SACRAMENTO -- Newly hired state employees in six unions would have to pay more into the system, work longer and will get less out of pensions than previous employees, under a series of new contracts that the state Senate ratified Monday.
The legislation narrowly passed when two Republicans joined 25 Democrats in approving the memos of understanding, which required a two-thirds vote. The bill now moves to the Assembly, where Democrats will also need two Republicans to ratify the contracts.
The so-called MOUs, negotiated between six public employee groups and Gov. Jerry Brown, permanently increase employee contributions to their pensions by an additional 2 percent to 5 percent, which will result in $350 million in savings, said Sen. Lou Correa, D-Santa Ana, the author of the legislation, SB151. Some salary increases would cost the state $152 million, so the total net gain to taxpayers over the next year is $200 million Correa said.
The bill fell one vote short in the first try, with only Sen. Sam Blakeslee, R-San Luis Obispo, joining Democrats. But after a two-hour recess, Sen. Anthony Cannella, R-Ceres, joined Blakeslee to provide the needed final vote.
"The contracts ratified today were negotiated at the bargaining table, and they do represent concessions from the unions involved and significant savings to the state," Cannella said in a statement. "Today, I received assurances from public-employee union leaders that they will engage in an earnest conversation about real pension reform."
More than 50,000 employees are covered in the bargaining units, including attorneys, the California Correctional Peace Officers Association, public safety personnel, professional engineers, professional scientists, and International Union and Operating Engineers.
Other Republicans argued that the agreement fell $200 million shy of what Brown had projected in his budget, and that he's asking voters to cover the shortfall with new taxes or cuts in other areas of the budget.
"We're $200 million short, so we have to go find that in negotiations," said Sen. Doug LaMalfa, R-Rocklin. "Where's that going to come from? Schools, highways, or more taxes? We're asked to take a deal that's going to put us in greater financial peril. We really should be getting the budget done first so we know where we're at."
Senate Republican leader Bob Dutton, R-Rancho Cucamonga, said that none of the pension reform demands that he made a month ago to Brown are in the contracts, and that a $60 billion unfunded liability for retiree health care remained unaddressed.
"All of this is in the backdrop of the governor's proposal for passing a $50 billion tax increase over the next five years," Dutton said. "This should be addressed as part of an entire budget package that includes reforms. This bill does provide some short-term gain but for a lot of long-term pain."
Last year, six of the 15 Republican senators, including Dutton, voted against a pension reform bill that would have rolled back 1999 benefits for a $400 million savings. Dutton and the others were accused by Gov. Arnold Schwarzenneger of "selling out" to the prison guard union, the California Corrections and Peace Officers Association.
The reform was eventually allowed to pass on a majority vote during a special session, which did not require a two-thirds vote. Senate Leader Darrell Steinberg, D-Sacramento, reminded Republicans of their refusal to go along with that deal.
"Forty percent of the membership of the minority party refused to vote for pension reform, and yet you talk about it all the time," Steinberg said. "This is now your second opportunity to vote for pension reform in the last seven months. Where is the commitment to actually reform something?"
The difference between what the governor scored in the budget and the outcome of the MOUs, said Sen. Mark Leno, D-San Francisco, "represent the very nature of collective bargaining.
"If he'd put in $100 million or $200 million lower, (the savings) would have been less than that," Leno said. "The governor has negotiated a much better MOU than what existed in the Davis administration."
Steinberg lauded Brown for doing something Schwarzenegger couldn't do in six years: the MOU gives the state the power to strip local prison bargaining units' agreements with local wardens.
Currently, the state cannot unravel local agreements. But under this MOU, the state can force new negotiations, and ultimately can unilaterally change the agreement.
"That is the single biggest concession the Schwarzenegger administration sought for six years and it's in this contract," Steinberg said. "The fundamental management issues have been resolved."
The contract, which lasts through fiscal year 2012-13, eliminates nine furlough days that had been in effect for the last two years.
For the first year, through mid-2013, employees will take pay cuts of about 5 percent, and can use one day of personal leave a month instead. At the end of the agreement in July 2013, employees at the top step of their salary range will get pay increases of from 2 percent to 5 percent to offset the increase in pension contributions they will make. The increase takes them back to the salary levels of five years, Correa said. The cost of salary increases is $152 million.
The MOUs make clear there is no cap on employees accruing leave time, an important issue particularly for the state's prison guards, whose ability to accumulate extra hours relieves the pressure for increased hiring.
But accrued leave cannot be used to spike pensions, Correa said. "You can cash it, take the money and pay taxes on it."