Report: California’s cost for state workers’ pay to increase $500 million next year

03/04/2014 11:00 PM

03/31/2014 10:49 PM

In a far-ranging assessment of how much California pays its help, a nonpartisan report on Tuesday said the state government will spend a half-billion dollars more on employee compensation next year, but most workers’ take-home wages will continue to lag behind inflation.

Meanwhile, the size of the state workforce will remain essentially flat as some departments add staff while others cut positions, according to the Legislative Analyst’s Office assessment of Gov. Jerry Brown’s 2014-15 state budget plan..

Most state workers will be in line for modest raises this year, assuming Finance Director Michael Cohen says the state can afford it, but even then employees’ take-home pay will only return to the buying power it had six or seven years ago, the new report says.

“The average state worker’s take-home pay even declined somewhat during the end of the last decade as state workers picked up larger shares of their benefit costs while being furloughed,” the report says. “(O)n an inflation-adjusted basis, we expect the average state worker’s take-home pay to return to its pre–2007-08 levels in 2014-15.”

Chris Voight, executive director of the state scientists’ union, said the report lays out in stark detail how much state workers have sacrificed. His union is one of three state bargaining units that have yet to accept a new contract. The big issue for the scientists – pay.

“It’s time for some catch-up,” Voight said, recalling years of furloughs and flat wages his members have endured while their out-of-pocket costs for benefits increased. “State workers need to be restored.”

When adjusted for inflation, average annual state pay for the last two decades hasn’t cracked $60,000, the analyst reported, while the state’s share of pension and health benefits has increased 40 percent. The impact: For the first time next year, state salary and benefits combined will cost the government an average $100,000 per state worker.

The analyst anticipates employee compensation costs will increase beyond 2014-15. Most state workers will receive another modest raise the following year. Rank-and-file pay hikes will put pressure on the state to similarly increase managers’ wages. And pension costs will continue to grow as CalPERS tries to recover from devastating investment losses and phases in higher rates based on new retiree life expectancy

The governor proposes $3.5 billion in state contributions to CalPERS for pension benefits covering 215,000 or so state employees under his authority. That’s up from $3.2 billion this year, according to the report. The figures don’t include increased costs from CalPERS’ recent decision to hike rates because state retirees are living longer than its forecasters had anticipated.

Brown’s budget also assumes that the state’s employee health benefits cost will grow to more than $2 billion, up about $100 million from the current fiscal year that ends June 30.

The governor’s proposal adds about 1,600 employees to the workforce. DMV, State Hospitals and Veterans Affairs are among the nearly one dozen departments adding 50 or more positions. Developmental Services, Public Health and the state prison system will offset some of those gains by shedding hundreds of jobs.

State Compensation 030414 by jon_ortiz

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