Schwarzenegger strikes 2 more pension-reform deals
June 30, 2010
SACRAMENTO, Calif. (AP) – The Schwarzenegger administration and two more labor unions reached tentative deals Monday to lower salaries and roll back pension benefits for state workers.
The administration announced two-year agreements with the Union of American Physicians and Dentists and the International Union of Operating Engineers. The unions represent about 14,000 of the state’s 235,000 workers.
The deals marked another victory for Gov. Arnold Schwarzenegger in his push for pension reform.
“I commend these two unions for stepping up to help bring our unsustainable pension and health benefits under control,” the governor said in a statement. “These agreements, along with the four agreements announced last week, will bring much-needed relief to California taxpayers and our state budget.”
The contract language must be approved by union members and the Legislature.
The two unions followed the lead of other unions representing 23,000 workers – the California Association of Highway Patrolmen, California Department of Forestry Firefighters, California Association of Psychiatric Technicians, and American Federation of State, County and Municipal Employees.
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Employees will contribute 5 percent more of their salaries toward retirement and for the first time send a fraction of their pay to retiree health benefits, starting in 2012. The International Union of Operating Engineers also agreed to increase the number of years it takes for members to qualify for retiree health benefits.
Most newly hired employees would have to work five more years before they receive full pension benefits under a change designed to raise the retirement age of state workers.
The unions also agreed to one day of unpaid personal leave a month, the equivalent of a nearly 5 percent pay cut. The agreements were set to take effect July 1 and extend through July 1, 2012.
In contracts ratified in 2006, the two unions agreed to prevent a practice referred to as “pension spiking” in which employees were given a raise during their final year of employment to boost their pensions.
One of the administration’s major goals is to calculate retirees’ pension compensation from their highest three years of wages.
Monday’s agreements were projected to save $66 million in the fiscal year starting July 1 in addition to the $72 million in savings from the four previous union agreements.
If similar deals are reached with the six other employee unions representing state workers, the administration estimates a total of $2.2 billion in savings in the new fiscal year.
The administration was scheduled to begin bargaining Monday with Service Employees International Union Local 1000, the largest state employees union representing more than 95,000 workers.
Officials with that union said they would not comment on details of the other deals.
“We’re ready to bargain over any issue that makes sense for California,” Yvonne Walker, president of SEIU Local 1000, said in a prepared statement. “However, we’re not going to agree to a contract at any cost. We want a contract that provides stability for our members.”