The State Worker

State analysis supports repealing toothless state job-positions law

A state law intended to eliminate chronically-empty state job positions is “clearly broken,” according to the non-partisan Legislative Analyst’s Office, and should be repealed as Gov. Jerry Brown has suggested.

But related proposed changes to how the state budgets for staff raise questions that the Legislature should carefully consider before signing off on the governor’s plan, the LAO said in an analysis released earlier this week.

A provision in Brown’s 2015-16 budget would abolish a law that requires state positions vacant six consecutive months to be eliminated. Departments, however, protect their vacancies by illegally manipulating employee transfers in an effort to maintain the spending authority that goes with them. The transactions can be extremely complex and labor-intensive, a 2014 Sacramento Bee statewide investigation showed.

State audits going back to at least 2002 have looked at specific departments’ employee transfer patterns and reached similar conclusions, finding that some departments devoted full-time staff to maintaining their faux transactions.

While the analyst agrees the six-month vacant-position law should go away, it is more cautious about Brown’s proposal to end the practice of separate budgeting for state job positions.

Currently, the Legislature sets the maximum number of positions for each department each year. The Department of Finance, after assuming a certain amount of attrition, separately budgets for those jobs. Departments’ other operating expenses – rent, travel, office supplies, computer upgrades and the like – are budgeted separately.

Although their positions are separately budgeted, departments can use their position allocations to pay those other expenses when their funds run out. Because the Legislature generally doesn’t increase operating budgets, former state managers say, vacancy manipulation has become a widespread workaround to to compensate.

Brown’s plan would lump together the staff and other operations budgets to give departments more spending flexibility without the employee-transfer sleight-of-hand. It would also make their budgets more transparent, the administration says.

The governor’s plan still gives the Legislature authority to place a cap on how many positions agencies could fill, but the administration would fund jobs based on a three-year average of filled positions. If a department wants to spend more on salaries, it would have to cut somewhere else.

The LAO’s report taps the brakes on the idea because, it says, it’s too late in the budget cycle for the Legislature to digest all the ramifications of such a sweeping budgeting change.

For example, the state analysis asks, will departments still have to absorb higher and higher operating expenses if they can’t use vacant-position allocations to cover them? It’s not clear.

“It would seem the state would need to change its current practice of requiring departments to absorb most rising costs of doing business,” the report states. “Increasing departmental appropriations for these costs could reduce available funding for other parts of the budget.”