An Assembly bill signed yesterday as part of the state's new budget allows CalPERS to use more than $265 million in excess reserves to offset members' health premiums for two months.You can expect to see the savings in the fall. CalPERS will post the timing on its Web site.

The governor isn't giving on demands to curb furloughs for agencies that are paid from special funds or losing money for the state because of shortened work schedules, reports State Worker columnist Jon Ortiz.

From the LA Times: With its staff furloughed three days a month, the Franchise Tax Board -- the state's tax collector -- could lose at least $550 million over the next three years and another $372 million for the two years after that from lost revenue and the backlog of dealing with disputes and late collections.

Gov. Schwarzenegger signed the budget yesterday, but not before paring it down further and nearly decimating some programs. For a bullet-point breakdown of the budget fixes, click here. And just when you've gotten comfortable, be warned that the new plan has "plenty of landmines," is "painful but precarious" and has no "safety net."

The governor signed the budget package this morning after making additional cuts that left it in the red.

Sacramento Bee/syndicated political columnist Dan Walters reports this morning that, with the budget deal done, politicians are now talking of reform. It may happen only with a constitutional convention, Walters suggests.

This short item from the mercurynews.com (San Jose Mercury News blog) reveals the hardships of a couple of real people behind the furlough cuts -- and of the public.

The Sacramento Bee Capitol Alert blog reports the governor has ruled out a fourth furlough day for state workers as he makes his final cuts to the state budget.

A Sacramento Bee editorial, one of a series this week, defends the state furloughs as a necessary option to save jobs but says more must be done. State service needs to be made more efficient, with better use of technology and private firms to perform basic services.

According to a Sacramento Bee story Sunday, the governor and legislative leaders didn't negotiate the budget alone. They had help -- from lobbyists. Related articles: Sacramento Bee editorial: The budget is just the beginning; California also needs a review of its tax structure, spending priorities and governance. Los Angeles Time editorial: Putting California back together will require a constitutional change.

The Assembly approved the final bill in the budget package to close a $26 billion gap this afternoon. The plans to take gasoline tax money from local governments and allow oil drilling off the Santa Barbara coast were axed. Deep cuts for education stayed in but will be reimbursed in the future. The final plan reduces the budget by $24 billion. Gov. Schwarzenegger probably will not act on the bills until next week, and it may take weeks before state can stop issuing IOUs.

State Worker columnist Jon Ortiz reports in his blog that SEIU succeeded in having its lawsuit to exempt SEIU's SCIF workers from the furloughs succeeded in having its case transferred to Judge Peter Busch, the same judge who ruled that SCIF had illegally furloughed its legal staff. Later that same day, Gov. Schwarzenegger's legal team challenged the assignment.

California State University professors voted to be furloughed two days a month to prevent further layoffs and save courses. A large majority also voted that they have "no confidence" in their chancellor. The details of the furlough proposal now must be negotiated.

The Senate finished its budget package at about 6:30 this morning; the Assembly is still struggling to complete its plan. The Senate's budget reduces the general fund by 18 percent from two years ago. Major cuts were made to public schools and colleges, social services, health programs and state prisons. State workers will still be furloughed three days a month.

A lubricant spill July 17 -- a furlough Friday -- took nearly 12 hours to clean up because nearby Caltrans workers couldn't be reached, prompting State Worker columnist Jon Ortiz to ponder: Were the phones not answered on purpose? Another Ortiz observation: The delay to close the budget deal cost the state the same amount of money it will save from the third furlough day.

State Worker columnist Jon Ortiz writes in today's blog that the 7,000 total state job cuts the governor announced in May and this month are still on despite the budget deal. The earliest date layoffs will begin is Sept. 15. Of the 5,000 May cuts, Ortiz reports, about 1,100 employees have either transferred or left state service.

CalPERS and CalSTRS together lost nearly $100 billion in the last fiscal year from the stock market beating.The decline means taxpayers will contribute more to shore up the two funds and state workers' contributions will increase. CalPERS has already announced it will demand increased contributions. CalSTRS can't ask for higher payments but has started talking to lawmakers about passing legislation to raise the contribution amounts.

Republicans are threatening to withhold budget votes, saying the Democrats have double-crossed them by developing a proposal to release thousands of prisoners to home detention and county jails. According to Assembly leader Sam Blakeslee, R-San Luis Obispo, it had been agreed the early-prisoner-release issue would not be tackled until after the main budget bill was approved. The vote on the budget is expected Thursday.

Gov. Schwarzenegger and legislative leaders agreed yesterday on a plan to close the $26 billion budget deficit. The plan, which must be voted on by the full Legislature, shifts costs into the future and takes money from local governments. It does preserve Prop. 98, the state's constitutional guarantee for education funding, though it contains several billion dollars in cuts to education at all levels. It is expected the plan would end the need for IOUs (cbsnews.ca story). One writer who is not impressed with the budget deal is The Sacramento Bee columnist Dan Walters.

Cleanup of a lubricant spill near San Rafael on "furlough Friday" was delayed several hours because Caltrans workers were on furlough, The Sacramento Bee's State Worker blog reports. Traffic backed up for miles. The story was originally reported in the Marin Independent-Journal. 

Gov. Schwarzenegger has appointed former ACSS member Jerome Horton to fill Judy Chu's seat on the Board of Equalization. Chu was sworn in July 16 as a congresswoman. Horton, 52, a Democrat, served three terms in the Assembly and was an Inglewood city councilman. ACSS wrote a letter to Gov. Schwarzenegger urging he support Horton's appointment.

Budget talks resume today. Gov. Schwarzenegger and legislative leaders had hoped to finish the deal yesterday, but the meeting was canceled because of a scheduling conflict. The leaders are reportedly close to closing the now-$26 billion deficit. The proposed budget continues the governor's three furlough days for state workers. However, the governor's press secretary said the number of furlough days may be reduced if the economy improves.

On June 4, a San Francisco Superior Court judge ruled that furloughing members of the state-employee association CASE (California Attorneys, Administrative Law Judges and hearing Officers in State Employment) who work at the State Compensation Insurance Fund is unlawful under the California Insurance Code. ACSS responded to this ruling by demanding that SCIF comply with the law and exempt ACSS members from being furloughed. To read the letter we sent, click here.

Julie Chapman, deputy director of labor relations for the Department of Personnel Administration, announced to employee associations and other groups Tuesday morning that the governor will eliminate another 2,000 jobs from state service. These cuts are on top of the 5,000 jobs he eliminated in May. Unlike the May cuts, these new cuts may be covered by department vacancies that already exist. The departments must notify DPA of their vacancies as soon as possible and DPA will determine which positions are eligible. Until then, the number of layoffs is not known, Chapman said. The list of targeted positions is expected to be released by the end of this month. DPA has promised to hold another conference call before notices are sent. Only general fund positions are subject to the layoff.

State Worker column: Rank-and-file state employees are angry enough over the furloughs to be talking about sickouts and even a strike.

The governor's proposal to impose a two-tier pension system on state workers is off the table, at least until the budget is resolved. The proposal would have lowered pension benefits for new state hires but would not have affected current employees.

Join ACSS and other state workers, a coalition of people who are being hurt by the governor's budget cuts and concerned citizens at a rally to protest the budget proposals tomorrow, July 15, beginning at 11:30 a.m., on the south steps of the Capitol. Middle class families are suffering! Tell the cigar-smoking governor not to let California go up in smoke!

Former CSEA PresidentJ.J. Jelincic has taken the San Jose Mercury News to task for its editorial support of pension reform. Jelincic points out that the 1999 pension increase under Gray Davis was the first for state workers in 30 years. "Public employees have traditionally traded lower wages for health benefits and retirement security," Jelincic writes. "That ... is what has allowed the public sector to pay below-market wages."

Vice President Arlene Espinoza, right, was elected ACSS' first woman president at Delegate Assembly Sunday, July 12. She succeeds Olin King. Elnora Fretwell is the new vice president. The team of Arlene and Elnora is the first time two women have held the organization's highest offices. Both women are in Chapter 503. Terry Sutherland was reappointed secretary/treasurer, which is not a voting position. Frank Ruffino was reelected director-at-large and Carlos Chavez is alternate director-at-large, replacing Jerry Fountain. Full election results here.

The Sacramento Bee's Capitol Alert blog reports that a former UCLA chancellor has asked the California Supreme Court to declare the constitutional requirement for a two-thirds vote to raise taxes invalid. The theory: When voters passed Proposition 13 in 1978, requiring the two-thirds vote, it was a "revision" of the state constitution rather than an "amendment" and, therefore, improperly approved.

Responding to the punitive furloughs and the governor's call for yet another 5 percent cut, the SEIU leadership council voted by conference call last night to authorize beginning the voting process among members for "concerted actions up to and including a strike." The union leaders will be holding a series of informational meetings in the next couple of weeks, an SEIU spokesman said. "We are hunkered down in war campaign mode starting Monday morning." The voting process could take two or three weeks. Brief information has been posted on The State Worker blog (scroll down).

A potpourri of news this day: Today is the first of three furlough Fridays this month; most state offices are closed. Various news sources are reporting the governor plans to ask for yet another 5 percent pay cut and then order a fourth furlough day when it's inevitably denied. Some major banks will refuse to redeem the IOUs after today. And Gov. Schwarzenegger, reports The Sacramento Bee, cannot support his accusations of fraud and abuse in the state's social service programs.

Assembly Speaker Karen Bass issued a statement today blasting Gov. Schwarzenegger for proposing another furlough day for state workers. She called it "the wrong direction," "a negotiating ploy," "a particularly cynical one." Read her brief statement here.

"The State Worker" columnist Jon Ortiz, wrting in The Sacramento Bee, reports this morning that Gov. Schwarzenegger is planning yet another 5 percent cut on state workers' pay -- to a total of nearly 20 percent. You know the procedure by now: The governor will propose an across-the-board cut, the Legislature will deny it and the governor will use the emergency powers law to add a fourth furlough day that the Legislature can't touch. "The 20 percent cut will bankrupt some of the 235,000 state workers affected," Ortiz writes. Ortiz will be the featured speaker at ACSS' Delegate Assembly Saturday at the Holiday Inn Capitol Plaza. For an editorial comment on these cuts, see the Calitics Web blog (not part of The Bee).

Few Californians have talked with more state workers than Jon Ortiz, “The State Worker” columnist and blogger for The Sacramento Bee. Ortiz, a reporter with The Bee’s Capitol bureau, will discuss the plight of state  workers as the featured speaker at ACSS’ Delegate Assembly on Saturday, July 11, at the Holiday Inn Capitol Plaza in downtown Sacramento. He is scheduled to talk at 11:15 a.m. There will be plenty of time for questions. Guests are welcome. Ortiz began his column about a year ago (continue here)

Donna Snodgrass, vice president of CSEA, interviewed at the state workers rally July 1, is quoted in the Riverside Press Democrat as saying that she has been unable to take her furlough days and has banked six of them. Other employees, Snodgrass pointed out, have incurred overtime to make up for the days not worked. The furlough "is not saving any money," she said. In a July 2 story, Snodgrass says "the workload is too much ... and the furlough days won't solve the problem. ... We are tired of being used as chess pieces."

"We play by the rules but our employer won't," writes Jeff Frederiksen, an ACSS member who works as a Caltrans maintenance supervisor, in a letter published on The Sacramento Bee's State Worker blog. Despite reduced pay and hours, Frederiksen and his employees continue to produce the best product they can, he writes. "We're running out of ways to cut."

As a special fund agency, the California Public Employees' Retirement System is not affected by the plan to pay some vendors and contractors with IOUs. CalPERS will issue cashable checks for all of its payments, including retiree pensions. To read the CalPERS press release, click on the headline above.

CalPERS has published the health care premium rates it has negotiated for state workers for 2010. The overall increase is 2.9 percent, the lowest in 14 years, the press release says.

The Department of Personnel Information has issued a short statement on its Web site correcting the rumor that a third furlough day will qualify some state employees for unemployment benefits. The rumor, circulated in an email, is talking about two programs the state of California does not participate in, the statement says (scroll to the bottom to read it). The State Worker blog contains a longer explanation from the Employment Development Department.

J.J. Jelincic, a former president of CSEA, takes The Sacramento Bee to task for its stand on reducing pension benefits back to 1999 levels. Jelincic accuses The Bee of trying to have it both ways: "cutting pay and benefits and laying off workers while expecting services to be maintained."

Gov. Schwarzenegger and legislative leaders resume budget negotiations this morning, The Sacramento Bee Capitol Alert reports. They are still at a seemingly impassable impasse after meeting for three hours last night.

Measure 1350, Paul McCauley's proposed initiative to reduce public employee pensions, has not qualified for the ballot, the Secretary of State's office reports. The measure needed 694,354 signatures by June 22 to qualify. We will post more information as it becomes available.

History professor Joseph A. Palermo writes in the Huffington Post one of the most enlightening accounts of the state's budget process we've seen. The story ran July 1, so a couple of references are out of date (and CalPERS is spelled wrong), but the facts and the opinions are strong. Don't miss the Robert Kennedy quote at the end.

The Sacramento Bee's Capitol Alert blog reports this morning that Senate President Pro Tem Darrell Steinberg is predicting a budget deal could be reached in a few days. Democrats have given up asking for tax increases, however. (As blog items are added, you may have to scroll to read.)

The first question you may want to ask has been answered here already, but it's worth repeating: State workers will not be paid in IOUs. You'll still get your paychecks, immediately cashable. For other answers, check out The Sacramento Bee's QandA this morning -- starting with "Why can't a state with the eighth-largest economy on Earth pay its bills?" (Unfortunately, many of the questions that appear in today's paper don't show up online. Here are a few very brief answers you can use: You don't have to cash the IOU right away; you can hold it to earn interest. Banks that have agreed to take them, some for a limited time, include Bank of America, Wells Fargo, Tri-Counties, Chase, Golden One Credit Union and several other credit unions.)

The DPA has issued a memorandum (PML 2009-029) explaining the details of the governor's furlough order. State workers will furlough the first, second and third Fridays of every month; for this month, however, the three furlough days will be July 10, 17 and 24 (the correct dates this time!). Charts clearly show furlough hours for part-time and intermittent workers.

State Treasurer Bill Lockyer, a Democrat, offers this unusual suggestion for resolving the budget impasse -- only partly tongue-in-cheek, we suspect. From the Los Angeles Times.

Sacramento Bee political columnist Dan Walters decries the unrelated extras -- such as pension reform -- that have become part of deals to pass a budget.

State Worker column: As most state workers struggle with a 14 percent pay cut, about 10 percent of the work force is not affected by the furloughs.