KQED News

State Furloughs May Not Save As Much Money As Expected

August 19, 2010 -- 5:30 PM

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Many state workers will have to take furlough days on Friday. Unions representing the workers had challenged Governor Arnold Schwarzenegger and the furloughs in court. They won in the Alameda Superior Court and a court of appeal, but on Wednesday, the California State Supreme Court agreed to take the case, and ordered that the governor can furlough state workers until a decision is reached.

Workers are asked to take off this Friday, next Friday, and a floating day in August to replace the Friday that was lost during the court hearings.

The furloughs will affect about 147,000 state employees, and are estimated to save about $150 million a month, according to Aaron McLear, a spokesman for the governor.

"Once we have a budget, the furloughs will go away. We'll have other means of compensation savings, but not the furloughs," McLear said.

Ken Jacobs, chair of the UC Berkeley's Center for Labor Research, found that a furlough of three days has impacts on morale and productivity.

"If somebody loses 15 percent of their income, that's very significant in terms of being able to make ends meet and mortgage payments," Jacobs said. "It also has ripple affects out into the economy. If people aren't earning that money, they are not spending it."

Jacobs also found that by furloughing people who worked in the Franchise Tax Board, the Board of Equalization and other revenue creating departments, the state was actually losing money.

This year the governor is exempting those revenue-earning departments, people in law enforcement, and people paid through specially earmarked funds.

However, other agencies feel that they should also be exempt. Prison employees and others who say they can not leave their jobs simply did not go on furlough, says Nancy Vogel, a consultant at a non-partisan Senate office that crunched the furlough numbers last year. Instead, the employees accumulated furlough hours to take later, along with earned vacation time.

"What that meant for the state was that those furlough hours and vacation time would be cashed out in the future when these employees were probably making a higher wage," Vogel said.

Six labor bargaining groups are also exempt because they had previously reached an agreement with Governor Schwarzenneger to reduce pensions.

"Pension reform is inevitable. This had nothing to do with pressure. This had everything to do with saving money in the absence of a budget," McLear said.

Because employees are being paid less, the state is also underpaying into CalPERS, the state pension fund. The state will eventually have to make up the difference though, Jacobs says.

The State Supreme Court has scheduled a hearing on the furlough case for September 8.