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Assembly approves AB 138 to codify recent MOUs; Republican member calls funding approach "kicking the can"
Summary
The Assembly passed AB 138, which codifies recently agreed MOUs and reflects addenda to collective bargaining contracts. Sponsor said it would produce $227 million in general fund savings; an opponent called the accounting approach irresponsible.
The California State Assembly on June 4, 2025, passed AB 138, a budget-related bill that codifies several recently negotiated memoranda of understanding (MOUs) and reflects addenda to collective bargaining contracts.
Assemblymember Rebecca Gabriel presented the bill and told the chamber AB 138 “codifies and ratifies 4 additional recently agreed upon MOU agreements. It also reflects addenda side letters to 14 different collective bargaining contracts.” Gabriel said the MOUs reflected in the measure “are expected to result in $227,000,000 in general fund savings.”
Assemblymember DeMaio spoke in opposition, characterizing the bill as an accounting maneuver that pushes costs into the future. “This bill … intentionally cooks the books, underfunds the bills that we are incurring for state employees this year in the form of not paying for their retiree health care benefits,” DeMaio said. He warned the move “pushes that debt off” and described the approach as “Enron style accounting.”
After floor debate, the clerk recorded the vote: the Assembly approved concurrence in the Senate amendments and passed AB 138 (Ayes 53; Noes 4). The measure was presented and processed under the budget concurrence procedure.
Why it matters: AB 138 implements negotiated labor agreements into state law and adjusts budgetary accounting for state employment costs. Supporters said the bill locks in agreements that produce near-term general fund savings; opponents objected to the accounting treatment and the deferral of costs.
What happens next: As a budget-related bill that codifies MOUs, AB 138 will be incorporated into the state’s fiscal implementation and managed by the Department of Finance and relevant personnel offices.
