The California Supreme Court is set to hear arguments over whether the Governor has the authority to furlough workers at the State Compensation Insurance Fund, but in the eyes First District Court of Appeal the issue is clear -- he doesn't. In an unpublished decision handed down on Friday, the Appeals Court rejected three different arguments as to why the furloughs should be upheld and a back pay order overturned.

Key among the First District's findings was that workers at State Fund should keep the back pay that a San Francisco court said they were entitled to as compensation for the earlier furlough days.

The administration argued in SEIU Local 1000 v. Schwarzenegger that the back pay award was "contrary to the concept of parity among civil service employees" and caused a disparity in pay and benefits among similarly situated workers. But that argument fell flat with the court. "Judge Woolard did nothing more than restore the state of affairs that existed between State Fund employees and the State prior to issuance of the two executive orders," the court noted in its opinion.

The administration had also challenged the calculation of the back pay award which was performed by the State Controller and not by Judge Woolard, but the court called the administration's rationale preposterous. Finding that Judge Woolard was ruling on the legal issue of entitlement and not the "individualized accounting of dollars and cents" the court maintained that the process was correct. "If the Controller could make individualized deductions for State Fund employees' furlough days, it was entirely reasonable for Judge Woolard to accept that he could compute back pay for those same individuals for those days," the court wrote.

The bulk of the case largely mirrors the issues in CASE v. Schwarzenegger that is now pending before the Supreme Court. In that case as well as the present one, the courts ruled the unions' lawsuits were not barred by an earlier court ruling in Sacramento that upheld the Governor's furlough authority. Here the court maintained that the cases resolved different legal issues and therefore were appropriate. It also upheld the lower court's finding that Insurance Code section 11873 limits the Governor's authority to furlough workers at State Fund.

"The authority to determine staffing needs is vested in the SCIF board and not the Governor, consistent with SCIF's structure as a 'quasi-governmental entity' mandated to be self-sufficient," the court held. "Moreover, defendant's interpretation would not achieve the announced purpose of the Governor's executive order, to improve the state's ability to meet its financial obligations. Any cost savings realized from a furlough of SCIF employees would accrue not to the benefit of the state's general fund, but to the ledger account maintained for the exclusive use of SCIF."

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