Tag Archives: CalPERS

California state payroll increased by $1 billion in 2017, twice as fast as previous year

Jerry Brown

California Gov. Jerry Brown is surrounded by unidentified SEIU workers after signing a bill creating the highest statewide minimum wage at $15 an hour by 2022 at the Ronald Reagan building in Los Angeles, Monday, April 4, 2016. (AP Photo/Damian Dovarganes)


No wonder the state wants half of the businesses’ tax-cut savings. Someone’s gotta fund the bureaucrats.
From Sacrament Bee: California’s state payroll – excluding its universities – grew by more than $1 billion last year, twice the rate of growth as the previous year, according to new figures from the State Controller’s Office.
The 6 percent growth rate was not unexpected. More than half of the state’s workforce voted on labor agreements early last year that included substantial pay raises. Money for the raises was included in the 2017-18 state budget.
The largest contract, for Service Employees Union Local 1000, included one-time bonuses of $2,500 for more than 95,000 state workers. That’s worth more than $235 million in total compensation for employees the union represents.
The California Department of Corrections and Rehabilitation saw payroll increase by $452 million, or 9 percent. The Department of Forestry and Fire Protection logged an $87 million, or 13 percent, increase in payroll as the state experienced a horrible wildfire season.
The Sacramento Bee’s state worker pay database has been updated with more than 250,000 civil service and California State University salaries for 2017. To search all state employee salaries, visit sacbee.com/statepay.
The number of state employees outside of universities earning more than $300,000 increased from 456 in 2016 to 709 in 2017, a rise of 56 percent. Those employees, however, still make up only a sliver of the state’s workforce.
Most of the highest-paid state workers outside of universities are doctors and dentists in the state prison system. The union for those doctors negotiated a pay hike of up to 24 percent over the next four years early last year. Prison health officials cited the difficulty of filling vacancies as a justification for the contract.
The highest-paid state worker outside of universities remains Ted Eliopoulos, chief investment officer of CalPERS. He earned about $867,000 last year, up from $768,000 in 2016.
CalPERS saw an 11.2 percent return on its investments in fiscal year 2017. That came as stock markets soared, with the S&P 500 increasing by 15.2 percent over the same period.
The state’s payroll fell during the recession a decade ago before stabilizing around 2012. It has risen since then.
Adjusted for inflation, California’s state payroll excluding universities was about 5 percent higher in 2017 than during 2008. The state’s population has grown about 9 percent over that period.
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California SEIU contract includes 9 to 19 percent raises for many workers

California Gov. Jerry Brown is surrounded by unidentified SEIU workers after signing a bill creating the highest statewide minimum wage at $15 an hour by 2022 at the Ronald Reagan building in Los Angeles, Monday, April 4, 2016. (AP Photo/Damian Dovarganes)

California Gov. Jerry Brown is surrounded by unidentified SEIU workers after signing a bill creating the highest statewide minimum wage at $15 an hour by 2022 at the Ronald Reagan building in Los Angeles, Monday, April 4, 2016. (AP Photo/Damian Dovarganes)


From Sacramento Bee: A proposed contract for state government’s largest union includes dozens of special pay raises for certain workers that could increase their salaries by as much as 19 percent next year, according to new details released this week by the bargaining units.
The biggest gains would go to financial experts working for departments like CalPERS, as well as workers with specialized training in competitive career fields.
Most actuaries next year would receive a 15 percent salary bump on top of the standard 4 percent raise that all workers represented by SEIU Local 1000 would gain. In general, they’re financial planners working for CalPERS who earn between $7,300 and $10,000 a month.
In total, the proposed SEIU contract would raise their salaries by 19 percent next year. Many vocational nurses would receive an 11.25 percent wage hike on top of the union’s 4 percent general salary increase.
Other job classifications, from tax auditors to environmental planners, would receive a 5 percent special salary hike next in addition to the general SEIU raise. Custodians, too, would gain 3 percent on top of the standard raise.
The state and its unions regularly conduct salary surveys, and special salary adjustments are intended to keep certain careers competitive with the private sector. A 2014 state salary survey showed that many SEIU workers had fallen behind their peers outside of state government.
Since then, the union and the state have studied how to offer better incentives for those high-demand workers.
SEIU Local 1000 Vice President Margarita Maldonado

SEIU Local 1000 Vice President Margarita Maldonado


“A lot of this came out of the state’s inability to recruit or retain” for competitive career fields, said SEIU Local 1000 Vice President Margarita Maldonado. “The work they do is really good quality work. As soon as (other employers) find out, (the workers) are getting a lot more money” and job offers.
SEIU Local 1000 members will vote on the contract between Jan. 4 and Jan. 17. It published the tentative agreement this week, and it has been hosting meetings for its members to learn more about it. The union’s advisory commission endorsed it last weekend.
SEIU Local 1000 was on the brink of a strike over the contract two weeks ago, arguing that its members deserved better than Gov. Jerry Brown’s initial contract offer. Brown had proposed a series of four annual raises of about 3 percent each, offset by rising employee contributions for retiree health care.
In broad terms, SEIU’s tentative contract looks similar to Brown’s proposal, although it delays and reduces the retiree health care contributions. It provides a $2,500 bonus this year, a 4 percent raise in 2017, a 4 percent raise in 2018 and a 3.5 percent raise in 2019.
Some of its members were angered when they saw that outline. One state worker even created a contract calculator online where SEIU members could compare Brown’s offer to the one SEIU negotiated.
But the new details reveal that thousands of SEIU members across a broad range of careers stand to gain significantly more money than the initial outline suggested. Maldonado characterized the base wage increase of 11.5 percent over four years as the floor of the agreement, with some workers gaining as much as 27 percent through 2019.
The California Department of Human Resources and the Legislative Analyst’s Office have not yet released an estimate regarding the contract’s total cost.
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Questions about California state retiree health benefits asked and answered

Unicorns are flying!

This chart illustrates how saving and investing for state retiree health benefits can save billions of dollars over time. The dotted line represents costs under the state’s current pay-as-you-go system. The solid line shows what happens when extra money set aside in a trust fund grows through investments and then is applied to retiree health benefits in about 30 years. Revised budget proposal, May 2015 Department of Finance

This chart illustrates how saving and investing for state retiree health benefits can save billions of dollars over time. The dotted line represents costs under the state’s current pay-as-you-go system. The solid line shows what happens when extra money set aside in a trust fund grows through investments and then is applied to retiree health benefits in about 30 years. Revised budget proposal, May 2015 Department of Finance


Sacramento Bee: It’s done – and it’s just beginning. The Legislature has approved the terms of new labor agreements for California state engineers and scientists that include contributions to their retiree medical benefits, extend how long new employees must work to vest in the program and, for the first time, lower the state’s share of cost for future retirees’ medical, dental and vision coverage.
With those contracts pending member ratification, the governor’s attention now turns the remaining unions with expired or expiring labor pacts. During a Senate committee hearing last week, administration officials acknowledged that Brown wants to bargain similar terms with the other groups.
The State Worker watched the Senate Budget and Fiscal Review Committee hearing and later spoke to Department of Finance staff, looking for answers to questions that blog users and Facebook and Twitter followers are asking. Here are some of your most common questions and the answers to them:
How does this work?
A: Assuming members approve the tentative agreements reached with Brown, the engineers and scientists would begin paying an incrementally increasing percentage of their pensionable pay into a retiree benefits fund starting July 1, 2017. The engineers’ contribution would top out at 2 percent on July 1, 2019, and the scientists’ contribution would top out at 2.8 percent on that same date. The state will match employee contributions dollar-for-dollar.
Why the different percentages?
A: The percentages meet what state-contracted actuaries have determined is appropriate to fund the benefits, given the demographics and wages of each group. Since the scientists earn less than engineers, their payment is a larger percentage of their wages.
How much might I have to pay into the retiree-benefits fund?
A: Generally speaking, actuaries figure most state employees need to kick in somewhere between 3 percent and 4 percent of pensionable pay to fund the benefit. Remember, however, that demographics play a role. Law enforcement officers, for example, will likely pay a higher percentage because they retire at younger ages. And this stuff has to be bargained unit by unit in the context of the state’s overall budget health, which always adds x factors to the equation.
My pension contributions have gone up in the last few years. Could that happen with the new retiree health contributions?
A: Yes. They also could decrease. As the state gathers real data and experience, future actuarial estimates could require higher or lower employer/employee contributions. Since the contributions are bargained and not legislated, they could change up or down in subsequent contracts.
Where will the money go?
A: Into the California Employers’ Retiree Benefit Trust. CalPERS is a third-party administrator of the fund, which has $4.4 billion in assets and serves about 460 local government employers. State maintenance workers, physicians, dentists and Highway Patrol officers are already paying ahead on their retiree health benefits, accounting for about $100 million in the fund.
CalPERS? Does that mean my retiree health benefits will be subject to the same political pressures and policy wrangling as my pension?
A: Unlike the pension fund it administers, CalPERS wields little power over the retiree benefits trust fund. CalPERS is essentially a third-party contractor managing the health benefits fund. It competes with Vangard, Fidelity and other financial services companies for the business.
Does this take care of the state’s long-term $72 billion unfunded liability for retiree health care costs?
A: Yes, but it will take up to 30 years. The new contributions will go into the trust fund and grow via investments. In the meantime, the state will continue paying the bills year-to-year as they come due. Because the state is prefunding future benefits, the unfunded liability will eventually stop growing and begin to shrink.
math is hard
Some day, about three decades hence, the trust fund money will kick in and presto! Virtually no more unfunded liability – assuming the actuaries hit their marks.
Of course, all this assumes governors, legislators and labor unions hold fast to the prefunding principle. Bargaining or legislation could change the rules of the game any time.
Governors have sometimes given raises to at least partially offset higher contributions to pensions. If that happens here, isn’t the retiree medical solution creating more trouble for the pension system by hiking wages that lead to higher pension payments?
It’s true that any wage increase ups pressure on the pension fund. But, as Finance budget analyst Eric Stern and Erika Li, the department’s assistant budget program manager, told the Senate committee on Friday, there’s not a clear dollar-for-dollar correlation between benefit contribution increases and pay raises, particularly over the last 10 years.
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