2020-21 State Budget: Governor Aims to Eliminate Debts, Pay Down Pension Liabilities and Grow Reserves

Posted: 1/24/2020

On January 10, 2020, Governor Gavin Newsom released his proposed 2020-2021 State Budget that will fund the government for the 12-month period starting July 1, 2020.

Under the governor’s plan, state spending next year would total just over $222 billion, with $153 billion in general fund and $63.8 billion in special fund spending. Another $5.4 billion in state bond spending makes up the difference. This is about a 3.5% increase over current fiscal year spending.

In this Budget, as with last year’s, the majority of the surplus is devoted to one-time spending. This approach enables the state to make significant investments in critical areas without making commitments to ongoing spending in future years.

Here is the quick rundown on a few items that will specifically interest ACSS members:

State Employee Compensation
The budget proposal includes $1.5 billion ($654 million general fund) in new funding for increased employee compensation, higher health care costs for active state employees, and the state’s contribution to prefund retiree health care costs for active employees. The budget summary notes the Administration will begin negotiations with 7 of the state’s 21 bargaining units, whose contracts expire in late June or early July 2020.

Building Budget Resiliency and Paying Down Unfunded Retirement Liabilities
In addition to the state’s required contributions, the Budget proposes to accelerate the payment of the remaining $500 million currently scheduled over fiscal years 2020-21 through 2022-23 into a single payment in 2020-21.

State Health Care/Retiree Health Care
Through the collective bargaining process, the state’s 21 employee bargaining units and related supervisors and managers now prefund retiree health benefits. As a result, $2.6 billion is currently set aside in the prefunding trust fund to pay for future retiree health benefits. A small but important step in paying for what is an estimated $85.6 billion in unfunded health care liability.

State Employee Position Increases
The budget projects the hiring of an additional 3,187 state employee positions in 2020-21 for a total of 219,017.

The Governor’s complete budget summary and draft budget can be found here: http://www.ebudget.ca.gov

As the proposed state budget progresses, ACSS will continue to meet with CalHR to advocate for inclusion of funding for supervisory and managerial compensation salary increases. ACSS will also be meeting-and-conferring with the state over realignments impacting ACSS members including the workforce programs moving into the new Department of Better Jobs and Higher Wages and the Juvenile Justice reorganization into the new Department of Youth and Community Restoration.

As we delve into more of the proposed budget details, we will report on any new positions and increased funding proposals for departments outlined in the full budget or if there are other proposals that impact ACSS and its members. Please let us know if you have any questions.

Click here to read the full version of the ACSS State Budget Report as presented by our ACSS Legislative Advocate, Ted Toppin at the January 18th, 2020, ACSS Board Meeting.



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