Proposed pay cuts need legislative, union okay

Much of Gov. Schwarzenegger’s plan to save the state $1.6 billion by cutting state workers’ pay, boosting their pension contributions and limiting the government workforce can’t be done unilaterally but requires agreements from the public-employee unions or the Legislature – or both.

His proposals to cut workers’ salaries by 5 percent and increase by 5 percent the amount they contribute to their pensions are issues that must be submitted to any or all of the workers’ 21 bargaining units. His plan to gain a 5 percent savings by capping the size of the state workforce can be done internally by the administration as part of its budget plan, although it — like the bargaining agreements — ultimately require legislative approval.

An additional 5 percent salary cut, which the governor said was contingent on whether hoped-for federal dollars flow to the best, also would require the unions’ approval, union representatives said.

The likelihood of that money ever fully coming to the state is dubious at state, according to the Legislative Analyst’s Office, a nonpartisan office that advises the Legislature on fiscal issues.

 “While it is reasonable to assume the state will secure some new federal funding and flexibility, the chances that the state will receive all of what the Governor seeks from Washington are almost non-existent. The Legislature should assume that federal relief will be billions of dollars less than the Governor wants —necessitating that it make more very difficult decisions affecting both state revenues and spending,” the LAO said.

 Last week, an hour after Schwarzenegger announced his budget blueprint and issued an executive order declaring a budget emergency, the administration held a conference call with the public employee unions.

“We reached out to the unions, we have already been engaging the unions to return to the bargaining table,” said Lynnelle Jolley, a spokeswoman for the state Department of Personnel Administration, which represents the state in collective bargaining negotiations. “We fully intend to bargain with them. We cannot impose (salary) cuts if the unions don’t agree to it,” she said.

State workers have been ordered to take three Fridays off without pay each month, and those furloughs are scheduled to expire at the end of the current, 2009-10 fiscal year on June 30. The proposed salary and workforce cuts are part of the governor’s new, 2010-11 budget. The state faces a $20 billion shortage during the two fiscal years, driven largely by flagging income tax collections.

There are some 238,000 state employees, and about 200,000 have been participating in the furloughs. The average salary is about $62,000. The attrition rate is about 12 percent annually, according to Schwarzenegger.

Reducing the workforce — much of which can be achieved by attrition, officials said — would save the state’s Genreral Fund some  $449.6 million in salaries. The plan requires that state executives “immediately act to achieve the 5 percent reduction by July 1, 2010 (the start of the new fiscal year.)”

“The constitutional offices are not included in the workforce cap because the fiscal year 2009-2010 budget for each of those officers included a permanent reduction that achieves savings to the level of the workforce cap or a higher amount,” the administration said.

Meanwhile, the across-the-board salary cut would save an $529.6 million, the state said, and boosting the employee contribution to the pension fund to about 10 percent of salary from the current 5 percent would save the state about $405.8 million.