California’s state worker unions are weighing furloughs against more creative ways to trim payroll in sped-up negotiations with Gov. Gavin Newsom’s administration.

The administration has given the unions a June 12 deadline to reach deals that will reduce state workers’ compensation by 10 percent, according to several of the unions. That’s three days before the state’s deadline to pass a budget that will address a projected $54 billion deficit.

Unlike the furloughs ordered by former Gov. Arnold Schwarzenegger at the beginning of the Great Recession, these pay reductions come with options. The unions are probing whether any of the alternatives are preferable to furloughs.

California spends about $30 billion per year on state workers’ pay and benefits, covering salaries, health insurance, pension contributions and a range of stipends and differentials. The pay structure creates a menu of potential savings, but none are pleasant.

“Ultimately it’s hard, because most of the personnel dollars flow into the employee’s pocket,” said Tim Yeung, an attorney who advises local governments on employment issues. “It’s hard to make it so it doesn’t affect their pocketbook, unfortunately.”

The president of the state’s largest union has been more upbeat.

“I believe it’s going to be a smorgasbord of ideas that’s going to help us achieve these 10 percent in savings,” SEIU Local 1000 President Yvonne Walker said in a video message to the union this week.

The union has been surveying workers for ideas ahead of bargaining scheduled to start Wednesday, Walker said in the videos.

The California Department of Human Resources manages bargaining for the state. The governor’s representatives in the department take their agreements to the Legislature for approval. In normal times, the Legislature rarely rejects the administration’s proposals.

If unions and the administration can’t reach agreements in the next three weeks, Newsom will seek to force pay cuts through the Legislature, according to his $203 billion budget proposal. That likely would mean two furlough days per month.

Legislative leaders so far have supported reaching agreements through bargaining.

“When tough budget times come, all options need to be assessed,” Senate President Pro Tem Toni Atkins, D-San Diego, said in an emailed statement that acknowledged the pain of pay cuts for workers.

‘Best of the bad options’

In the past, furloughed workers typically have received a day of leave for each unpaid day, which they could bank for the future but couldn’t cash out.

“It’s not like they like furloughs, but it’s the best of the bad options available for unions,” said Yeung, the attorney. “At least you’re getting some time off.”

Walker said last week she thinks her members might prefer an alternative.

“We can figure out the equivalent of what that 10 percent represents and try to negotiate something that, yeah, there might be a little pain involved, but it won’t be the same two furlough days and how you think about it,” she said in a video. “I know the choice I would make and I believe I know the choice you would want us to make.”

In bargaining, each union will have a dollar amount equivalent to its share of the 10 percent across-the-board cut, which the state has said equals $2.8 billion.

By far the largest share of the state’s payroll spending goes to corrections workers, who account for about 35 percent of the state’s general fund payroll, according to 2019 pay figures.

“We will be using all resources and creative thinking to mitigate the impact felt by our membership as a whole,” California Correctional Peace Officers Association President Glen Stailey said in a recent letter to correctional officers. “We understand everyone will be impacted.”

The administration is looking for savings in the fiscal year that starts July 1. It’s not entertaining things like giving up vacation or sick days, said Steve Crouch, director of public employees for the International Union of Operating Engineers.

“They’re insisting on cash,” Crouch said.

The administration has floated at least one idea, however, with little short-term impact to workers. The state is considering suspending workers’ contributions to a retirement health care fund, Human Resources Director Eraina Ortega told a supervisors’ association.

Workers contribute between about 2 percent and 4.4 percent of their pay toward an underfunded retiree health care trust fund, according to a State Controller’s Office report.

The Human Resources Department has declined to discuss details of the negotiations. Walker and several other union leaders also declined to discuss specifics.

Salary, health care, pensions

The Legislative Analyst’s Office recommended the Legislature look for options other than furloughs to reduce pay, since the leave days accrue and become more costly over time as salaries increase. The office hasn’t yet suggested specific alternatives.

Salary, health care and pensions are the three primary categories of state workers’ compensation, said Nick Schroeder, an analyst with the office.

There’s little room for reducing what the state pays toward pensions since they’re protected under the California rule, a longstanding legal precedent that generally prevents pension reductions.

In the past, the state has asked workers to pay more toward their pension and health care benefits. Since those are pre-tax contributions, the hit is lighter for workers than a pay loss.

Yet state workers have been increasing their pension contributions since 2013, and most now split the monthly contributions toward their plans evenly with the state. Raising their contributions beyond half is less likely, Schroeder said.

Health insurance increases could create barriers to employees getting treatment, which would be problematic during a pandemic, he said.

That leaves salaries. As part of their pay, different groups of state workers earn a range of special types of pay, such as uniform allowances, bilingual differentials, extra pay for night or weekend work, longevity pay, hazard pay, geographic pay and a range of other additions.

Some of those could be on the table, and proposals will vary by bargaining unit.

“We are not taking a one-size-fits-all approach to these reductions,” Mary Halterman, a Department of Finance budget analyst, said during a Senate hearing Thursday.

Crouch said he’s leery of reductions in special pay.

“With furloughs, there’s a trigger on it,” he said. “When you give up that other stuff, you may never get that stuff back again.”

Negotiations could include discussions over eliminating retired annuitants or temporary workers from departments. Unions in the past have also looked to reduce the state’s use of contractors.

Those types of savings have not typically shown up in bargaining agreements. Departments likely already are looking at those types of savings in addition to pay reductions, Yeung said.

Newsom has directed departments to look for those savings, and his proposal calls for departments to reduce operating spending by 5 percent for the fiscal year starting July 1, 2021.

The Bee Capitol Bureau’s Hannah Wiley contributed to this story.

This story was originally published May 23, 2020 at 5:00 AM with the headline "California state unions have three weeks to negotiate pay cuts. Can they avoid furloughs?."