The State Worker

Chronicling civil-service life for California state workers

January 5, 2012
State Compensation Insurance Fund workers take pay to leave

Editors note, 12:20 p.m.: Details of the severance agreement have been added to this report.

Nearly 1,000 State Compensation Insurance Fund employees took an unusual severance package in December that required they leave their jobs by last Friday.

Fund spokeswoman Jennifer Vargen said that 971 employees accepted the so-called "transition package" under terms negotiated by the quasi-public agency and Service Employees International Union Local 1000. She said the total cost of the payouts isn't yet available.

About 1,800 employees in 26 job classifications slated for elimination could have taken the deal at an estimated cost of up to $50 million to State Fund.

State Fund employees who took the severance package waived their rights to preferential treatment for hiring into other state jobs and "probably" are not eligible for unemployment insurance benefits, Vargen said.

The agency sells employee compensation insurance to businesses. Although its employees are in state civil service, State Fund doesn't receive any tax funding, so the money to cover the exit payments came from the fund's investment assets and insured client premiums, not taxpayer dollars.

Civil service rules don't require severance pay, and the State Fund severance agreement was the first of its kind for a California state agency.

The arrangement gave departing employees with seven or more years of State Fund service six months of salary plus $9,000 "for the loss of health care and other benefits," according to an internal staff memo that the Bee obtained in November.

Employees with less than seven years at State Fund would receive a payment equal to four months of gross salary plus $6,000 for lost benefits.

State Fund has been consolidating operations for more than a year and announced in October that it would lay off about a quarter of its 7,300 employees early this year.

Shortly after that announcement, SEIU hammered State Fund management for prodding some of its members to relocate -- ostensibly saving their jobs -- without telling them in advance that they would be laid off anyway.

When news of the unique severance package surfaced in November, Vargen said that the deal, "reflects the board's commitment to doing the right thing for employees facing layoff,"

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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


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