The State Worker

2015 opens with drama on budget

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So what’s in store for California state workers in 2015? Glad you asked.

▪ Unions representing scientists, building equipment engineers and state attorneys will soon return to contract talks with Gov. Jerry Brown looking for significant pay raises – or at least a path to close the yawning pay gap between their earnings and those of their local- and federal-government counterparts.

State firefighters, under contract until 2017, will also reopen salary talks with Brown.

The unions hope post-election Brown is more generous than pre-election Brown and sends more cash their way. Their agreements will likely set the template for other union talks in 2016.

Hint: Watch Brown’s soon-to-be issued 2015-16 budget proposal, since it will lay down a marker for what the famously frugal Democrat wants to spend on employee compensation.

▪ The Brown administration has said the budget plan will include paying down some of state’s $71.8 billion in unfunded retiree health obligations and eventually fully fund the benefit for current workers. At the moment, the state pays medical bills as they come up instead of setting money aside for future obligations.

Brown could call for cutting retiree benefits, requiring retirees to pay more, requiring employers and employees to kick in money, or some combination of those options.

He could dip into the new Proposition 2 fund, but would have to explain using rainy-day money to pay workers’ benefits. And income tax-fed Proposition 2 funding fluctuates, so it’s not a long-term fix for a long-term obligation.

Brown could offer raises then take back money to prepay retiree medical benefits. Similar give-and-take deals have been bargained when the state raised employees’ pension contributions.

▪ Look for the governor and CalPERS Board of Administration to square off again over whether higher pay from a temporary promotion should count toward a public employees’ pension.

Right now it does, along with 98 other “special pays” that award California state and local government employees extra money for everything from career longevity to finishing cement projects.

Brown said including temporary promotion pay undermines his 2013 pension law’s ban on “ad hoc” payments when calculating retirement payouts. But a majority of the CalPERS Board of Administration last year voted to continue counting “temporary upgrade pay” and all the other pay supplements.

Richard Gillihan, who sits on the CalPERS board as Brown’s top state human resources official, says the administration wants to raise the issue again as part of a discussion about special pay and pensions.

The outcome of that debate, like contract talks and how government prepays retiree benefits, will impact state workers beyond 2015.

Call Jon Ortiz, Bee Capitol Bureau, (916) 321-1043. For more columns, go to sacbee.com/stateworker.

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