Examining the Tentative Agreements With Six State Unions

Governor Arnold Schwarzenegger touts several recent, tentative agreements with six of the state’s 12 employee bargaining units as “significant first steps toward pension reform and reining in the state’s growing pension costs.”

The tentative agreements affect roughly 37,000 employees, including the 6,660 employees of the California Highway Patrol, according to Schwarzenegger’s Department of Personnel Administration.

Combined, the tentative agreements save $138 million, according to a press release issued by the GOP governor announcing the latter two agreements.

Membership in the remaining six bargaining units is four times that of the six unions who have struck deals – 157,000. Savings from striking deals with those employee unions would be significantly greater.

One of Schwarzenegger’s press releases says:

“If similar agreements were reached with the state’s six other employee unions, state savings (in the current fiscal year) would total $2.2 billion, with $1.2 billion of that from the general fund.”

Each deal struck with each union lasts a finite amount time. Two fiscal years for the international Union of Operating Engineers and the Union of American physicians and Dentists, July 1, 2010 through July 1, 2012.

The deals struck with the California Association of Highway Patrolmen and the California Department of Forestry Firefighters last three fiscal years.

At that time, the state and the unions return to the bargaining table and some of the conditions of these agreements could be eliminated.

In all six tentative agreements, pension formulas are made less generous for new – not current — employees. Given the state’s dire fiscal condition, it’s unclear how many new employees will be added to the state’s rolls.

What appears like a sacrifice by the unions, in some cases, isn’t.

The Highway Patrol, for example, says for new employees, retiring at 55, would receive 3 percent times their years of service to calculate what percentage of their three-highest-years average salary they would receive as a pension. Currently, it’s 3 percent at age 50.

Most Highway Patrol personnel retire at 55 already.

As a pot sweetener, Schwarzenegger says that members of the four initial unions to settle will not be furloughed nor have their pay reduced to the minimum wage during the life of the agreements.

Reducing state worker pay to the federal minimum of $7.25 per hour is being litigated. Such a reduction would occur only if a budget is not in place.

The operating engineers and the physicians and dentists union, who settled later, will receive continuous appropriations during the life of the agreements so their paychecks won’t be affected by delays in passing a budget.

Each contract includes a new top salary step for workers. Currently, there are five salary steps; the top can be reached after five years of satisfactory service.

Starting one year after he leaves office on January 1, 2012, the GOP governor gives each member of four of the six unions a sixth step with a salary that’s 5 percent higher than the current top step. Highway Patrol personnel receive a 2 percent higher top step and state firefighters, 4 percent.

This raise would apply only to those state employees who have reached the top of the current pay scale steps.

The increased salary, for those eligible, would boost the amount of the pensions they receive when they retire.

Members of the unions and the Legislature must approve the deals. The Democratic majority Legislature has shown no rush to do so.

(Summaries of the tentative agreements can be found here and here at the Department of Personnel Administration.)


Filed under: Budget and Economy

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