Pay cuts, canceled raises and more telework: the recession reaches state workers

Pay cuts, canceled raises and more telework: the recession reaches state workers

California capitol building

The California state capitol building in Sacramento.

Gov. Gavin Newsom last week proposed reducing state workers' pay by 10 percent to help address a projected budget deficit of $54 billion.

Questions are swirling over the specifics. Details have yet to be worked out. Below are five common questions and what we know so far.

Will there be furloughs?

Newsom's proposal, which requires approval from the state Legislature, relies on collective bargaining between his administration and state unions to reach agreements on how to achieve the 10 percent reduction in pay. Unions are exploring ways to do that.

Newsom is seeking authority from the Legislature to force the reductions if agreements cannot be reached. The most likely mechanism for mandatory pay reductions would be furloughs. Two furlough days would reduce salaries by 9.24 percent. The proposal calls for the reductions to start in July.

Will state workers get their raises?

No, not under Newsom's proposal. The proposal suspends salary increases many state unions negotiated that are scheduled to go into effect July 1, including general salary increases and special raises for specific job classifications. Pay would be reduced 10 percent from June 2020 levels.

Does this affect pensions?

Newsom has not proposed any reductions to state pensions for employees or retirees. California state law has long been interpreted to prevent any reductions to pensions, including for current workers, absent new benefits that are equally valuable.

Canceling the raises could affect retirement plans for some workers near the end of their careers. Without this summer's raises, they could have to work longer to earn the pension they had planned on.

Furloughs could in theory negatively affect pension calculations by reducing the pay on which pension amounts are based. In the past, the state has not factored furloughs into pensions, so if someone wanted to retire in a furlough year, their pension would be calculated as if the furloughs hadn't happened.

What about health insurance stipends?

SEIU Local 1000 and the California Attorneys, Administrative Law Judges and Hearing Officers in State Employment each negotiated health insurance stipends of $260 per month for state employees enrolled in CalPERS health plans. Local 1000 will continue to receive the health insurance stipends through the coming fiscal year since they have a multi-year contract, but the stipends will end for the attorneys' union in June, since its contract was only for one year.

How will work change?

Newsom's proposal calls for expanding the government's use of telework to increase efficiency and save money. State officials have issued similar orders since at least 1990, but it might be real this time. That's because many state agencies had to rapidly adapt to telework when the coronavirus arrived, forcing workers to work from home to avoid spreading the virus.

"The state's response has shown that teleworking on a large scale is possible, and the ability to optimize a telework approach can reduce the state's carbon footprint and leased office space, while increasing the state's digital presence for the benefit of both California's employees and the people they serve," the budget proposal says.

The administration, along with the Government Operations Agency, is reviewing which job classifications could continue teleworking and how the state could save money by using less leased space, according to the proposal.

The proposal anticipates reducing state office leases as part of the process. Plans for three major state office renovations have been suspended.

Distributed by Tribune Content Agency, LLC.

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