Fed Up

Late last week I received a statement from an anonymous state employee working at the Employment Development Department, which included some pretty stunning allegations about how Arnold Schwarzenegger and the Legislature are dealing with state workers. For example, the Governor would reduce all state employee salaries by 5%, including ones not paid out of the General Fund but through other dedicated resources, including federal dollars. Our budget deficit is a General Fund crisis, not a crisis of those other resources, and so there is absolutely no necessity to reduce those salaries. In addition, the Governor has proposed furloughing such workers, an illegal action since state law excludes Special Fund workers from these types of job reductions. The State Compensation Insurance Fund just successfully sued the Governor over this matter.

Perhaps worst of all, the Governor and the Legislature have in recent years used special fund money to balance the budget. This is EXACTLY what Props. 1D and 1E would have done, moving dedicated funds into the General Fund. And yet the Governor and a compliant legislature goes ahead and does it anyway when the funds at risk are more murky and have lower-profile champions. This parallels the Governor, despite failing with Prop. 1A, budgeting a $4.5 billion dollar reserve for the upcoming fiscal year, despite the "rainy day" we're currently facing, essentially moving forward in violation of the will of the voters with a spending cap.

Democratic lawmakers are floating a plan to use that projected reserve, but resist augmenting that with new revenues, leading to $19 billion in additional cuts and borrowing from local governments, really a terrible plan considering the alternative options on fees. The unions are getting impatient with the lack of leadership, and advocacy groups seem more interested not in working with them but just going the heck around them. This note at the bottom of the LAT piece from Lenny Goldberg is the buried lede:

The next step for unions could be going directly to voters. One labor-backed group, the California Tax Reform Assn., has prepared a possible ballot measure to repeal the three corporate tax cuts Democrats agreed to in the last year to get GOP support for the budget.

"It's ready to go," said Lenny Goldberg, the group's executive director.

Reading the statement from the state employee, which I've posted below, gives you some of the reasons why workers feel they have no allies in Sacramento anymore.

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I'm a California State Employee and I'm currently working approved overtime in the middle of a state financial crisis. I work for the Employment Development Department (EDD). EDD is conducting massive hiring. In the two months alone, my office alone has hired 30 trainees and is continuing to hire. This action is allowable because approximately 90% of EDD's budget is paid directly with federal dollars. The majority of the remaining balance is paid by seven other special funds. Only one quarter of a percent derives from the General Fund.
Gov. Schwarzenegger would have Californians believe that all state employees are lumped into one sole classification. In reality, state employees work for departments that fall into one of two categories: General Fund or Special Funds.

Special Funds Departments budgets are allocated by either self sustaining revenue funded entirely on fees or premiums and/or have been designated for a sole purpose by California Voters or funds from the federal government. There are 51 state departments whose budgets are derived from the Special Fund. The current State financial crisis is a General Fund crisis, NOT a Special Fund crisis. Politicians and the media fail to emphasize the distinction. They would have you believe that there is one state indistinguishable budget.

For example, The Department of Alcoholic Beverage Control, The Department of Community Services and Development, and The State Council on Development Disabilities and are funded entirely out of federal dollars and receive no General Fund dollars. The Department of Motor Vehicles and California Highway Patrol are funded entirely out of special funds.

I and my co-workers are at a loss to understand why the governor is proposing to reduce all state employee salaries by 5%. His action is illogical. Special Fund employee salaries are not paid out of the General Fund. This is wasteful management of resources and of personnel. There is no justification for this action. Why reduce an employee's salary when there is no necessity to? Why continue to hire if the state is in cash flow crisis? Anyone can review the State Personnel Board's web site (http://jobs.spb.ca.gov/wvpos/search_p.cfm?showAll ), and can see for themselves that the State is still hiring. There are currently over 2000 job vacancies with the State of California.

On top of the proposed 5%, the governor implemented a two day furlough for all state employees. The reality is that I am mandated to report to work on my furlough days to meet public need and not get paid for it. The official policy is that the furlough days are accrued and can be taken at a later date. However, due to the high work load, requests for time off in exchange for furlough days are denied. There is a deadline for which all furlough dates must be taken: June 2010. Use it or lose it. The California Attorneys, Administrative Law Judges and Hearing Officers in State Employment have filed a lawsuit on behalf of its Special Fund Employees as being unlawful. Interested parties can read the brief at http://www.sacbee.com/static/w...
The lawsuit cites how each department is funded and its impact on the General Fund.

My co-workers and I work overtime to recoup lost hours just to pay for my necessities of life, such as my food and my mortgage. Contrary to popular opinion, the average employee does not make six figures. In issuing furloughs and the proposed 5% cut, the state increases its budget deficit in that it loses income tax revenue from state workers.

In recent years, the governor and the legislative branch have dipped into the Special Funds Budget to cover the General Fund deficit. Gov. Schwarzenegger balanced last year's budget by borrowing $574 million from various special funds. Where does this money go? How is it repaid? No one truly knows. Californians rejected his budget measures in the May 19 special election to shift money from special funds for mental health services and early childhood care and education. Why is this practice still being continued?

On February 5, 2009, The Los Angeles Times reported that the U.S. Labor Department objected to EDD employees being furloughed since the salaries were primary paid with Federal dollars. (http://articles.latimes.com/2009/feb/05/business/fi-unemploy5) The Labor Department notified the governor that the furloughs could impact EDD's performance in meeting criteria for the timely handling of unemployment claims and appeals. The Labor Department notified the EDD that failing to comply could violate Social Security laws. The governor was unmoved.

Similar to 911, this is a game of power and politics. It is a tactic to instill fear in the general public to justify actions that would not normally be endorsed or approved. The governor should follow the President Obama's lead and use a scalpel rather than an ax to make precise cuts. The governor can not have budget reform without the trust of the people and without providing the state with crucial and vital details of the nature of the budget.

Signed
Employee Proudly Serving the State of California