California's prison officers union is getting a loan from taxpayers – interest-free – to settle a multimillion-dollar debt it owes the state.

The deal sealed on Wednesday closes the books on what the Department of Mental Health and the Department of Corrections and Rehabilitation said was at least $4.5 million the California Correctional Peace Officers Association owed for wages and benefits paid to CCPOA leaders while they were away from their state jobs tending to union business.

CCPOA, which represents about 30,000 correctional and parole officers, refused to settle the so-called "union paid leave" tab that has been running since 2005, saying it was being overcharged.

Talks broke down a few times, so the departments and the Schwarzenegger administration hauled CCPOA into court in 2010.

The case was mired there when Gov. Jerry Brown took office last year and tapped former CCPOA attorney Ron Yank to head the Department of Personnel Administration, which was handling the litigation.

Months of quiet talks between the state and the union produced a deal that reduces the debt to $3.5 million – "the state's bookkeeping problems are credible," Yank said – with an initial $750,000 cash payment due next week.

CCPOA must make a $250,000 payment by Jan. 31, 2013, and another one year later. Those installments can be made in cash or by liquidating hours in a leave bank stocked with vacation time that union members donated years ago.

Then CCPOA must make annual $350,000 payments until the account is settled. There's no financing charge. Late payments carry a 10 percent penalty.

In other words, if you start the clock at 2005 and figure the debt won't be paid until 2021, the state has agreed to a 16-year, interest-free loan to subsidize CCPOA's business.

It's not a perfect arrangement, Yank said Wednesday, but both his own in-house attorneys and outside lawyers told him the court fight would be risky.

The litigation would take years, with legal fees chewing up a big chunk of whatever CCPOA wound up paying – and that assumes a state win. "Litigation is never a slam dunk," Yank said.

Then there's Dawe v. CUSA, a $5 million federal defamation case that CCPOA lost in 2010.

The union has appealed a jury's decision in that case, but a federal judge ordered CCPOA to put up its West Sacramento headquarters and other properties as collateral. The union also has to make quarterly $500,000 security deposits to the court until there's enough money in the account to cover the judgment and then some.

"That was a reason to take the money and run," Yank said. "If CCPOA loses Dawe, (the state) might end up with nothing."

The administration and the union – which spent heavily to elect Brown – wanted to move on.

"This was a big irritant to all of us," Yank said.

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Call The Bee's Jon Ortiz, (916) 321-1043. Read his blog, The State Worker, at sacbee.com/blogs.

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