The State Worker

Column: The Affliction of Comfort
Milan - JUST when you thought that absolutely nothing could make you feel warm and fuzzy about the American political system, I bring tidings from Italy. Here there are 945 active members of Parliament, in contrast with 535 members of the United States Congress, though Italy's population is less than a fifth of America's. (New York Times)

Prison guard at Susanville correctional center indicted, accused of bribes; tobacco, phone smuggling alleged
A federal grand jury returned a six-count indictment Wednesday against a prison guard at California Correctional Center in Susanville. The indictment alleges he accepted at least $15,000 in bribes from inmates to smuggle tobacco and cellular telephones. (Redding Record Searchlight)

Op ed: Voters Want State Government Reform
Americans believe that bold action to restrict spending is necessary to stabilize the finances of state government. Last month, in a wide-ranging national survey of 1,000 randomly selected, registered voters, and in 10 polls in individual states each with 400 respondents, my polling company found that voters strongly favor measures to pare the compensation of current and future public employees. They strongly oppose higher taxes. (Wall Street Journal)

This just in: Gov. Jerry Brown has dropped a lawsuit filed by former Gov. Arnold Schwarzenegger that asserted his right to impose a minimum wage order on state workers during a budget stalemate.

Colleague Susan Ferriss has the details over at our sister blog Capitol Alert.

State worker news in our morning roundup includes a Bee editorial that asks whether the California judicial branch should scrap its big IT project ... A CalSTRS lawyer calls out the GOP in Congress for scare tactics ... Wisconsin state workers protest a plan to end collective bargaining, prompting the guv there to talk about calling in the National Guard.

Editorial: Yet another state snafu that doesn't compute
Has another state information technology project gone badly wrong? Will it have to be scrapped? That's the obvious question raised by a scathing audit released last week that slams the Administrative Office of the Courts' handling of a $2 billion, seven-year-long statewide court computer system project.

Republicans Beat Unions With Pension 'Fright,' Fund Lawyer Says
Congressional Republicans are using scare tactics to push a bill blocking bailouts of state pensions as a way to undermine government unions, said John Stanton, a lawyer for the California State Teachers' Retirement System. "They are peddling fright about the supposed imminent insolvency of public pension plans," Stanton said yesterday at a meeting of the second-largest U.S. public pension fund's board. "It really is an attack on the public-employee unions." (Hat tip to Blog User J for flagging this story.)

States Aim Ax at Health Cost of Retirement
Governors and mayors facing large deficits have set their sights on a relatively new target -- the soaring expense of health benefits for millions of retired state and local workers.

We told you on Tuesday that minimum wage litigation has been delayed between Gov. Arnold Schwarzenegger (who insists that state workers' pay must be withheld during a budget impasse) and Controller John Chiang (who says his computers and the state's pay rules make it impossible).

Here's why: The Schwarzenegger administration requested it.

Court documents in the case amount to finger pointing by both sides about why attorneys won't be ready for the now-canceled Nov. 29 hearing. Here's what the Department of Personnel Administration's attorney, Suzanne Solomon, said in this Nov. 12 request for Sacramento Superior Court Judge Patrick Marlette to postpone the hearing:

A key court date set for the end of this month in the state worker minimum wage case has been postponed with no new date set.

Judge Patrick Marlette had scheduled the minimum wage hearing in Sacramento Superior Court for Nov. 29. The two sides were supposed to present evidence about whether the controller has the computer capacity to pay state employees minimum wage during a budget impasse.

The delay injects new uncertainty into the legal battle between the lame duck Schwarzenegger administration and Controller John Chiang. Gov. Arnold Schwarzenegger leaves office in January, and it's difficult to envision a lower court decision in the minimum wage litigation before that.

And even in the unlikely event that happens, the matter would drag well past January -- and into Gov.-elect Jerry Brown's term -- if the losing side appealed a December ruling.

Chiang has twice refused to withhold state worker pay, contending that the state's payroll technology and state payroll procedures prohibit it. Schwarzenegger has said the controller is defying established case law and cannot assume failure.

According to this court document, both sides agreed to put off the hearing:

After some discussion with all counsel, it was agreed that the November 29, 2010. Evidentiary Hearing would be vacated. The Court ordered that counsel meet and confer regarding trial dates and a briefing and discovery schedule.

We've asked the controller and the Department of Personnel Administration to explain what happened and whether this means Schwarzenegger is handing the issue off to Brown. We'll let you know what we hear.

IMAGE: www.yolocourts.ca.gov

One stage of the 2-year-old court battle between Gov. Arnold Schwarzenegger and Controller John Chiang ended this morning with a simple two-word post on the 3rd District Court of Appeal's website: "Case complete."

With all of the historic events of the last two weeks -- action on the state budget, the SEIU labor deal and the California Supreme Court decision on furloughs -- we almost forgot about another high-profile issue that's not yet resolved: state worker minimum-wage litigation.

Sacramento Superior Court Judge Patrick Marlette has scheduled Endsley v. Chiang for oral argument on Jan. 7. If Marlette's past decisions on furloughs and minimum wage are a guide, he'll issue a tentative decision ahead of the January hearing and then, unless an argument changes his mind, he'll quickly issue a final decision.

Between now and then, there's a Nov. 29 "evidentiary proceeding" during which witnesses will testify, possibly for an entire week. Each side will then submit more documents to Marlette, which he'll consider in the days leading up to oral arguments.

Let's catch up on lawsuit news.

Professional Engineers in California Government andCalifornia Association of Professional Scientists have filed a lawsuit in Sacramento to stop Gov. Arnold Schwarzenegger's latest furlough order. CalPERS and CalSTRS have jointly filed a Petition for Writ of Mandate with the state Supreme Court with the same aim. Here's an internal memo sent Monday to CalPERS employees from fund CEO Anne Stausboll that lays out the details:

As noted in this July 26 post, Gov. Arnold Schwarzenegger's tussle with Controller John Chiang over state worker minimum wage will see some court action this week.

Look for Judge Patrick Marlette to issue a tentative ruling by this afternoon on several technical legal points raised by Chiang about the governor's July 1 minimum wage order.

Here's an example from filed Chiang's 28-page cross-complaint:

Some state employees covered by the Pay Letter are paid salary or wages from continuing appropriations or from other funding sources not requiring legislative action. The Pay Letter fails to exempt those employees from its terms or otherwise to provide the Controller with lawful instructions regarding payment to such employees, contrary to state law.

The Department of Personnel Administration has retained an outside law firm, Liebert Cassidy Whitmore, to help with minimum wage litigation.

The $425,000 contract, which you can view here, runs through June 30, 2011.

Liebert Cassidy has offices in Los Angeles, San Francisco and Fresno. The firm's website says it "provides legal services for public sector employers, and city, county, and state agencies."

As we reported last week, Controller John Chiang also has outside legal help with the ongoing state worker minimum wage litigation. His lead attorney, Steven Rosenthal, is with Kaye Scholer. The global firm litigates in a number of areas, including governmental affairs.

The State Worker has asked the Controller's Office for the Kaye Scholar agreeement. We'll post it here when we receive it.

Money for both contracts comes from the general fund. Until a budget is in place, billings for services rendered to either side from July 1 forward can't be paid.

A Sacramento Superior Court hearing today wound up pushing back the date for when attorneys will again debate whether Controller John Chiang must issue minimum wage paychecks to state workers. The upshot: No minimum wage for state workers now at least through September, and quite possibly well beyond that.

Instead, "other issues" will be discussed during an Aug. 26 hearing and "the infeasibility argument will take place some time in the future," said Ryan Endean, spokesman for PECG and CAPS, two of the unions that have supported Chiang's position.

It's not clear when the court will hear infeasibility arguments. The case hinges on expert testimony and analysis, so the two sides will need time to compile their evidence and witnesses, exchange the information and then break down the opposition's arguments.

"So by our understanding," Endean said, "we're looking at full wages at least through September, if not beyond."

The caveat: If the budget fight drags on, Gov. Arnold Schwarzenegger could order more furloughs. Click here for a recent post about that.

Here's a shirt that state workers will appreciate. Thanks to Blog User J for sending along this image and a link to Elk Grove-based correctionstees.com, which bills itself as "the only corrections-themed apparel company on the net." Click here for more info.

The Sacramento City Council on Tuesday passed a resolution opposing Gov. Arnold Schwarzenegger's pay orders to withhold state worker pay to federal minimum allowed until lawmakers break the budget impasse.

Click here to read the entire resolution, which borrows figures from this July 11 Sacramento Bee story by Philip Reese and Dale Kasler.

Here's the key language:

BASED ON THE FACTS SET FORTH IN THE BACKGROUND THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. That the City of Sacramento strongly opposes Governor Schwarzenegger's directive to cut state worker's pay to minimum wage.
Section 2. That the City of Sacramento urges Governor Schwarzenegger to rescind his directive to pay state worker's federal minimum wage in light of the devastating effect to Sacramento's economy.

A couple of State Worker blog users have asked a question: Does the same state Supreme Court decision that Gov. Arnold Schwarzenegger has invoked to issue minimum wage orders in 2008 and this month also preclude appropriating payroll funds outside of the annual budget?

CAHP, CAPT, CDFF, UAPD, AFSCME and IUOE have tentatively agreed to labor contracts that shield their members from minimum wage in the event of a budget impasse. Controller John Chiang has said he won't comply with Schwarzenegger's latest minimum wage order because the state's payroll system is inadequate, both technologically and legally. He and the governor are suing each other in Sacramento Superior Court.

The 2003 Supreme Court decision that the governor has relied on as he has pressed the minimum wage issue, White v. Davis, contains this section:

After Friday's minimum wage decision by Judge Patrick Marlette, state worker Kara Kemmler sent this e-mail. We called her and secured permission to post her words here, unedited. She speaks only for herself, not her employer or her union.

Jon,

This is good news (for now) for struggling state employees, at least for those who are ordered to be punished in a transparent move by the Governor to gain an unfair advantage in contract bargaining processes. The Controller is the only one in Sacramento doing his job- why should we spend resources adjusting the payroll system to accommodate what won't actually be a cost savings for the state, creating a net added cost?? Thanks to Chiang, it looks like we will at least receive our full pay for July. That is a HUGE relief. But I have to wonder- if the "Governator" would terminate his efforts to repeatedly sue the Controller and other political maneuverings, would he save the state enough money to cover the pay for state workers that he's spending so much resources on trying to withhold and ultimately reduce...?

Instead of continuing to bash state employees and try to trim fat off an emaciated animal, it would be incredibly redeeming if he would make some sort of attempt to address the real budget problems in the state.

Thank you for reading my rant.

sincerely,
kara kemmler

Bee Capitol Bureau colleague Torey Van Oot reported that the Fair Political Practices Commission on Friday issued an advice letter to the Senate Banking, Finance & Insurance Committee that employees do not have to report no-interest budget impasse loans as gifts or income on their statements of economic interests -- as long as the loans are offered to all state employees who are members of the institutions.

FPPC drew up the letter after concerns arose in some quarters that at least one bank -- one of the many that didn't announce a no-interest state worker loan program earlier this month -- was telling state workers that such loans had to be reported.

For now, the matter is moot except for legislative employees, who get no pay until a budget is approved. Judge Patrick Marlette's decision on Friday means that the state won't withhold pay to the federal minimum for about 200,000 state employees for this month or next while litigation plays out in Sacramento Superior Court.

Still, we recommend you check out Torey's post on our sister blog, Capitol Alert, for more info and a link to the FPPC advice letter.

IMAGE: www.stock.xchng.com

You can read the Sacramento Superior Court decision to deny Gov. Arnold Schwarzenegger's request to compel Controller John Chiang to issue minimum wage paychecks to state workers by clicking here.

This link opens our story about it in today's Bee.

On a related note, Judge Patrick Marlette on Friday also denied four unions' requests to join Chiang's side in the lawsuit.

Several labor attorneys pressed their case but Gregg McLean Adam, representing the California Correctional Peace Officers' Association, took the lead. He argued that the union would give voice to the harms of minimum wage to correctional officers and other state workers and that if not allowed to join this case, the unions would probably start filing lawsuits in other courts -- some of them against Chiang. (The state attorneys' union already has, as we reported here.)

California Association of Professional Scientists, Professional Engineers in California Government and SEIU Local 1000 also applied for "leave to intervene." The Schwarzenegger administration opposed the idea.

Marlette told attorneys during Friday's hearing that he recognized the harm of withholding state employees' pay to minimum wage, noting that the unions had presented declarations from many workers in their "friend of the court" briefs. But he said that Chiang would adequately represent the unions' interests, so he denied their request to become parties in the case.

Click here for Marlette's ruling on the unions' leave to intervene.

IMAGE: Judge Patrick Marlette / 2009 Sacramento Bee file

Here are some of the press releases and comments received by The State Worker after today's news that Judge Patrick Marlette declined to force Controller John Chiang to immediately begin issuing minimum wage paychecks. Click on each entry to read the entire release or e-mail.

"We're gratified that the court acknowledged the existence of the significant legal concerns surrounding the governor's minimum wage order and made what we believe is the right decision at the right time." - CCPOA Executive Vice President Chuck Alexander

"We are confident we will continue to win on the merits of this case, as we already have done twice. We hope the Legislature passes a budget by then so we don't have to pay our employees minimum wage." - Lynelle Jolley, Department of Personnel Administration spokeswoman

"I am pleased the court ruling today spared taxpayers and California's economy from further harm." - State Controller John Chiang

"Today's ruling likely galvanizes John Chiang's political operation but it unfortunately continues to highlight the fact that we wouldn't be in this situation had John Chiang used the millions taxpayers gave him to upgrade his payroll system over four years ago." - Sen. Tony Strickland, R-Moorpark, who is running against Chiang for controller

"The judge's ruling means that 95,000 Local 1000 members and their families will be able to buy food and pay their bills for another month while we continue to work for a long-term solution in the Legislature and at the bargaining table." - Yvonne Walker, SEIU Local 1000 president

"Today's court ruling is legally sound, fiscally responsible and morally upright. The Governor's minimum wage order is nothing more than a ploy to gain leverage in budget negotiations by threatening the livelihoods of innocent, hardworking Californians." - Senate President Pro Tem Darrell Steinberg, D-Sacramento

"We are happy with the ruling that state engineers and all state employees will get paid in full for the work that they do. State employees up and down the state can breathe a sigh of relief, at least for the moment." - Bruce Blanning, executive director of the Professional Engineers in California Government

Sacramento Superior Court Judge Patrick Marlette told attorneys at the outset of this morning's hearing that he is leaning against granting Gov. Arnold Schwarzenegger's request for a temporary restraining order to compel Controller John Chiang to pay state employees minimum wage.

The hearing has just begun, though, and lawyers, left, will make their arguments before Marlette issues a final ruling.

PHOTO CREDIT: Jon Ortiz, Sacramento Bee

The State Worker is heading to Sacramento Superior Court's Department 19 this morning to hear minimum wage litigation oral arguments set for 11 a.m. before Judge Patrick Marlette.

The debate won't be about whether Controller John Chiang is making a sound legal argument that he can't legally or physically withhold state workers' pay during the budget impasse. Attorneys for the Department of Personnel Administration and the controller have filed plenty of paper on that issue, and Marlette is apparently ready to publish a decision today about that matter.

Instead, attorneys this morning will argue two points: If Chiang loses, should Marlette directly order the controller to comply with the law and Schwarzenegger's minimum wage order? And should four unions be allowed to join Chiang in the minimum-wage legal battle?

State workers won't have to wait to find out what Sacramento Superior Court Judge Patrick Marlette thinks about Controller John Chiang's arguments against issuing minimum-wage paychecks.

Marlette's court clerk, Barbara Freitas, said that the judge will publish a decision on Friday after an 11 a.m. hearing. Judges sometimes wait days or weeks to render a decision.

Marlette will not issue a tentative ruling ahead of time, however, according to a notice that the court issued today.

Judges will often issue tentative rulings before they hear oral arguments. In January 2009, Marlette issued a tentative ruling in favor of the governor's furlough authority prior to a hearing on the matter. What he heard didn't change his mind, and the tentative ruling became final. Furloughs started a few days later.

(Thanks to Blog User T for flagging the court notice for The State Worker.)

IMAGE: www.yolocourts.ca.gov

Litigation over state worker minimum wage has been moving so quickly that we're just now catching up to the news that Controller John Chiang filed a court papers late Tuesday opposing Gov. Arnold Schwarzenegger's minimum wage pay order.

You can download the opposition brief here. It's a continuation of the legal back-and-forth that restarted last week.

The filings include these declarations by former state payroll chief John Harrigan, Chiang, consultant Brent Ehrman and others who say that the state payroll system cannot turn on and turn off minimum wage in a way that complies with Schwarzenegger's order without running afoul of federal law.

The SCO also commissioned public accounting and consulting firm Crowe Horwath to study the payroll system. The firm issued this study, dated July 2, that backs up the minimum wage arguments that the controller has made.

Another report dated July 11 lays out several options to get the SCO in position to execute a minimum wage withholding during a budget impasse. It concludes that the best options would require up to four years and up to $11.7 million to implement. Even those would be "partial" solutions.

PHOTO: Gov. Arnold Schwarzenegger speaks with State Controller John Chiang after he delivered an address to the state Legislature last month. The two are at odds again over pay for state workers. / Hector Amezcua, 2009 Bee file

Thanks to blog user D for passing this along.

California Attorneys, Administrative Law Judges and Hearing Officers in State Employment have sued State Controller John Chiang and State Compensation Insurance Fund to keep the controller from implementing minimum wage.

In a letter to members, CASE says it filed its complaint in San Francisco Superior Court on Wednesday to challenge the legality of the governor's pay instructions on several points:

(I)t seeks to exempt from its coverage those bargaining units that have already reached tentative agreements with the administration, the fact that the pay letter violates principles of equal protection, and the fact that the pay letter fails to exempt employees paid out of continuously appropriated funds (like those CASE members at State Fund), both of which are in direct contravention of the California Supreme Court's decision in White v. Davis (2003) 30 Cal.4th 528. We believe our lawsuit raises the best legal theories to protect all CASE members from the threat of reduced or no wages.

Click here to read the CASE e-mail to members.
This link opens the CASE complaint.
Open the declaration of CASE President Peter Flores Jr. by clicking here.
Clicking here opens CASE's Points and Authorities.

As Friday's court hearing on minimum wage approaches, we want to know what State Worker blog users think will happen.

We're sticking with the prediction made in this July 1 State Worker column: Between Chiang and the Legislature -- and now, the unions -- there are too many moving political and legal parts for this to happen by July 22, the last day for mass payroll changes to be made for checks issued Aug. 1.

But, admittedly, we're notoriously bad at making predictions.

Attorneys for the Schwarzenegger administration on Tuesday filed a brief in Sacramento Superior Court that argues state employee unions shouldn't be allowed to enter the minimum wage fight between the governor and State Controller John Chiang.

As reported here, California Association of Professional Scientists and Professional Engineers in California Government on Monday filed a motion to be a party in the minimum wage litigation flying back and forth the last week or so. SEIU Local 1000 and CCPOA have done the same. All the unions are siding with Chiang. A hearing is set for Friday at 11 a.m.

The administration's brief argues that the unions haven't proven that they have reason to inject themselves into the minimum wage battle and that the court should deny their request. Click here to read the court filing.

(Side note: We asked Judge Patrick Marlette's clerk whether the judge would issue a tentative ruling on Thursday. As of last night, no decision had been made.)

IMAGE: www.yolocourts.ca.gov

Related stories:

State pay cut could ravage Sacramento region

Chiang pleads poor technology in resisting wage cut

The unions are zeroing in on minimum wage.

California Association of Professional Scientists and the Professional Engineers in California Government on Monday filed a motion to be a party in the minimum wage lawsuit. The two groups would be on Controller John Chiang's side. In an e-mail to The State Worker, Lisa Marie Burcar, spokeswoman for both organizations, summarized the legal questions the lawsuit will probe:

Among the issues before the court are which employees will be working overtime, which requires full payment of salary; which employees are currently paid through an appropriation which doesn't have to wait for the State Budget; whether it is feasible for the Controller to turn paychecks off and on each month; and whether a court should base a ruling on the assumption that the Legislature will continue to fail to pass a State Budget within the Constitutionally-required timelines.

Click here to read the PECG/CAPS motion to intervene.

This link opens the declaration of state worker Wilburn Thompson about how reducing wages to the federal minimum would impact him.

Union lobbyist Ted Toppin's declaration looks more broadly at the hit to PECG and CAPS members. He also notes that some have already worked overtime this month and that many will probably continue to do so through the end of the July pay period. Click here to read the Toppin declaration.

IMAGE: www.yolocourts.ca.gov

Brooks Ellison, the chief negotiator for California Attorneys, Administrative Law Judges and Hearing Officers in State Employment, has canceled a bargaining session set for Tuesday with to the Department of Personnel administration.

In a July 8 letter sent via snail mail to DPA Director Debbie Endsley, Ellison blamed Gov. Arnold Schwarzenegger's July 1 minimum wage order for the cancellation.

"Unfortunately, we have been forced to postpone the upcoming bargaining session in order to address the more immediate pressing legal crisis created by the Governor's order directing that no paychecks be issued to Unit 2 members until a budget agreement is reached," Ellison wrote.

Schwarzenegger's actions "have created a counterproductive, hostile, and unlawful environment" for contract talks, Ellison's letter says, but CASE is still willing to talk. The administration hasn't yet responded to the union's latest offer.

While most state workers would receive the federal minimum hourly pay of $7.25 if Controller John Chiang complies with Schwarzenegger's pay letter, state attorneys would receive nothing. (Doctors and a few other job classifications fall into this same zero-pay category. Exempt employees such as managers and supervisors would receive $455 per week.)

Click here to read Ellison's letter.