One of the governor’s more controversial proposals to close California’s $11 billion budget shortfall is to furlough state employees for one day a month through the end of 2009-2010. This amounts to a 4.62% reduction in pay, according to the proposal. It also eliminates Columbus Day and Lincoln’s birthday as state holidays and eliminates premium pay for hours worked on the remaining state holidays. How to define state employee is the question, and at the moment, State Compensation Insurance Fund’s roughly 7,800 employees are included in the mix.
It makes little or no sense that SCIF employees would be included because SCIF is “off budget”— its employees are paid out of premiums, not the state budget. But industry insiders say management will be able to cut costs by going along with the governor on this one. SCIF is running at unprecedentedly high cost levels, so cutting costs this way is tempting, insiders say.
SCIF adjusts workers’ comp claims for all state agencies, so lower costs at SCIF might reflect lower costs at other agencies.
SCIF management has been silent on the issue, either refusing or fearing to comment on any of the governor’s proposals.
Insiders say SCIF president Janet Frank and Jeanne Cain, Board Chair of SCIF and Executive Vice President of Policy for the California Chamber of Commerce, are reluctant to go against the governor on much of anything, no matter how detrimental to SCIF. Allowing off-budget state employees to be furloughed seems a poor way to boost morale, especially after making much ado about a “rebranding” effort, in large part to make SCIF employees feel more appreciated.
The governor has proposed budget cuts and revenue generators, none of which have received thumbs-up from the Legislature. In November the governor called for specific cuts and revenue generators in addition to a proposal for a stimulus package to reinvigorate the economy. “They didn’t do anything last month. They were 0 for 4,” says Aaron McLear, spokesman for Governor Schwarzenegger, adding that the governor’s proposal on the furlough has not changed.
Last week, Governor Schwarzenegger declared a fiscal emergency, calling the Legislature back into a special session to address the budget. He also called a second special session to address the economy. The Legislature approved it, and started work this week. McLear says the Legislature has 45 days to address the shortfall. “If they don’t, they can’t work on anything else until they do,” he says.
SEIU Battles for SCIF Employees
At the moment, the furlough proposal applies to all state agencies, including SCIF. SEIU (Service Employees International Union), which represents SCIF employees, is carefully monitoring the situation on behalf of all its members. It is known to be active in the legislature and is working the halls.
“Right now because there is nothing on the table we don’t have anything that’s SCIF specific. They say they want to furlough everybody.”
— Jim Zamora, SEIU 1000
“The Legislature met until Tuesday night (November 25) and did nothing. We bargained right up to the last minute,” says Jim Zamora, spokesman for SEIU Local 1000, adding that it’s likely nothing will happen with the furlough until January.
He says the union has some assurances by senior Democrats that the Legislature won’t push anything on furloughs through the Legislature, believing it’s something that should be worked out between the governor and the unions.
“It’s a bizarre thing…Right now because there is nothing on the table, we don’t have anything that’s SCIF specific. They say they want to furlough everybody…That’s what we’re fighting,” Zamora says, adding that once the negotiators make a final decision on which state agencies would be included in the furlough, the union will take up that battle.
SCIF employees are not so sure that they’ll get off that easy, especially if management has the opportunity to use a fiscal emergency to cut costs. The money just goes right into the budgets of SCIF’s management.
“We have not heard one way or the other,” says one SCIF employee who asked not to be identified. “This makes no sense, and in fact, loses the state money because whatever they would cut would not go to the general fund.”
The last time a pay furlough was implemented was in 2003, according to the SCIF employee. He says SCIF personnel got one day off a month extra in exchange for a 5% reduction in pay. “The state promised to pay us for the time if we saved it, but again, reneged on it,” he says.
“What happened last time is that DPA had this lame excuse that they thought that SCIF would cause a brain drain from other state agencies because employees from general-funded agencies would want to go to SCIF,” he says. “This, as I see it, would cause a lot of problems with SCIF because the law also requires insurance companies to be open during regular business hours.”
“I suspect pay furloughs would be something that should be in the collective bargaining agreements. How that plays out when we get to the day that there is not cash is anyone’s guess,” says Mark Rakich, chief consultant for the Assembly Insurance Committee.