Legislative Analyst's Office

Analysis of the 2001-02 Budget Bill

Department of Personnel Administration (8380)

The Department of Personnel Administration (DPA) manages the nonmerit aspects of the state's personnel system. (The State Personnel Board manages the merit aspects.) The Ralph C. Dills Act provides for collective bargaining for most state employees. Under this act, DPA is responsible for (1) reviewing existing terms and conditions of employment subject to negotiation, (2) developing management's negotiating positions, (3) representing management in collective bargaining negotiations, and (4) administering negotiated memoranda of understanding (MOUs). The DPA also is responsible for the compensation and terms and conditions of employment of managers and other state employees not represented in the collective bargaining process.

The budget proposes total expenditures of $51.7 million for support of the department in 2001-02. The principal funding sources are:

The proposed expenditures for DPA support are $17.2 million, or 25 percent, less than estimated current-year expenditures. This is due primarily to a reduction of $17.2 million from the General Fund for (1) one-time expenditures in 2000-01 related to work and family issues, as negotiated in MOUs, and (2) a doubling up of costs for the rural health subsidy program in the current year.

One-Time Current-Year Funds For Collective Bargaining Consultant Should Be Deleted

We recommend that the Legislature delete $50,000 from the department's General Fund appropriation to remove one-time, current-year consultant funds related to collective bargaining from the department's budget. (Delete $50,000 from Item 8380-001-0001.)

The 2000-01 Budget Act includes $50,000 (General Fund) for DPA to hire a consultant to assist with preparation of the state's policies and strategies for collective bargaining during spring 2001. This work should not be required on an ongoing basis since the bargaining is for MOUs that expire this spring. The department's budget, however, includes this item as an ongoing expenditure. Therefore, we recommend that the Legislature delete $50,000 from DPA's budget-year General Fund appropriation.

New Collective Bargaining Agreements to Be Negotiated

The Department of Personnel Administration should report to the Legislature during budget hearings on the administration's collective bargaining proposals and the status of negotiations.

In September 1999, the Legislature approved MOUs for all of the state's 21 collective bargaining units. (This does not include employees in higher education.) These agreements are effective through June 30, 2001. The MOUs provided two 4 percent general salary increases effective July 1, 1999 and September 1, 2000. For employees not covered by collective bargaining (such as managers and supervisors), DPA approved a compensation package similar to that approved in the MOUs.

The Governor's budget does not include any budget-year funding for employee compensation. However, DPA will begin collective bargaining negotiations to replace the expiring MOUs this spring. Consequently, we anticipate the state will face some increased costs for employee compensation in 2001-02.

The Ralph C. Dills Act directs the administration and employee representatives to endeavor to reach agreement before adoption of the budget act for the ensuing year. The act further specifies that provisions of MOUs requiring the expenditure of state funds be approved by the Legislature in the annual budget act before the provisions may take effect. Historically, however, agreements often have not been reached in time for legislative consideration as part of the budget process.

In recognition of the statutory intent and the importance of these negotiations for the 2001-02 budget, we recommend that DPA report to the Legislature during budget hearings on the administration's collective bargaining proposals and the status of negotiations. Furthermore, in our analysis of "Augmentation for Employee Compensation" (Item 9800) in this section of the Analysis, we have recommended that the Legislature (1) require a minimum 30-day review period between the submittal of proposed MOUs to the Legislature and hearings on the proposals to ensure that their fiscal and policy implications are fully understood and (2) review the administration's MOU proposals at the budget hearings and adopt them in the budget act (or as amendments to the act if they are not available for review during budget hearings).

Return to General Government Table of Contents, 2001-02 Budget Analysis