Full-time teachers are paid six-figure salaries to work for their union while keeping their school district seniority and pensions afloat. The dual work arrangements are built into union contracts.

“This has been going on for years, and it’s hard to know how widespread it is,” said Larry Sand, who has spotlighted the arrangements at unionwatch.org and heads the nonprofit California Teachers Empowerment Network. “It varies district by district and each contract has to be looked into. … A lot of the time, school board members don’t even know, or they are pressured by the unions to keep a policy in place.”

Built into the contract

As included in the teaching contract at the San Diego Unified School District, “when negotiations with the District are scheduled during working hours, association representatives will be released from work without loss of pay.”

The contract in the Bakersfield City School District provides a full-time leave of absence for the teachers union president to tend to association business: “The president shall be paid in the usual manner as if he/she were a regular employee of the District and shall suffer no reduction in salary.”

And in the Fountain Valley School District in Orange County, the union president can devote one day per week to union business, costing taxpayers up to $22,230 per year, according to unionwatch.org.

A union official who has received dual salaries said the arrangements are helpful.

“There is a lot of mutual benefit there,” said Michela Cichoki. “Some are teaching partners, and so there is a period of release for officers. And a lot of the time they are in meetings with the district, and they are teacher representatives on those committees, representing the teachers.”

In 2012, Cichoki received a pay package worth $242,754 for service as secretary-treasurer of the California Teachers Association. The same year, Cichoki was paid a package worth $118,818 from the San Bernardino City Unified School District for her work as a “hearing panel member.”

Cichoki’s case illustrates the complicated formula of reimbursement at the upper levels of the union/school district entanglement.

The union reimbursed the district for her package, although she was allowed to maintain her pension while gone by paying her share from her pocket.

“I was released from the school district while I was at CTA,” Cichoki said. “It’s in the [education] code that we can be released for union work, and the district can ask for reimbursement, and that comes from the union so that no taxpayer funds are paying for it.”

Dean Vogel, past president of the California Teachers Association, received a pay package worth $277,356 in 2012, the last year records are available. In 2013, while serving as president of the state’s teacher union, public records show he received $97,542 for working on “special assignment” in the Vacaville Unified School District.

The union may have reimbursed the district for Vogel’s pay package, as in the case of Cichoki. A spokeswoman for the CTA did not return calls.

Union work should be kept separate

Sand blames the local school board members for allowing teachers who should be in the classroom to instead conduct union work on taxpayer time.

“The school boards should be serving the public instead of serving the union,” Sand said.

The dual salary arrangements have drawn legal complaints in other states, similar to the noise being made by the teachers who contend they shouldn’t have to pay union dues that go to efforts they don’t support.

Some teachers also believe their union-connected colleagues shouldn’t be allowed to spend time outside the classroom when their job is to teach.

A lawsuit in Pennsylvania challenges the arrangement in the Philadelphia School District, where up to 63 teachers are allowed to gain seniority, accrue pension benefits and receive insurance, just as they would as teachers, while engaging in union activities.

Steve Miller can be reached at 517-775-9952 and avalanche50@hotmail.com. His website is www.Avalanche50.com

First came Los Angeles Superior Court Judge Rolf True’s ruling that teacher tenure laws are unconstitutional and “shock the conscience” because they protect incompetent teachers and funnel them to the schools in poor minority communities that most need the best teachers.

Now U.S. Bankruptcy Judge Christopher Klein has struck another blow for sanity by rejecting CalPERS’ argument that the city of Stockton can’t cut the pensions of city employees and retirees as it tries to get out of bankruptcy. CalPERS’ claim that state laws somehow trump federal laws has always seemed strange. Klein’s comments Wednesday certainly reflected that view. This is from Ed Mendel at calpensions.com:

Part of his analysis yesterday that CalPERS pensions are not state “governmental or political powers” protected under federal bankruptcy law is that while state workers are in CalPERS by statute, cities choose to join CalPERS.

Klein said California cities have the option of forming their own pension systems, joining a county pension system, hiring a private pension provider or withdrawing from CalPERS, if they can afford to do so.

He concluded that benefits not prescribed by state law are not “governmental or political” powers protected by the federal bankruptcy law, but instead are unprotected “business powers.”

Klein said a CalPERS-sponsored state law preventing cities from rejecting their CalPERS contracts in bankruptcy is “flat-out invalid” under the constitutional “supremacy clause” giving federal law priority over state law.

The judge said another CalPERS-sponsored state law that gives CalPERS a lien on all city assets, except wages, when they declare insolvency is an invalid attempt by the state Legislature to “edit” the federal bankruptcy law.

Judge: “Why should I take [CalPERS claim] seriously?

The New York Times treated this ruling as a major national story and made a point that California coverage did not: “Judge Klein’s ruling went beyond anything that Stockton was seeking.” More from the NYT:

Calpers had argued that if Stockton stopped making payments and dropped out of the state pension system, the lien would let it claim $1.6 billion of its assets. But Judge Klein said those statutory powers were suspended once a California city received federal bankruptcy protection.

“Why should I take that lien seriously?” he asked a lawyer for Calpers, Michael Gearin. …

“The bankruptcy code provides that the lien can be avoided and be treated as an unsecured claim,” Judge Klein said.

Judge Klein also said that Stockton had many options other than Calpers for retirement benefits: a private provider, like an insurance company; a multiemployer pension plan affiliated with a union; one of California’s county-run pension plans; or it could even offer no pensions at all.

“There are lots of permutations and combinations out there with respect to the art of the possible,” he said, adding that nothing in the law required any city to give its business to Calpers. “The whole world is out there.”

Conservatives, libertarians and believers in small government have long viewed the courts with suspicion. That’s especially so in California, where conservative ballot propositions have often been scrapped or enfeebled by courts but liberal ballot measures rarely seem to get picked apart.

But Judge Treu and Judge Klein go against that narrative — and offer hope that a new balance of power is coming in a state dominated for too long by public employee unions.

]]> https://calwatchdog.com/2014/10/02/stockton-ruling-like-vergara-ruling-shakes-ca-status-quo/feed/ 20 68689 https://calwatchdog.com/2014/08/05/another-blow-to-pension-reform/ https://calwatchdog.com/2014/08/05/another-blow-to-pension-reform/#comments Wed, 06 Aug 2014 00:55:16 +0000 http://calwatchdog.com/?p=66555 The ultimate pension reform is Detroit-style bankruptcy, with retirees getting less than what they are owed by contract. As the NY Times reported on July 22:

“DETROIT — Coming to terms with what came to be seen as inevitable, this city’s public-sector retirees have voted to lower their expected pension benefits, a crucial step in the city’s plan to emerge from bankruptcy before the end of the year.

“The result, announced late Monday night, came after two months of court-required voting.

“The balloting revealed a belief by current workers and retirees that the city’s offer — as much as 4.5 percent cuts to some pensions and diminished future cost-of-living increases — would be even worse if this one was rejected.”

Note: That’s for those already retired.

But here’s what’s still going on in California, according to CalPensions.com

“A labor board may have helped open a new front in public pension battles last week by overturning a Los Angeles cost-cutting reform, ruling that pension cuts for new hires must be bargained.

“New hires have been a target for lower pensions because, unlike workers already on the job, they are not believed to have a ‘vested right’ to their current pension, protected by contract law, that can only be cut if offset by a comparable new benefit.

“The five-member Los Angeles Employee Relations Board unanimously adopted a hearing officer’s conclusion that the city violated labor law by imposing a pension cut on non-sworn new hires without bargaining with public employee unions.”

The ruling will be repealed. But it’s clear that California public-sector unions and their members don’t understand yet that there just isn’t enough money for the lavish retirements they have been promised.

]]> https://calwatchdog.com/2014/08/05/another-blow-to-pension-reform/feed/ 51 66555 https://calwatchdog.com/2014/01/25/sacto-city-clerk-rejects-petition-to-put-arena-subsidy-to-a-public-vote/ https://calwatchdog.com/2014/01/25/sacto-city-clerk-rejects-petition-to-put-arena-subsidy-to-a-public-vote/#comments Sat, 25 Jan 2014 18:04:23 +0000 http://calwatchdog.com/?p=58425 In another twist in Sacramento’s arena derangement syndrome, a petition drive to put a public subsidy for the proposed Sacramento basketball arena project to a public vote, has been rejected by the Sacramento City Clerk.

Friday, the city clerk announced that she rejected the petitions, along with 34,000 signatures, on the grounds some of the petition versions did not comply with election code.

“Due to technical issues identified in the submitted petitions, I find the petition noncompliant with significant provisions of the California Elections Code and the Sacramento City Charter, and therefore insufficient to move forward,” Shirley Concolino, Sacramento City Clerk, said in a press release.

Yet, just last week, the Sacramento County Registrar certified there were enough verified signatures on the petitions to qualify the measure for the ballot.

The signatures were collected by STOP, Sacramento Taxpayers Opposed to Pork, and Voters for a Fair Arena Deal, to put the decision of whether a public subsidy for the new arena project downtown, should be on the ballot in the city of Sacramento.

“The4000, a group representing the new downtown arena plan responded to Friday’s decision by saying, ‘For STOP, this has never been about a vote and democracy; it has always been about tricking voters and stalling the arena with a two-part vote designed to blow up the project,’” reported Fox 40 news.

The4000 is a group headed up my Mayor Kevin Johnson, a former NBA player. “The downtown arena is an extraordinary, once-in-a-generation project with a profound potential to generate catalytic economic benefits for the downtown, city and region,” The4000 claims.

In the letter Concolino sent to STOP about her decision, she cited the nine different petition versions as being problematic. Concolino said even though the petition’s signatures are valid, they were gathered before STOP officially filed their notice of intent with the city clerk’s office.

In a new report on the spending plan, the Legislative Analyst’s Office said Jerry Brown’s proposal to use cap-and-trade funds for high-speed rail is unlikely to maximize greenhouse gas emission reductions, which was the entire stated purpose of AB 32 and the cap-and-trade program.

Under AB 32, the California Air Resources Board created a regulation that establishes
 a cap-and-trade program, to help lower carbon emissions in California. AB 32 is the Global Warming Solutions Act, passed in 2006 by the state Legislature and signed into law by Gov. Arnold Schwarzenegger. The goal is to reduce greenhouse gas emissions in the state to 1990 levels by 2020.

Cap-and-trade was established to help achieve this goal. The regulation places a “cap” on aggregate greenhouse gas emissions from businesses and entities responsible for approximately 85 percent of the state’s emissions.

In the implementation the cap-and-trade program, the California Air Resources Board allocates a certain number of carbon allowances to the businesses. According to the CARB, each allowance equals one ton of carbon dioxide equivalent. The CARB provides some allowances for free to designated businesses. Other businesses are required to purchase allowances at auctions. Once the allowances have been allocated, entities can then “trade,” buy and sell the allowances, in order to obtain enough to cover their total emissions for a given period of time.

From the LAO report:

In order to minimize the economic impact of cap-and-trade, it is important that auction revenues be invested in a way that maximizes GHG emission reductions. Maximizing emission reductions (specifically in the capped sectors) reduces competition for allowances, thereby putting downward pressure on the price of allowances. This, in turn, reduces the overall cost for covered entities to comply with AB 32 and the potential negative economic impacts of the program on consumers, businesses, and ratepayers. It is, however, unclear to what extent the complement of activities proposed by the Governor maximizes GHG emission reductions.

college essays writing servicesThe LAO warns the Legislature there are legal risks with Brown’s plan to use cap-and-trade auction funds for funding high-speed rail:

Based on an opinion that we received from Legislative Counsel, the revenues generated from ARB’s cap–and–trade auctions are considered “mitigation fee” revenues. Thus, the use of these revenues are subject to certain legal criteria. Specifically, we are advised that their use is subject to the so–called Sinclair nexus test. This test requires that a clear nexus must exist between an activity for which a mitigation fee is used and the adverse effects related to the activity on which that fee is levied. Given this legal requirement, the administration’s proposal to fund activities (such as high–speed rail) could be legally risky. While the high–speed rail project could eventually help reduce GHG emissions somewhat in the very long run, it would not help achieve AB 32’s primary goal of reducing GHG emissions by 2020.

High-speed rail will not reduce carbon emissions

The Legislative Analyst’s Office warned in 2008 that the high-speed rail project would initially increase greenhouse gas (GHG) emissions for many years.

Following up, a greenhouse gas emission analysis done by the High Speed Rail Authority in 2013 indicates that once the high-speed rail system is completed and operational in 2022, it would contribute a relatively minor amount of GHG emission reductions.

The bullet-train project was touted as a way to dramatically reduce these emissions. Yet even after contrary reports, the governor still insists the project is green. “The high-speed rail is a reducer of greenhouse gases, an enhancement of the quality of California life and a bringing together of our various communities around the state,” Brown said at his budget press conference Thursday. He said because the state's population will grow by millions of residents, “we need alternatives.”

But as the LAO has consistently warned since 2008, and has does again with its new report, the construction of the project would actually produce additional emissions:

Despite these findings, roughly 30 percent of the funding in the Governor’s proposal goes to the high–speed rail project. Compared to a different mix of investments that could be made with the cap–and–trade revenue, the governor’s proposal is unlikely to maximize GHG emission reductions. Therefore, the Legislature will need to consider the most effective use of the cap–and–trade auction revenue.

Set to expire in 2018, it was sold to voters as a temporary tax.

“’We need to renew Prop. 30,’ Torlakson, the state Superintendent of Public Instruction, said Wednesday night at a coffee meeting with local PTA leaders in a Sacramento home,” the Sacramento Bee reported online.

Two days later, the Bee did a newspaper story  (and put it online) about that same meeting with Torlakson in a private home. But those pieces said the meeting was to talk to parents and teachers about the new Common Core state education standards. There was no mention of Torlakson’s call to extend Prop. 30 in the newspaper version of the story, yet both stories were written by Bee reporter Diana Lambert.

Perhaps Torlakson had an early copy of the Legislative Analyst’s Office 2014-15 fiscal review.

“As Proposition 30 Personal Income Tax increases phase out, much slower revenue growth forecasted,” the LAO headline said.

“Under Proposition 30, the increase in Personal Income Tax rates for high–income taxpayers generates a much greater proportion of revenue than the sales tax increase,” the LAO report found.

Under a hypothetical recession, the LAO explained, “the revenue losses would be offset somewhat by lower Proposition 98 minimum requirements, and we assume that the state would reduce spending to the lower allowed spending levels.”

The LAO warned against overcommitting, which could bring back budget shortfalls.

General fund spending

The California Personal Income Tax is two–thirds of the annual general fund revenues.

“We note, however, that the proportion of the general fund supported by PIT revenues likely would be growing even if Proposition 30 were not in effect due to more income concentration among the highest–income taxpayers and the other factors described earlier,” the LAO said.

Remember when Gov. Jerry Brown was campaigning to pass Prop. 30? “The taxes that I’m proposing on sales and higher income people goes to the schools — 100 percent of it,” the Los Angeles Times reported Brown saying. “But it goes in a way that integrates it with the budget itself.”

(Note: The L.A. Times stories with this quote are no longer available; the story linked is in the Press Democrat, but is a column by L.A. Times columnist George Skelton.)

However, what Brown wasn’t saying is that when state revenue increases, so does school funding, automatically. Proposition 98, passed in 1988 by the voters, guarantees K-12 public schools and community colleges about 40 percent of the general fund. So when general fund revenues go up, so does school spending. Conversely, when general fund revenues are reduced, school spending is also reduced.

“The first 18 months of the tax hike would raise $9 billion, according to the state Finance Department. Schools would be entitled to $3.8 billion, or 42 percent. The remaining $5.2 billion, or 58 percent, would be earmarked for budget balancing,” Skelton wrote.

So schools would not be receiving the bulk of the tax increase revenues. Is it any wonder Torlakson want to prolong the tax hike — other than a promise made to voters?

The governor’s $155 billion total spending plan increases the general fund spending to $106.8 billion from last year’s $97.7 billion. The budget only partly addressed the $10 billion owed to the federal government for unemployment borrowing,  about $6 billion borrowed internally from other funds, not to mention the estimated $500 billion in unfunded pension debt.

The budget is flush with new cash due to the modest economic recovery, and to the temporary tax increase from the governor's ballot initiative, Proposition 30, passed in 2012. This tax increase imposed a 10.3 percent tax rate on taxable income more than $250,000, an 11.3 percent tax rate on taxable income more than $300,000, a 12.3 percent tax rate on taxable income more than $500,000, and a 13.3 percent tax rate on taxable income more than $1 million.

Brown's budget also called for using $250 million in cap-and-trade money from Assembly Bill 32, the Global Warming Solutions Act of 2006, to fund the High-Speed Rail project, despite the criticism the project has come under lately, especially from the courts. Brown insisted the High-Speed Rail system, whose long-term cost is at least $68 million, will reduce carbon emissions.

At the press conference, Brown justified cap-and-trade funding the rail, “Cap and trade is a very good source for that … coming from the sources of pollution, to reduce pollution.”

Republican response, and ridicule, was swift to the rail funding idea. State Sen. Andy Vidak, R-Hanford, sent out a response using lyrics from an old song by legendary rock band the Eagles: “Governor Brown, why don't you come to your senses?” 

Vidak meant the proposal could be seen as a desperado attempt to save the project.

'New' budget still ignores debt

Brown also proposed $10 billion in new state spending on schools and community colleges, increasing the spending to more than $45 billion. In addition to the $10 billion going to schools and community colleges, Brown’s budget calls for $1 billion more for universities. Brown indicated he would continue to incentivize the state university systems to encourage graduation in four years.

What’s the carrot? Another $50 million in higher-ed funding.

Medi-Cal, the state's low-income health program, will receive an additional $670 million. Health and Human Services funding will increase to more than $48 billion.

“Wisdom and prudence should be the order of the day,” Brown said several times during the press conference. And he promised to chip away at California’s long-term debt. But Brown said he plans to only repay $11 billion in long-term debt, and would be putting away $1.6 billion in a rainy-day fund.

With the state's overall long-term debt problem chronically ignored, $11 billion is government chump change, and won't really chip away at the massive, growing debt problem.

“We owe $10 billion to the feds alone for unemployment compensation,” said Assemblyman Dan Wagner, in an interview. “$11 billion won't fix the problem, but sounds good in the media.” In Brown’s budgets, the hefty unemployment debt to the federal government is never included in the long-term “Wall of Debt.”

Brown limits what’s included in the Wall of Debt largely to money owed from the 2004 state bonds voters approved, and to money owed to K-12 schools and community colleges. The latter, in effect, is the state “owing” the money to itself.

Wagner said California ought to be working harder to pay the debts from outside of the state, such as the federal unemployment fund debt, which continue to rack up interest and penalties, rather than focusing on paying back funds borrowed from ourselves.

“And the unfunded pension liability is going to kill us,” Wagner added. “California is not back. No way.”

Fiscal restraint through tax increases and salary increases

Brown said he is committed to fiscal constraint. But the Republican minority in the Legislature held otherwise.

“In comparison to the [Democratic-run] Legislature, yes,” Brown has shown more constraint, said Everett Rice, Communications Director to Sen. Mimi Walters, R-Laguna Niguel. “But he also did tax increases, and gave pay increases to state employees. It’s hard to be constrained when you push tax increases and pay raises.”

The debt

Of the significant debt issues, pension and retirement benefits for public employees are unfunded by half a trillion dollars, according to Stanford University, and the state has billions of dollars in other outstanding obligations and debts. The California State Teachers Retirement System pension fund is currently underfunded by $80.4 billion, something Brown acknowledged in his budget proposal.

Brown called for “a new funding strategy” to include more from teachers and school districts, and have the state kick in more. But those solutions were not included in the budget numbers.

“The governor’s budget spends more than it should, pays down a pittance of the state’s long-term debt and saves too little for a rainy day,” said Assemblyman Jim Patterson, R-Fresno, in a statement. “It spends $10 billion more than last year; relies heavily on the new taxes that will end soon; and accomplishes little to chip away at California’s … wall of debt. It appears slightly better than some previous years, but it still misses the mark.”

“We now find that California's state budget situation is even more promising than we projected one year ago,” stated a report on the 2014-15 budget by the Legislative Analyst's Office. “The state's budgetary condition is stronger than at any point in the past decade.”

The estimation represents a surprising turnaround for California, which had been wallowing in a $26 billion deficit only three years ago, when Brown took office after Gov. Arnold Schwarzenegger had failed in his 2003 promises to end “the crazy deficit spending.”

“We have climbed out of a hole with a Proposition 30 tax,” Gov. Jerry Brown announced during budget negotiations last May. He was referring to the $7 billion tax increase voters passed in Nov. 2012.

Raises

The following are some items to look for in Brown's budget proposal to see how, or if, they are accounted for.

On July 1, state workers will begin enjoying 2.5 percent pay raises Brown negotiated for them. That will be followed by another 2 percent on July 1, 2015. Brown explained:

“If I characterize it to please the critics, then I might say that it’s good for the taxpayer.  And if I’m trying to get it ratified, I’ll say it’s a helluva deal for the workers.  So either way, I will err – and therefore, I will say nothing more than it’s fair.”

SEIU Local 1000 President Yvonne Walker said:

“We have achieved each of the four top priorities identified by our members. Protecting retirement security, preserving our 80/20 health benefit premiums, no new furloughs or PLP [Personal Leave Program] days and a wage increase for everyone.”

High-speed rail 

In his budget proposal, Brown is expected to advance spending millions of dollars on the state's controversial high-speed rail project. The money would come from penalty fees assessed by the California Air Resources Board on California businesses for carbon emissions.

Yet a congressional committee is in the middle of a probe of California’s high-speed rail project over charges of conflicts of interest and questionable spending of federal dollars.
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The projected high-speed rail costs have varied from an original estimate of $33 billion, to an official high estimate of $98.5 billion, and back down to $68.4 billion. But the Legislative Analyst’s Office warned it is “highly uncertain if funding to complete the high-speed rail system will ever materialize.”

New taxes?

Senate Bill 768, by Sen. Kevin de León, D-Los Angeles, proposes to more than triple California’s cigarette excise tax from $0.87 to $2.87, amounting to a $2 tax increase on every pack of cigarettes, which would increase the price to about $9 per pack in grocery stores, a little less in tobacco stores. The tax would also extend to cigars.

SB768  is backed by the same coalition which supported Proposition 29, a failed $1-a-pack tax initiative voters rejected in June 2012: the American Heart Association, the American Lung Association, the American Cancer Society, the Service Employees International Union and Health Access California.

These longtime proponents of cigarette tax increases said Prop. 29′s narrow defeat justified bringing it back through the Legislature. The groups also stand to benefit from the estimated $1.4 billion raised by the tax because much of the money would go into medical research and anti-tobacco programs.

A big potential problem would be an increase in the cigarette black market from the higher prices. This has happened in high-cig tax New York City, where 60 percent of cigarettes are black-market smokes.

Debt

Despite the rosy predictions for budget surpluses, the governor's own May 2013 Revision to his budget proposal cautioned the state still does not set aside “significant money” to address the more than $100 billion in unfunded state employee pensions. It also found the state has not set aside enough money to cover the $63.8 billion in unfunded liabilities for retired state employee health care, and “that liability increases by billions of dollars each year.”

There is also the additional $71 billion in unfunded liabilities for the California State Teachers Retirement System, which according to the Legislative Analyst’s Office requires $4.5 billion in additional annual spending in order to maintain solvency.

Moody’s said California’s unfunded pension liabilities for state and local governments actually could be even much higher, totaling more than $329 billion.

Overtime for nannies and domestic workers

The “Domestic Workers Bill of Rights,” Assembly Bill 241, by Assemblyman Tom Ammiano, D-San Francisco, “would specially regulate the wages, hours, and working conditions of domestic work employees,” according to the bill’s language. And it would “include childcare providers, caregivers of people with disabilities, sick, convalescing, or elderly persons, house cleaners, housekeepers, maids, and other household occupations.”

It also would mandate pay for “travel time spent by a personal attendant” and regulate “accommodations for a domestic work employee who is required to sleep in a private household.”

In 2010, the State Legislature passed a Resolution for a Domestic Workers Bill of Rights, which spawned a study by UCLA on the issue. What was promised in the Legislature as just a resolution recognizing this group of the workforce morphed into AB241.

According to Ammiano:

“The campaign to adopt a California Domestic Worker Bill of Rights attempts to address one core principle: domestic workers deserve equal treatment under the law. Unfortunately, California suffers from a unique and confounding contradiction: Domestic workers who care for property such as landscaping or housekeeping are generally entitled to overtime. Those domestic workers who care for children, the infirm, the elderly, and those with disabilities do not.”

The California Chamber of Commerce explained its opposition:

“The wage-and-hour burden that AB241 creates on individual homeowners as well as third-party employers is significant, and unprecedented. …

“Failure to comply invokes costly statutory penalties and litigation, including an employee’s right to attorneys’ fees. The detrimental impact of this potential liability will either discourage the employment of ‘domestic work employees,’ thereby increasing the unemployment rate in California; or force such homeowners and ‘third-party employers’ into the underground economy.”

Expanding the prevailing wage

Senate Bill 7 is by state Senate President pro Tem Darrell Steinberg, D-Sacramento. It expands the prevailing wage law to the projects of charter cities. According to the California Department of Industrial Relations, the “prevailing wage” is determined by several factors in each sector, but is heavily dependent on wages from union contracts.

Before SB7, state law already mandated that the prevailing wage be paid by “general law” cities, which have less autonomy than the state’s 121 charter cities. (Charter cities tend to be larger, such as Los Angeles and Anaheim.)

The California Constitution guarantees California’s charter cities broad authority over their municipal actions, including setting prevailing wage laws. According to the state Senate floor analysis of SB7, several court cases have upheld the charter cities’ rights in this matter. That’s why SB7 does not outright order charter cities to pay the prevailing wage. Instead, it withholds state funds from charter cities that refuse to pay the prevailing wage.

According to an analysis by the Haight Brown & Bonesteel law firm, “The fight about SB7 will likely now turn to the courts given the constitutional ramifications of the legislation.”

If SB7 remains the law, charter cities might have to forego important infrastructure projects because of higher costs. The League of California Cities had asked Governor Brown to veto the bill, noting that “using political leverage to punish those exercising rights provided by the Constitution is unjust.”

The bill was sponsored by the powerful State Building and Construction Trades Council, AFL-CIO, which would benefit from SB7’s punishment of construction firms using non-union labor. SBCTC President Robbie Hunter explained why he thought the bill was needed:

“Low-ball contractors have used charter cities as a loophole to get around the state policy of requiring prevailing wage on public works projects. SB7 makes it clear that such tactics are not in the best interest of California, and cities who permit these substandard wages on their projects won’t be rewarded with state funds.”

Prevailing wage in private businesses

SB54 is by Sen. Loni Hancock, D-Berkeley. It expands the payment of prevailing wages to privately financed refinery construction projects. “We have people dying in the refineries,” said Hancock at a September hearing. “We need a skilled work force, they need to be trained in a state-accredited program.”

Catherine Reheis-Boyd, president of the Western States Petroleum Association, explained industry opposition:

“Despite a strong and vocal opposition from oil industry workers, small businesses, labor, safety officials, and regional newspapers, California Governor Jerry Brown yesterday [Oct. 13, 2013] signed into law SB54. The bill requires refiners to pay prevailing wages to contract workers and restricts their ability to hire qualified employees to a limited pool of applicants.”

Assemblyman Tim Donnelly, R-Twin Peaks, said at the September hearing.

“This bill is going to make it harder to build another refinery in California. We need at least two more. If we want to lower gas prices for the average hard-working Californian, we need to get off the backs of those who are refining the fuels that operate the vast majority of vehicles in this state. This is the government coming in and interfering in the name of safety in a private contract. We need to make it easier for those who are willing to go through the inordinate amount of regulation we already have on them to put a refinery in to refine the special fuels we use in California. We need more refineries. This is not going to add refineries.”

Hancock’s response to these objections, according to the state Senate floor analysis of SB54:

“[T]he author’s office states that ensuring that outside contractors that work at chemical refineries have properly trained workers through approved apprenticeship programs will reduce public health and safety risks. The author’s office states that outside contractors at these facilities should be using a qualified workforce, not unskilled, low-wage workers hired off the street or brought in from other states to save money.”

New whistle-blower protections

SB496 is by Sen. Rod Wright, D-Los Angeles. Starting Jan. 1, employers will be prohibited from engaging in anticipatory retaliation, or taking action against an employee based on the belief he or she might report suspected illegal activity. The new law also expands employee whistleblower protections to prohibit retaliation by any person acting on behalf of the employer.

And it protects employees who disclose, or may disclose, information regarding alleged violations “to a person with authority over the employee or another employee who has authority to investigate, discover or correct the violation.” The bill was passed unopposed in both the state Senate and the Assembly.

Explained attorney Laura Reathaford, writing for the Society of Human Resource Management:

“Because a violation of California’s general whistle-blower statute can have serious consequences for employers — not the least of which are civil penalties of up to $10,000 per violation — California employers would be well advised to update their whistle-blower protection policies to reflect the changes effected by SB496 and to train managers and supervisors about the new retaliation provisions applicable to their conduct. Of particular concern to employers should be the fact that they can now be found liable for ‘anticipatory retaliation’ if they, or any person acting on their behalf, take adverse action against an employee based on the mere belief that the employee has disclosed or might disclose information about a reasonably-believed violation of federal, state, or local law.”

I’ve received calls from EDD employees with tales of lazy coworkers and strange office work conditions one would usually only find in Hollywood sitcoms.

“The Office” has nothing on the EDD, according to EDD employees I spoke with. But even with the lazy, napping, snoring, or movie-watching co-workers, EDD workers say there is no shortage of employees to process unemployment claims.

No shortage of EDD employees

Several EDD employees told me they believe the upper management at the EDD is allowing the massive unpaid claims debacle to continue in order to show the Legislature and governor that the agency needs more funding, and more personnel hired.

But  several of the workers I spoke with, some of who have been with the EDD for more than 10 and 20 years, say the problem is a lack of leadership within the agency.

Why else would EDD employees be allowed to watch movies on their iPads all day? Or snore loudly while they nap? Or make personal phone calls — for hours? EDD employees reported that coworkers really do this.

The tales I heard did not sound as if they were coming from disgruntled employees either. I was a Human Resources Director for 20 years. I am relatively adept at identifying real workplace complaints, or employees who feel unappreciated.

EDD employees turn phones off?

One EDD employee told me most of her co-workers shuffle papers all day, killing time. She said many of the workers turn the EDD desk phones off, and refuse to take phone calls from claimants. Instead, so they don’t have to take phone calls, they fight over the mail. “They should be answering phone calls, but they don’t,” she said.

Another EDD employee told me about a co-worker who watches movies all day long on his iPad. She said his desk is right next to the supervisor’s office.

Another EDD employee said one of his coworkers snores loudly when she naps at her desk. He said supervisors walk by the napping employees and movie watchers, but never correct the behavior.

Of the EDD employees who contacted me, all said supervisors are either busy socializing with coworkers, or never come out of their offices.

“People turn off the phones,” one EDD employee said. “They don’t even answer the calls. The lack of work ethic these people have comes form the very top,” she added. “Nobody is accountable for anything.”

Holiday parties

One EDD employee who said she’s been with the agency 22 years, said staff are spending entire work days decorating the offices for the holidays, and planning holiday parties. “They are bored,” she said. “I am amazed at how much time they spend planning parties, and they are pulling in overtime wages.”

In her office, she also said EDD employees watch television shows on their iPads, right in front of supervisors.  “Some are sleeping at their desks. This is insane!” she added.

“There is no shortage of manpower,” she said. “The EDD did that massive hiring with the funding from the Obama administration. There’s no lack of staff.”

“I called that dude Henry Perea,” she said, referring to Assemblyman Henry Perea, D-Fresno. Perea is chairman of the Assembly Insurance Committee, and held a hearing in November about the EDD computer failures, which left tens of thousands of claimants without their anticipated unemployment checks.

“I left him a message telling him about what goes on in my office,” she added. “I’ve been with the EDD 22 years, and it’s never been like this… this bad.”

“And the good employees, we’re watched like hawks,” another EDD employee told me. “If we’re productive, they deliberately slow our work down,” he said.

“It’s no wonder in the annual survey of best and worse run state governments, we’re always ranked the worst managed state,” he said. “And EDD is the worst of the worst.”

Links for my Three-Part Series: Part 1, an interview with EDD Spokesman Dan Stephens, is here. Part 2, “EDD computers must be fixed by Dec. 31,” is here. Part 3, “Employment Development Computer system not yet fixed,” is here.