High Price of CA State Worker Contracts About to Increase $5 Billion More

Despite warnings from the nonpartisan Legislative Analyst’s Office and concerns from some labor-friendly Democrats, the Senate budget committee on Wednesday approved two bills to fund new contracts for three-fourths of the state’s rank-and-file workers.

The misgivings? Extra goodies in the tentative deal for prison guards, the lack of time to review the contracts negotiated by the Newsom administration, flaws in computing salary comparisons and vacancy rates — and, oh, the bottom-line cost of $5 billion over three years.

That was the overarching apprehension since the state faced a $31.5 billion budget shortfall this year and could face future deficits. By 2025-26, when the contracts would cost $2.2 billion, state revenues could be tens of billions lower, or higher, than current estimates, according to the analyst office’s report that dropped late Tuesday.

Assembly Bill 148 (which covers contracts for 14 of the 21 state’s bargaining units, including the nine represented by the largest union, SEIU Local 1000) and AB 151 (which specifically pertains to state correctional officers) include 80% of the state’s General Fund payroll costs.

The legislative analyst has repeatedly warned the Legislature against ratifying labor contracts of longer than two fiscal years because of “changing economic situations.” But most of the contracts discussed at Wednesday’s hearing, including the one hammered out with SEIU Local 1000, would be in effect for three years.

Aside from bigger paychecks and bonuses, the new contract for correctional officers establishes a 401(k) retirement fund on top of the existing state pension, which would increase state costs by an estimated $23 million a year. It’s a provision that made some committee members bristle, especially given the limited amount of time they said they were given to review the contracts and analysis.

• Democratic Sen. Josh Becker of Menlo Park: “This is a significant change to our policy, so I’m very concerned about the precedent…. It’s not a (compensation) tool we’ve used before, so it’s a new tool we’re putting in the toolkit, which seems like it’ll be used many times in the future if we put it in here.”

Analysts were also concerned about what they described as flawed methodology used by CalHR and the unions to look at vacancy rates and new compensation rates — a point reiterated by several committee members.

• Democratic Sen. Richard Roth of Riverside: “Obviously I support public safety pay increases, certainly where appropriate. But it’d be nice to have confidence in the material that’s presented to us to support those increases, particularly in light of some of the criticisms some of us are receiving as legislators.”

(In response, CalHR told CalMatters that its compensation surveys aren’t used to determine salaries, but “serve as a reference document to be used” during the bargaining process.)

And citing a 2022 case of one prison guard assaulting several female inmates at a Chowchilla state prison, Sen. Lola Smallwood-Cuevas raised concerns over greenlighting as much as $5,000 a year in cash bonuses for correctional officers who may be under investigation for disciplinary issues or connected to “any sort of lawlessness.”

• Smallwood-Cuevas, a Democrat from Los Angeles: “While I understand and recognize how we have a need to recruit and fill vacancies for a number of positions here at the state, why would this particular unit receive a $5,000 cash bonus?”

But the concerns weren’t enough for legislators to hold up the bills, which passed mostly by party-line votes.

Two Democrats, Susan Talamantes Eggman of Stockton and Caroline Menjivar of Van Nuys, broke ranks and voted “no” on the prison guard contract. Interestingly, Republican Sen. Shannon Grove of Bakersfield, who also supported withholding bonuses from officers under suspension, voted to approve the measure. Besides legislative approval, the contracts still require sign-off from Gov. Gavin Newsom and the unions’ membership.

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