Taxpayers will foot bill for state worker ‘savings’

Aug. 16, 2012

Katy Grimes: With the recent payroll and vacation buyout scandal at the state Parks and Recreation Department, state worker compensation is under a microscope, and should be. Despite that microscope and public scrutiny, it appears that in the long run, state worker pay and benefit cuts and furloughs will end up costing taxpayers more.

How?

“The 2012 Budget includes $2.4 billion for state contributions to the California Public Employees Retirement System for General Fund programs–$350 million more than 2011.  The state’s contribution for all funds (General Fund plus Special Funds) cost taxpayers $4.3 billion.  The budget did not include any provisions to reduce current or future retirement costs,” according to the California Budget Fact Check.

State worker salaries

“State employees will continue to receive salary increases in 2012-13, at a cost of more than $110 million,” California Budget Fact Check reports. “Since 2008-09, state employees have received salary increases that have cost state taxpayers more than $1.7 billion.”

Hold on and read on…

The California Budget Fact Check found that:

* The 2012-13 budget assumes one-time General Fund savings of $420 million from employee compensation.  These savings are achieved by adopting a one day a month unpaid Personal Leave Program (PLP) for most state workers, which represents a 4.6% pay reduction.  According to the Legislative Analyst, the savings are one-time in nature and may cost the state more in the long run. 

* State employees will continue to receive salary increases in 2012-13, at a cost of more than $110 million. Since 2008-09, state employees have received salary increases that have cost state taxpayers more than $1.7 billion.  

* In the current budget, the state will pay $350 million more than last year in increased retirement costs.  No provisions to curtail growing retirement costs were adopted as part of the budget. 

Savings One-time in Nature

“21 bargaining units have agreed to a one day per month unpaid Personal Leave Program (PLP).  However, the budget still assumes that those remaining bargaining units that have not agreed will have a one day per month unpaid leave program imposed.  This is equivalent to a 4.6 percent pay reduction for 2012-13 only.  This pay reduction does not affect the employee’s retirement benefit.  Under the Governor’s furlough provisions, employees’ retirement benefits will be calculated at their full salaries, as if they did not take a furlough day.

According to the nonpartisan Legislative Analyst’s Office, this provision saves the state money in 2012-13 but will cost the state more in the future. This personal leave can be banked and taken at any time.”

Read the full report: “Taxpayers foot bill for state worker “savings.” And be sure to read the many other excellent reports by the California Budget Fact Check.