BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 1368
Gloria Negrete McLeod, ChairHearing date: April 18, 2012
SB 1368 (Anderson) as amended 4/16/12 FISCAL: YES
STATE EMPLOYEE COMPENSATION
HISTORY :
Sponsor: Author
Prior legislation: AB 2936 (Ridley-Thomas)
Chapter 240, Statutes of 2006
AB 1787 (Portantino), 2012
Assembly Public Employment Retirement & Social
Security
SB 967 (Yee), 2012
Senate Education, Failed Passage
SUMMARY :
SB 1368 would limit the salaries of state officers and
employees, including overtime, to no more than the salary
received by the Governor, and recommends that the University
of California (UC) also limit salaries for officers and
employees of UC to no more than the salary received by the
Governor.
BACKGROUND AND ANALYSIS :
1)Existing law :
a) requires the California Citizens Compensation
Commission (CCCC) to annually set the salaries for state
constitutional officers and legislators, including the
Governor. The Governor's salary is currently $173,987.
The Governor receives the highest salary set by the CCCC.
b) 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 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 $238,011.
c) allows specified state agencies to set the salaries for
a limited number of officers and employees appointed by
the governing boards of those agencies, including the
following: the Public Employees' Retirement System, the
Teachers' Retirement System, the Military Department, the
Emergency Medical Services Authority, State Compensation
Insurance Fund, the Board of Governors of the Community
Colleges, the Health Benefits Exchange, the Housing
Finance Agency, and High Speed Rail.
d) sets 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 (CalHR) 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 CalHR can be no more than 125 percent of the
Governor's salary. CalHR has approved salaries for the
following officers in excess of the Governor's salary:
the Directors of the Departments of Corrections and
Rehabilitation, Forestry and Fire Protection,
Transportation.
e) requires CalHR to set salaries and salary ranges for
state employees of the executive branch, and except for
the statutory exceptions summarized in (c) above, does
not allow an individual department to set salaries for
its state officers outside of the salary ranges approved
by CalHR.
f) as determined by the federal court, placed the state's
prison health care system under the oversight of a
federal receiver, who has exercised his authority to
oversee pay increases for prison medical professionals to
achieve parity with medical professionals in the private
sector. Some high level medical professional salaries
have exceeded the Governor's salary; moreover, these
employees often are subject to overtime requirements.
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g) 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.
h) specifies that if a memorandum of understanding (MOU)
expires, the provisions of the MOU shall remain in force
as long as the parties continue to negotiate in good
faith.
i) defines an exempt employee, in part, 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 a board or commission.
2) This bill :
a) recommends that the University of California limit
annual salaries for its officers to no more than the
salary set for the Governor.
b) requires that the annual rate of salary of a state
officer or employee, plus overtime pay, shall not exceed
the salary authorized for the Governor.
c) exempts elected constitutional officers from the
limitation for state officers and employees.
d) exempts salaries set pursuant to a MOU or employment
contract in place prior to January 1, 2013, but requires
that the salaries for the impacted employees will be
subject to these limitations upon expiration of the MOU
or contract, notwithstanding the statutory requirement
that the terms and the conditions of the contract remain
in effect while the parties bargain in good faith.
e) exempts compensation for an exempt public safety
employee from the limitation if the salary is approved by
the employee's department head or chief administrative
officer, and defines public safety employee as a
correctional officer, an officer of the Highway Patrol,
or other public safety officer whose duties are essential
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to the immediate preservation of public safety.
f) exempts state employees from these provisions when the
Governor declares a state of emergency.
g) declares the intent to apply the salary limitation to
all state agencies no exempted by the California
Constitution, including employees currently subject to
the federal receiver once the federal receiver returns
control of prison health care to the state, and to the
California State University system (CSU).
COMMENTS :
1) How are state salaries currently set ?
State employees include employees of the executive, judicial,
and legislative branches. They work under a variety of
salary setting authorities, with the Legislature and the
Judicial
Council setting salaries for legislative branch employees and
judicial branch employees, respectively.
In general, executive branch employees are subject to CalHR
for salary setting, with limited exceptions:
a) Some state agencies have limited salary setting
authority for designated positions. These authorities
are approved in statute, and generally are used for high
level professionals with particular skills. For
example, CalPERS and CalSTRS have appointment and salary
setting authority for specified investment
professionals, the chief actuary, and specified
executive staff. Usually the authority extends to
appointment and salary setting for the director and a
limited number of executive level positions.
b) The Director of CalHR may approve a salary higher
than the Governor's (up to 125% of the Governor's
salary) when the position requires expertise or is of an
extremely critical nature and the higher pay is
necessary to hire or retain an employee capable of
succeeding in the position. This authority is used
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rarely and must be reported to the Legislature. The
Director of the Department of Corrections falls into
this category.
c) Medical professionals in the prison health care
system are under the oversight of a federal receiver.
As a result of that oversight, some high level medical
professionals have a higher base salary than the
Governor's.
Medical professionals in the Departments of Mental
Health, Veteran's Affairs, and Developmental Services
have approximate pay parity with medical professionals
in the prisons, although prison workers receive slightly
more pay. This was bargained because once pay ranges
were raised for prison personnel due to the oversight of
the federal receiver, the other departments began to
lose their medical professionals, who in many cases had
been difficult to recruit in the first place, at an
alarming rate. The departments' abilities to adequately
staff their facilities and their federal funding were
jeopardized as a result.
Since many of these medical professionals who work in
24/7 facilities are now fairly highly compensated, some
have the potential to make more than the Governor when
they add overtime pay to their base salaries; moreover,
employees in 24/7 facilities may be called upon to work
overtime more frequently than employees in state
agencies that keep regular business hours.
In addition :
Individuals in management at all levels do not
receive overtime pay.
Salaries for UC employees or employees of the CSU
are set by those employers.
2) Arguments in Support :
According to the author, "In 2010 President Obama froze
federal pay for two years to address budget concerns."
"According to the New York Times and the Bureau of Labor
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Statistics, public sector worker "compensation per hour is
much higher" than their counterparts in the private sector.
The Times continued "certain states, however, are clearly
more generous than others, at least relative to the private
sector. California, Iowa, Nevada, New York and Rhode
Island are at the upper end of the spectrum for both
college-educated workers and those without college
degrees."
"In 2010, there were 8,434 State of California employees
earning more than Governor Brown. Of those employees,
there are 5,902 employed by the University of California,
1,123 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."
According to the San Diego Tax Fighters, "This measure is a
common sense solution to help in some small way to
alleviate the budget deficit in California. Employing this
compensation cap will help ensure taxpayers are protected,
and that state funds are directed towards fulfilling the
state's existing financial obligations."
3) Arguments in Opposition :
According to CalSTRS:
"As currently written, SB 1368 would infringe on the
plenary authority of the Teachers' Retirement Board to
set compensation as specified in current law, directly
affecting Ca1STRS' ability to attract and retain high
quality executive management and investment staff.
Furthermore, this bill raises both legal and
constitutional concerns related to employee rights, such
as what, if any, notice will be given to affected
employees. This could cause undue hardship to employees
and potential litigation costs could be incurred by
Ca1STRS and the State should this bill be enacted into
law. In addition, this bill would restrict Ca1STRS
ability to manage assets internally and likely require
additional movement of assets to external managers. This
would result in a considerable increase of Ca1STRS
costs."
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The California Correctional Peace Officers Association
(CCPOA) believes that including overtime pay in the
limitation set by the bill is inappropriate. "Employees
who are required to work overtime as a result of the
inadequate staffing levels should not be penalized as a
result of the mandates of their occupation. 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 University (CSU) opposes the bill,
stating the following:
"In late 2009, the California Postsecondary Education
commission compared faculty salaries and 20 comparison
higher institutions and found a faculty salary lag of
18.5 percent. In addition, 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 have double-digit salary lags. Utilizing the
recently updated tiered comparators, the salary lag is
about 30 percent for presidents and one percent for
faculty. These comparisons confirm that CSU has a
challenge competing with other states and institutions,
which could impact the ability of the CSU to meet its
educational and business operational goals and
requirements.
The University of California (UC), noting that SB 1368
requests that the regents of UC limit employee salaries as
directed in the bill, opposes SB 1368, stating that its
effects would be devastating, and would "directly affect
the University's ability to carry out its core educational
mission of teaching, research, an public service with the
highest quality."
4) SUPPORT :
Howard Jarvis Taxpayers Association (HJTA)
National Tax-Limitation Committee
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San Diego Tax Fighters
5) OPPOSITION :
California Association of Professional Scientists (CAPS)
California Correctional Peace Officers Association (CCPOA)
California Correctional Supervisors Organization (CCSO)
California State University (CSU)
Professional Engineers in California Government (PECG)
University of California (UC)
California State Teachers' Retirement System (CalSTRS)
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