Budget and Policy Post
March 1, 2016

The 2016-17 Budget

Public Employment Relations Board (PERB)

Role in Public Sector Employee Relations. The Public Employment Relations Board (PERB) is a quasi-judicial administrative agency charged with administering the eight statutes that establish the collective bargaining process for about 2.3 million governmental employees in California. In this role, PERB (1) ensures these laws are implemented and applied consistently and (2) mediates and adjudicates disputes between governmental employers and employees. Such disputes include “unfair labor practice” claims. Section 3541 of the Government Code establishes PERB and specifies that the board “shall be independent of any state agency.” The board consists of up to five members appointed by the Governor with the advice and consent of the Senate; however, the board can establish a quorum—allowing it to conduct business—with three members.

Of PERB’s 57 total authorized positions, 13 positions are dedicated to the State Mediation and Conciliation Service (SMCS), which mediates public sector contract labor disputes between employers and unions and conducts representation elections. The other 44 positions are dedicated to PERB’s adjudication functions, including the Office of the General Counsel and the Division of Administrative Law.

Budgetary Challenges

PERB reportedly has had budget problems recently. The board’s public discussions (see June 11, 2015; August 13, 2015; October 8, 2015; December 10, 2015; and February 11, 2016 board minutes), the Governor’s 2016-17 budget, and the 2016-17 budget proposals discussed later in this analysis all illustrate the board’s recent budget difficulties. For example, at the December board meeting, it was noted that PERB management, facing significant budget challenges,  “opted to hold off pursuing the layoff process and instead decided to cut back its operating budget wherever possible and not fill vacancies.” As we discuss below, PERB has had to hold a significant share of its authorized positions vacant in order to redirect funds for other purposes.

Common for Departments to Have Vacant Positions. Each year, departments’ costs of doing business increase. These costs include (1) inflationary cost increases for operating expenses and equipment (rent, postage, fuel, etc.) and (2) merit salary adjustments that departments must provide to eligible employees every year. Departments generally do not receive augmentations to pay for these rising costs. In many cases, departments hold authorized positions vacant and redirect the funds associated with vacant positions to pay for these rising costs. The 2016-17 Governor’s Budget estimates that in 2015-16 about 9 percent of authorized non-higher education executive branch positions were held vacant statewide. In addition to positions held vacant for purposes of freeing up funds, departments typically have vacancies resulting from natural turnover among staff. (The budget used to assume that 5 percent of a department’s authorized positions would be vacant at any one time due to natural turnover. This assumption was removed from the budget in 2012 through a statewide budget exercise.)

PERB Has Relied on Large Number of Vacant Positions to Redirect Funding… The Governor’s Budget indicates that PERB has relied on about 9.5 positions being vacant in order to redirect $767,000 to pay for higher-than-budgeted costs associated with personnel and operations and equipment. This means that PERB has relied on about 17 percent of its 57 authorized positions being vacant.  These vacancies appear to have been in the adjudication sections of PERB (that is, the parts of PERB outside of SMCS). In fact, the budget proposal indicates that there are no vacancies among the 13 SMCS positions. Instead, most of PERB’s vacancies are among attorney classifications reporting to the board’s General Counsel, an office that, among other duties, provides the first level of PERB review of unfair labor practice charges. (At the time the Governor submitted his budget to the Legislature, the Office of the General Counsel had three vacant attorney positions—two at the Sacramento office and one at the Oakland office.) This all suggests that over 20 percent of the 44 non-SMCS positions at PERB may have been vacant at some points in recent years, in part to redirect funds in the board’s budget. This is an inordinate number of vacant positions relative to what is typical among state departments.

…Including a Previously Vacant Board Position. In recent years, PERB has operated with a vacant seat on its appointed board. Board members each receive a salary of nearly $140,000 and benefits. With the fifth board member’s seat vacant, PERB was able to redirect this money to pay for other positions and operating expenses. As the administration indicates in one of the 2016-17 PERB budget proposals, relying on a vacant board seat to maintain operations “is inefficient and carries significant implications, particularly when the Governor appoints a full Board.” In April 2015, the Governor appointed an individual to fill the vacant position on the board. (At the time of this analysis, the appointment had not yet been confirmed by the Senate.)

Growth in Responsibilities and Backlogs

Expanded Responsibilities Over Time. Over the decades since PERB was established, the number of statutes under its jurisdiction has expanded to the eight it now oversees. With each additional statute, PERB has become responsible for adjudicating labor disputes between an increasing number of governmental employers and employees. Most recently, the In-Home Support Services Employer-Employee Relations Act (IHSSEERA)—enacted in 2012—increased the number of employees under PERB’s jurisdiction by more than 400,000 employees. Since PERB was established in 1976, its jurisdiction has grown from overseeing one statute covering approximately 470,000 employees to eight statutes covering approximately 2.3 million employees.

Authorized Positions Largely Flat While Workload Increased. The Governor’s 2016-17 budget proposal indicates that the expanded responsibilities discussed above significantly increased PERB’s non-SMCS workload, but the board’s position authority and budget has remained largely flat. This has made it difficult for  PERB to resolve labor disputes within a reasonable amount of time—likely contributing to backlogs in processing cases.

Significant Backlogs Reported. The administration indicates there is a significant backlog in unfair labor practice charges filed with PERB. Over the past 20 years, the number of unfair labor practice charges filed with PERB doubled but the number of staff working on this workload has decreased as (1) the number of positions authorized for PERB’s non-SMCS workload remained relatively flat at about 45 positions and (2) positions in the Office of the General Counsel have been held vacant for budgetary purposes. The administration’s budget proposal suggests that it should take the Office of General Counsel less than 60 days to complete its investigation and issue a determination for unfair labor practice charges. Currently, however, it typically takes more than five months for the office to do this work.

Prior Legislative Interest in This Issue. While considering the 2015-16 state budget, members of the Legislature’s budget committees expressed concerns regarding the backlog of cases at PERB and considered a proposal to augment PERB’s budget by $1 million. This augmentation ultimately was not included in the final 2015-16 budget. The administration committed to working with PERB to determine its resource needs while developing its 2016-17 budget proposal.

Governor’s 2016-17 Budget Proposals

As part of the Governor’s proposed 2016-17 state budget, the administration proposed two augmentations for PERB: (1) $885,000 to fund five new positions—bringing the board’s total position authority to 62 positions—and (2) $217,000 to pay for costs associated with relocating the Glendale office. This new funding would come from the state’s General Fund.

Augmentation to Reduce Backlogs. The administration indicated that its proposal for five new positions and $885,000 in 2016-17 ($873,000 ongoing) was intended to address increased workload, reduce backlogs, and contribute towards meeting statutory requirements. The requested funding would support four of the five positions. The fifth position would be funded with existing departmental resources freed up by canceling a contract with the Department of General Services (DGS) to provide administrative services. The new positions would be distributed across PERB’s four divisions with two new supervising attorney positions under the Office of the General Counsel (one based in Oakland and one in Glendale).

Glendale Office Relocation. The Los Angeles regional office is located in Glendale. This regional office is PERB’s busiest regional office and processes more than 50 percent of cases. The board has occupied its current building since March 2009 with an annual rent of $259,000. DGS determined that the existing office space does not fully comply with federal and state laws that establish standards to ensure buildings are accessible to people with disabilities. DGS directed PERB to move to a building that complies with these laws before February 2017 when the “soft term” of the existing lease expires. The administration’s proposal provides $100,000 one-time funding for moving to the new building and $117,000 on an ongoing basis to pay for increased rental costs.

LAO Comments

Uncertain if Proposed Office Funding is Sufficient. Any appropriation for PERB’s lease must be based on estimated costs because the administration has not yet identified the building to which PERB would move. The administration’s proposal is constructed on assumptions derived from one estimate provided by DGS. The actual cost could be higher or lower than this estimate. At PERB’s February board meeting, staff indicated that two prospective spaces (1) likely would be more expensive than the administration assumes and (2) each were 600 square feet smaller than the amount of space DGS estimated would be necessary. To the extent that this is true, higher rental costs could force PERB to redirect money from elsewhere in its budget—including holding positions vacant—to cover these additional costs. In addition, the smaller office space could negatively affect PERB’s ability to process cases.

Proposals May Not Achieve Goal of Reducing Backlogs. The backlog that exists likely stems in large part from the fact that PERB’s workload has increased while a large share of authorized positions have been held vacant to pay for departmental operating expenses. In large part, the backlog appears to exist because of vacant positions in the Office of the General Counsel. The administration’s budget proposal should allow PERB to employ more people than it currently does, and this could have some effect in reducing the backlog. In our view, however, it seems unlikely that the administration’s proposal would provide enough resources for PERB to significantly reduce the existing backlog of cases.  In particular, the vacant positions PERB currently relies on for budgetary purposes may remain vacant. Moreover, if expenses for the board’s relocated office space in the Los Angeles area exceed budgeted amounts, there could be additional pressures to hold positions vacant.

LAO Recommendation

Legislature Can Set Goals for Timely Case Processing at PERB. The legislative branch has the role of reviewing the performance of a state department like PERB and determining if additional resources are needed to meet desired policy priorities. One such policy priority for PERB is the speed with which it considers cases. As a first step in considering PERB’s 2016-17 budget, we suggest the Legislature ask PERB and affected employer and employee groups their views on how fast cases should be addressed by the board. The Legislature may then wish to adopt budget bill language communicating clearly its goal for case processing times and requiring reporting over the next year on PERB’s progress in moving toward this goal. This desired timeline for case processing could help inform the Legislature’s budget decisions for PERB.

Key Questions for Budget Hearings. After setting a desired timeline for case processing at PERB, the Legislature could then make an independent determination of PERB’s near-term budgetary needs. We advise legislators—in committee hearings—to ask PERB and affected groups questions in order to understand what level of funding and staffing is necessary to process cases within the desired amount of time. Key questions that the Legislature can consider include:

  • Are there additional efficiencies that can be realized in case processing to help reduce processing times and backlogs?

  • In order to process cases within the desired amount of time, how many people would PERB need to employ? Would the existing or proposed mix of employee classifications need to be altered in order to achieve this goal?

  • Are budgeted funds for the Glendale office relocation sufficient to cover associated costs and prevent the need to hold positions vacant in order to fund office costs?

Options for 2016-17 Budget. Having decided on a desired timeline for PERB case processing, instituted a reporting requirement to track progress in reducing backlogs, and considered the amount of staffing and funding needed to accomplish these goals, the Legislature would have a number of choices about how much to budget for PERB in 2016-17. It could, for example, fund PERB (1) at the amount requested by the administration for 2016-17 but with an understanding that this funding level would be revisited next year in light of reported progress in reducing backlogs or (2) at a different amount than requested by the administration in line with its independent assessment of the board’s resource needs.