The State Worker

We've been fielding some calls and e-mails about where to go for information on the pile of legislation that Gov. Arnold Schwarzenegger has signed and vetoed. Our suggestions to add to your favorites list:

The Governor's Web site, which includes links to "all bills acted on," "featured bills," "bill search" and press releases. Be warned: some of these sites can be a bit tardy to update.

You can search bills several ways, read their language and analyses and track histories at the state's bill information Web site.

And you can get a simple list of bills signed into law at the Secretary of State's Bill Chapters site.

While media attention focuses on the political back-and-forth over bailing out Wall Street, we're keeping an eye on IRS Notice 2007-69, an obscure change in tax law that redefines the "normal" retirement age and puts state and local public pension plans in legal peril.

You can get up to speed on the notice by clicking here for our prior blog posts.

The IRS hasn't returned our calls, but we did catch up to Jeannine Markoe Raymond, director of Federal Relations for the National Association of State Retirement Administrators in Washington, D.C. Raymond participated in a House Ways and Means Committee roundtable discussion about the IRS rule changes on Sept. 19 with federal officials and representatives of several concerned organizations, including CalPERS' attorney Peter Mixon.

CalPERS has declined to talk about the IRS notice.

During that meeting, Raymond said, the Treasury Department, which runs the IRS, committed to pushing back the date that the notice would go into effect so that they can sort out and possibly change the rules affecting state and local public employee pensions. The officials said that they would make a formal announcement clarifying their plans within two weeks of the Sept. 19 meeting. Friday marks two weeks since the meeting.

"It's definitely under review," Markoe said during a 35-minute telephone interview. "The fact that (Treasury Department officials) said it in front of Congress carries a lot of weight. They would not publicly speak about (reviewing the rule) unless they are going to do something."

We'll let you know when the news breaks.

Gov. Arnold Schwarzenegger this weekend plowed through a mountain of bills addressing issues that affect state workers. Here's some of what we've noticed so far:

Vetoed:

SB 1718 would have required that the state conduct a comprehensive annual survey of public entities to find out what they pay their legal professionals. DPA would have had to report its findings to the Legislature, Governor and the exclusive representative of Bargaining Unit 2 (which represents attorneys, administrative law judges and hearing officers) by March 15 of each year.

SB 1505, which aimed to strengthen legal protections for whistleblowers.

Signed into law:

AB 1844, based on recommendations by Schwarzenegger's Public Employee Post-Employment Benefits Commission, aims to increase public employee benefits transparency through more reporting. It also adds detection tools that various retirement systems need to detect and prosecute fraud.

SB 1123 revises pension sunshine laws and creates the California Actuarial Advisory Panel, "to provide impartial and independent information to pensions, other post employment benefits, and best practices to public agencies."

AB 2023 restricts information considered for a disability retirement benefit by CalPERS, CalSTRS and 20 counties to "competent medical documentation." It also prohibits personnel, disciplinary, or other non-medical issues from being considered.

Thanks to the Dean of Capitol Coverage, Dan Walters, for lending a hand.

Civilian federal employees get a 3.9 percent pay raise for fiscal 2009, as noted in this weekend press release by the Federal Managers Association.

The association notes that, " ... according to the Bureau of Labor Statistics, there currently exists a 30 percent pay deficit for public-sector employees versus their private-sector counterparts. ... Unfortunately, the public sector continues to lag behind the private sector in the area of compensation."

What, if any impact will this have on state worker contract talks? Would you be satisfied with a similar pay increase?

We put out the call, and state CPA Terry Sutherland answered.

We've been trying to understand a pending IRS rule change that could (or will, depending on the source) alter when public workers can retire with full benefits. If you need to get up to speed on IRS Notice 2007-69 and what various experts and pundits think about it, click here.

Sutherland, an audit supervisor with the California Franchise Tax Board in San Francisco, answered our appeal for an expert in the state ranks to analyze what the IRS is proposing. You can click here to read the entire amusing and thoughtful e-mail.

Some highlights:

It looks to me like the public safety state workers, CHP, firefighters, etc. are OK. CalPERS in recent years adopted a "normal retirement age" of 50 for these workers. They cannot retire prior to age 50, fulfilling the other IRS proposal -- end of story. ...

I would expect that even ... minor reasonable proposals by the IRS will be side-tracked by the lobby tsunami. Pencil-carrying grunts like me will never be affected by any of this. But these proposals will hurt some of the worst abusers and double dippers -- and they usually have the power and political machinery. Stay tuned . ...

Thanks, Terry, for sharing your insight and expertise.

We're still looking into IRS Notice 2007-69, which redefines the "normal" retirement age and could keep most retired public employees from collecting benefits before turning 55, with a preferred retirement age of 62.

We've invited you to join our search for answers. We we have been gathering information, interviewing experts and asking questions that that you want answered. As the information has rolled in, we've put it on the blog for your inspection and comment.

It's becoming clear that the experts don't agree -- or won't talk -- about what the rule would mean to state government pensions when it takes effect in 2010.

The IRS has yet to call us back.

CalPERS wouldn't comment about its interpretation of the IRS notice. Spokeswoman Pat Macht referred the State Worker to ...

A group letter signed by more than a dozen state government, union and professional organizations. It predicts that the IRS regulation change means that "serious problems will be created for (pension) plans, sponsors and plan participants. This is particularly problematic where attainment of normal retirement age entitles participants to rights that are protected by constitutional guarantees." California is one such state.

Henderson, Nev., government relations specialist Santana Garcia, who wrote this memo thinks the rule changes would push back retirement for civil service workers across the country.

The Las Vegas Review-Journal ran this story based on the Garcia memo and followed it with an editorial that begins, "How ironic that taxpayers' new best friend in the politically impossible task of reforming public employee pensions is none other than the tax man himself."

Actuarial firm Gabriel, Roeder Smith & Co in its analysis said the rule changes are "unclear and potentially problematic" for public pension funds.

We've also received thoughtful analysis from state workers. We'll be sharing that here and in the story that we'll be writing.

And renowned pension expert Susan Mangiero of Pension Governance LLC is analyzing the notice. We expect to get her take in the next day or so. You can read Susan's insightful blog, Pension Risk Matters, by clicking here.

Click here to read earlier State Worker entries and your comments about IRS Notice 2007-69.

And if you haven't already, check out today's State Worker column about Gene Pixley, a state scientist who is still working full time at age 76.

Members of the Governor's office and cabinet secretaries will be dunk tank targets during today's charity fundraiser at Roosevelt Park on 9th and P streets including Finance Director Mike Genest. DPA head Dave Gilb was supposed to participate, but we just learned that he's sick today. No word on a replacement.

The event runs from noon to 1:15 p.m.

If you want to take a shot, it's $5 for two tosses, $20 maximum per turn. Click here for more details, including the schedule of state celebs who will be in the tank.

Health and Human Services is sponsoring the event with the proceeds going to the California State Employees Charitable Campaign.

We alerted you on Monday to pending IRS rule changes that, according to this story in the Las Vegas Review-Journal, could push many public employees to retire later than age 55.

We've invited you to report this story with us by reviewing documents and posing questions for us to ask our sources as we delve into this issue. You can click here to read the IRS notice of the rule change and a letter from several concerned organizations responding the idea by clicking here.

Here are a few more items for you to look over:

The Henderson, Nev., city memo that was the basis of the Las Vegas story.

An analysis of the IRS rule change by actuarial firm Gabriel, Roeder Smith & Co.

With those documents in hand, where should we go from here? As we talk to CalPERS, the IRS, unions and professional groups, what questions need to be answered? And what about you, the state worker? What is your take on all of this?

State Finance Director Micheal Genest this afternoon said that the state employees whose jobs were a casualty of California's budget impasse won't be rehired this budget year.

Gov. Arnold Schwarzenegger's executive order on July 31 terminated about 10,000 part-time and retired annuitant positions, curbed overtime and suspended some contracts.

"We expect the order to remain in effect the rest of the (fiscal) year," Genest said to reporters shortly after Schwarzenegger signed the budget.

The state estimates that the savings from the record-setting budget delay and lower operating costs from the executive order will save the state about $340 million for the fiscal year.

Genest left a little wiggle room, however, saying that some positions could be filled after consideration on a "case-by-case basis," but that jobs vital to public health, safety or property protection had already been exempted.

"Some of the people (who were laid off) will not be coming back," Genest said. "Some of those contracts will not be coming back."

Click here to download the 2008-09 California State Budget.

We're fielding questions and reading documents and analyses about IRS Notice 2007-69, which, according to a story in the Las Vegas Review-Journal, could ultimately push the minimum retirement age for government employees from 55 to 62. Click here to read our first blog item on the story.

The story leaves plenty of questions unanswered, as many of you have pointed out in comments online and e-mail.

Let's answer them together.

We're planning to share facts as we gather them, take your questions and observations, then write a story if what we find warrants it. Feel free to conduct your own research and share it with us. Include links to reputable Web sites or other information you think is pertinent to the story.

Maybe this is one of the biggest issues to hit pensions in a while. Or it might be that the IRS notice won't have any impact on public pensions at all. Let's report it out and see where it leads.

Here are a few documents for you to look over:

IRS Notice 2007-69
The group letter responding to the notice

Thanks to Jason Dickerson at the LAO for lending a hand.

Now that the budget deal is done, what happens to the approximately 10,000 state workers who were terminated by Gov. Arnold Schwarzenegger's July 31 executive order?

We contacted officials at the Department of Personnel Administration, the Personnel Board and the Department of Finance seeking answers. Here's what we've learned so far from those sources:

Schwarzenegger's order stipulated that terminated employees can't be rehired until Department of Finance Director Michael C. Genest certifies that the money is available. That certification will happen some time after the governor signs the budget late tomorrow morning. A Finance Department spokesman deferred questions about specifics until a press conference scheduled for tomorrow.

Departments and agencies aren't required to rehire retired annuitants who lost their jobs.

We'll report more details as we learn them.

In the meantime, please tell us how losing retired annuitants and part time workers impacted your job and your agency or department. In the seven weeks since they were let go, how have you adapted? Do you expect they'll be rehired?

A deal between Blue Shield of California and NorthBay Healthcare will give CalPERS Blue Shield Access+ members access to NorthBay VacaValley Hospital in Vacaville and NorthBay Medical Center in Fairfield effective October 1, 2008. The agreement will also give members access to a Northbay's network of doctors in the area.

Open enrollment for CalPERS members started Sept. 15 and ends Oct. 10.

You can read the CalPERS announcement here.

From the Las Vegas Review-Journal:

A major change proposed by the IRS for public pension plans, including Nevada's public employee retirement system, could eliminate early retirement pay for government employees in less than two years.

A new regulation the agency is pursuing would prohibit most public pension plans from allowing participants to retire and collect benefits earlier than age 55, with a preferred retirement age of 62. This would cover everyone from teachers to police to city and state workers in Nevada and across the country.

Click here to read the entire story.

The State Worker is verifying the story and, assuming it is accurate, we'll be writing a piece that focuses on what the IRS rule change would mean for public employees in California.

We'd like to hear from you. How would eliminating the reitrement at 55 rule affect you? What questions should we ask as we do our reporting?

We're looking for state workers who would be part of our story. If you'd like to contribute, please click on "Jon Ortiz" to shoot an e-mail to us with your take on this issue.

So is everybody popping champagne where you work?

As Bee Capitol Bureau ace reporter Kevin Yammamura reports in this story, Gov. Arnold Schwarzenegger, the Democrats and the Republicans have cut a budget deal -- eighty-one days into the 2008-09 fiscal year.

We could rant about the record-setting delay, its impact on California residents and businesses and how it's further tarnished the state's reputation for what Dan Walters in his column today says , "... remains a stopgap budget filled with accounting gimmicks and questionable 'spending cuts' and 'revenues' - and still leaves the state's fiscal house in great disorder."

But we're more interested in hearing from you.

How do you think this deal will impact your job, your agency or department?

What are you hearing about rehiring part timers and retired annuitants who were summarily whacked by Schwarzenegger's executive order? Do you think some key people have moved on to other jobs and won't come back?

How long will it take for the dust to settle before your bargaining unit comes back with a new contract? What do you think it will include?

Our man in Las Vegas, Andy Furillo, reports in this story that CCPOA's re-elected president Mike Jimenez is toning down his recall rhetoric.

As we noted in our column today, some union watchers think that CCPOA's threat to mount a recall campaign against Gov. Arnold Schwarzenegger was more about boosting Jimenez's image than ousting the Austrian Oak.

Our take: When the governor responded to the recall threat -- "So the prison guard union is not going to intimidate me with their kind of action... This is a different governor sitting here," -- he re-energized Jimenez and CCPOA. The union may be divided (hence 28 members who filed to run against him), but nothing unites like a common enemy.

Of course, the controversial union makes a foil for Schwarzenegger, too,

So what do you think? Is a recall push still an option for the union? Or now that he's been re-elected, will Jimenez save the million bucks or so it would take to get a recall on the ballot and put it toward other efforts?

The correctional officer's union just gave Bee colleague Andy Furillo the boot from its big presidential candidate debate in Las Vegas. Union delegates vote later today, and it looks like the contest is now down to two candidates and incumbent Mike Jimenez. Read the breaking news story here.

And check out our column today about division in CCPOA by clicking here.

As the budget battle drags on, we continue to field e-mails, phone calls and blog posts from unhappy state employees and laid-off part timers who are sick of the mess.

This e-mail from Orlando Fuentes, a retired annuitant, raises an interesting question for state workers: What counsel would you give your kids about becoming state civil servants?

Hi, Jon,

I started in 1979 at the age of 30 (with an MSW in hand and 5 years of professional experience including 3.5 years at the county level) and retired at age 55 with 25 plus years of service. I have been a retired annuitant for 3 seasons now.

I can say confidently that state salaries have not kept up for professionals in all of these years. It's been one budget crisis after another. I have found that county salaries are much better than state salaries, for example in departments of social services, health, and mental health. I have worked in each of those at the state level and have always been on the search to compare salaries at the county level ...

As state professionals, we usually deal with higher level management at the local level as their state consultants ... We often deal with our counterparts who make so much more than we do. (We act) as their experts on state law and state programs, as high level trainers of other professionals, etc. Do we get recognized for such? No.

All we hear, is "not this year." And then the speculation, "they'll have to make up for this next year," which never happens.

I have two daughters who are professionals; one is a lawyer and one working on her PhD. I highly recommend to each of them to avoid at any and all costs becoming civil servants for the state, build their 401Ks, and find their career path elsewhere.

Thanks for this opportunity to comment.
Orlando Fuentes

Our State Worker column in tomorrow's Sacramento Bee touches on how union leaders set the public's perception of rank-and-file members. We think that there's a tendency to see the unions as filled with folks who march in lockstep with their leadership, endlessly clawing tor more money and benefits.

As the faces of their organizations, union bosses are heavily scrutinized, right down to their personal grooming. For an example, check out the first paragraph in this piece on CCPOA State President Mike Jimenez run by the left-leaning Mother Jones.

The more powerful the union, the more its leaders attract the attention of the media and the public. It's why CCPOA gets lots of press while the scientists' union gets relatively little.

Do you agree with the premise of the piece we're writing? How much do leaders calibrate public perception of their members? And how much room do union members have for dissent?

Capitol Bureau reporter Peter Hecht in today breaks down new poll numbers that show,

Californians are thoroughly fed up with the state of affairs of the Golden State ... Yet by an overwhelming margin, voters don't believe (Gov. Arnold) Schwarzenegger should be recalled from office.

You can read Hecht's story by clicking here.

Looking inside the Field Poll numbers, nearly 60 percent of union members surveyed disapprove of Schwarzenegger's performance. About 50 percent of those who said they weren't part of a union gave the governor a thumbs down.

When asked if a recall election would be good or bad for California, a little over three quarters of union and non-union respondents said it's a bad idea.

The Field survey didn't tease out state worker responses. What would you have said if asked:

Do you approve or disapprove of the way Arnold Schwarzenegger is handling his job as Governor of California?

Some groups are trying to organize an effort to gather signatures to hold a special statewide election to ask voters whether or not they want to remove Governor Arnold Schwarzenegger from office. Generally speaking, do you think holding a recall election of Governor Schwarzenegger would be a good thing or bad thing for California?

You can read the latest Field Poll and others going back more than a year by visiting our companion Web site, Capitol Alert.

Image: sacbee.com

Capitol Bureau colleague Steve Wiegand reports in this lead story in today's Bee today that lawmakers have reached a budget deal that includes $9 billion in cuts, speeding up collection on some one-time revenue, a bit of borrowing from the lottery, beefing up the state's rainy day fund and limited gubernatorial authority to make midyear budget cuts.

So what does this mean for the 83 percent of state workers who are under union contract? We've heard from literally hundreds of state employees who are sick of their wage increases lagging inflation. But given the state's finances and serious questions about whether California's slumping economy will recover soon, what leverage do labor representatives have at the bargaining table to pry loose more pay for state workers? What is reasonable to expect?

CalPERS today announced open enrollment for its health plans in this press release. The enrollment period runs through Oct. 10. Registered members can access information and enroll online at My CalPERS.

Premiums rose again this year for most CalPERS health insurance participants. While CalPERS Preferred Provider Organization Basic rates will remain essentially flat next year, health maintenance organization premiums will increase an average of 6.6 percent. Some experts predict that HMO premium rates for large employers around the country will jump nearly 12 percent next year, according to the CalPERS release.

While such comparisons are valid, we can't avoid noting that health care premiums for the majority of state workers -- 68 percent have HMO coverage -- are rising while the prospects of a significant pay raise are dim. (Check out today's earlier blog post, "Budget in sight, state worker contract talks next," for more about the coming bargaining unit talks.)

What do you think about the premium increase? Are you satisfied, given the larger trend? Or do you think that CalPERS could do better for its members?

After this story in appeared in today's Bee, the Service Employees International Union fired off a press release to contradict an internal e-mail from Senate President Pro Tem Don Perata -- cited extensively in the story -- that the union is "OK with borrowing" to reach a state budget compromise.

Courtni Pugh, executive director of the union's California State Council, said in the release that, "SEIU has not said that it is 'Okay with borrowing.' In fact, our record on this issue is clear and has been consistent throughout this long budget struggle. We need real solutions to our budget problem, not band-aids and temporary get-out-of-town fixes."

You can read the SEIU release by clicking here.

According to the SEIU, the next court hearing over whether Gov. Arnold Schwarzenegger's pay reduction order must be followed is set for federal court in Sacramento on Oct. 17. The state court hearing that was scheduled for today was canceled when the union moved the matter to federal court.

As you'll recall, the legal fight started after Schwarzenegger's July 30 order terminated about 10,000 part-time state employees and temporarily chopped the wages of about 150,000 more to the federal minimum $6.55 an hour.

State Controller John Chiang refused to comply with the order and Schwarzenegger sued to compel him. Local 1000 and other unions have jumped into the legal battle on Chiang's behalf.

Law professor Mario Mainero, a key player in the pension fight between Orange County and its deputy sheriffs, says the battle there over retroactive benefit increases "has raised concern among unions up and down the State, because if we are right, we could save various local governments in California up to $5 billion."

We've been telling you to keep an eye on Orange County, especially now that CalPERS and Attorney General Jerry Brown have entered the fight on the side of the deputies.

You can read Mainero's rationale for invalidating the pension hike here. He also is behind a November Orange County ballot measure that would require that voters approve future public employee pension benefit increases. And he advocates phasing out the current defined benefit system common in public employee plans by putting new hires into defined contribution plans.

We'd be remiss if we didn't note that CalPERS says it has 93 percent of what it needs to meet its pension promises. CalSTRS reports it's about 88 percent funded. Experts generally consider 80 percent the threshold for healthy pension funds.

Rumors are spreading around the Capitol that The Golden 1 will start charging interest on the zero-interest loans that it has extended to about 850 legislative staffers and gubernatorial appointees whose pay has been withheld during the state budget impasse.

"Absolutely not true," Terry Halleck, The Golden 1's president and CEO, told The State Worker this afternoon in a telephone interview.

We called Halleck after a handful of legislative staff told The Bee that the credit union was discontinuing the no-interest loans.

Halleck said that one state worker had asked credit union staff at The Golden 1 branch nearest the Capitol whether the rumor is true.

"False information," Halleck said. "It's somebody trying to stir the pot."

While cruising the Web the at home last night (the State Worker needs a life), we ran across this sample test published online by the Department of Corrections Office of Officer Selection. The 15 questions test reading comprehension, math and writing skills.

Of course, state corrections officers also have to pass psychological and physical tests, a background check (no convicted felons allowed) and complete academy training before they start work.

If yo're a state worker, how do these questions compare with the civil service test that you took for your job? We've looked around and haven't found other sample tests online. Feel free to send us a link via e-mail or post a site address to one in the comments below.

A few days ago we posted this item, comparing two union stories in the news: The Bee's piece on CCPOA's effort to oust Gov. Arnold Schwarzenegger and San Diego's ongoing fight over public pensions as editorialized by the Wall Street Journal.

We quoted the top of the Journal editorial that called City Attorney Mike Aguirre, "a public official (who) is looking out for taxpayers rather than for unionized public workers."

Now the San Diego Union Tribune says in this opinion piece that the Journal editorial mischaracterized the city and Aguirre, which the paper calls "simultaneously menacing and incompetent."

So what do you take away from these two tales of the city official? Does this dust up reveal anything about the media and how it covers pensions or unions?

Construction workers this morning hoisted the last steel beam framing a facility that will heat and cool 5.5 million square feet of state office space. It's a signature moment for the central plant, which the state wants to achieve a Leadership in Energy and Environmental Design Gold certification when it comes online next year.

State officials were on hand to celebrate the plant's progress. You can read the DGS press release here.

Photo: Ken Hunt, DGS

Colleague Andrew McIntosh's story in today's Bee, which you can read by clicking here, outlines the state's deal with American Express that requires state conference, meeting and event organizers and hosts to pay for their functions with state AmEx cards or AmEx travel account. Same thing for state workers attending events.

You can read the DGS memo here.

From your perspective what are the pluses and minuses, if any, of this policy?

It's easy to get caught up in the latest political intrigue or sound bite budget bickering and forget that many people selflessly serve the state in both paid and volunteer positions.

We want to celebrate those people, and to that end we share this press release from the Office of Emergency Services:

September 10, 2008

Governor's Office of Emergency Services (OES) Law Enforcement Branch is pleased to announce Major Jan Ostrat of the California Wing and Civil Air Patrol as this year's recipient of the annual "Larry Peabody Memorial Award" for 2008.

The "Peabody" is an annual award presented by OES to the California volunteer search and rescue (SAR) individual or team that performs their SAR duties with professionalism, dedication, and an unswerving desire to successfully accomplish their noble mission. It is given in honor of Larry Peabody, a dedicated professional volunteer, who served OES for over 27 years, providing valuable search and rescue canine coordination 24 hours a day, 7 days a week. Peabody's tireless commitment to California search and rescue so "that others may live," is revered by all who have performed the search and rescue duty.

In like spirit, this year's recipient, Jan Ostrat, a Major with the California Wing of the Civil Air Patrol, has been a professional volunteer, responding to missing or overdue aircraft missions as well as distress alert beacon activations, namely Emergency Locator Transmitters (ELTs), since 1980. For the past 28 years his unselfish efforts have been
instrumental in successful responses to many very difficult and complex missions. Jan participates in at least 25 missions per year, or about 700 calls for duty. Many lives have been saved as a direct result of his efforts. Jan often volunteers his own personal aircraft, a Cessna 206, to conduct search and rescue missions.

"It's my honor to congratulate Jan as this year's Larry Peabody Memorial Award recipient and extend my deepest gratitude for the selfless, live-saving work that he has performed over the years," said Henry Renteria, Director of the Governor's Office of Emergency Services. "The citizens of California depend on the hard work of both our OES personnel and the dedicated volunteers like Jan to provide the best public safety services in the nation," said Renteria.

Jan's vast expertise in conducting missing aircraft and ELT searches is known statewide and nationally. As a result, he is often called upon to assist in overcoming the most complex missions. Jan is recognized as a "Subject Matter Expert" in the aircraft and ELT search arena by the California Governor's Office of Emergency Services - Law Enforcement Branch. As a result, he is not only called upon often to assist with
search missions but also to instruct, as a key instructor, within the branch's Search and Rescue Management Courses. Jan, as a volunteer instructor, has personally trained thousands of search management students how to properly respond to missing and overdue aircraft missions and distress alert beacon activations - to include the new personal locator beacons or PLB's.

When Jan is not volunteering his time to help search for persons in distress he is busy managing his metal fabricating company near his home in Fairfield. During the summer months, he also remains very busy flying wild land fire "Air Attack" or "Recon" for Cal Fire or USFS in his Cessna.

Jan's dedication and extraordinary excellence as a professional volunteer to help others in need is outstanding and he is a role model for others to follow. The personal sacrifices that Jan makes "So Others May Live" are above and beyond the call of duty.

For more information on the OES Peabody Award, please contact OES Law Enforcement Branch at (916) 845-8700.

###

CCPOA's move to recall Gov. Arnold Schwarzenegger was the first topic discussed during the 8 a.m. hour of the Armstrong & Getty radio show this morning with Joe Getty and fill-in co-host Gary Dietrich. A few of their observations:

Dietrich (sarcastic): We need a few more elections in California, don't you think?

Getty: I have said ... Fellas, hubris will bring you down. You're overreaching.

Click here to hear the entire segment. Go to the Armstrong & Getty Show 9-10-08 8 a.m. item and click "Listen." The CCPOA recall discussion starts at about 3 minutes and 50 seconds in and runs five minutes.

According to this CalPERS press release, UnitedHealth Group's former CEO William McGuire will pay $30 million to company shareholders to settle a lawsuit over claims that he profited from illegally manipulating stock options. The fund owns 4.7 million UnitedHealth shares valued at about $140 million.

From this morning's release:

The settlement with McGuire, which is subject to approval by the United States District Court in Minnesota, is believed to be the largest cash recovery ever obtained from an individual defendant in a securities class action lawsuit. The proposed settlement also provides for an additional payment of $500,000 from UnitedHealth's former General Counsel.

On one level, the settlement is a drop in CalPERS' vast $232 billion financial bucket. But no one should profit from ripping off shareholders. Bravo, CalPERS for protecting your members and other investors.

The Bee has learned that the SEIU district president arrested Tuesday on child porn possession charges will likely lose his office and membership with the union.

As reported in this story by The Bee's Chelsea Phua, SEIU Local 1000 District Labor Council 784 President Jaime E. Feliciano, 49, was arrested on suspicion of possessing child pornography and violating his probation as a sex offender.

Phua reports, "According to court records, Feliciano was convicted in 1993 of lewd or lascivious act with a child under the age of 14 years, which is a felony."

In an e-mail to the State Worker this morning, Local 1000 President Yvonne Walker said, "I am personally disgusted and appalled. I am filing charges to remove him from office and from membership in Local 1000."

Feliciano is a research program specialist at the state insurance department.

So how does a convicted child molester become a union leader? We asked SEIU spokesman Jim Zamora late last night. His e-mail reply, sent at 1 a.m. this morning:

We are all shocked and disgusted by these charges. No one in SEIU leadership knew that he was a convicted sex offender prior to the media reports of his arrest.

(Feliciano) was elected by his fellow workers at Department of Insurance in Sacramento and some folks in other nearby agencies. (I'm not sure which departments at this time) He represents approximately 1,000 to 1,500 workers. It's an unpaid position, with no desk, no physical office etc. He keeps his day job. It's an election among peers. To be eligible he needs to be a state employee working in the geographic area represented by that DLC (District Labor Council) and a member of SEIU Local 1000. He does NOT have to be longtime SEIU member or veteran activist to run for office. There is no background check or criminal records search of candidates internal union elections.

Obviously this case raises the issue that perhaps more vetting should be done in the future. That is something that would be reviewed by Local 1000 attorneys, our president and other senior leaders. But at this time, everyone is waiting to learn more about the criminal investigation.

He was first elected in late May and was sworn into office in mid-July. The only major meetings he attended as an elected official were on the July weekend he was sworn in. (Local 1000's main council meets 4 times a year) Prior to his election in June, I'm not sure how active he was in Local 1000 or how well known he was to workers outside of his colleagues at the Department of Insurance. His elected position did not put him in contact with children or teenagers.

TechLeader.tv at 11:30 a.m. today is Webcasting an interview with Jim Butler, head of purchasing for the Department of General Services. The interview will be rerun on the Web and on public access television on Friday at 7 p.m, Saturday at 11 p.m. and Sunday at 3 a.m. (that last time slot is for obviously for hardcore viewers only).

The promo for the interview promises it will touch on ...

• Strategic Sourcing - How's it working? What's next?


• DGS Procurement Terms & Conditions got you down? Let's ask the boss!


• AB730 which would prohibit a vendor found liable for breach of a State or local government IT contract from doing government work for 5 years! Is it still possible?


• What will be Jim Butler's legacy at DGS Procurement?

No mention in the e-mailed advisory whether the infamous Office Depot audit we blogged about last week will come up.

Click here to go to TechLeader.tv. You'll have to register a username, password and e-mail address to view the Webcast.

Cap Bureau colleague and fellow blogger Shane Goldmacher reports in this story that CCPOA is launching a recall of Gov. Arnold Schwarzenegger.

Meanwhile, in San Diego, the Wall Street Journal reports that a huge fight over city pension contracts, "... is worth watching. In a welcome change, a public official (San Diego City Attorney Mike Aguirre) is looking out for taxpayers rather than for unionized public workers." You can read the story by clicking here.

What do you think these stories, together or separately, do for the image of public employee unions with the general public? Does public opinion count in either case?

It's often said the state of California has become so big and so complex that it's unworkable.

But is it?

We're looking for what the people who actually run the state government on a day-to-day basis think about how it's going. Is the state serving its customers well - or at least better than a few years ago? Do things move along as well as can reasonably be expected, or are there snafus that could be avoided if the system were streamlined? Let us know.

Image: University of Washington NatureMapping Program

The state's recent Office Depot Inc. audit, covered in this story by The Bee, is, we think, a shot across the bow to private sector vendors by Chief Purchasing Officer Jim Butler. His message: We're watching you.

The 84-page report lays out how Office Depot overcharged the State of California for supplies to the tune of $2.5 million. You can read the audit here. Click here to read Butler's response.

There are a lot of reasons that it happened: Office Depot sold stuff to the state that wasn't allowed under the contract, it mispriced some items, it failed to update catalog prices and products and its online purchasing system's search function de-emphasized or excluded some of the cheapest products.

Of course, one of the oddest -- yet legal -- practices discussed by the audit involves how Office Depot subcontracts to small companies, The companies bought goods from Office Depot and then sold the products to the state. In some cases the small businesses never even took possession of the products: Office Depot processed the order and shipped the item for them. State attorneys told the auditors that the practice is legal.

So that's our quick take on the audit. What did we miss?

Image: makezine.com

It looks like your September paycheck is safe, state workers. October looks pretty good too.

We got word this afternoon that the legal wrangling over Gov. Arnold Schwarzenegger's order to whack state worker pay will drag out through the end of October. Probably.

You may recall, as we reported earlier, that several unions got together and pushed the legal fight between Schwarzenegger and Controller John Chiang into federal court. That created uncertainty whether a Sept. 12 state court hearing would take place to resolve whether Chiang has to comply with the governor's order.

The Department of Personnel Administration, representing Schwarzenegger's interests, could successfully argue to keep the matter in state court, which could revive the Sept. 12 hearing. But it's looking unlikely.

Thursday afternoon, controller spokesman Jacob Roper delivered this bit of news via e-mail to the State Worker:

Since the case has moved to the Federal court, the Sept 12th superior court hearing will not be held. A group of labor organizations has filed a motion to move the case from the Eastern Federal district to the Northern district, and a hearing on that motion is scheduled for October 31.

Roper also restated the controller's assertion that cutting salaries to minimum wage would be a massive, time-consuming reprogramming task, "so there is no reason to believe that minimum wage checks would be issued anytime soon."

DPA's Lynelle Jolley in an e-mail said, "(There's) still a question mark over the Sept. 12 hearing date but I wouldn't say it's officially dead. DPA hasn't yet filed its 'motion to remand to state court.' "

Footnote: Be sure you check out our Capitol bureau colleague Steve Wiegand's story in today's Bee. Steve spells out the impact of what will become the state's longest-ever budget deadlock unless legislators and the governor reach an agreement today.

The state teachers' retirement system board met this afternoon to talk about changing the policy that keeps it from investing in tobacco companies.

Two things happened.

First, the board added human health as a risk factor that must be considered before it invests in stocks such as tobacco. That means that CalPERS' investment managers have to consider the risk to an investment's profitability if it makes a product "that is highly detrimental to human health" that might attract significant liability lawsuits, government regulation or sanctions, or otherwise discourage other institutional investments.

Second: The board members heard presentations from tobacco company representatives, a tobacco industry stock analyst and a spokesman for the American Lung Association as they weighed a broader policy change that could allow tobacco investment. You can read the background materials for today's panel discussion by clicking here.

We've written about CalSTRS' and CalPERS' "sin" investments, including this story and this blog item, "How sex, booze and gambling secure your retirement." CalPERS, which also doesn't invest directly in tobacco stocks, has said it is "monitoring" the CalSTRS discussion.

CalSTRS dumped its tobacco stocks eight years ago after developing a set of rules that excluded tobacco companies. It justified the move as consistent with its responsibility to do right by its members, not because tobacco is bad, but because at the time the industry faced lawsuits, bankruptcies and government regulation that many predicted would hammer tobacco company stock prices.

Those dire predictions didn't hold true, and tobacco stock prices have risen since CalSTRS divested. The fund figures it would have been up to $1 billion richer if it had held on to its tobacco investments. That raised the question: Is CalSTRS being irresponsible by avoiding tobacco?

It's an emotionally charged issue. CalSTRS board member Dana Dillon said that the fund has received 600 faxes and 382 e-mails about tobacco investing. Some of those, however, were probably drummed up by organized interests, she said.

Today's discussion didn't produce a benchmark policy confirmation or change. The board will take up the issue again, probably in November..

The state auditor released a report today that gives failing marks to the Department of Public Health's Laboratory Field Services. Some lowlights noted in report's cover letter:

Specifically, Laboratory Services is not inspecting licensed laboratories every two years as the law requires ... has struggled to respond to complaints ... closed many complaints without taking action. ...

Laboratory Services raised its fees improperly one year and failed to impose two subsequent fee increases called for in the budget act. As a result, Laboratory Services did not collect more than $1 million in fees from clinical laboratories.

The audit includes DPH's response:

Current staffing resources are not sufficient to conduct state mandated workload related to licensure and registration of these laboratories, and workload associated with biennial inspections, complaint investigations, proficiency testing oversight and enforcement actions in the clinical laboratories in California and out-of-state laboratories. In addition, state statutes and mandated activities have continued to expand, imposing significant workload on the program.

You can read the report and DPH's response by clicking here.

How widespread are these kinds of resource problems? What would the auditor say about your department?

National Public Radio's hilarious call-in game show, "Wait Wait ... Don't Tell Me," recently featured Carol, a state worker who played "Listener Limerick Challenge." Carol and show host Peter Sagal took turns jabbing Gov. Arnold Schwarzenegger.

To listen in, click here to go to the show's Web site. Then click the "listen to the show" link. When the media player loads, click on "Listener Limerick Challenge" in the "My Playlist" menu.

Here's a video that mixes pleasure and pain. The pleasure: the CalPERS Chorus, directed by Richard Maness, performing a terrific arrangement of the national anthem before a Sacramento Kings playoff game. The pain: realizing the team hasn't been in the playoffs since 2006.

We'll have more on the chorus soon. We'll leave the basketball stuff to colleagues far more qualified to talk sports at the Kings Blog.

Watch carefully. A legal fight over deputy sheriff pensions that has drawn in CalPERS and state Attorney General Jerry Brown could have implications for other public employee contracts.

The lawsuit by the Orange County Board of Supervisors against the Orange County Employees Retirement System seeks to invalidate a 2001 deal that retroactively gives deputies a "3 percent at age 50" formula for retirement. The county says the agreement violates provisions of the California Constitution. CalPERS doesn't think so. Attorney General Jerry Brown is planning to file a brief in Los Angeles Superior Court on the fund's behalf.

It's worth noting that the formula change is retroactive.

You can read the notice of pending legal action that OCERS sent to members by clicking here. It explains the case and its possible impact.

This matters because it's a piece of a larger puzzle summed up in this recent LA Times story:

Reigning in public pension costs has become a battle cry of fiscal conservatives in recent years, as handsome benefit enhancements have been bestowed on government workers and the costs have mounted. Earlier this year, a panel appointed by Gov. Arnold Schwarzenegger found local and state government pension funds underfunded by $64.5 billion. Watchdogs say that cost will either eat heavily into other government services or require tax increases to pay for the benefits.

And this piece on LegalNewsline.com does a pretty good job of laying out arguments for and against the Orange County pension rollback.

Is this part of a political play to blame public employees for the leadership failings of elected officials? Or is this a legitimate move to roll back excessive pensions that the public can't afford? And what are the implications if the lawsuit succeeds or fails?

Our column in Thursday's Bee, which observed that a lot of folks who contact us with workplace concerns don't want to be quoted, prompted a San Diego state worker, Christine Valle, to send this e-mail:

"You ought to know that there is a great deal of criticism of the labor organizations among State employees. I think most of it occurs outside of Sacto. Part of the reason Sacto is so mum is the concentration of employees and union types. People don't feel like they can speak freely.

In the regional areas and agencies offices, there is widespread discontent especially with SEIU. Since they have come to power they have hijacked the State employee agenda for their national objectives."

Is the e-mail accurate? Are Sacramento state workers less likely to speak freely about their concerns with their work environment or their labor representation? Do workers outside of Sacramento have a different mindset?