Analysis of the 2008-09 Budget Bill: General Government

Department of Personnel Administration (8380)

The Department of Personnel Administration (DPA) represents the Governor in negotiations with state employee unions, administers several categories of policies concerning state personnel, and manages certain state employee benefit programs. The Governor’s budget includes $15 million of General Fund expenditures for DPA staff and other operations. In addition, the budget includes over $22 million from the General Fund to pay benefits of the Rural Health Care Equity Program (RHCEP), which subsidizes the costs of health benefits for state employees and retirees living in parts of rural California. The Governor subjected most parts of DPA’s workload budget to his proposed, across–the–board cuts. Nevertheless, under his proposed budget, total General Fund expenditures for DPA would increase 8.7 percent between 2007–08 and 2008–09 as a result of proposals to:

• Authorize 30 new positions on a two–year limited–term basis—at an annual cost of $3 million—to manage anticipated workload resulting from position reductions and layoffs in other departments. We discuss this proposal below.
• Increase funding for active state employees enrolled in RHCEP in line with anticipated growth of their health premiums.

While the Governor exempts active employees’ RHCEP benefits from his proposed budget–balancing reductions, he proposes reducing subsidies for state retirees in RHCEP by 10 percent for a savings of $515,000.

Layoff–Related Workload Will Depend on Budget Plan

When the Legislature approves measures to reduce the size of the workforce in state departments, the workload of the Department of Personnel Administration (DPA) increases—especially to support departments that must initiate the process to lay off some employees. The

Governor proposes $3 million and 30 two–year, limited–term positions for DPA to handle layoff–related workload. We withhold recommendation on this proposal because DPA’s staffing requirements will depend on the extent to which the Legislature balances the budget through reductions in the size of departmental workforces.

DPA’s Role in the Layoff Process. The Governor proposes the elimination of positions in many departments. Should the Legislature approve the Governor’s proposals, some departments will need to initiate a layoff process in order to reduce the size of their workforces. The layoff process—which is complex and can take months for departments to complete—is governed by state law and collective bargaining agreements. The DPA has many responsibilities in this process, including:

• Reviewing departmental layoff plans.
• Calculating seniority credits for each affected employee to determine the order of layoff.
• Reviewing and adjudicating layoff appeals.
• Meeting and conferring with state employee organizations concerning the effects of layoffs and alternatives to layoffs.

Accordingly, if the Legislature decides to reduce the size of the workforce in many state departments as part of its effort to balance the budget, DPA’s workload will increase.

The Layoff Process in Recent Years. The state last implemented large numbers of position reductions in 2003–04. According to DPA, 9,300 positions statewide—most of them vacant positions—were eliminated in 2003–04, but only 291 employees lost their job. Another 929 were demoted, transferred, or opted to retire in lieu of a layoff. In that year, DPA increased its staff by 14.5 limited–term positions to manage layoff–related workload. Given the long timeframe required to complete the layoff process, departments sometimes must initiate the formal steps of the layoff process—increasing DPA’s workload—even if, in the end, they are able to minimize or eliminate the need for layoffs through attrition or other means.

Withhold Recommendation. We withhold recommendation on the administration’s proposal for added DPA staff to handle layoff–related workload. The DPA’s staffing requirements in this area will depend on the extent to which the Legislature opts to reduce positions in departments to help balance the budget. Based on the information available to us at the time this publication was written, it appears that the bulk of possible layoffs under the Governor’s budget would occur in the Department of Corrections and Rehabilitation (CDCR). Accordingly, the Legislature’s actions on CDCR’s budget may influence the need to authorize more or less staff for DPA than the Governor proposes.