An act relating to the Budget Act of 2025. An act to amend Sections 19829.9854, 19829.9855, 19829.9856, 19851, 20677.5.1, 20677.61, 20677.92, 20677.93, 20677.94, 20683.81.3, and 22944.5 of the Government Code, and to amend Section 3.90 of the Budget Act of 2025, relating to state employment, and making an appropriation therefor, to take effect immediately, bill related to the budget.
SB 138 is a budget trailer bill for the 2025-26 budget year that implements and approves a package of collective bargaining agreements between the state and multiple state employee bargaining units. It ratifies memoranda of understanding and addenda for units including 1, 2, 3, 4, 5, 7, 8, 10, 11, 13, 14, 15, 16, 17, 18, 19, 20, and 21, while making clear that any provisions requiring expenditures only take effect if specifically appropriated. The bill also allows either side to reopen negotiations if the Legislature does not appropriate the needed funds.
The measure makes a series of conforming changes to state employment law, including extending or revising continuous appropriations that would cover payroll and benefits if future budget acts are delayed. It also updates rules for the Personal Leave Program 2025, expanding participation to additional bargaining units and excluding certain state entities from the associated reductions. In addition, SB 138 adjusts or suspends employee and employer contribution changes for CalPERS pension and retiree health prefunding for several bargaining units, delaying some scheduled increases and setting new contribution schedules beginning in later fiscal years.
The bill’s fiscal effect is substantial. It reduces specified Budget Act appropriations by a combined $528.074 million across General Fund, special funds, and other nongovernmental cost funds, reflecting savings tied to the negotiated agreements and the Personal Leave Program. It also changes statutory contribution formulas and effective dates for retirement and health care prefunding, affecting state employees in multiple bargaining units, the Department of Human Resources, the Controller, CalPERS, and state departments that administer payroll and benefits.
Overall sentiment around the bill appears favorable in the Legislature, at least procedurally, as reflected by the Senate’s 28-10 vote on third reading. The bill is framed as a budget-related implementation measure and was moved through the budget process rather than as a standalone policy bill. The available record does not include committee testimony, but the vote suggests majority support for the negotiated savings and labor agreement framework.
The main points of contention are likely the labor-cost savings measures themselves: the expansion of the Personal Leave Program, the suspension of some retirement and retiree health contributions, and the extent to which the Legislature is approving labor agreements outside the annual Budget Act. The bill also preserves leverage for both the state and unions to reopen negotiations if funding is not provided, indicating that the fiscal terms remain tied to budget decisions and could be revisited.
SB 138 amends multiple Government Code sections governing state employee bargaining, pay, leave, pension contributions, and retiree health prefunding, and it also amends Section 3.90 of the Budget Act of 2025. It authorizes and conditions implementation of negotiated agreements for several bargaining units, expands continuous-appropriation backstops for payroll and benefits in future budget delays, and modifies contribution schedules and effective dates for CalPERS and PEMHCA-related obligations. The bill directly affects state employees in the listed bargaining units, the Department of Human Resources, the Controller, CalPERS, and state departments that administer compensation and benefits.
The overall sentiment appears generally supportive and budget-driven. The Senate approved the bill on third reading by a 28-10 vote, indicating majority backing for the negotiated labor package and associated savings. The bill is presented as an immediate, budget-related measure necessary to implement the 2025 Budget Act and related agreements, suggesting it was treated as part of the state’s fiscal plan rather than a controversial standalone policy change.
The most notable areas of contention are labor and fiscal policy issues: whether the state should impose or extend the Personal Leave Program 2025, whether employee and employer retirement and retiree health contributions should be suspended or delayed, and whether the Legislature should approve bargaining-unit agreements through a budget trailer bill. These provisions affect a broad set of represented employees and shift compensation timing and benefit contributions, so unions and employee groups would be the most likely stakeholders to scrutinize the savings measures, while fiscal proponents would emphasize the budget relief and continuity of payroll authority.