BILL ANALYSIS
AB 1765
Page 1
Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1765 (Solorio) - As Amended: March 11, 2010
Policy Committee: P.E.R. &
S.S.Vote: 4-0
Urgency: No State Mandated Local
Program:NoReimbursable:
SUMMARY
This bill prohibits a state employee from being furloughed,
during a time in which California's unemployment rate reaches or
exceeds 8.5%, if the employee is in a position funded at least
95% by the federal government, performs services that combat the
state's recession, and works for the California Unemployment
Insurance Appeals Board (CUIAB) or the Employment Development
Department (EDD).
FISCAL EFFECT
According to the controller, there are about 10,000 employees at
EDD and 800 employees at CUIAB, the majority of which are funded
from federal funds. The impact of the bill depends on future
unemployment rates and the extent to which furloughs are
implemented in the future.
As an illustration, if the governor were to order three-day per
month furloughs in 2011-12 and the unemployment rate were above
8.5%, the bill would result in $50 million in annual
compensation related costs (mostly federal funds).
COMMENTS
1)Rationale . This bill is intended to improve unemployment
related services during periods of high unemployment.
According to the author, "Employee furloughs in EDD and the
CUIAB impede employees' ability to review applications for
unemployment insurance, pay unemployment benefits, and approve
AB 1765
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training that will help unemployed individuals regain
marketable skills. Additionally, furloughs are creating a
long-term liability for the state when the affected employees
begin to utilize their required banked furlough days."
2)Background . In response to last year's budget and cash crisis,
the governor issued an executive order requiring mandatory
furloughs of two days per month beginning in February 2009,
and a second order upping the furloughs to three days per
month beginning in July of 2009. Since the July
implementation, many state departments, boards, and
commissions have been ordered closed three days per month,
while others are permitted to put employees on a self-directed
furlough program. The self-directed program allows employees
to accrue furlough days and use them like vacation days, upon
management approval. Accrued furlough days have no cash value
and must be used within 24 months of the end of the furlough
program. The current three-day furlough requirement amounts to
a reduction of 13.85% of employees' compensation.
Furloughs are scheduled to conclude on June 30, 2010 and the
governor has proposed alternative employee compensation
related savings in 2010-11 (5% pay reduction, 5% increase in
employee contributions to retirement, and 5% departmental
reductions).
Certain departments have received exemptions from the furlough
program. These include the California Highway Patrol and 911
Dispatchers, the Department of Forestry and Fire Protection
(during fire season), the Public Utilities Commission,
3)Opposition . Administration officials state furlough exemptions
based on funding sources are inconsistent with long held
principles of California's civil service system, which hold
that state employees should be treated equitably in pay,
benefits, working conditions, without regard to funding
sources. They also assert that inconsistent application of
furloughs could trigger staffing problems as furloughed
employees seek higher pay in exempt departments, and that
elimination of furloughs for special fund employees will
aggravate shortfalls the currently exist in many special
funds.
4)Related Legislation . AB 29 X8 (Steinberg) would have exempted
most employees funded by non-General Fund sources, plus those
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working for the major tax collection agencies, from the
three-day per month mandatory furlough. The bill passed both
houses of the Legislature but was vetoed on March 24, 2010. AB
2008 (Arambula), currently in P.E.R. & S.S, exempts employees
of the Department of Corrections and Rehabilitation, EDD, FTB,
and BOE from furloughs
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081