On January 10, 2018, Governor Brown released his proposed 2018-2019 State Budget. The proposal maintains a balanced budget for the foreseeable future under current projections and will also bring the Rainy Day Fund to $13.5 billion, the maximum level allowed under the State Constitution. Revenues for the current budget year are predicted to be $4.7 billion higher than previously estimated. While next fiscal year’s Budget is projected to have a healthy surplus, Brown noted the state will continue to face uncertain times, including the ramifications of the recently enacted federal tax bill and his reiterated warnings to plan for an inevitable recession. The Governor’s budget proposes $131.7 billion in General Fund expenditures, an increase of 4.1 percent over the 2017-2018 budget.
State Employee Compensation
The Budget adds $1.2 billion for increased employee compensation, health care costs for active state employees and retiree health care prefunding for active employees in 2018-19. ACSS has learned that as expected, the amount for employee compensation includes proposed general salary increases for supervisors, managers and confidential employees and calendar year increases in health care premiums and enrollment. The money will also cover salary and benefit increases resulting from collective bargaining (20 of the 21 state bargaining units have agreements that extend through at least July 1, 2018) while four of the 21 bargaining units will begin negotiations for new contracts beginning this year. ACSS will continue to meet with CalHR over general salary increases and continue to advocate strongly for special salary adjustments.
State CalPERS Contribution
The budget summary tones down the rhetoric from past years about the state’s pension and retiree health care obligations and notes steps taken to preserve these benefits while addressing the state’s liabilities. The Budget includes $6.2 billion for state contributions to CalPERS for state pension costs. This amount is a nearly $1 billion increase from last year to cover the costs associated with the recent CalPERS board decision to phase in the lowering of the assumed earnings rate (discount rate) which will eventually be 7 percent.
Civil Service Reform
The budget summary notes that much work is left for the Governor’s Civil Service Improvement project. Launched in 2015, the CSI project seeks to “improve hiring, recruiting, succession planning, retention, training, and other civil service functions to allow California to compete for and retain the best and brightest employees.” This year the emphasis on class consolidation will continue. The summary also notes, “The Budget proposes additional statutory changes to make the civil service system more efficient and transparent.” This proposed budget trailer bill language is not available yet. When the trailer bill is released, ACSS will work to ensure any changes are consistent with the merit based civil service system and protects the interests of ACSS members.
State Employee Position Increases, Funding Proposals
The Budget projects to add an additional 2,528 state employee positions in 2018-19 for a total of 209,417. Last year the budget projected 941 new positions, but data says the number of state positions are projected to decrease by 708 during the current budget.
As we delve into the details as the State Budget evolves, we will report on proposals that impact ACSS members. The Governor’s complete budget summary and draft budget can be read at: www.ebudget.ca.gov.