2014/15 Supplemental Documentation

Uses of Revenue

Health Care Premium Increase, $12,066,000

The California Public Employees' Retirement System (CalPERS) administers CSU employee health care benefits. Health care premiums are shared between the CSU and its employees, with the CSU funding a significant portion of the costs. The 2014/15 CSU budget plan includes $12 million to fund the base increase in employer-paid health care costs resulting from changes in premiums effective January 2014. The following chart indicates the Government Code (employer-paid) health care contribution increases from 2010 through 2014:

Government Code Health Care Monthly Employer Contribution Rates

Eligible
Dependents

2010

2011

2012

2013

2014

Five-Year Increase
 
%
$
Employee
Only
$493 $542 $566 $622 $642 30.2% $149
Employee
+ 1 dependent
$936 $1,030 $1,074 $1,183 $1,218 30.1% $282
Employee
+ 2 or more
$1,202 $1,326 $1,382 $1,515 $1,559 29.7% $357

The CSU is governed by Government Code Section 22871 that defines the way employer-paid health care contribution rates are calculated. Either through policy or collective bargaining agreement, the CSU covers health care costs for represented and non-represented employees up to an amount equivalent to the established Government Code rates, with the exception of Unit 6 (Skilled Crafts), which bargained for CSU employer health contribution rates slightly above Government Code rates.

The total increase in CSU health care costs due to contribution changes during this five-year period is nearly $106 million.

5-Year Increase in Health Care Costs
Calendar Year
(Contract Period)
Government Code Health
(Employer-Paid
Budget Increase)
CSU Annualized
Health Care
(Budget Increase)
2010 3.0% 9,700,000
2011 10.2% 36,407,000
2012 4.3% 15,086,000
2013 9.8% 36,226,000
2014 3.0% 12,066,000
5-Year Increase in CSU Health Care Costs $109,485,000

The 2014/15 budget request funds permanent base budget costs associated with January 2014 employer health care premium increases. The CSU must absorb approximately $6 million during 2013/14 to fund the one-time costs related to the January 2014 premium increases for the six-month period from January-June 2014.