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8/28/2007
Governor Schwarzenegger signed a state budget on August 24th after a 52 day standoff between Senate Republicans and the rest of the state legislature. The Governor used his line-item authority to issue his largest set of vetoes since taking office. As part of a pledge to fellow Republicans to bring spending in line with projected revenues during the year, Schwarzenegger cut $703 million from a variety of programs. The general fund budget now totals $102.3 billion. During the third-longest budget standoff in the past 30 years, Senate Republicans held out for more spending cuts and protections against greenhouse gas emissions lawsuits. Meanwhile, Democrats fought to preserve annual increases for schools and low-income assistance for the aged, blind and disabled. "It was a difficult process, but in the end, this is a good budget for California," said Schwarzenegger. “I applaud the Republicans for pushing us to take the operating deficit down to zero this year…and I applaud the Democrats for being willing to compromise while sticking to their principles to get the budget done.” The governor's vetoes included a $332 million reduction in California's health insurance program for the poor, known as Medi-Cal. Schwarzenegger also deleted $6.3 million for the state and counties to implement the California Discount Prescription Drug Program, a program championed by the Governor last year which is supposed to help the state use its buying power to negotiate discounts with drug companies, making prescriptions more affordable. The budget signing frees the state to start paying vendors and issuing checks to a variety of programs that went without state payments as the Legislature's budget debate stretched 52 days beyond July 1, the beginning of the fiscal year. …HEALTHCARE ISSUE TAKES CENTER STAGE With just a few weeks left in the legislative session following the 52 day budget standoff, the State Legislature now is turning its attention toward healthcare reform. In January, Governor Schwarzenegger unveiled a sweeping proposal to extend health insurance to all Californians. There are also 2 other major pieces of healthcare reform legislation that are under serious consideration. One, the plan being pushed by the legislature’s Democrats has already been vowed to be vetoed by the Governor. The other is a “single-payer” system that equates to a universal, government-run healthcare system, an idea Schwarzenegger has already stated opposition towards. Reform advocates believe this is the best opportunity in years to revamp a system that always proves tough to change. Recently, however, expectations have been declining. Democrats oppose Schwarzenegger's requirement that all residents carry insurance, saying it would stick low-income and working-class families with health insurance bills they can't afford. Republicans also oppose the governor's financing plan, saying it amounts to a tax on businesses, doctors and hospitals. Schwarzenegger says the Democratic alternative places too heavy a financial burden on employers, and signaled he would consider launching a healthcare ballot initiative if negotiations fail. He also has dismissed the idea of more limited reform, such as simply insuring all children, saying a more comprehensive fix is needed. Both the Governor’s and Democrats’ plans would require businesses to provide healthcare to their employees or pay a percentage of payroll into a state health fund (4 percent for the governor and 7.5 percent for Democrats). Both would restrict health insurers from turning away people because of pre-existing conditions and also require insurance companies to devote 85 percent of revenues to pay medical bills, as opposed to profits and administration. To summarize the plans, Schwarzenegger wants to spread the financial burden among businesses, doctors, hospitals, government and individuals - a concept he calls "shared responsibility." The Democrats’ plan relies more centrally on employers and government to shoulder the costs. The Governor’s plan also calls for universal coverage, while the Democrats’ plan would cover about two-thirds of the state's 6.6 million uninsured. …UPDATE ON RETIREMENT-RELATED BILLS Due to the budget negotiations and focus on healthcare issues, most of the retirement–related issues have been untouched since the last Legislative Alert. The following few changes, however, are worth noting… AB 221 (Anderson) Divestment from Iran This bill would prohibit PERS and STRS from investing public employee retirement funds in a company with business operations in Iran. The bill would also require PERS and STRS to sell or transfer any investments in a company with business operations in Iran. This bill was placed in the Appropriations suspense file but may be reconsidered soon. AB 554 (Hernandez) PERS: Pre-funding Retiree Healthcare Benefits This bill would allow PERS to offer its retiree healthcare pre-funding program to all public entities, including those that do not participate in PEMHCA. This bill was recently amended to remove the urgency status that was amended into the bill last month. Removing the urgency status means that the bill will no longer require the two-thirds vote it would have needed to pass and the bill will no longer take effect immediately. The decision to remove the urgency clause was apparently due to some fear that there would not be enough support to get the necessary two-thirds votes. AB 1296 (Torrico) PERS PEMHCA Housekeeping Bill This bill would require a health benefit plan or contract to disclose to the PERS Board the cost, utilization, and actual provider claim payments on behalf of each member for all healthcare services rendered. The bill would deem this information confidential and exempt from the California Public Records Act. This bill passed the Appropriations Committee on August 20th and is awaiting a vote. AB 1307 (Krekorian) PERS Supplemental Contribution Program This bill allows PERS to significantly expand its supplemental defined contribution program. After the amendment in early July to remove language allowing employer “pick-up” contributions and any pre-tax contributions to the plans, this bill passed the Appropriations Committee and is currently awaiting a vote on the Senate floor. SB 755 (Alquist) Increased Death Benefits for State Retirees This bill would increase the death benefit paid to the designated beneficiary of any state or school member from $2,000 to $5,000 for a state member who retires on or before July 1, 2008. Interestingly, this bill was amended on July 25th to completely gut the bill and insert language pertaining to wave-pool safety. Then on August 20th that language was removed and the original language amended back in. Feel free to contact PARS with any question or requests for further information. Additional news and an archive of past Legislative Alerts are available on the PARS website at www.pars.org. Thank you, Maureen Toal (800) 540-6369 ext. 135 PARS HAS ESTABLISHED TWO INNOVATIVE MULTIPLE-EMPLOYER TRUSTS TO ASSIST PUBLIC AGENCIES WITH PRE-FUNDING THEIR OPEB (POST-RETIREMENT HEALTHCARE) OBLIGATIONS UNDER GASB 45. FOR MORE INFORMATION, CONTACT: Maureen Toal The contents of this
publication reflect PARS’ understanding of the facts. |
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