The Union Deals: Savings Today, Savings Long Term, but Next Year?


Gov. Arnold Schwarzenegger recently announced agreements with six state workers' unions, deals that were touted for making groundbreaking savings in pensions. Now the non-partisan Legislative Analyst's Office, which is highly respected in Sacramento, has examined the deals and found that they are mixed bag.

The six deals cover about 20 percent of the state's rank-and-file workers, including California Highway Patrol officers. And the deal provide some savings in the current 2010-2011 by reducing pay 4.6 percent for 12 months and by forcing employees to contribute more to their pensions (an increase from 3 percent of pay to 5 percent of pay). The good news for taxpayers and the budget is that these increased pension contributions, combined with provisions in the deals that reduce pensions for future employees, "should reduce state costs substantially in the coming decades," the LAO concludes.

The less than wonderful budget news is that the deals also increase the top level of pay by as much as 5 percent beginning in 2012. The LAO finds that this pay increase would "offset" the state savings in the current budget year. Essentially, in terms of the budget savings, the deals help Gov. Schwarzenegger with his final year budget while saving the state some money long-term -- at the cost of making budget balancing a bit more difficult for whomever is his successor.

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