Members of California's largest state employee union approved a contract Tuesday that cuts pay by nearly 5 percent for 95,000 government workers and rolls back pension benefits, a move that will protect them from more sweeping government furloughs.
About three-quarters of those who voted ratified the Service Employees International Union Local 1000 contract, after union leaders reached a tentative agreement last month with Gov. Arnold Schwarzenegger. The contract was approved in October by the Legislature as a provision in the state budget and is part of Schwarzenegger's attempt to control pension costs across all of state government.
The terms of the SEIU contract go into effect immediately for employees in a variety of state jobs, including information technology professionals, custodians, office technicians, accountants, levee inspectors and non-prison guard personnel at the California Department of Corrections and Rehabilitation.
SEIU Local 1000 President Yvonne Walker said the concessions in the contract, which runs through July 2013, earned state workers long-term job and pension security.
"We've done our part to get the state through this unprecedented budget crisis," Walker said in a statement. "This is the worst recession in more than eight decades, and our members stepped up and made temporary sacrifices to help California and keep CalPERS strong."
Pension formulas for all new state employees enrolled in the California Public Employees' Retirement System will be scaled back to pre-1999 levels under terms of the contracts negotiated by the Schwarzenegger administration and approved by the Legislature.
New employees would have to work five years longer to receive full benefits — raising the retirement age from 55 to 60 for nearly all state employees.
Workers known as "safety employees" who work with inmates or at state medical institutions, still could retire at 55 but with a lower benefit. State prison guards, who belong to a different union, are not covered by the contract.
Current SEIU employees would contribute more to their pensions. The amount will be increased by 3 percent for SEIU employees, a slightly lower amount than the increases of 4 percent to 5 percent the Schwarzenegger administration negotiated with other unions.
While SEIU employees had previously banned a practice known as "pension spiking" in their 2006 contract, the Legislature broadened the rules for all state workers as part of this year's budget agreement. It permanently ends the practice in which employees are given a raise during their final year of employment to boost the amount they will receive in retirement.
This year's pension changes are a victory for Schwarzenegger, who had said he would not sign state budget that failed to address the state's soaring retirement costs.
The administration estimates the SEIU contract will save the state $383 million in the 2010-11 fiscal year. Another $140 million in savings is projected from contracts approved earlier this year by six other unions that represent about 37,000 California Highway Patrol officers, firefighters, psychiatric technicians, physicians and operating engineers. Those unions agreed to pension changes similar to those in the SEIU contract.
The SEIU contract requires employees to take one day of unpaid leave per month as opposed to three furlough days ordered by Schwarzenegger for the estimated 57,000 state workers who belong to six unions that have not renewed their contracts.
New employees in those unions will be subject to the lower pension benefits because the reforms were put into statute by the Legislature. However, they will not be required to increase their monthly pension contributions unless it is called for in their future contracts.
It also protects SEIU employees from having their pay reduced to the federal minimum wage of $7.25 an hour if a state budget is late, a cost-saving measure Schwarzenegger had sought to impose on state workers.