Budget Plan Aims To Sway Unions To Pay Into Retiree Health Fund

Gov. Jerry Brown's (D) recently proposed fiscal year 2016-2017 budget plan includes funding for possible state employee compensation increases in an effort to incentivize unions to make retiree health fund contributions, the Sacramento Bee's "The State Worker" reports (Ortiz, "The State Worker," Sacramento Bee, 1/12).

Background on Budget Plan

Last week, Brown released a $170.7 billion proposed budget with several health care proposals.

Among other things, the proposal includes:

• A plan to replace the state's expiring tax on managed care organizations;
• $19.1 billion in funding for Medi-Cal, the state's Medicaid program;
• $9.2 billion, including $3 billion in general funds, for the In-Home Supportive Services program, which would help restore a 7% cut in service hours;
• $1.9 billion in general funds for prison medical care; and
• $145 million for SB 4, by Sen. Ricardo Lara (D-Bell Gardens), which expands Medi-Cal to about 170,000 undocumented immigrant children (California Healthline, 1/8).

Brown Seeks Retiree Health Fund Contributions

Brown's budget plan also includes $350 million in funding for "potential employee compensation increases."

According to "The State Worker," Brown included the funding because he is in talks with 15 bargaining units with expiring contracts to start contributing to the state's retiree health fund.

Last year, Brown sought similar deals with four bargaining units:

• Correctional officers, who have not yet reached a deal;
• Maintenance workers, who also have not yet reached a deal;
• Scientists, who rejected a 15% raise over three years with incrementally rising contributions to the retiree health fund; and
• Engineers, who accepted a three-year deal with a total 7% pay raise and retiree-health contributions that eventually reach 2% of pay, which the state matches.

Brown's budget plan called the deal with state engineers "progress" toward lowering an estimated $72 billion in unfunded medical obligations for retirees over the next three decades.

According to "The State Worker," Brown is likely to face difficult negotiations with lower-paid state workers, who would have harder time affording new contributions.

Further, Brown also wants to increase the number of years state employees must work before they can fully vest in retiree health care ("The State Worker," Sacramento Bee, 1/12).