or her first year in the position, upon meeting the standards for satisfactory performance in their position.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on August 16, 2018

Fiscal Impact:

According to the CSU, this bill would result in General Fund costs of approximately $71 million in the first year and $75 million thereafter, with ongoing growth in costs as the base amount grows. This estimate assumes an average cost of $15 million for every one percent increase, and would apply to all staff excluding management personnel, executives, and faculty.

Author Amendments:

Provide that any costs associated with the implementation of this measure shall be paid for using existing resources and also require that language effectuating the bill’s provisions shall automatically be incorporated into any pertinent memorandum of understanding or collective bargaining agreement entered into or renewed by the CSU.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 1231 (Weber) - Public postsecondary education: California State University: support staff employees: merit salary adjustments

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

This bill requires each support staff employee of the California State University (CSU) to receive a five percent merit salary intermediate step adjustment after his or her first year in the position, upon meeting the standards for satisfactory performance in their position.

Fiscal Impact:

According to CSU, this bill would result in General Fund costs of approximately $71 million in the first year and $75 million thereafter, with ongoing growth in costs as the base amount grows. This estimate assumes an average cost of $15 million for every one percent increase, and would apply to all staff excluding management personnel, executives, and faculty.

Background:

Employees at CSU are explicitly exempt from civil service, and their salary terms are a negotiated item in collective bargaining agreements and subject to approval by the Trustees. The Higher Education Employer-Employee Relations Act (HEERA) provides a statutory framework to regulate labor relations at the University of California, CSU, and Hastings College of Law, and their employees. . Under HEERA, terms and conditions of employment, such as wages, hours, and working conditions are considered to be within the mandatory scope of bargaining or scope of representation. Matters that are not within the scope of representation include: “consideration of the merits, necessity, or organization of any service, activity, or program established by statute or regulations adopted by the trustees, except for the terms and conditions of employment of employees who may be affected thereby.”

The Public Employment Relations Board (PERB) has the authority to enforce HEERA. PERB has issued thousands of decisions regarding what matters are within the scope of HEERA, which generally are those matters that: (1) are reasonably related to wages, hours, or conditions of employment, (2) areas where management and employees are likely to conflict, and (3) areas that would not significantly abridge the employer’s freedom to exercise managerial choices.

Proposed Law:

This bill requires each support staff employee of the CSU to receive a five percent merit salary intermediate step adjustment after his or her first year in the position, upon meeting the standards for satisfactory performance in their position. The bill specifies that if its’ provisions are in conflict with a provision of a memorandum of understanding but is not in conflict with a provision of a collective bargaining agreement, the provision of the memorandum of understanding shall prevail. Further, if a provision is in conflict with a collective bargaining agreement or a provision of a collective bargaining agreement and a provision of a memorandum of understanding, the provision of the collective bargaining agreement shall prevail.

-- END --

SENATE COMMITTEE ON EDUCATION

Senator Benjamin Allen, Chair

2017 - 2018 Regular

Bill No: Hearing Date: May 9, 2018

Subject:

SUMMARY

This bill requires each support staff employee of the California State University (CSU) to receive a five percent merit salary intermediate step adjustment after his or her first year in the position, upon meeting the standards for satisfactory performance in their position.

BACKGROUND

Existing law establishes the Higher Education Employer-Employee Relations Act (HEERA) to provide a statutory framework to regulate labor relations at the University of California, CSU, and Hastings College of Law, and their employees. The Public Employment Relations Board has the authority to enforce HEERA.

Employees at CSU are explicitly exempt from civil service, and their salary terms are a negotiated item in collective bargaining agreements and subject to approval by the Trustees.

ANALYSIS

This bill requires each support staff employee of the CSU to receive a five percent merit salary intermediate step adjustment after his or her first year in the position, upon meeting the standards for satisfactory performance in their position.

STAFF COMMENTS

1. Need for the bill. According to the author, “Evidence strongly suggests that the CSU is the only California state agency that does not provide salary steps to its employees. This creates an “inversion” in salaries where new hires are earning more than more experienced employees. Following a 1996 impasse in contract negotiations, the CSU Board of Trustees unilaterally eliminated existing employee salary steps, increases tied to job performance and longevity. Since this change, CSU employee salaries have not progressed through an “open range” salary structure imposed by the CSU to replace salary steps.”

“For 20 years, the CSU has been unwilling to reinstate salary steps, despite the failure of the existing salary structure and the inability of employees to earn a fair and equitable wage. A 2017 state audit found that CSU management positions grew at twice the rate of support staff, with a half-billion dollars per year total compensation outpacing salary increases of other employee.”

1. Salary step increases at other state agencies. State law charges the California Department of Human Resources (CalHR) with establishing and adjusting salary ranges for each position class in state civil service, with each salary range consisting of minimum and maximum salary limits and intermediate steps within the limits to govern salary adjustments. State law also establishes the merit salary adjustment (MSA), an annual salary increase for employees below the maximum step of their salary range. The MSA is contingent on satisfactory job performance and is effective on the employee’s anniversary date. The amount of each step increase—defined for most represented employees in a Memorandum of Understanding and in CalHR regulations for non-represented employees—is five percent.

While California State University (CSU) employees are exempt from civil service, they received MSAs consistent with civil service employees until the early 1990s.

1. CSU collective bargaining history and status. In April 1994, during collective bargaining, the CSU Trustees proposed that MSAs be replaced with discretionary performance pay. Labor fought this proposal, but after exhausting the statutory impasse procedures of mediation and fact-finding, the CSU withdrew salary steps on April 1, 1996. The MSA was replaced with the Service Salary Increase (SSI), which was set at 2.5 percent. Unlike MSAs, SSIs are not automatic and are awarded only in years when they are funded.

In October 2017, the CSU and CSU Employees Union (CSUEU) reached a tentative agreement on a successor contract. The new three-year collective bargaining agreement will run through June 2020. CSUEU represented employees will receive 3 percent general salary increases on July 1, 2017 (retroactive), July 1, 2018, and July 1, 2019. Current full-time employees will receive a one-time recognition bonus of $650 upon ratification of the successor agreement by the CSU Trustees.

1. Wages are within the mandatory scope of the Higher Education Employer-Employee Relations Act. California's Higher Education Employee-Employer Relations Act (HEERA) is the law that governs labor relations between public institutions of higher education and their employees. Under HEERA, terms and conditions of employment, such as wages, hours, and working conditions are considered to be within the mandatory scope of bargaining or scope of representation. Matters that are not within the scope of representation include: “consideration of the merits, necessity, or organization of any service, activity, or program established by statute or regulations adopted by the trustees, except for the terms and conditions of employment of employees who may be affected thereby.”

The Public Employer-Employee Relations Board (PERB) is responsible for enforcing HEERA. PERB has issued thousands of decisions regarding what matters are within the scope of HEERA, which generally are those matters that: (1) are reasonably related to wages, hours, or conditions of employment, (2) areas where management and employees are likely to conflict, and (3) areas that would not significantly abridge the employer’s freedom to exercise managerial choices.

1. Audit of California State University (CSU) management growth and compensation. In stating the need for this bill, the sponsors cite an April 2017 report by the California State Auditor concerning the growth and compensation of CSU management personnel. The report finds that stronger oversight is needed for hiring and compensating management personnel and for monitoring campus budgets. The report specifically cites the following:
   1. Staffing levels and compensation for CSU management personnel have increased at a faster rate than for other employee groups. While staffing levels and compensation for CSU employees have grown over a nine-year period, the number and compensation of management personnel significantly outpaced those of other types of employees.
   2. Campuses do not adequately oversee their budgets, of the six campuses audited none had written policies in place that require periodic comparisons of spending levels to budget limits and only two documented the results for their budget oversight.
   3. State law exempts CSU from many of the budget oversight mechanisms that apply to other state agencies; CSU does not need authorization to establish new employee positions.
   4. CSU has recently granted minimal raises to its executives, but board policy does not cap reimbursements of relocation costs. CSU granted nominal raises to its executives who also receive substantial amounts of other compensation, such as car and housing allowances.

6) The report also makes the following recommendations:

• 1. The Legislature should require the CSU to submit annual information that demonstrates how its activities meet the State’s goals for students.
  2. The Chancellor’s Office should take action to:
     1. Require that its departments and campuses prepare and maintain written justifications for any proposed new management positions.
     2. Ensure campus create, implement and adhere to written merit evaluation plans for management personnel.
     3. Work with the board to develop, approve, and implement an executive compensation policy that prohibits the use of foundation funds to pay campus presidents and establish caps on the relocation reimbursements it pays to executives as well as require campuses to establish similar caps for nonexecutive staff.

7) CSU response to audit recommendations. In response to the recommendations made by the California State Auditor, the California State University (CSU) Chancellor’s Office adopted two policies relative to management personnel. The adopted policies require:

• 1. Written justifications for both the purpose and the specific number of proposed additional management positions. The justification should include the number of management personnel to be hired for a specific position as well as information about assessments of skills, knowledge and other qualifications outlined in regulations.
  2. The creation and implementation of and adherence to a written merit evaluation plan for management personnel. In addition campuses and the Chancellor’s Office must comply with their written merit evaluation plans and grant raises to management personnel based on merit as evidence by current, documented performance evaluations.

8) Arguments in support. Proponents of this bill argue that salary steps are foundational to public service, and can be found at every state agency, as well as the other public higher education systems. For 20 years, the CSU has been unwilling to reinstate salary steps, despite the failure of the existing salary structure and the inability of employees to earn a fair and equitable wage. As employee salaries have become marginalized, a 2017 state audit showed CSU management positions grew at twice the rate of support staff, with a half-billion dollars per year total compensation that far outpaced the salary increases of other employees.

9) Arguments in opposition. CSU states that it recently completed its negotiations with the CSU Employees Union and a compensation pool of nine percent over the next three years was agreed to by both parties. The negotiations occurred in good faith and came to a successful agreement, as envisioned by the labor relations act that guides public higher education. This bill is contrary to that act, which was enacted to create a “harmonious and cooperative process” on issues related to wages, hours, and working conditions. Statutorily mandating salary adjustments for one group of employees above all other budget priorities undermines the ability of the board to manage its budget to address other high priority needs of the system.

10) Technical Amendment. As currently drafted, this measure specifies that if a provision of the bill is in conflict with a memorandum of understanding (MOU), the MOU shall prevail. If it is the will of the Committee to pass this measure, the bill should be amended to clarify that the MOU is subject to collective bargaining.

SUPPORT

California State University Employees Union (co-sponsor)

Service Employees International Union (co-sponsor)

American Federation of State, County and Municipal Employees, AFL-CIO Local 3299

California Faculty Association

California Federation of Teachers

California Labor Federation

California Nurses Association/National Nurses United

California School Employees Association, AFL-CIO

California Teamsters Public Affairs Council

University Professional and Technical Employees-CWA Local 9119

OPPOSITION

California State University

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1231

Author:(Weber)

As Amended Ver:January 3, 2018

Majority vote

SUMMARY: Stipulates that, after completion of their first year in a position, and after completion of each subsequent year thereafter, a nonacademic employee of the California State University (CSU) shall receive a merit salary intermediate step adjustment of 5% upon meeting the standards for satisfactory performance as determined by the employee's administrator. Any provision of a memorandum of understanding in conflict with this requirement would prevail.

EXISTING LAW:

1. Establishes the CSU, governed by the Board of Trustees, and provides that the Trustees are responsible for the rule of government of their appointees and employees (Education Code Section 89500, et seq.).
2. Provides that officers and employees of the University of California (UC) and CSU are exempt from civil service (California Constitution, Article VII, Section 4(h)).
3. Establishes the Higher Education Employer-Employee Relations Act (HEERA) to provide a statutory framework to regulate labor relations between UC, CSU, and Hastings College of Law and their employees; provides the Public Employment Relations Board (PERB) authority to enforce HEERA (Government Code Section 3560-3599).

FISCAL EFFECT: According to the Assembly Appropriations Committee, approximately $72 million in year one and $75 million in year two, with on-going growth in costs as the base grows. This assumes an average cost of $15 million per every 1% increase. Currently, only 1.47% of CSU employees are within 5% of the maximum of their range.

COMMENTS: Background. In 1945, the Merit Salary Adjustment (MSA) system was created in statute for state civil service employees. The MSA is a 5% annual salary increase for employees below the maximum step of their salary range. The MSA is contingent on satisfactory job performance and is effective on the employee's anniversary date.

Until the early 1990s, pay increases at CSU mirrored those provided to state civil service employees, thus CSU employees received MSAs. In April 1994, however, during collective bargaining, the CSU Trustees proposed that MSAs be replaced with discretionary performance pay. Labor fought this proposal, but after exhausting the statutory impasse procedures of mediation and fact-finding, the CSU unilaterally withdrew salary steps on April 1, 1996. The MSA was replaced with the Service Salary Increase (SSI), which was set at 2.5%. Unlike MSAs, SSIs are not automatic and are awarded only in years when they are funded.

Purpose. This bill, sponsored by the CSU Employees Union (CSUEU), reinstates MSAs for represented, nonacademic CSU employees. The author notes that CSU is the only state agency that does not have salary step increases for its employees.

As noted above, CSU employees are explicitly exempt from civil service, under the California Constitution, and instead are covered by the HEERA, which provides a framework to regulate labor relations. Salary terms are a negotiated item in collective bargaining agreements and subject to Trustees approval.

CSU/CSUEU agreement. According to CSUEU, there have been multiple attempts to negotiate salary steps with the CSU, all which have been rejected by the CSU.

However, the CSU and CSUEU reached a tentative agreement at the end of October 2017 on a successor contract. The new three-year collective bargaining agreement will run through June 2020. Per the successor collective bargaining agreement, CSUEU-represented employees will receive 3% general salary increases on July 1, 2017 (retroactive), July 1, 2018, and July 1, 2019. Current full-time employees will receive a one-time recognition bonus of $650 on ratification of the successor agreement by the CSU Trustees.

Arguments in support. The California Faculty Association (CFA) and the California School Employees Association (CSEA) point out that the CSU is the only California state agency that does not provide salary steps to its employees. Both CFA and CSEA argue that CSU support staff salaries have become marginalized while CSU management positions have grown and outpaced the salary increases of support staff.

Arguments in opposition. CSU argues that this bill undermines both the collective bargaining process and the Trustees' ability to manage the system's budget, which CSU believes would be particularly problematic in an economic downturn and declining state support to CSU. Additionally, CSU believes that the provisions of this bill prioritize the salary needs of one group of employees above all other budget priorities; and could potentially be applied to more than just employees that are part of the CSUEU bargaining units.

Current CSU Budget Pressures. As noted by the Legislative Analyst's Office in its analysis of the 2017-18 Governor's Budget, CSU currently faces four notable cost pressures: funding collective bargaining agreements already ratified by the Board of Trustees; covering basic cost increases, such as for health care and pensions; funding enrollment growth for more transfer students, as CSU continues to report denying admission to eligible transfer students; and pressure to provide compensation increases to other employee groups, such as CSUEU, with open contracts.

Related legislation. AB 2019 (Santiago) of 2016, which was held on Suspense in the Assembly Appropriations Committee, would have provided an annual MSA of at least 2.65% for CSU academic employees.

Analysis Prepared by: Jeanice Warden / HIGHER ED. / (916) 319-3960 FN: 0002537

Date of Hearing: January 9, 2018

ASSEMBLY COMMITTEE ON HIGHER EDUCATION

Jose Medina, Chair

ABPCA Bill Id:AB 1231 (

Author:Weber) – As Amended Ver:January 3, 2018

SUBJECT: Public postsecondary education: California State University: support staff employees: merit salary adjustments.

SUMMARY: Stipulates that, after completion of their first year in a position, and after completion of each subsequent year thereafter, a nonacademic employee of the California State University (CSU) shall receive a merit salary intermediate step adjustment of 5 percent upon meeting the standards for satisfactory performance as determined by the employee's administrator. Any provision of a memorandum of understanding in conflict with this requirement would prevail.

EXISTING LAW:

1. Establishes the CSU, governed by the Board of Trustees, and provides that the Trustees are responsible for the rule of government of their appointees and employees (Education Code Section 89500, et seq.).
2. Provides that officers and employees of the University of California (UC) and CSU are exempt from civil service (California Constitution, Article VII, Sect. 4(h)).
3. Establishes the Higher Education Employer-Employee Relations Act (HEERA) to provide a statutory framework to regulate labor relations between UC, CSU, and Hastings College of Law and their employees; provides the Public Employment Relations Board (PERB) authority to enforce HEERA (Government Code Section 3560-3599).

FISCAL EFFECT: Unknown.

COMMENTS: Background. In 1945, the Merit Salary Adjustment (MSA) system was created in statute for state civil service employees. The MSA is a 5 percent annual salary increase for employees below the maximum step of their salary range. The MSA is contingent on satisfactory job performance and is effective on the employee’s anniversary date.

Until the early 1990s, pay increases at CSU mirrored those provided to state civil service employees, thus CSU employees received MSAs. In April 1994, however, during collective bargaining, the CSU Trustees proposed that MSAs be replaced with discretionary performance pay. Labor fought this proposal, but after exhausting the statutory impasse procedures of mediation and fact-finding, the CSU unilaterally withdrew salary steps on April 1, 1996. The MSA was replaced with the Service Salary Increase (SSI), which was set at 2.5 percent. Unlike MSAs, SSIs are not automatic and are awarded only in years when they are funded.

Purpose. This bill, sponsored by the CSU Employees Union (CSUEU), reinstates MSAs for represented, nonacademic CSU employees. The author notes that CSU is the only state agency that does not have salary step increases for its employees.

As noted above, CSU employees are explicitly exempt from civil service, under the California Constitution, and instead are covered by the HEERA, which provides a framework to regulate labor relations. Salary terms are a negotiated item in collective bargaining agreements and subject to Trustees approval.

CSU/CSUEU agreement. According to CSUEU, there have been multiple attempts to negotiate salary steps with the CSU, all which have been rejected by the CSU.

However, the CSU and CSUEU reached a tentative agreement at the end of October 2017 on a successor contract. The new three-year collective bargaining agreement will run through June 2020. Per the successor collective bargaining agreement, CSUEU-represented employees will receive three percent general salary increases on July 1, 2017 (retroactive), July 1, 2018, and July 1, 2019. Current full-time employees will receive a one-time recognition bonus of $650 on ratification of the successor agreement by the CSU Trustees.

Arguments in support. The California Faculty Association (CFA) and the California School Employees Association (CSEA) point out that the CSU is the only California state agency that does not provide salary steps to its employees. Both CFA and CSEA argue that CSU support staff salaries have become marginalized while CSU management positions have grown and outpaced the salary increases of support staff.

Arguments in opposition. CSU argues that this bill undermines both the collective bargaining process and the Trustees' ability to manage the system's budget, which CSU believes would be particularly problematic in an economic downturn and declining state support to CSU. Additionally, CSU believes that the provisions of this bill prioritize the salary needs of one group of employees above all other budget priorities; and could potentially be applied to more than just employees that are part of the CSUEU bargaining units.

Current CSU Budget Pressures. As noted by the Legislative Analyst's Office in its analysis of the 2017-18 Governor's Budget, CSU currently faces four notable cost pressures: funding collective bargaining agreements already ratified by the Board of Trustees; covering basic cost increases, such as for health care and pensions; funding enrollment growth for more transfer students, as CSU continues to report denying admission to eligible transfer students; and pressure to provide compensation increases to other employee groups, such as CSUEU, with open contracts.

Committee comments. This measure stipulates a five percent MSA for CSU support staff. While this increase appears to bring parity with CSU support staff and other non-CSU employees, this Committee may wish to determine whether or not the Legislature should stipulate the actual percentage, or should it be left to the bargaining units to negotiate the actual percentage.

Related legislation. AB 2019 (Santiago) of 2016, which was held on Suspense in the Assembly Appropriations Committee, would have provided an annual MSA of at least 2.65 percent for CSU academic employees.

REGISTERED SUPPORT / OPPOSITION:

Support

American Federation of State, County and Municipal Employees, AFL-CIO Local 3299

California Faculty Association

California Federation of Teachers

California Nurses Association/National Nurses United

California School Employees Association, AFL-CIO

California State University Employees Union (Sponsor)

California Teamsters Public Affairs Council

Service Employees International Union, Local 1000

University Professional and Technical Employees-CWA Local 9119

Opposition

California State University

Analysis Prepared by: Jeanice Warden / HIGHER ED. / (916) 319-3960

Date of Hearing: January 18, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 1231

Author:(Weber) – As Amended Ver:January 3, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill stipulates that after completion of their first year in a position, and after completion of each subsequent year thereafter, a nonacademic employee of the California State University (CSU) will receive a merit salary intermediate step adjustment of 5% upon meeting the standards for satisfactory performance as determined by the employee's administrator. Any provision of a memorandum of understanding in conflict with this requirement would prevail.

FISCAL EFFECT:

Approximately $72 million in year one and $75 million in year 2, with on-going growth in costs as the base grows. This assumes an average cost of $15 million per every 1% increase. Currently, only 1.47% of CSU employees are within 5% of the maximum of their range. AB 1231 applies to all staff excluding management personnel, executives and faculty.

COMMENTS:

1. Background. Existing law establishes the CSU, governed by the Board of Trustees, and provides that the Trustees are responsible for governing of their appointees and employees. CSU employees are explicitly exempt from civil service, under the California Constitution, and instead are covered by the Higher Education Employer-Employee Relations Act (HEERA), which provides a framework to regulate labor relations. Salary terms are a negotiated item in collective bargaining agreements and subject to Trustees approval.

In April 1994, however, during collective bargaining, the CSU Trustees proposed that Merit Salary Adjustments (MSAs) be replaced with discretionary performance pay. Labor fought this proposal, but after exhausting the statutory impasse procedures of mediation and fact-finding, the CSU unilaterally withdrew salary steps on April 1, 1996. The MSA was replaced with the Service Salary Increase (SSI), which was set at 2.5%. Unlike MSAs, SSIs are not automatic and are awarded only in years when they are funded. Most recently, the CSU and CSU Employees Union (CSUEU) reached a tentative agreement at the end of October 2017 on a successor contract. The new three-year collective bargaining agreement will run through June 2020. CSUEU represented employees will receive a 3% general salary increases on July 1, 2017 (retroactive), July 1, 2018, and July 1, 2019. Current full-time employees will receive a one-time recognition bonus of $650 upon ratification of the successor agreement by the CSU Trustees.

1. Purpose. This bill is sponsored by the CSUEU, to reinstate MSAs for represented, nonacademic CSU employees. The author notes that CSU is the only state agency that does not have salary step increases for its employees.
2. Related Legislation. AB 2019 (Santiago) of 2016 provided an annual MSA of at least 2.65% for CSU academic employees. The bill was held on Suspense in this committee.
3. Staff Comment. This bill adds mandatory costs to CSU's budgeting practices. Meeting such mandatory costs during periods of severe state budget constraints could increase pressures on discretionary parts of CSU's budget, like enrollment levels, and/or increase pressure to raise revenue through higher tuition.

Analysis Prepared by: Daisy Gonzales / APPR. / (916) 319-2081

Date of Hearing: January 9, 2018

ASSEMBLY COMMITTEE ON HIGHER EDUCATION

Jose Medina, Chair

ABPCA Bill Id:AB 1231 (

Author:Weber) – As Introduced Ver:February 17, 2017

SUBJECT: Public postsecondary education: California State University: support staff employees: merit salary adjustments.

SUMMARY: Stipulates that, after completion of their first year in a position, and after completion of each subsequent year thereafter, a nonacademic employee of the California State University (CSU) shall receive a merit salary intermediate step adjustment of 5 percent upon meeting the standards for satisfactory performance as determined by the employee's administrator. Any provision of a memorandum of understanding in conflict with this requirement would prevail.

EXISTING LAW:

1. Establishes the CSU, governed by the Board of Trustees, and provides that the Trustees are responsible for the rule of government of their appointees and employees (Education Code Section 89500, et seq.).
2. Provides that officers and employees of the University of California (UC) and CSU are exempt from civil service (California Constitution, Article VII, Sect. 4(h)).
3. Establishes the Higher Education Employer-Employee Relations Act (HEERA) to provide a statutory framework to regulate labor relations between UC, CSU, and Hastings College of Law and their employees; provides the Public Employment Relations Board (PERB) authority to enforce HEERA (Government Code Section 3560-3599).

FISCAL EFFECT: Unknown.

COMMENTS: Background. In 1945, the Merit Salary Adjustment (MSA) system was created in statute for state civil service employees. The MSA is a 5 percent annual salary increase for employees below the maximum step of their salary range. The MSA is contingent on satisfactory job performance and is effective on the employee’s anniversary date.

Until the early 1990s, pay increases at CSU mirrored those provided to state civil service employees, thus CSU employees received MSAs. In April 1994, however, during collective bargaining, the CSU Trustees proposed that MSAs be replaced with discretionary performance pay. Labor fought this proposal, but after exhausting the statutory impasse procedures of mediation and fact-finding, the CSU unilaterally withdrew salary steps on April 1, 1996. The MSA was replaced with the Service Salary Increase (SSI), which was set at 2.5 percent. Unlike MSAs, SSIs are not automatic and are awarded only in years when they are funded.

Purpose. This bill, sponsored by the CSU Employees Union (CSUEU), reinstates MSAs for represented, nonacademic CSU employees. The author notes that CSU is the only state agency that does not have salary step increases for its employees.

As noted above, CSU employees are explicitly exempt from civil service, under the California Constitution, and instead are covered by the HEERA, which provides a framework to regulate labor relations. Salary terms are a negotiated item in collective bargaining agreements and subject to Trustees approval.

CSU/CSUEU agreement. According to CSUEU, there have been multiple attempts to negotiate salary steps with the CSU, all which have been rejected by the CSU.

However, the CSU and CSUEU reached a tentative agreement at the end of October 2017 on a successor contract. The new three-year collective bargaining agreement will run through June 2020. Per the successor collective bargaining agreement, CSUEU-represented employees will receive three percent general salary increases on July 1, 2017 (retroactive), July 1, 2018, and July 1, 2019. Current full-time employees will receive a one-time recognition bonus of $650 on ratification of the successor agreement by the CSU Trustees.

Arguments in support. The California Faculty Association (CFA) and the California School Employees Association (CSEA) point out that the CSU is the only California state agency that does not provide salary steps to its employees. Both CFA and CSEA argue that CSU support staff salaries have become marginalized while CSU management positions have grown and outpaced the salary increases of support staff.

Arguments in opposition. CSU argues that this bill undermines both the collective bargaining process and the Trustees' ability to manage the system's budget, which CSU believes would be particularly problematic in an economic downturn and declining state support to CSU. Additionally, CSU believes that the provisions of this bill prioritize the salary needs of one group of employees above all other budget priorities; and could potentially be applied to more than just employees that are part of the CSUEU bargaining units.

Current CSU Budget Pressures. As noted by the Legislative Analyst's Office in its analysis of the 2017-18 Governor's Budget, CSU currently faces four notable cost pressures: funding collective bargaining agreements already ratified by the Board of Trustees; covering basic cost increases, such as for health care and pensions; funding enrollment growth for more transfer students, as CSU continues to report denying admission to eligible transfer students; and pressure to provide compensation increases to other employee groups, such as CSUEU, with open contracts.

Committee comments. This measure stipulates a five percent MSA for CSU support staff. While this increase appears to bring parity with CSU support staff and other non-CSU employees, this Committee may wish to determine whether or not the Legislature should stipulate the actual percentage, or should it be left to the bargaining units to negotiate the actual percentage.

Related legislation. AB 2019 (Santiago) of 2016, which was held on Suspense in the Assembly Appropriations Committee, would have provided an annual MSA of at least 2.65 percent for CSU academic employees.

REGISTERED SUPPORT / OPPOSITION:

Support

American Federation of State, County and Municipal Employees, AFL-CIO Local 3299

California Faculty Association

California Federation of Teachers

California Nurses Association/National Nurses United

California School Employees Association, AFL-CIO

California State University Employees Union (Sponsor)

California Teamsters Public Affairs Council

Service Employees International Union, Local 1000

University Professional and Technical Employees-CWA Local 9119

Opposition

California State University

Analysis Prepared by: Jeanice Warden / HIGHER ED. / (916) 319-3960