California state worker raises to cost $5.6B

Nearly two-thirds of California state workers will receive raises in the coming months based on new contracts their unions negotiated with Gov. Gavin Newsom’s administration this year.

The state is boosting pay for about 147,000 of its 235,000 employees through the contracts, giving raises of about 3 percent per year to most while increasing salaries for some hardto-fill jobs by as much as 25 percent.

Pay, benefit and health care changes in their contracts, which have terms of one to three years, will cost the state about $5.6 billion, according to the California Department of Human Resources.

Last year, the state spent about $18.4 billion on wages and about $8.2 billion on retirement and health benefits, for a total of about $26.6 billion, according to State Controller’s Office data. That’s up from about $19 billion 10 years ago.

The state’s total payroll hovered between $14 billion and $15 billion from 2009 to 2014, when it started ticking upward as the economy recovered.

Newsom took office in a year when contracts with six state worker unions were expiring, including its agreement with SEIU Local 1000, the largest state worker union representing about 100,000 workers. The state also was sitting on a budget surplus.

After a slow start, negotiations went relatively smoothly, avoiding the strike threats and standoffs that peppered some of the negotiations with former Gov. Jerry Brown’s administration. Newsom signed legislation Oct. 13 finalizing the new contracts.

State workers with the new contracts received salary increases that are in line with those being negotiated by cities and counties, where workers’ unions have been negotiating 3 to 5 percent raises, said Tim Yeung, a labor and employment lawyer with Sacramento-based firm Sloan Sakai.

Newsom’s bargaining team demonstrated willingness to offer special raises for job classifications with recruitment and retention problems, authorizing hefty increases for workers in select jobs. This year’s contract agreements include a couple novel arrangements, such as a new $3,100-per-year health insurance stipend and the diversion of part of a California Highway Patrol raise to help pay for retirement benefits.

Taken together, the contracts reflect a bargaining approach aimed at bolstering the state’s workforce while minimizing the pay increases that add the most to the state’s pension burdens, Yeung said.

“Historically the state has been conservative in their general salary increases for public employees, and I think these contracts preserve that position,” he said. “To the extent they’re having retention problems, it sounds like they’re trying to target particular raises for those positions, which makes sense to me.”

In addition to new raises and perks, many of the contracts call for slight increases to what state workers pay toward their retirement benefits, including changes that move employees closer to a 50-50 split with their employers in making annual pension contributions.

Just one union with an expired contract, the California Association of Psychiatric Technicians, didn’t reach a new agreement. A spokesman for the union, whose workers care for mentally ill and developmentally disabled people in state facilities, declined to comment on where negotiations stand. When contracts expire, employees keep working under their last contract’s terms.