An in-depth report out this week by Bloomberg News shows that California has not done a good job of containing public employee costs.
Bloomberg reporters spent nearly a year combing through the payrolls of the 12 most-populous states, where they found that California workers made far more than their counterparts in terms of wages and overtime pay.
"Our idea going into the project was to see what kinds of comparisons we could make…No matter how you look at the data — by job category, by type of pay — California far exceeds other states in terms of compensation for public employees at the state level," said Bloomberg's Mark Niquette on Take Two.
California's cost of living far exceeds that of most other states, and though one would expect state workers here to be paid more compared to elsewhere, it does not explain some of the most glaring examples of overpayment.
For example, according to the data, a prison psychiatrist made $822,000 a year, which is more than five times the salary of California Governor Jerry Brown. In another instance, a worker was given a $609,000 lump sum upon retirement for unused vacation and leave time. Such a large payment is derisively termed a "boat check," by New Jersey Governor Chris Christie.
Niquette says his team traced some of the problems back when governor Gray Davis introduced legislation that allowed for the inflation of state worker pay. Davis served from 1999-2003 and was the first governor in California to be recalled, and the second in American history, after North Dakota's Lynn Frazier in 1921.
"Starting with Senate Bill 400, which was passed, that gave retroactive increases to tens of thousands of retirees, and changed benefit structures for folks like in the Highway Patrol, and other decisions that were made that essentially locked in a benefit and cost structure that the state maybe could afford at the time, when the economy was better, but over the course of time could no longer afford," said Niquette.
Bloomberg reporters also interviewed union members for comment about the large payments, to which they argued that pay decisions were made based on market cost. Some state departments have been understaffed, leading to increased overtime pay for some workers. Also, in California, private sector workers are paid more than in other states, leading to an uptick in pay for public sector workers as well.
"What we found was…essentially there was a bidding war going on between psychiatrists who work for mental health and psychiatrists who work for the prison system...it sort of led to this bidding war where it drove up salaries for both mental health and prison," said Niquette. "That got exported into other states where that became the standard, where you saw the same kind of affect or influences on pay in places like Ohio or Michigan or other states where in the data we found that state psychiatrists rank toward the top of the pay scale."
State worker furloughs were put in place to deal with some of the short-term budget problems. While these saved money on the front end, they actually increased the amount of unused time that employees could cash out when they retired, saddling the state with payments it can no longer afford.
"It sort of was a ticking time bomb that the state's eventually going to have to deal with, and is driving up costs in the lump sum payoffs that the state is paying out now and will be paying out in years to come," said Niquette.