Employees at State Compensation Insurance Fund are agreeing to a 5% pay cut and 12 personal days of leave as part of the contract deal the Service Employees International Union (SEIU) has reached with the Schwarzenegger administration. Dubbed a personal leave program (PLP), the one-time, 12-month initiative carries a promise that no additional furlough days will be imposed during the period.

In addition to covering more than 5,000 of the 7,800 workers at State Fund, the SEIU contract also covers state workers at the Division of Workers’ Compensation (DWC) and the Workers’ Compensation Appeals Board (WCAB). DWC is currently dealing with three furlough days a month.

Belt-tightening isn’t limited to rank-and-file workers. Gov. Schwarzenegger issued an executive order calling on all non-represented state employees, including supervisors and managers, as well as all exempt state employees, to take the same pay and benefit cuts. The changes are scheduled to take effect November 1 and Department of Personnel Administration officials confirmed to Workers’ Comp Executive that the order will apply to managers and executives at State Fund.

So what impact will this have on the bottom line at State Fund and on the rates employers pay? Not much, according to SCIF officials.

“A Personal Leave Program is not a furlough. If ratified, employees will receive additional leave days in exchange for the pay reduction. They can use this leave at their own discretion the way they do vacation,” says spokeswoman Jennifer Vargen, noting that the quasi-governmental agency has effectively managed through past PLP programs. But she warns against any expectations of a real savings. “We need to accrue the PLP as a liability on our balance sheet so that offsets the salary savings,” she says, noting that the main benefit will be from a cash flow standpoint.

The PLP program is seen as preferable to mandatory furloughs because it will allow agencies to manage leaves more effectively and will not shutter state offices one or more days a month.

Under court order, State Fund employees were exempted from prior furlough orders, but that decision is still being reviewed by the California Supreme Court. It noted in a recent opinion that the governor’s prior furlough program for most state workers was ultimately legal because the Legislature authorized the furlough when it included the expected savings in its budget. But in a footnote, the court said it would deal with the State Fund issue in a separate ruling (for past coverage, see Supreme Court…).

In addition to the PLP provisions, the contract also calls on workers to contribute an extra 3% to their pension plan, but provides a 3% boost to pay for workers at the top of their pay range effective July 1, 2013. The contract includes new pay protections for when the Legislature can’t agree on a budget. State workers faced the prospect of working for minimum wage if a budget deal hadn’t been reached, but the contract has a “continuous appropriation” guarantee that means workers would receive full salary even if the budget were delayed.