California State Retiree -- Paul McCauley, the public employee detractor who wanted to change the constitution to allow for the renegotiation of pensions for current and future retirees, acknowledged in an e-mail July 2 that he had not collected enough signatures to get his proposal on the ballot.

SACRAMENTO BEE

Published Wednesday, Jul. 01, 2009

With California on the verge of issuing IOUs, Gov. Arnold Schwarzenegger moved to conserve cash Wednesday by ordering state workers to take a third day of unpaid furlough each month.

The executive order signed by Schwarzenegger will reinstate "Furlough Fridays," requiring more than 200,000 state workers to take unpaid leaves on the first three Fridays of each month.

The move amounts to an additional 4.62 percent pay cut for state workers, bringing their total reduction in 2009 to about 14 percent because of two furlough days imposed previously.

Schwarzenegger announced the new pay cut and other budget-balancing proposals one day after negotiations fizzled with the Legislature on more than a dozen bills designed to solve the state's massive budget hole.

Because state leaders failed to strike a deal before the fiscal year ended at midnight Tuesday, Schwarzenegger's Department of Finance estimates the shortfall has grown by about $2 billion - from $24.3 billion to $26.3 billion.

SACRAMENTO BEE

Published Tuesday, Jun. 30, 2009

California public employee unions already reeling from pay cuts have been dealt a new blow by Gov. Arnold Schwarzenegger – a push to lower pension and retiree health care benefits for state workers hired after today.

Schwarzenegger's call for creation of a two-tier system of retiree benefits was part of a package of proposals submitted to Democratic leaders Saturday in tense negotiations over the state's $24.3 billion shortfall.

The plan would not affect existing state employees.

The governor previously had imposed about a 9 percent pay cut on state workers by requiring two unpaid furlough days per month. Last week he threatened to add a third furlough day unless a budget deal was struck immediately.

"Attacking hard-earned pensions, on top of a pay cut, does not solve the crisis," said Yvonne Walker, president of Service Employees International Union Local 1000.

SACRAMENTO BEE 

Published Tuesday, Jun. 30, 2009

With the clock ticking toward a midnight deadline, Senate Republicans again rejected a three-bill, stopgap package this morning that is designed to help the cash-strapped state avoid IOUs.

But negotiations over a solution are expected to continue all day and evening, as lawmakers seek resolution before midnight.

The measures would keep state government from running out of money immediately and provide more time for lawmakers and Gov. Arnold Schwarzenegger to negotiate a comprehensive solution to California's $24.3 billion shortfall.

The three-bill package requires a two-thirds vote in the Legislature to take effect immediately. The Assembly has passed the proposals, but the Senate balked Monday night and again this morning along party lines.

Senate President Pro Tem Darrell Steinberg immediately placed the package on call, meaning a final vote will be taken later today.

The three-bill stopgap package would free up money by cutting spending on education in the fiscal year that ends at midnight tonight; defer some payments to schools, colleges and local governments; and redirect money from local redevelopment areas to school districts.

If the bills are not signed by midnight tonight, the state loses the chance to save $3.3 billion in cuts still available in the expiring fiscal year.

SACRAMENTO BEE -- Friday, Jun. 26, 2009

Gov. Arnold Schwarzenegger plans to furlough state workers an additional day each month starting in July if lawmakers do not send him a solution for the entire $24 billion budget deficit, he said today.

Schwarzenegger's move would force state workers to take three unpaid days of leave each month, the equivalent of roughly a 14 percent pay cut in all. The governor framed the additional furlough day as an effort to save cash as the state faces the prospect of issuing IOUs starting Thursday.

"It's clear that if the Legislature does not send a full budget solution to my desk by June 30, California will face an extreme cash-flow problem that will threaten our ability to pay for vital services," Schwarzenegger said in a statement. "I cannot force the Legislature to act, so I must do what is in my power as Governor to conserve cash so that the state can continue to operate. Today I am directing all agencies to prepare to implement a third furlough day for all employees beginning July 1 in the event that no budget solution is in place by that date."

SACRAMENTO BEE, June 24, 2009
State controller John Chiang warned today that if legislators and Gov. Arnold Schwarzenegger fail to come up with a budget-balancing package in the next week, he would begin paying California's bills with IOUs on July 2.

The controller's warning came as legislators began what many on both sides of the aisle acknowledged was a rhetorical song-and-dance over closing a $24 billion deficit that stretches over the fiscal year that ends Tuesday and the one that begins Wednesday.

Republicans in both houses were rejecting a Democratic bill that contained $11 billion in spending cuts - the first of a 20-bill package aimed at reducing the deficit.

The Democratic plan contains new tax hikes and some accounting legerdemain along with the spending cuts.. Republican lawmakers and the governor have said the Democratic plan is dead on arrival, and there were indications Democrats were ready to abandon the tax-hike portion of the plan, possibly in favor of "borrowing" $1.9 billion from local governments.

While Democrats control majorities in both houses, the package required a two-thirds approval so it could go into effect immediately. Even then, Schwarzenegger said he would not sign a plan with new taxes, fees and accounting gimmicks, even though he had initially proposed some of them.

"Next Wednesday we start a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression," Chiang said in a news release. "The state's $2.8 billion cash shortage in July grows to $6.5 billion in September, and after that we see a double-digit freefall."

Resorting to IOUs -- whose technical name is registered warrants -- would mark only the second time since the 1930s that California has paid its bills that way. The last time was 1992.

Chiang and other state officials had said that the state would first probably resort to delaying payments to vendors, local governments and others of the state's creditors while a budget balancing deal was worked out so the state could borrow money from Wall Street for its cash flow problems.

Both borrowing for cash flow and delaying payments are commonplace. In fact, Chiang delayed payments in February for 30 days while legislators and the governor wrestled with a budget deficit.

But, Chiang said, the current cash shortfall was five times larger than the February hole. Since Gov. Schwarzenegger said last month he would not authorize a form of short-term borrowing through what are called revenue anticipation warrants, Chiang said IOUs were the only option.

By Shane Goldmacher and Eric Bailey

June 17, 2009

Reporting from Sacramento — Setting up a contentious partisan showdown, a legislative budget panel approved plans Tuesday to boost oil and tobacco taxes, slash money for schools, eliminate the high school exit exam and reduce the budget for state prisons.

But in completing a budget blueprint to put before the full Legislature next week, the committee pulled back from some of the deepest cuts proposed by Gov. Arnold Schwarzenegger to tame California's $24.3-billion deficit.

The Democrat-controlled group, working into the evening, also voted to raise community college fees by $6 a unit, reduce court funding and slice social services for the poor.

But members declined to endorse Schwarzenegger's bid to eliminate some health and welfare programs altogether.

The most contentious vote came on the Democratic plan to hike taxes on the oil and tobacco industries.

The proposal, approved on a straight party-line vote by the six Democrats on the 10-member budget panel, calls for a new 9.9% levy on oil pumped from California soil, which would produce about $830 million in the coming fiscal year. It would increase the state's cigarette tax by $1.50 a pack, raising $1 billion. And the repeal of a corporate tax break approved just months ago would net $80 million.

But the levies on big business are anathema to the Republican governor and GOP lawmakers, who blasted the plan and vowed to block it.

"In the midst of the worst recession since the Great Depression, it makes absolutely no sense to solve our budget with proposals that target Californians' pocketbooks," said Aaron McLear, Schwarzenegger's spokesman

Assembly GOP Leader Sam Blakeslee said the proposal to raise taxes portends a battle between Republicans and Democrats that will "jeopardize the Legislature's ability to solve this crisis in time to avoid insolvency."

Even some Democrats who voted for the taxes expressed reservations.

"Californians are struggling to pay their mortgages, to pay their rent, to put food on the table," said state Sen. Alan Lowenthal (D-Long Beach), a panel member.

"The perception of the Legislature is that we can't live within our means," he said.

The panel also voted to impose a new 3% income tax withholding requirement for independent contractors.

Lawmakers said the proposal would speed the arrival of those funds and improve compliance, netting the state $2 billion.

Ana Matosantos, the governor's chief deputy finance director, said Schwarzenegger opposes the idea.

With Wall Street analysts considering yet another downgrade of California's credit and the Obama administration reiterating its refusal to guarantee loans to the Golden State, lawmakers on the budget panel rolled up their sleeves Tuesday with a renewed sense of the inevitable.

But although Assembly Speaker Karen Bass (D-Los Angeles) said the plan would close the state's entire deficit, other legislators and their aides said Tuesday evening they had not tallied their work.

"We're having a hard enough time ourselves trying to keep track of it," said state Sen. Bob Dutton (R-Rancho Cucamonga).

The panel voted to cut $4.5 billion from public schools, giving districts the option of shortening the school year by five days, rather than the governor's proposed 7 1/2 days, to absorb the loss.

Districts may retain the traditional 180-day school year if they want to cut in other ways. Regardless, California would have one of the shortest school years in the nation.

Lawmakers rejected the governor's call to eliminate CalWorks, though they cut the welfare-to-work program by $270 million. And the committee refused Schwarzenegger's bid to reduce by 5% the pay of the state's heavily unionized workforce, prompting an angry response.

The governor called it "outrageous" that Democrats would ask Californians to pay higher taxes while refusing to decrease state wages.

"This is exactly why so many Californians have lost faith in Sacramento's ability to solve problems," Schwarzenegger said in a statement.

Democrats defended the move, saying that state workers already must take two unpaid furlough days a month, equivalent to a nearly 10% pay cut.

Democrats countered with some budgetary sleight of hand. They voted to delay one month's payroll for all state workers in June 2010, pushing the expense into the next fiscal year. That accounting move would reduce the state's deficit by $1.2 billion, according to legislative aides.

"It sounds kind of cute, but it works," said Assemblywoman Noreen Evans (D-Santa Rosa), chairwoman of the budget committee.

The group shaved $117 million from the state-subsidized network of home-care workers who tend the elderly and disabled, a roughly 10% reduction.

Schwarzenegger wanted to cut the ranks of those workers -- most of them represented by unions that contribute heavily to Democrats -- by 90% to save $765 million.

The legislators also voted to cut $102 million from state courts, which equals the amount the state could save by closing every trial court for one day each month.

Prisons would be cut by more than $1.1 billion, but the panel didn't provide details on how to accomplish that.

Schwarzenegger had proposed lighter sentences and less costly custody arrangements for inmates serving time for lesser crimes, and early release and deportation of illegal-immigrant felons.

Some of Tuesday's decisions veered from big savings into setting policy, such as the plan to eliminate the controversial high school exit exam.

Some lawmakers and educators have been eager to see the exam abolished, saying that it unfairly penalizes young women and some minorities.

But eliminating it offers scant savings: between $5 million and $10 million from the $92-billion general fund put in place in February.

Supt. of Public Instruction Jack O'Connell said that eliminating the exam -- a graduation requirement since 2006 -- would bring the state "back to a relatively meaningless high school diploma" and cost taxpayers more in increased unemployment benefits and incarceration rates.

"This would be a giant step backward," O'Connell said.

 

CalPERS Press Release – The CalPERS Board of Administration today approved an overall 2.9 percent increase in health care premiums for its members – the lowest increase achieved in its health care program in 14 years.

“These rates were the result of better health care practices by our members and hard work by our Board and staff,” said Rob Feckner, President of the CalPERS Board. “This is good news for our members who are facing furloughs, pay cuts and difficult economic times.”

CalPERS basic HMO plans will increase by 3.4 percent, basic PPO plans by 3.3 percent and a 1 percent increase for the pension fund’s association plans serving highway patrol, correctional and peace officers. Members in Medicare plans will see an average increase of 1.1 percent.

Date: 6/16/2009 5:15:26 PM

CalPERS PRESS RELEASE, SACRAMENTO, CA – Members of the California Public Employees’ Retirement System (CalPERS) could see the lowest increase for health care in 14 years under a recommendation today by the CalPERS Health Benefits Committee.

The recommended overall 2.9 percent increase – which goes to the full Board of Administration tomorrow -- was achieved due to better health care practices by its members, and decisions and actions by the Board and staff that saved the program more than $600 million.

Under today’s recommendation, members enrolled in basic HMO plans would see a 3.4 percent premium increase, basic PPO plan members a 3.3 percent increase and a 1 percent increase for the pension fund’s association plans serving highway patrol, correctional and peace officers. Members in Medicare plans will see an average increase of 1.1 percent.

CalPERS PRESS RELEASE, SACRAMENTO, CA – The State of California’s efforts to move into the age of wired health care received a shot in the arm today as the California Public Employees’ Retirement System (CalPERS) joined with Anthem Blue Cross, Blue Shield of California, and Medco Health Solutions, Inc., to launch the state’s largest electronic prescribing (e-Prescribing) initiative to date.

The pilot program will use input from participating physicians to determine the best ways to employ e-Prescribing technology in their practices and facilitate use by all prescribers. Program organizers will track results, such as the number of identified preventable adverse drug events, use of e-Prescribing, and generic drug and formulary prescribing rates. The program will continue through December 2009 with results to be reported in 2010.

“The evidence supports the thesis that e-Prescribing improves patient safety, enhances the quality of patient care, and reduces cost to the physician, the health plan and the patient,” said Priya Mathur, Chair of the CalPERS Health Benefits Committee. “Our goal with this pilot project is to protect our members’ safety, while accelerating the acceptance and adoption of e-Prescribing by the physicians who serve them.”

About e-Prescribing

e-Prescribing uses an automated data entry system (such as a desktop computer, handheld device or personal computer tablet) in the physician’s office to electronically submit a prescription directly to the patient’s pharmacy of choice. e-Prescribing gives physicians real-time access to important safety and prescription coverage information so they can make more informed prescribing decisions.

“We are pleased to partner with our health plans and participating physician groups on a technology solution that could enhance patient care, reduce medication errors, and improve health outcomes,” said Gregory Franklin, Assistant Executive Officer of CalPERS Health Benefits Branch. “By giving doctors the ability to electronically send an accurate, understandable, and secure prescription directly to the pharmacy, e-Prescribing virtually eliminates the danger of a patient getting the wrong drug or a different medication with a similar name because someone misinterpreted a doctor’s handwriting.”

SACRAMENTO BEE

Declaring that "California's day of reckoning is here," Gov. Arnold Schwarzenegger said today the state should turn its dire budget straits into an opportunity to make government more efficient.

Speaking to a rare mid-year joint session of the Legislature and other constitutional officers, Schwarzenegger acknowledged the billions of dollars in spending cuts he has proposed to close a $24.3 billion hole in the budget will be devastating to millions of Californians.

"People come up to me all the time, pleading 'governor, please don't cut my program,'" he said. "They tell me how the cuts will affect them and their loved ones. I see the pain in their eyes and hear the fear in their voice. It's an awful feeling. But we have no choice.

"Our wallet is empty. Our bank is closed. Our credit is dried up."

In the face of such adversity, the governor said, "there are also some great opportunities." Among the reforms he said should be enacted are:

• Making school textbooks available in digital formats, freeing "hundreds of millions of dollars that could be used to hire teaches and reduce class sizes."

• Using privately run correctional facilities as part of an effort to reduce the cost of prisons.

• Giving local governments more opportunity to run things without interference from Sacramento.

ORANGE COUNTY REGISTER

A Los Angeles Superior Court judge has once again thrown out the county's case against Orange County deputy sheriffs seeking to roll back a portion of their pension enhancement, referred to as "three at 50."

Last month, county officials amended their original complaint against the deputy sheriffs after Judge Helen Bendix threw out the majority of their case. She allowed county officials to restate one claim if they could prove that the annual payments for the retirement benefit were making it impossible to meet bills.

After a series of closed session meetings, supervisors finally amended their argument but ignored Bendix's instructions and instead restated their argument that the retroactive benefit violated the state constitution's debt limits because it granted benefits that were not earned.

Apparently, Bendix wasn't convinced. The question now facing supervisors is whether they continue their effort and appeal her decision to a higher court.

NEW YORK TIMES -- Even as Congress hunted for ways to finance a major expansion of health insurance coverage, the Obama administration reported Tuesday that the financial condition of the two largest federal benefit programs, Medicare and Social Security, had deteriorated, in part because of the recession.

As a result, the administration said, the Medicare fund that pays hospital bills for older Americans is expected to run out of money in 2017, two years sooner than projected last year. The Social Security trust fund will be exhausted in 2037, four years earlier than predicted, it said.

Spending on Social Security and Medicare totaled more than $1 trillion last year, accounting for more than one-third of the federal budget.

The fragility of the two programs is a concern not just for current beneficiaries, but also for future retirees, taxpayers and politicians. Lawmakers say they would never allow Medicare's trust fund to run out of money. But beneficiaries could be required to pay higher premiums, co-payments and deductibles to help cover the costs.

CSEA Retirees, Inc. is taking steps to be included in legislation that would increase the death benefit for state retired members. However, CalPERS committee members noted that the future isn’t bright for any bill with increased costs to the state.

AB 1477 (Krekorian) is sponsored by the California Federation of Teachers (CFT), who are seeking to increase the current $2,000 death benefit their members receive to $6,163.

CSEA Retirees President Roger Marxen testified before the CalPERS Benefits and Program Administration Committee April 21 that the committee should approve the bill if an amendment is made to include CSEA Retirees, Inc. members.

The California Public Employees’ Retirement System (CalPERS) Board of Administration in April approved a new pilot program designed to improve health care quality at reduced costs to active and retired members in Sacramento, Placer and El Dorado counties.

The board is working with Blue Shield of California, Catholic Healthcare West (CHW) and Hill Physicians Medical Group to implement the pilot program starting January 2010.

A health care model will be created to align incentives among the health plan, hospital system and medical group. Even if the pilot’s cost reduction goals fall short of expectations, rates will not go up, CalPERS said.