BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 270
Gloria Negrete McLeod, Chair
Hearing date: March 21, 2011
SB 270 (Hernandez) as introduced 2/14/11 FISCAL: YES
STATE EMPLOYEES: CONTINUOUS APPROPRIATION OF SALARIES WHEN
BUDGET IS DELAYED
HISTORY :
Sponsor: Professional Engineers in California
Government (PECG)
California Association of Professional
Scientists (CAPS)
Prior legislation: AB 1523 (Soto)
Died on Assembly Appropriations
Suspense File, 2007
AB 790 (Hernandez)
Died on Senate Inactive File, 2010
AB 1125 (Hernandez)
Died on Assembly Appropriations Suspense File,
2009
AB 1699 (Hernandez)
Died on Senate Floor, 2010
SUMMARY :
1) This bill :
a) would provide-in any year in which a budget is not
enacted by July 1st -a continuous appropriation to pay
state employee salaries and benefits for the period of time
occurring between July 1st and when the budget is enacted.
b) specifies that employees shall be paid at rates
consistent with memoranda of understanding or the salaries
they were receiving in the fiscal year immediately
preceding the new budget year.
c) allows the Department of Finance to reduce the new
budget, once it is enacted and without further legislative
action, to reflect the monies already paid for employee
compensation under the continuous appropriation.
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Date: 3/09/11 Page 1
d) this is an URGENCY BILL and applies only to state
employees of the executive branch of government.
BACKGROUND AND ANALYSIS :
1) 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, or 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.
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.
2) What is the impetus for this bill ?
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 (currently
$7.25/hour) if the State enters a new fiscal year without a
budget.
In July 2008, then-governor Schwarzenegger ordered state
workers' pay to be reduced after the Legislature failed to
pass a timely budget. State Controller John Chiang refused
to cut paychecks that would have paid 238,000 state workers
$6.55 per hour, which was the federal minimum wage at that
time. The Department of Personnel Administration sued the
Controller, arguing that 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
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Date: 3/09/11 Page 2
appropriated in the state budget."
3) This bill :
a) provides for a continuous appropriation to pay state
employee wages, in any year in which a budget is delayed,
for the period of time beginning July 1st and ending upon
enactment of the new budget;
b) specifies that wages be paid consistent with memoranda
of understanding, or according to the rate of pay prior to
the end of the previous fiscal year for non-represented
employees; and
c) allows the Department of Finance to deduct from the new
budget-without further legislative action-any monies paid
for compensation under the continuous appropriation during
the time when the new budget was delayed.
FISCAL EFFECT :
Unquantified, however, any savings achieved by only paying
minimum wage during a budget impasse would be temporary since
unpaid wages would be paid in full upon passage of a new
budget.
COMMENTS :
1) Arguments in support
Supporters believe that it is in the best interest of the
state to pay employees on time. Not doing so will result in
legal and personal consequences that are unnecessary and
harmful to the state and employees.
According to the sponsors, CAPS and PECG:
SB 270 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. Not doing so will
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severely impact the ability of state employees to meet
their financial obligations, care for their families, and
participate in California's economic recovery.
Service Employees International Union, Local 1000 states:
There has been a long history in California of budgets not
being in place by the constitutional deadline. Last year's
budget was not signed until October, leaving state
employees with the threat of minimum wage for over three
months. Simply put, if state employees go to work, they
should be paid in full and on time.
2) SUPPORT :
Professional Engineers in California Government (PECG),
sponsor
California Association of Professional Scientists
(CAPS), sponsor
Service Employees International Union, Local 1000
(SEIU), co-sponsor
California Attorneys, Administrative Law Judges and
Hearing Officers in State Employment (CASE)
California Correctional Supervisors Organization (CCSO)
3) OPPOSITION :
None to date
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Date: 3/09/11 Page 4