BILL ANALYSIS �
Bill No: SB
1368
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
SB 1368 Author: Anderson
As Amended: April 19, 2012
Hearing Date: April 24, 2012
Consultant: Art Terzakis
SUBJECT
State Officers and Employees: salaries
DESCRIPTION
SB 1368 limits annual salaries (including overtime) of
state officers and employees to no more than the salary
received by the Governor and recommends that the Regents of
the University of California (UC) also limit the annual
salary for its officers and employees to no more than the
amount received by the Governor. Specifically SB 1368:
1.Declares legislative intent to limit the annual rate of
salary for state officers and employees to no more than
the amount received by the Governor.
2.Also, declares legislative intent that this act applies
to: (a) all state employees who are not constitutional
officers or who are not currently subject to an existing
memorandum of understanding (MOU) or employment contract
with the state entered into prior to January 1, 2013; (b)
all state agencies and positions not exempted by the
Constitution, including the Department of Corrections and
Rehabilitation, once the federal receivership returns
control to the state; and, (c) the California State
University System (CSU).
3.Stipulates, notwithstanding any other provision of law,
that beginning January 1, 2013, the annual rate of
salary, including overtime pay, of a state officer or
employee shall not exceed the salary authorized for the
Governor (currently $173,987).
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4.Exempts any elected constitutional officer whose
compensation is set pursuant to Section 8 of Article III
of the California Constitution (California Citizens
Compensation Commission).
5.Exempts salaries set pursuant to an MOU or employment
contract in place prior to January 1, 2013 however,
provides that the salaries for the impacted employees
shall be subject to these limitations upon expiration of
the MOU or contract, notwithstanding the statutory
requirement that the terms and conditions of the contract
remain in effect while the parties bargain in good faith.
6.Stipulates that this act shall not affect the annual rate
of salary of a "public safety employee" that exceeds the
Governor's annual salary if that salary is approved by
the department head or the chief administrative officer
of the employee's respective state agency.
7.Defines "public safety employee" to mean a correctional
officer, an officer of the CHP, or other public safety
officer whose job duties are essential to the immediate
preservation of public safety.
8.Provides that this act shall not apply if the Governor
declares a state of emergency and determines it is
necessary to exceed the annual salary limitations.
9.Recommends that the UC Regents also limit annual salaries
for its officers to no more than the salary set for the
Governor.
EXISTING LAW
Proposition 112, passed by California voters in June 1990
established the California Citizens Compensation Commission
(CCCC) to set the annual salaries and medical, dental,
insurance and other benefits for Members of the
Legislature, the Governor, Constitutional Officers and the
members of the Board of Equalization. The Governor's
annual salary is currently $173,987 .
Existing law provides that the salary of a judge shall not
be reduced during a term of office below its highest level
during that term of office and requires that judges receive
an annual salary increase equal to the average annual
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increase received by all state employees. The current
salary for a Superior Court Judge is $178,789; the salary
for the Chief Justice is $238,011.
Existing law allows certain state entities to set the
salaries for a limited number of officers and employees
appointed by the governing boards of those entities (e.g.,
the California Public Employees' Retirement System, the
California Teachers' Retirement System, the California
Military Department, the California Emergency Medical
Services Authority, the California Compensation Insurance
Fund, the Board of Governors of the California Community
Colleges, the California Health Benefits Exchange, the
California Housing Finance Agency and the California High
Speed Rail Authority).
Existing law establishes the salaries for state appointed
officers of the executive branch, including agency and
department directors and members of state boards and
commissions and allows the Director of the Department of
Human Resources (Cal-HR) to exceed the statutory salary
amount for agency and department directors when certain
criteria are met and upon informing the Legislature. The
salary set by Cal-HR can be no more than 125% of the
Governor's salary.
Existing law requires Cal-HR to set salaries and salary
ranges for state employees of the executive branch and
except for certain statutory exceptions referenced above
the law does not permit an individual department to set
salaries outside of the salary ranges approved by Cal-HR.
Existing law requires that represented employees receive
1.5 times their hourly pay or equivalent compensating time
off, for working overtime and that they have the right to
collectively bargain over wages and working conditions,
including requirements for working overtime.
Existing law provides that if an MOU expires, the
provisions of the MOU shall remain in force as long as the
parties continue to negotiate in good faith.
Existing law defines an exempt employee as one who is not
subject to the civil service. In general, exempt state
employees are usually executive level appointees of either
the Governor or an independent appointing authority such as
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a board or commission.
In 2005, a federal judge ordered the takeover of
California's prison health care system and placed it under
control of a court-appointed receiver with the authority to
oversee salary increases for prison medical professionals
to achieve parity with medical professionals in the private
sector. As a result, some of these high level medical
professionals have salaries which exceed the Governor's
salary plus these employees are subject to overtime
requirements.
Existing law establishes the California State University
trustees and requires that they administer the California
State University. Existing law also outlines the
authorities, responsibilities and requirements of the
trustees relative to personnel matters.
The California Constitution establishes the University of
California (UC) as a public trust to be administered by the
Regents of the UC with full powers of organization and
government, subject only to such legislative control as may
be necessary to insure the security of its funds and
compliance with the terms of the endowments of the
university and such competitive bidding procedures as may
be made applicable to the university for letting
construction contracts, selling real property, and
purchasing materials goods and services. (Article IX,
Section 9)
Existing law also requires that proposals for the
compensation package of specified executive officers (the
Chancellor, president of an individual campus, vice
chancellor, treasurer, general counsel and the trustee's
secretary) occur in open sessions of a committee of the
trustees and the full board of trustees, as specified.
Existing law declares the Legislature's intent that no
proposal relating to the salary, benefits, perquisite,
severance payments (except in the case of a dismissal or
litigation settlement), retirement benefits or any other
form of compensation paid to an officer of the UC become
effective unless specified notice requirements have been
met and action taken in an open session meeting of the
regents.
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BACKGROUND
Purpose of SB 1368: The author's office states that this
measure is intended to rein in the outrageous state
salaries that Californians keep hearing about. The
author's office provides the following examples: physician
and surgeon - Department of Corrections - $784,595 (over
double the national average of $339,738); staff
psychiatrist - Department of Corrections - $566,029 (over
triple the national average of $167,738); dentist -
Department of Corrections - $446,531 (over triple the
national average of $142,870); astronomer - UC Santa Cruz -
$274,977 (almost triple the national average of $93,340);
registered nurse - Department of Corrections - $269,810
(over quadruple the national average of $62,450); and,
University librarian - the University of California San
Francisco -- $231,186 (over quadruple the national average
of $55,180).
The author's office notes that in 2010 President Obama
froze federal pay for two years to address budget concerns.
The author's office also cites various newspaper articles
and Bureau of Labor Statistics that indicates public sector
worker compensation is much higher than the private sector.
Additionally, the author's office points out that certain
states are clearly more generous than others with respect
to salaries granted the public sector workforce v. private
sector. According to information provided by the author's
office, California, Iowa, Nevada, New York and Rhode Island
are at the upper end of the salary spectrum for both
college-educated workers and those without college degrees.
The author's office references a 2010 Sacramento Bee news
story which discovered there were 8,434 State of California
employees earning more than Governor Brown. Of those
employees, 5,902 were employed by the University of
California, 1,123 were employed within the Department of
Corrections and Rehabilitation, 404 within the Department
of Mental Health, 147 within the California State
University System, and 398 statutory officers �i.e.,
judges], among others.
Arguments in Support: Writing in support, the San Diego
Tax Fighters note that, "This measure is a common sense
solution to help in some small way to alleviate the budget
deficit in California. Employing this compensation cap
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will help ensure taxpayers are protected, and that state
funds are directed towards fulfilling the state's existing
financial obligations."
Also writing in support, the Howard Jarvis Taxpayers
Association states "With California facing a $9 billion
budget deficit and unfunded pension obligations at or near
$500 billion, we need to do everything in our power to
constrain government spending. With two million
Californians out of work, plenty of residents have taken a
haircut on their income." This proponent believes that
forcing public sector employees to do the same, especially
when most make well under $170,000 annually, is an idea
worth exploring.
Arguments in Opposition: The California Correctional Peace
Officers Association (CCPOA) believes that including
overtime pay within the provisions of this measure is
highly inappropriate. CCPOA points out those employees who
are required to work overtime due to inadequate staffing
levels should not be penalized as a result of the mandates
of their occupation. CCPOA emphasizes that if the overtime
is worked, federal law mandates that the employee must be
compensated for the time worked. CCPOA also notes that
placing limitations on the collective bargaining process
undermines California's employer/employee relations
structure.
The California State Teachers' Retirement System (CalSTRS)
argues that this measure would infringe on the plenary
authority of the CalSTRS Board to set compensation as
specified in current law thus, directly affecting Ca1STRS'
ability to attract and retain high quality executive
management and investment staff. Additionally, CalSTRS
believes SB 1368 will very likely result in legal and
constitutional challenges causing undue hardship to
employees and burdening the state and CalSTRS with high
litigation costs. Furthermore, CalSTRS contends that SB
1368 would restrict its ability to manage assets internally
and likely require additional movement of assets to
external managers - resulting in a considerable increase of
Ca1STRS costs."
Also writing in opposition, the California State University
(CSU) points out that in late 2009, the California
Postsecondary Education Commission compared faculty
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salaries with 20 comparable higher education institutions
and found a faculty salary lag of 18.5%. Additionally, the
CSU Human Resources 2008/09 staff market analyses indicated
that many classifications including physicians, health care
support, and various technical and administrative support
groups also had double-digit salary lags. Utilizing the
recently updated tiered comparators, the salary lag is
about 30% for presidents and one percent for faculty. CSU
believes that such comparisons clearly confirm that CSU has
a challenge competing with other states and institutions,
thus SB 1368 could impact the ability of the CSU to meet
its educational and business operational goals and
requirements.
The University of California (UC) is also opposed to this
measure and emphasizes that its impact on the UC system
would be devastating and would directly affect the
University's ability to carry out its core educational
mission of teaching, research, and public service with the
highest quality.
PRIOR/RELATED LEGISLATION
SB 967 (Yee) 2011-12 Session. Among other things, would
prohibit the California State University Trustees from
increasing the monetary compensation (defined as salary,
vehicle and housing allowance) of, or approving payment of
a monetary bonus to, any executive officer for two years if
there was a system-wide fee increase or a decrease in the
general fund appropriation to the California State
University in the immediately preceding fiscal year. Also,
would cap the salary of an incoming officer at 5% above the
monetary compensation paid to the immediate executive
office predecessor and would request that the Regents of
the University of California comply with these same
conditions on executive officer compensation.
Additionally, would sunset these provisions on January 1,
2023. (Pending in Senate Policy Committee)
SB 952 (Alquist) 2011-12 Session. Would prohibit, from
July 1, 2012 to June 30, 2014, inclusive, the trustees of
the California State University (CSU) from entering into or
renewing a contract for a compensation increase of any
employee whose annual salary exceeds $200,000 or more from
General Fund sources, as defined, in the fiscal year during
which the contract is executed, relative to the immediately
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prior contract for that same position. Also, would
prohibit, on or after June 1, 2014, and until July 1, 2018,
the trustees from entering into, or renewing, a contract
that provides for a compensation increase of more than 10%
for a California State University employee whose annual
salary exceeds $200,000 from General Fund sources in the
fiscal year during which the contract is executed, relative
to the immediately prior contract for that position. In
addition, would encourage the Regents of the University of
California to adopt a policy that reflects the goals of
this bill. (Pending in Senate Appropriations Committee)
AB 1787 (Portantino) 2011-12 Session. Would, until January
1, 2015, prohibit a person employed by the state whose base
salary on or after the effective date of the bill is
greater than $100,000 per year from receiving a salary
increase while employed in the same position or
classification. Also, would exempt from this prohibition a
person whose compensation is governed by an operative
memorandum of understanding, as described, a person who has
been exempted by executive order of the Governor, as
specified, or a person whose salary is set pursuant to the
California Constitution. (Pending in Assembly Policy
Committee)
AB 1735 (Wieckowski) 2011-12 Session. Would expand the
list of positions for which CalSTRS has the authority to
set the compensation and terms and conditions of employment
to include the chief operating officer (COO) and chief
financial officer (CFO) and prohibits the salary for the
COO and CFO from exceeding 150% of the Governor's salary,
currently $173,987 per annum. (Pending in Assembly
Appropriations Committee)
AB 1317 (Mullin) Chapter 333, Statutes of 2007. Expanded
the list of key positions under which CalPERS and CalSTRS
boards have authority to set compensation and terms and
conditions of employment to include the general counsel.
SB 269 (Soto) Chapter 856, Statutes of 2003. Allowed the
CalPERS Board of Administration and the CalSTRS Board to
set compensation and terms and conditions of employment of
certain investment positions.
ABx1-1 (Portantino) 2009-2010 Session. Would have, until
January 1, 2014, prohibited a person employed by the state
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whose base salary on or after the effective date of the
bill was greater than $150,000 per year from receiving a
salary increase while employed in the same position or
classification. Also, would have exempted from this
prohibition a person whose compensation is governed by an
operative MOU, as described, a person who exempted by
Executive order of the Governor, as specified, or a person
whose salary is set pursuant to the California
Constitution. (Died at Desk)
SCA 12 (Kopp) 1993-94 Session. Would have prohibited an
elected state or local official from earning a salary
greater than the Governor ($120,000 at the time). (Failed
passage in Assembly policy committee)
SUPPORT: As of April 20, 2012:
Howard Jarvis Taxpayers Association
National Tax-Limitation Committee
San Diego Tax Fighters
OPPOSE: As of April 20, 2012:
California Association of Professional Scientists
California Correctional Peace Officers Association
California Correctional Supervisors Organization
California State Teachers' Retirement System
California State University
Professional Engineers in California Government
University of California
FISCAL COMMITTEE: Senate Appropriations Committee