(a)
The trustees, subject to such conditions as they may establish, may enter into contracts of group life insurance and contracts of group disability insurance or protection with respect to any class of their employees they may designate or with respect to all such employees, with any insurer, medical service plan, or nonprofit hospital service plan corporation they may select; provided, that all applicable provisions of state law relating to any such coverage, or to the qualifications of the provider of coverage, are satisfied.
(b)
If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Chapter 12 (commencing with Section 3560) of Division 4 of Title 1 of the Government Code, the memorandum of understanding shall be controlling without further legislative action, except that if such provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.