The State Worker

Chronicling civil-service life for California state workers

February 3, 2011
Analyst says Legislature should consider pay cuts

LAO logo.jpgThe Legislature should consider cutting state workers' pay, according to a new, grim review of what Gov. Jerry Brown's budget plan means for California's civil servants.

The Legislative Analyst's Office notes that Brown says departments won't make about one-third of the cuts required in the 2010-11 general fund budget. Furthermore, the LAO says, Brown's budget plan for 2011-12 contains several suspect assumptions about employee cost savings.

Let's hit this point by point:

The 2010-11 general fund budget assumes about $1.5 billion in savings through labor contract concessions and furloughs ($896 million), the so-called "workforce cap" of unspecified cuts left for departments to make on their own ($450 million) and operating expense and equipment cuts ($130 million).

What's really happening? The savings estimated from contract concessions and furloughs will be about $166 million less than originally estimated for this budget year, the Brown administration has said. The workforce cap will save the general fund about $281 million -- CDCR is going to miss its target by $272 million. Operating expenses and equipment? The state will manage only $30 million in cuts this year.

Brown's budget assumes $308 million in employee compensation cuts negotiated with six unions with expired contracts, but that will only happen, the LAO says, if the deals cut the state's wage and benefits obligation by 10 percent. (Brown has said he's looking for an "8 percent to 10 percent" reduction in those employees' take home pay, but his budget assumes 10 percent.)

A cheaper employee health plan option that Brown envisions probably won't save $72 million because the graying state workforce won't go for it in a big way.

Brown's budget assumes another $200 million in unspecified general fund cuts. He also figures that CDCR and two other departments that will miss their 2010-11 savings target will carry that goal into 2011-12 and achieve it.

"It is unclear how departments would achieve these additional proposed reductions..." the LAO says. "The administration assumes the three departments--including CDCR--that were unable to fully achieve their workforce cap savings in 2010-11 will do so in the (coming) budget year. The CDCR has a significant structural shortfall and, to our knowledge, has no plan to achieve these workforce cap savings."

So what are some alternatives? Here's what the analyst says:

Negotiate 14 percent compensation cuts -- equal to three furlough days -- with the six unions with expired deals instead Brown's stated 8 percent to 10 percent goal.

Furlough other employees one day per month when their contractual 12-month personal leave program (and no-furlough guarantee) expires. Units that would be affected: 1, 3, 4, 11, 12, 14, 15, 16, 17, 20, 21.

Cut pay. We'll leave this one to the LAO to explain:

Reducing employee salary offers the greatest legislative flexibility. Collective bargaining is largely a process of quid pro quo, and right now the state has little or nothing to give employees in exchange for large cuts. Under the Ralph C. Dills Act, the Legislature has reserved for itself its constitutional powers to appropriate funds and, therefore, the right to set salary levels for represented employees at the level it desires. The Legislature could vary the size of pay reductions by bargaining unit or classification. This would give the Legislature some ability to prioritize certain employment classifications. Conversely, the Legislature could reduce pay for employees who are compensated at higher levels than similar government or private sector employees. We note that any pay reduction should be applied equally across all employees in a given classification.

2011-12 Budget: The Governor's Employee Compensation Proposals

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at jortiz@sacbee.com.

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