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File: California Gov. Jerry Brown announces his public employee pension reform plan October 27, 2011 at the State Capitol in Sacramento.
Gov. Jerry Brown wants to cut state worker pay by 5 percent to help close California’s $16-billion budget gap.
To get the expected $800 million in savings, ($400 million to the general fund) the governor is proposing to shorten the workweek for state employees. But a cut to the state payroll now could drive up state costs later.
For example, in 2008-2009 Gov. Arnold Schwarzenegger ordered state workers to take off first two and then three days a month without pay.
But Ryan Sherman with the California Correctional Peace Officers Association (CCPOA) says prison guards couldn’t take those furlough days because overcrowded prisons were too short staffed.
“Since the facilities never close, all three shifts have to be covered, and especially mandatory posts, the tower, you know, all the different security positions.” Sherman says.
CCPOA warned Schwarzenegger that the 30,000 prison guards would have to work on furlough days. They’d accumulate lots of vacation days and the state would have to pay for them years later when guards resigned or retired. But, says Sherman, the state opted for the immediate savings.
“They just borrowed money short-term from state workers by making them, at least for our members, making them work without pay with a promise of payment or time off in the future,” says Sherman.
A 2009 report by the Senate Office of Oversight and Outcomes found that in just seven months, prison guards accrued more than 1 million hours of vacation time — a 500 percent increase from the year before. The bump could someday cost the state an extra $52 million.
The Brown administration says its plan to cut state worker pay will steer clear of problems like that.
“It’s not a furlough by another name,” insists Finance Director Ana Matosantos. She says the plan to shorten the workweek for state employees differs from the furloughs under Schwarzenegger because it restructures state government operations. She thinks the change can be achieved with minimal effect on the public.
“What the public may see in some cases, will be extended work hours, so greater services outside of the traditional 8-5, but we may be closed on Fridays.
The 5 percent pay cut applies to all state workers, but Matosantos says the administration will look for innovative ways to achieve a 5 percent pay cut at state agencies that can’t close – like the prisons or the California Highway Patrol.
In a report analyzing the governor’s revised budget last week, Legislative analyst Mac Taylor calls the plan “problematic.” With more time off, workers would likely accumulate more paid vacation days - and that will cost. Taylor says the governor could order layoffs, but that takes time, and might not match the legislature’s priorities.
Extracting savings from the state payroll, Taylor concludes, is just plain tough: “You don’t have easy savings in employee comp, because typically you have to bargain those. And so that if you get savings in the short term, you typically have to give up something that may be a cost to you in the longer run.”
Oakland Democrat Don Perata, who used to lead the State Senate, says pay cuts that the state bargained for in the last decade drove up pension liabilities.
“We got into trouble for years because we would get concessions on salary, but we’d add to the pension, which has simply created the problem that we really have in spades right now,” Perata said.
So what options are left? Perata suggests Brown close redundant departments or agencies.
“It’s not going to save a jillion dollars. It’s not going to balance the state budget. But before you start taking the two-by fours out of the wall of the structure of state government, start looking what you can throw over the side," says Perata.
Bruce Blanning with the Professional Engineers in California Government wants the governor to jettison “no-bid” contracts awarded to outside firms.
“Why would you cut the pay of your employees if you’re paying twice as much to somebody on the outside to do the same work?”
Blanning represents 13,000 engineers and surveyors who design and inspect Caltrans projects as well as the state’s energy and utility projects. He says it’s encouraging that the Governor Brown budget questions proposals to hire outside firms to do the work the state engineers do - at double the cost to the taxpayer. He says Brown should tackle that problem before asking state workers to take another pay cut.
“When you get rid of that waste in outsourcing, then let’s see, do you still need to save more money? And let’s talk about how you do that,” says Blanning.
The governor and his budget advisors will huddle with union leaders and department heads to come up with a pay cut that everyone can live with. They have to work fast. Brown wants that pay cut to take effect on July 1.