BILL ANALYSIS
AB 53
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Date of Hearing: April 1, 2009
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Ed Hernandez, Chair
AB 53 (Portantino) - As Amended: March 25, 2009
SUBJECT : State employment: salary freeze.
SUMMARY : Prohibits specified state employees whose annual base
salary is over $150,000 from receiving a salary increase or
overtime pay until January 1, 2012. Specifically, this bill :
1)Prohibits an employer from providing a pay raise or overtime
pay to a person employed by the state whose annual base salary
is over $150,000.
2)Defines "person employed by the state" as any person employed
by the executive, legislative or judicial branches of
government, appointees to state boards and commissions, and
employees of the California State University system.
3)Exempts from these provisions a state employee whose salary is
governed by Memoranda of Understanding, as set forth in the
Ralph C. Dills Act, the Meyers-Milias-Brown Act, or pursuant
to another collective bargaining agreement, a person who
occupies a classification that is deemed necessary to public
safety and security by the Governor through an executive
order, or a person whose salary is set by the State
Constitution.
4)Authorizes the Controller to reject a request for a
disbursement of funds that violates these provisions.
5)Urges the University of California system to adopt this
policy.
6)Specifies that this section will remain in effect until
January 1, 2012.
EXISTING LAW requires the Department of Personnel Administration
(DPA) to set and adjust salaries for each classification in
state service.
AB 2936 (Ridley-Thomas), Chapter 240, Statutes of 2006, among
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other things, gives DPA special salary setting authority for
certain statutorily exempt employees, primarily department and
agency secretaries, commissioners, and directors allowing DPA to
make salary determinations on a case-by-case basis after
considering a number of factors, including growth in the
position's stature and responsibilities, compensation paid in
similar positions in other jurisdictions, the need to avoid
salary compaction, and special recruitment needs.
AB 257 (Chesbro), Chapter 748, Statutes of 2006, among other
things, allows the Board of the California Housing Financing
Agency to set the compensation of key exempt management
positions, including the executive director, chief deputy
director, the general counsel, director of financing, director
of homeownership programs, director of multifamily programs,
director of insurance, and financial risk management director.
SB 269 (Soto), Chapter 856, Statutes of 2003, allows the boards
of administration of the California Public Employees' Retirement
System (CalPERS) and the California State Teachers' Retirement
System (CalSTRS) to set the compensation for specified key
executive and investment positions. These include the chief
executive officer, system actuary, chief investment officer, and
other investment officers and portfolio managers whose positions
are classified managerial by state civil service standards. In
setting these salaries, the Boards must be guided by the
principles contained in existing civil service laws, to
compensate employees at levels competitive with the compensation
paid to employees in other retirement and financial service
entities. AB 1317 (Mullin). Chapter 333, Statutes of 2007,
expands the list of key positions to include the general
counsel.
AB 743 (Keeley), Chapter 792, Statutes of 1999, requires that
supervisors of state employees represented by Bargaining Units
(BU) 5 (California Highway Patrol Officers), 6 (correctional
peace officers), and 8 (state firefighters) receive salary and
benefits that are at least generally the economic equivalent to
the salary and benefits granted to the employees they supervise.
AB 2801 (W. Brown), Chapter 762, Statutes of 1994, establishes
the policy of the state to compensate sworn members of the
California Highway Patrol at the average compensation, including
specified benefits, paid to the equivalent officers in five
specified agencies. Any increase in compensation is determined
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through collective bargaining.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, "Over the past few years,
various state agencies have given inappropriate and excessive
compensation increases while California is grappling with a
budget crisis. Particularly at the University of California and
the California State University, the governing bodies of those
systems have approved numerous compensation increases and
personnel moves for executives and staff who already make six
figure salaries. In order to solve this budget crisis, everyone
will need to help shoulder the burden, including the state's
highest paid employees.
In a March 25, 2009, San Francisco Chronicle article, reporter
Jim Doyle wrote, "The University of California's worst financial
crisis in years has not prevented the hiring of high-salaried
administrative talent or the awarding of pay raises, promotions
and perks to a dozen executive, university records show. The
new appointments reflect the university's commitment to
providing 'management effectiveness and accountability,' said UC
spokesman Paul Schwartz, adding that the system also needs to
provide competitive salaries and benefits to attract and retain
those qualified to run a major academic institution. Last week,
for example, the governing Board of Regents appointed two
executives at salaries of more than $350,000 a year and
authorized paid administrative leaves to two former campus
chancellors - one receiving $402,200 a year and the other
$315,000. Over the last two months, the board also granted pay
increases of as much as 22.3% to a half dozen senior managers
and approved higher salary ranges for several additional
department manager positions at UCSF and at the university's
headquarters in Oakland."
The Boards of Administration of both CalPERS and CalSTRS took
"oppose unless amended" positions on the introduced version of
the bill citing concerns that they would be unable to hire,
motivate and retain high quality investment staff which
ultimately could result in higher investment staff vacancy
rates, higher recruitment costs and the need for a more costly
externally managed investment program.
Opponents state, "While the University acknowledges its
responsibility to assist the State in addressing the growing
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fiscal crisis in California, we believe that AB 53 would have a
tremendous and long-lasting negative impact on the University of
California, the ability of UC to carry out its educational
mission, and its ability to help the State during this critical
time."
Opponents go on to state, "The CSU has serious concerns with
this proposal and its effects on the ability of the system to
govern itself and attract and retain the best available faculty,
staff, and executives to lead this complex institution through
tough time such as today. The CSU has taken action to reduce
costs during this fiscal crisis to protect our students, faculty
and staff and to preserve the quality of our universities. The
Chancellor's Office and all of its 23 campuses have taken the
following mandatory measures: travel restrictions for employees;
cancellation of all non-critical equipment and supply purchases;
and a hiring freeze on all positions except those essential to
the operation of the university. In addition to this, the CSU
has implemented a salary freeze for all vice president level
positions and above including presidents' and vice chancellors'
salaries, and the Chancellor effective immediately through the
2009-10 budget year."
According to the State Controller's Office, this bill will
impact 94 state agencies, including state hospitals,
correctional facilities, and the California State University.
Approximately 785 state employees meet this bill's criteria.
The Committee is recommending a technical amendment be made to
clarify that the bill's provisions apply to anyone moving into a
position making $150,000 after the effective date of the bill or
anyone whose salary increases after the effective date of the
bill to be more than $150,000.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
California State University
University of California
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Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957