BILL ANALYSIS
AB 1699
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Date of Hearing: April 7, 2010
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Alberto Torrico, Chair
AB 1699 (Hernandez) - As Introduced: February 1, 2010
SUBJECT : State employees: compensation.
SUMMARY : Ensures that state employees will continue to be paid
even if a budget is not enacted by the beginning of the new
fiscal year. Specifically, this bill :
1)Requires, in any fiscal year in which the budget is not
enacted by July 1, an amount to be continuously appropriated
from the General Fund and special funds to pay state employee
salaries and benefits.
2)Specifies that if there is a memorandum of understanding (MOU)
in effect, pay and benefits will be consistent with the MOU's
provisions.
3)Specifies that for managers and other excluded state
employees, compensation and contributions will be at the rate
approved by the Department of Personnel Administration (DPA)
in the prior fiscal year.
4)Specifies that if no MOU is in effect and if DPA has not
approved a compensation package for excluded employees, the
compensation payments will be at the rate in effect the prior
year.
5)Authorizes the Department of Finance to reduce the appropriate
budget act allocations by the amount of warrants drawn once
the budget is enacted without action having to be taken by the
Legislature or the Governor.
EXISTING LAW provides that no state officer or employee will be
deemed to have a break in service or to have terminated his or
her employment, for any purpose, not to have incurred any change
in his or her authority, status, or jurisdiction or in his or
her salary or other conditions of employment, solely because of
the failure to enact a budget act for a fiscal year prior to the
beginning of that fiscal year.
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The California Constitution requires the Legislature to pass a
budget bill by June 15 of each year for the fiscal year
commencing on July 1. Under the California Constitution, money
may be drawn from the Treasury only through an appropriation
made by law and upon a Controller's duly drawn warrant.
FISCAL EFFECT : Unknown.
COMMENTS : According to supporters, "This is a very important
measure during these difficult financial times, especially with
state workers being furloughed and threatened with being paid
the federal minimum wage, should a budget agreement not be
reached by the end of the fiscal year.
"The California Constitution requires the Legislature to pass a
budget bill by June 15th for the fiscal year commencing July
1st. The Constitution also specifies that money can be drawn
from the Treasury only through an appropriation made by law and
upon a Controller's duly drawn warrant. In 2005, the California
Supreme Court upheld an appellate court decision ruling that
state workers, paid by the hour and who do not work overtime in
a particular pay period, are entitled only to the federal
minimum wage if the state enters a new fiscal year without a
budget. At that time, former State Controller Steve Westly
opined that the Supreme Court decision left him with the
authority to decide how much to pay state employees. He argued
that because decisions on overtime cannot be made in advance, he
would have to pay all workers in-full or risk violating the law.
"In July 2008, Governor Schwarzenegger ordered state workers'
pay to be reduced after the Legislature failed to pass a budget
on time. State Controller John Chiang refused to cut paychecks
that would have paid 238,000 state workers $6.55 per hour, which
is the federal minimum wage (currently federal minimum wage is
$7.25 per hour). The Department of Personnel Administration
took the Controller to court arguing the law compelled him to
pay federal minimum wage absent an on-time budget. In a ruling
by the court siding with the Governor, the court stated: 'while
state workers have the ultimate right to their full wages, the
law does not authorize the full pay until the money is
appropriated in the state budget.
"AB 1699 is a simple bill. It seeks to ensure that state
employees receive their full salary in the event a budget is not
passed in a timely manner. A recent court decision, coupled
with the three-day per month furlough order forced upon state
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workers by the Administration, leaves them vulnerable to sharply
reduced pay during late budget periods."
This bill is similar to AB 1523 (Soto) of 2007 which was held in
the Assembly Appropriations Committee, AB 1125 (Hernandez) of
last year which was held in the Assembly Appropriations
Committee, and AB 790 (Hernandez and Ruskin) which is currently
pending action on the Senate floor.
REGISTERED SUPPORT / OPPOSITION :
Support
Professional Engineers in California Government (Co-Sponsor)
California Association of Professional Scientists (Co-Sponsor)
American Federation of State, County, and Municipal Employees
Local 2620
California Association of Highway Patrolmen
California Attorneys, Administrative Law Judges and Hearing
Officers in State Employment
California Correctional Peace Officers Association
California Labor Federation
California State Employees Association
CDF Firefighters
Service Employees International Union Local 1000
Opposition
None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN:
AB 1699
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