On December 1, 2008—faced with (1) a large current state budget deficit that was projected to grow to more than $40 billion by the
Two and one-half weeks later, on December 18, 2008, the Legislature passed its own proposed comprehensive budget legislation, comprising 15 separate budget-related bills. Among many other differences from the Governor's proposal, the Legislature's alternative plan did not include the Governor's recommended furlough provision.
On December 19, 2008, the Governor issued the executive order that lies at the heart of the present litigation, instructing the Department of Personnel Administration to implement, beginning on February 1, 2009, and continuing through June 30, 2010, a mandatory two-day-a-month unpaid furlough of most state workers employed in the executive branch.
Shortly after the Governor's issuance of this executive order, a number of employee organizations—the recognized, exclusive bargaining representatives of a majority of the workers employed by the State of California—filed three separate, but similar, lawsuits, contending that the Governor lacked authority to implement unilaterally an involuntary furlough of represented state employees that reduced such employees' hours and earnings by approximately 10 percent. The trial court, acting on an expedited basis, treated the three cases as related, heard argument in the cases together, and thereafter issued a single ruling rejecting the broad attacks made by the employee organizations on the executive order and concluding that the Governor possessed the authority to impose the furlough in response to the fiscal emergency facing the state.
The employee organizations (hereafter sometimes referred to as plaintiffs) appealed from the trial court's ruling. After briefing in the Court of Appeal was completed and the three cases were consolidated for purposes of oral argument and decision, but before the Court of Appeal set the matter for oral argument or issued a decision, we exercised our authority pursuant to article
For the reasons explained below, we conclude that, under existing constitutional provisions and statutes, the Governor on December 19, 2008, possessed authority to institute a mandatory furlough of represented state employees, reducing the earnings of such employees, only if specifically granted such unilateral authority in an applicable memorandum of understanding entered into between the state and the employee organization representing the affected employees. Although there is considerable doubt whether the applicable memoranda of understanding granted the Governor such authority, we further conclude that even if the Governor lacked authority to institute the challenged furlough plan unilaterally, plaintiffs' challenge to the furlough plan now before us must be rejected. In mid-February 2009—shortly after the furlough program went into effect—the Legislature enacted, and the Governor signed, legislation that revised the Budget Act of 2008 (2008 Budget Act) by, among other means, reducing the appropriations for employee compensation contained in the original 2008 Budget Act by an amount that reflected the savings the Governor sought to obtain through the two-day-a-month furlough program. The February 2009 legislation further provided that the specified reduction in the appropriations for employee compensation could be achieved either through the collective bargaining process or through "existing administration authority." That phrase, in the context in which the revised budget act was adopted and in light of the provision's legislative history, reasonably included the furlough program that was then in existence and that had been authorized by the current gubernatorial administration. In particular, the bill analyses considered by the Legislature made specific reference to furlough-related reductions of employee compensation costs. Under these circumstances, we conclude that the Legislature's 2009 enactment of the revisions to the 2008 Budget Act operated to ratify the use of the two-day-a-month furlough program as a permissible means of achieving the reduction of state employee compensation mandated by the act.
Accordingly, we conclude that the 2009 budget legislation validated the Governor's furlough program here at issue, and reject plaintiffs' challenge to that program.
The California Constitution provides that "[t]he Legislature shall pass the budget bill by midnight on June 15 of each year" (Cal. Const., art. IV, § 12, subd. (c)(3)), but, as we noted in White v. Davis (2003) 30 Cal.4th 528, 533 [133 Cal.Rptr.2d 648, 68 P.3d 74], "in recent years the timely adoption of the budget bill in California has proven to be the exception rather than the rule."
Although the national and state economies already were in dire straits when the 2008 Budget Act finally was enacted, shortly thereafter the economy further deteriorated dramatically in light of the financial credit crisis and the resulting stock market collapse in October 2008 and a sharp decline in real estate values and consumer spending. In early November 2008, the Department of Finance reported that the state faced a revenue shortfall of $11.2 billion for the 2008-2009 fiscal year and a much higher budget deficit by the end of the 2009-2010 fiscal year, and further stated that "[i]f no action is taken to reduce spending, increase revenues, or a combination of both, the state will run out of cash in February and be unable to meet all of its obligations for the rest of the year." (Dept. of Finance, Rep., Governor's Budget, Special Session 2008-09, p. 1, <http://www.dof.ca.gov/budget/historical/2009-10/documents/special_session_ 08-09_web.pdf> [as of Oct. 4, 2010].)
On November 6, 2008, the Governor published a letter addressed to all state employees, announcing that in order to cope with the state's worsening fiscal situation he would propose, among other spending reductions, a number of cuts related to state employees, including a one-day-a-month furlough of state employees that would result "in a pay cut of about 5 percent" but that would not "affect retirement and other benefits for which you are eligible." The letter declared that "[a]ll the actions we're proposing must first be approved by the Legislature."
On December 1, 2008, after the newly elected legislators took office and the 2009-2010 regular legislative session began (Cal. Const., art. IV, §§ 2, subd. (a), 3, subd. (a)), the Governor issued a proclamation declaring a fiscal emergency pursuant to the provisions of article IV, section 10, subdivision (f) of the California Constitution, and calling the Legislature into special session as provided by that constitutional provision. The Governor resubmitted to the Legislature the same comprehensive budget legislation that he had proposed the previous month, including the proposal to add specific provisions to the Government Code directing the implementation of a one-day-a-month furlough of state employees through the end of the 2009-2010 fiscal year. (See Assem. Budget Com., Summary of Governor's Proposed Dec. 2008-09 Budget Adjustments (Dec. 2, 2008) p. 14.)
The Legislature did not enact the Governor's proposed budget package but instead, on December 18, 2008, passed an alternative comprehensive budget package (comprising 15 separate budget-related bills). The Governor expressed immediate disapproval of the Legislature's action and subsequently (on Jan. 6, 2009) vetoed all 15 bills.
Shortly after the executive order in question was issued, a number of employee organizations—recognized bargaining representatives for the majority of represented state employees—filed three separate actions, challenging the validity of the Governor's executive order on a variety of grounds. On December 22, 2008, Professional Engineers in California Government and California Association of Professional Scientists filed a petition for writ of mandate in the Sacramento Superior Court (No. 34-2008-80000126), naming the Governor, the DPA, and the State Controller as defendants and seeking an order to restrain implementation of the executive order. On January 5, 2009, California Attorneys, Administrative Law Judges and Hearing Officers in State Employment (CASE) filed a similar petition in Sacramento Superior Court (No. 34-2009-80000134), and on January 7, 2009, Service Employees International Union Local 1000 (SEIU) also filed a similar petition in Sacramento Superior Court (No. 34-2009-80000135).
On January 9, 2009, the Director of the DPA sent a memo to all state departments indicating that the unpaid furlough program would be implemented by a general closing of state government operations on the first and third Friday of each month, beginning on February 6, 2009. For state operations that cannot close (such as prisons and hospitals), the memo indicated that agency heads could request approval from the DPA to use a "self-directed" furlough program for specific positions, under which employees either would choose two furlough days per month with the approval of
Meanwhile, in the three pending Sacramento Superior Court actions, all parties stipulated to a briefing and hearing schedule that would permit the designated judge (Hon. Patrick Marlette) to hear the three cases together prior to February 1, 2009, the date on which the furlough program was scheduled to begin. On January 29, 2009, the trial court conducted a single hearing in all three cases, and on January 30 the court issued a single ruling denying all three petitions on the merits and ordering the State Controller (Controller) to comply with the executive order in the course of issuing pay warrants to the affected state employees. Thereafter, on February 11, 2009, the court entered a formal judgment denying the petitions.
Plaintiffs and the Controller filed timely appeals in the Court of Appeal in all three cases. On February 2, 2009, SEIU filed a petition for a writ of supersedeas in the Court of Appeal, requesting that the appellate court stay implementation of the furlough program pending appeal. The appellate court denied the petition for supersedeas on February 27, 2009, and the Controller implemented the furlough order during the pendency of this appeal insofar as the order applied to the employees represented by plaintiff employee organizations.
Meanwhile, the Controller had sent a letter to the trial court on February 3, 2009, requesting that it clarify whether its January 30 ruling applied to persons employed in offices headed by independently elected constitutional officers (such as the Attorney General and the Controller). In response, the trial court, on February 4, 2009, issued an order stating that no issue regarding application of the executive order to employees of independently elected constitutional officers had been raised or litigated in the writ matters on which the court had ruled, and indicating that its ruling expressed no view regarding that issue. The Controller subsequently informed the Governor that, in issuing salary warrants, he (the Controller) would not implement furloughs
On February 9, 2009, the Governor filed a petition for a writ of mandate in Sacramento Superior Court against the Controller, requesting an order compelling the Controller to implement furloughs for the independently elected constitutional officers. (Schwarzenegger v. Chiang (No. 34-2009-80000158).) On March 12, 2009, the trial court ruled that the Controller must implement the Governor's furlough order with respect to employees who work for independently elected constitutional officers. The Controller appealed from that ruling, and the trial court's order in that matter has been stayed by the appeal, which is currently pending in the Court of Appeal, Third Appellate District (C061648).
On February 19, 2009, after extended discussion and negotiation, the Legislature passed, and on February 20, 2009, the Governor signed, Senate Bill No. 2 (2009-2010 3d Ex. Sess.) (Senate Bill 3X 2), which revised the 2008 Budget Act in response to the fiscal emergency. (Stats. 2009, 3d Ex. Sess. 2009-2010, ch. 2 (sometimes hereafter revised 2008 Budget Act).) Section 36 of Senate Bill 3X 2 added section 3.90 to the original 2008 Budget Act (Stats. 2008, ch. 268). Section 3.90, subdivision (a) provides in part: "Notwithstanding any other provision of this act, each item of appropriation in this act . . . shall be reduced, as appropriate, to reflect a reduction in employee compensation achieved through the collective bargaining process for represented employees or through existing administration authority and a proportionate reduction for nonrepresented employees (utilizing existing authority of the administration to adjust compensation for nonrepresented employees) in the total amounts of $385,762,000 from General Fund items and $285,196,000 from items relating to other funds." As discussed below (post, at pp. 1043-1048), the amount of the reduction in appropriations for employee compensation set forth in section 3.90 reflected, among other proposed reductions, the reductions that the Governor proposed to achieve
On the same date (Feb. 19, 2009) the Legislature enacted legislation amending the 2008 Budget Act (revising the budget for the 2008-2009 fiscal year), it also passed the initial version of the Budget Act of 2009 (Sen. Bill No. 1 (2009-2010 3d Ex. Sess.) (Senate Bill 3X 1), enacted as Stats. 2009, 3d Ex Sess. 2009-2010, ch. 1), which set forth the budget for the 2009-2010 fiscal year (2009 Budget Act). The 2009 Budget Act included the reduced appropriations for state employee compensation proposed by the Governor, which reflected the savings generated by the two-day-a-month furlough plan, and included language in section 3.90 of that act identical to language in the revised 2008 Budget Act, indicating that the reductions in employee compensation are to be achieved "through the collective bargaining process for represented employees or through existing administration authority and a proportionate reduction for nonrepresented employees (utilizing existing authority of the administration to adjust compensation for nonrepresented employees) . . . ." (Sen. Bill 3X 1, § 3.90, subd. (a). p. 633.)
The revised 2008 Budget Act and the initial 2009 Budget Act were signed into law on February 20, 2009, as part of a comprehensive budget package that included a number of proposed constitutional amendments that were to be put before the voters at a special election to be held shortly thereafter.
On July 24, 2009, the Legislature passed Assembly Bill No. 4X 1 (2009-2010 4th Ex. Sess.) (Assembly Bill 4X 1), which revised the 2009 Budget Act. (Stats. 2009, 4th Ex. Sess. 2009-2010, ch. 1.) As enacted by the Legislature, Assembly Bill 4X 1 further reduced the appropriations for employee compensation and retained the same language regarding the manner in which the reductions were to be achieved as appeared in the revised 2008 Budget Act and the initial 2009 Budget Act. (Assem. Bill 4X 1, § 552 [amending § 3.90 of the 2009 Budget Act].) The Governor signed this bill into law on July 28, 2009. The present litigation does not involve the validity of the third furlough day that was in effect from July 1, 2009, to June 30, 2010.
The two-day-a-month furlough plan that began on February 1, 2009, and the subsequent three-day-a-month furlough plan that began on July 1, 2009, both terminated on June 30, 2010.
On July 28, 2010—a budget act for the 2010-2011 fiscal year not having been timely enacted and the state's serious budget problems continuing
We now describe in somewhat greater detail the proceedings below.
In each of the three Sacramento Superior Court cases, the petition filed by the employee organization sought (1) the issuance of a writ of mandate directing the Controller and the Governor not to implement the mandatory two-day-a-month unpaid furlough instituted by the Governor's December 19, 2008, executive order, and (2) a declaratory judgment stating that the executive order was invalid. The principal contention advanced in all three cases is that the Governor lacks authority to impose a mandatory unpaid furlough unilaterally—reducing the wages of the employees represented by the plaintiff employee organizations—and that such a measure may be adopted only by the Legislature. Each petition asked the trial court to act expeditiously, before February 1, 2009, when the furloughs were scheduled to go into effect.
In contrast to the Governor and the DPA, the Controller, who also had been named as a defendant in each of the petitions, filed an answer concurring in plaintiffs' challenge to the Governor's executive order. Like plaintiffs, the Controller maintained that the Governor lacks authority to reduce state employees' pay unilaterally through a mandatory furlough, arguing that only the Legislature possesses such authority.
The trial court considered the matter on an expedited basis and, after conducting a single hearing, issued a ruling applicable to all three cases. In its ruling, the court first overruled the demurrer to the petitions, concluding that the superior court properly could exercise jurisdiction over the actions. Turning to the merits, the court then rejected plaintiffs' claim that the Governor and the DPA lacked authority to institute the challenged furlough plan. In reaching its conclusion on the merits, the trial court relied primarily upon its interpretation of sections 19851 (a provision concerning workweek hours) and 19849 (a provision granting the DPA general authority to issue regulations "governing hours of work and overtime compensation"), as well as its determination that the applicable memoranda of understanding (MOU's) between the employee organizations in question and the state authorized the Governor and the DPA to take such action in a fiscal emergency. As part of its ruling, the trial court explicitly ordered the Controller to comply with the Governor's furlough order.
Plaintiffs and the Controller filed timely appeals in the Court of Appeal. After the regular rounds of briefing were completed, that court issued an order consolidating the three cases for oral argument and decision, and shortly thereafter directed the parties to file supplemental briefs addressing a series of detailed questions. After the rounds of supplemental briefing were completed, but before the Court of Appeal was prepared to set the consolidated matter for oral argument or issue a decision, we transferred the matter
We begin with a brief overview of the general provisions of the California Constitution and the California statutes relating to state finances and the state budget.
The Constitution further provides that "[t]he Legislature may control the submission, approval, and enforcement of budgets and the filing of claims for
Until 2004, however, there was no specific provision establishing a procedure for dealing with a situation in which, in the course of a fiscal year, it became apparent that the expenditures originally anticipated and authorized under the existing budget substantially would exceed the estimated revenues that the state would obtain during the fiscal year.
In the primary election held on March 2, 2004, a ballot measure was put before the voters that directly addressed the type of midyear fiscal emergency that led to the executive order challenged in the present case. That measure, appearing on the ballot as Proposition 58, proposed adding a new provision—article IV, section 10, subdivision (f) (hereafter article IV, section 10(f))—to the California Constitution. The voters approved the measure at that election, adding the provision to our state Constitution.
On December 19, 2008, citing a worsening fiscal situation and maintaining that during the fiscal emergency special session "the Legislature failed to effectively address the unprecedented statewide fiscal crisis," the Governor issued the executive order at issue in this case, directing implementation of a two-day-a-month unpaid furlough of state workers employed in the executive branch, to begin on February 1, 2009, and run through June 30, 2010. Thereafter, on February 19, 2009, the Legislature adopted, and on February 20, 2009, the Governor signed, a revised 2008 Budget Act (Stats. 2009, 3d Ex. Sess. 2009-2010, ch. 2) and an initial 2009 Budget Act (id., ch. 1), which reduced the appropriations for state employee compensation to a level proposed by the Governor—a level that included reductions attributable to the furlough program.
In light of this chronology, we believe it is useful to analyze the issues presented in this case by posing two broad questions. First, on December 19, 2008, did the Governor possess authority to impose unilaterally a mandatory two-day-a-month unpaid furlough for state employees by issuing an executive order? Second, did the Legislature's enactment in February 2009 of the revised 2008 Budget Act and the initial 2009 Budget Act affect the validity of the Governor's executive order or the remedy that the employee organizations may be entitled to obtain in the present proceeding? We begin our analysis with the first of these two questions.
Plaintiffs contend the Governor lacked the authority to impose unilaterally, through his December 19, 2008, executive order, a mandatory unpaid furlough on state workers. Plaintiffs maintain it was well understood at the time
Plaintiffs first point to article IV, section 10(f), noting that this provision clearly contemplates that, in the event of a midyear fiscal emergency, the Governor can propose remedial measures, but that such proposals will take effect only if adopted by the Legislature and signed into law. Plaintiffs emphasize in this regard that resolution of a serious budget problem invariably implicates a myriad of fundamental policy decisions and tradeoffs, and they maintain that article IV, section 10(f) accurately recognizes that under the traditional separation-of-powers principles embodied in the California Constitution (art. III, § 3) it is for the Legislature to fashion an appropriate solution to a fiscal emergency through the passage of legislation—legislation that is then subject to the Governor's veto authority.
It is true that article IV, section 10(f) was proposed and adopted in 2004 in response to a perceived need for a new procedure to deal with midyear fiscal emergencies, and that this provision recognizes that ordinarily the Governor will be unable to solve the problem alone and that a solution to such a fiscal emergency generally will require the Legislature's enactment of new legislation. The circumstance that article IV, section 10(f) recognizes that the Legislature ordinarily will play a key role in resolving a midyear state budget crisis, however, does not signify that the Governor lacks authority to undertake any unilateral actions to conserve funds and cut state expenditures in response to a fiscal emergency. No one argues, for example, that, in response to a midyear fiscal emergency, the Governor could not delay discretionary spending on public works projects or could not (at least with regard to those executive employees under his direct control) freeze hiring (leaving unfilled those vacant positions for which funds had been appropriated). In the present case the Governor essentially is arguing that instituting a mandatory unpaid furlough of state employees, similar to not filling vacancies, is one of the measures that he lawfully could institute unilaterally.
Plaintiffs respond that there is clear and abundant evidence that, prior to the Governor's issuance of the initial furlough order on December 19, 2008, it was well understood that a mandatory furlough of state employees (encompassing a cut in employee wages) could not be imposed by the Governor unilaterally. Initially, plaintiffs point out that the Governor himself, in his November 6, 2008, letter to state employees, explicitly recognized the need for legislative concurrence when he first announced his intention to propose a
Of course, neither the position taken by the Governor in his November 6, 2008, letter to state employees, nor his proposal that the Legislature adopt provisions directing the implementation of a furlough, constitutes a legally controlling determination that the Governor lacks authority to impose such a furlough unilaterally. In defending his December 19, 2008, executive order in the present litigation, the Governor, noting the absence of any definitive judicial ruling, advances a number of grounds to support his claim that he possesses the unilateral authority to impose such a mandatory furlough.
The Governor initially maintains that his authority to institute unilaterally the challenged furlough program derives from the broad language of article V, section 1 of the California Constitution, which provides in full: "The supreme executive power of this State is vested in the Governor. The Governor shall see that the law is faithfully executed." The Governor contends the power to furlough state employees in the face of a fiscal emergency is an inherent part of his constitutional authority as the state's chief executive.
The Governor alternatively contends that his authority to institute the state employee furlough program arises from a number of statutory provisions, maintaining in this regard that there is no judicial decision in point holding the Governor is not statutorily authorized to impose such a furlough program, particularly in the context of a fiscal emergency. Although there is no California case precisely in point, two Court of Appeal decisions that arose out of a state fiscal emergency comparable to the circumstances that engendered the executive order in the present case—Department of Personnel Administration v. Superior Court (Greene) (1992) 5 Cal.App.4th 155 [6 Cal.Rptr.2d 714] (Greene) and Tirapelle v. Davis (1993) 20 Cal.App.4th 1317 [26 Cal.Rptr.2d 666] (Tirapelle)—provide considerable guidance regarding the issues now before us. As we shall see, the decision in Greene dealt with proposed changes to the terms and conditions of employment of represented employees (that is, those state employees who are covered by the Ralph C. Dills Act (§§ 3512-3524 (hereafter the Dills Act))
The litigation in Greene, 5 Cal.App.4th 155, arose out of what the Court of Appeal described as "an unprecedented budgetary crisis at the outset of fiscal year 1991-1992, with expenditures projected to exceed revenues by more than $14 billion." (Id. at p. 163.) In response to this fiscal situation, the Budget Act of 1991 (1991 Budget Act), as enacted by the Legislature and
After the 1991 Budget Act was enacted, the DPA (in its role as the bargaining representative for the state) and various employee organizations representing state employees met and conferred in an attempt to reach an agreement on salaries and other terms and conditions of employment. At the time of those negotiations, the prior MOU's—that is, the public sector equivalent of collective bargaining agreements—between these employee organizations and the state had expired, but the parties continued to negotiate in good faith for several months in the hope of reaching agreement on new MOU's. By early November 1991, however, the parties had reached an impasse in negotiations, and on November 5, 1991, the DPA notified the employee organizations that, although the state would continue to maintain the status quo as to many of the terms and conditions of employment set forth in the expired MOU's, with regard to two items—salaries and health benefits—the state, beginning on November 12, 1991, unilaterally would implement the terms set forth in its final offer, cutting the current salaries of the state employees represented by the employee organizations by 5 percent and reducing the employer's contribution rates for health care premiums for such employees to the amounts specified in the state's final offer.
Two employee organizations immediately challenged in superior court the DPA's actions, and the trial court, after a hearing, concluded that under the governing statutory provisions the DPA lacked authority unilaterally to reduce either wages or health benefits of represented state employees. With regard to wages, the trial court held that section 19826, subdivision (b) expressly precluded the DPA from unilaterally reducing the wages of represented employees. With regard to health benefits, the trial court concluded that, in the absence of an applicable MOU, the regular formula for state contributions to health care premiums set forth in former section 22825.1 applied and precluded the state from decreasing its contribution rates.
In analyzing the validity of the DPA's action regarding wages, the appellate court in Greene, supra, 5 Cal.App.4th 155, initially explained that, in contrast to most other collective bargaining statutes, the Dills Act is a "`supersession statute'" (Greene, at p. 174), meaning that when a provision of an MOU conflicts with an otherwise applicable statutory provision governing the terms and conditions of employment, the provision of the MOU generally "supersedes" or prevails over the terms of the otherwise applicable statute, without any need for further legislative approval of the conflicting MOU provision. (§ 3517.6.)
The court in Greene, supra, 5 Cal.App.4th 155, pointed out that section 19826 draws a clear distinction between the DPA's authority with regard to represented employees as contrasted with its authority with regard to nonrepresented employees. With regard to nonrepresented employees, the DPA, under section 19826, subdivision (a) is authorized to "establish and adjust salary ranges for each class of position in the state civil service," but with regard to represented employees, section 19826, subdivision (b) provides that "[n]otwithstanding any other provision of law, the department shall not establish, adjust, or recommend a salary range for any employees in an appropriate unit where an employee organization has been chosen as the exclusive representative pursuant to Section 3520.5."
The court in Greene concluded that "[t]he plain language of section 19826 supports the respondent court's conclusion that DPA may not unilaterally decrease salaries for represented employees." (Greene, supra, 5 Cal.App.4th at p. 174.) Further, after reviewing the structure and legislative history of the
The DPA argued in that case that it was unreasonable to interpret the relevant statutes to preclude the DPA from acting unilaterally with regard to wages when a reduced budget appropriation (triggered by a large projected budget shortfall) created a need to reduce wages and when the parties had bargained to impasse over the wage issue. The court in Greene explained, however: "[G]iven that DPA's and the unions' authority to set salaries derives from a legislative delegation, it is not at all absurd that the Legislature would reserve its authority to act in the event of a stubborn wage dispute. . . . Considering also the highly political nature of this dispute, it makes further sense that it will be ultimately resolved in the political branch. Our conclusion is consistent with the Dills Act, which represents only a limited delegation of the Legislature's salary-setting function, and includes numerous provisions suggesting the Legislature intended to retain final determination of state salaries." (Greene, supra, 5 Cal.App.4th at p. 182.) Finally, rejecting the DPA's suggestion that the conclusion reached by the Court of Appeal "shuts out the Governor (i.e., DPA) from the process of establishing state salaries" (ibid.), the court in Greene pointed out that "[t]he Governor retains his veto power over any subsequent wage legislation." (Ibid.)
At the same time the Court of Appeal upheld the trial court's determination that the DPA lacked authority, even at impasse, to reduce unilaterally the wages of represented employees, the appellate court reached a contrary conclusion regarding the validity of the DPA's proposed reductions in employer contributions to health care premiums. As noted, the trial court had concluded that, in the absence of an applicable MOU, the state employer's contributions to health care premiums were governed by former section 22825.1, the general statute prescribing the amount of employer contributions in the absence of a conflicting MOU. The Court of Appeal, however, concluded that section 22825.15—a narrower, more specific statutory provision enacted "during the height of the 1991-1992 budget crisis" and sent to the Governor as part of an urgency measure just days before the Legislature sent him the 1991 Budget Act (Greene, supra, 5 Cal.App.4th at p. 190)—was intended to apply in these circumstances, and that under this statute the contribution rates for health care premiums regarding represented employees were to be determined through "`the collective bargaining process.'" (Ibid.) Furthermore, the Court of Appeal found that, in light of the specific context in which section 22825.15 was enacted, the term "collective bargaining process" as used in that statute properly should be interpreted to permit the DPA, after the parties have bargained to impasse, to implement its last, best, and final offer. (Greene, at p. 191 ["the Legislature intended that the issue of
In rejecting the trial court's conclusion that the two potentially applicable statutes should be harmonized by interpreting the provisions of former section 22825.15 to permit the parties to negotiate contribution rates but, failing agreement, to require the state to comply with the ordinarily applicable contribution rates set forth in section 22825.1, the Court of Appeal observed that section 22825.15 "contains undebatable evidence the Legislature intended it to supersede the provisions of section 22825.1." (Greene, supra, 5 Cal.App.4th at p. 192.) Moreover, the Court of Appeal explained that in view of the context in which section 22825.15 was adopted, the result produced by the trial court's reasoning could not have been intended. The court in Greene stated in this regard: "Given that section 22825.15 was enacted as urgency legislation to address the $14 billion budget shortfall, it is inconceivable the Legislature intended to have the parties engage in collective bargaining only to have the most favorable [health care premium contribution] formula [from the employees' perspective] apply in the absence of an agreement." (Greene, at p. 192.)
Accordingly, the Court of Appeal in Greene, supra, 5 Cal.App.4th 155, reversed the judgment rendered by the trial court insofar as it restrained the DPA from changing the state's contribution to the health care premiums of represented employees, but affirmed the judgment insofar as it restrained the DPA from unilaterally implementing the proposed 5 percent pay cut for represented employees.
The Court of Appeal's decision in Tirapelle, supra, 20 Cal.App.4th 1317, like its decision in Greene, supra, 5 Cal.App.4th 155, arose in the wake of the state's 1991 fiscal emergency and the enactment of the provision in the 1991 Budget Act that reduced the appropriations for state employee compensation by a specified amount but did not direct how that reduction should be achieved. (See, ante, at p. 1017, fn. 17.) Unlike Greene, however, Tirapelle involved the validity of a 5 percent salary reduction that the DPA proposed to apply to nonrepresented state employees—that is, state employees not covered by the collective bargaining provisions of the Dills Act. Thus the validity of the DPA's action did not call for interpretation or application of the provisions of the Dills Act, but rather turned on the proper interpretation and application of the DPA's authority with regard to nonrepresented employees.
The legal proceeding in Tirapelle, supra, 20 Cal.App.4th 1317, resulted from a conflict between the DPA and the Controller. At the outset of the
On appeal, after carefully reviewing the respective roles played by the Department of Finance, the DPA, and the Controller (Tirapelle, supra, 20 Cal.App.4th 1317, 1320-1324, 1327-1335), the Court of Appeal addressed the principal contention advanced by the Controller and the employee organizations: that the DPA, in imposing an across-the-board 5 percent reduction in salaries for nonrepresented employees, had exceeded its authority under section 19826, subdivision (a) to establish and adjust the salaries of nonrepresented employees.
Earlier in its opinion, the court in Tirapelle, supra, 20 Cal.App.4th 1317, explained that because the 1991 Budget Act had reduced the appropriations for state employee compensation without explicitly directing how such reductions should be implemented, the DPA was confronted with a difficult choice. The court observed: "There are limited means by which employee compensation can be reduced so as to stay within employee compensation budget allotments. The available means fall into the broad categories of reducing the size of the work force, reducing the compensation payable on a per-employee basis, or some combination thereof." (Tirapelle, at p. 1324.) The court then explained: "The DPA asserts that the employee compensation allotment reductions of the Budget Act of 1991 raised the specter of significant employee layoffs. It therefore determined to attempt to reduce
In challenging the validity of the DPA's action in light of the provisions of section 19826, subdivision (a) the Controller asserted, among other contentions, that "the DPA took its salary reduction actions out of a general concern for the state's fiscal condition and that the state's fiscal condition is a matter for the Legislature rather than the DPA to resolve." (Tirapelle, supra, 20 Cal.App.4th at p. 1336.) In responding to this argument, the court in Tirapelle explained: "In 1945, when public employee salaries were determined by the State Personnel Board, former section 18850, the predecessor to section 19826, included the state's financial condition in the list of factors to be considered in setting salaries. [Citation.] That factor was deleted from former section 18850 in 1949. [Citation.] We may assume for purposes of argument that a general concern over the state's financial condition is not an appropriate factor for the DPA to consider but such an assumption does not advance the position of the Controller or the interveners. Here, the DPA was concerned with specific legislative reductions of the allotments and appropriations available for employee compensation and that is a matter that the DPA certainly must consider." (Id. at pp. 1336-1337, fn. 25, italics added.)
One of the intervener employee organizations in Tirapelle argued alternatively that "the power to establish and adjust salary ranges granted to the DPA by section 19826, subdivision (a), does not include the authority to adjust salaries within the ranges thus set," and therefore that the DPA lacked authority to reduce the salaries of those employees whose prior salary would be within the new range established by the DPA. (Tirapelle, supra, 20 Cal.App.4th at p. 1342.) The court in Tirapelle emphatically rejected this contention, noting that although salary levels for state employees have been set by long-standing practice as a range, the DPA traditionally has possessed and exercised authority to establish and adjust salaries within such ranges. (Id. at pp. 1342-1343.)
In sum, the Court of Appeal in Tirapelle, supra, 20 Cal.App.4th 1317, concluded that the Controller and interveners had failed to establish a lawful basis for the Controller's blanket refusal to implement the DPA's 5 percent salary reductions with regard to exempt and nonrepresented state employees. Accordingly, the court in Tirapelle affirmed the trial court's judgment in favor of the DPA.
Although the circumstances underlying the decisions in Greene and Tirapelle differ in a number of respects from those present in the case now before us, those decisions nonetheless provide useful analytical guidance for our resolution of the instant dispute. First, both of these appellate decisions demonstrate that, even in a fiscal emergency, the question whether the Governor or the DPA possesses the authority unilaterally to alter the wages or other terms and conditions of employment of state employees depends upon a close and careful interpretation of the applicable statutory provisions. Second, the decision in Greene makes clear that, particularly with respect to represented state employees, the Legislature has demonstrated a special interest in retaining (through the budget process or otherwise) ultimate control over the salary and wages of such employees. Third, the decisions in both Greene and Tirapelle reveal that legislative provisions contained within a budget act (or in bills accompanying or in close proximity to that act) often provide the key to determining how reductions in employee compensation mandated by a budget act must or may be implemented.
We shall refer to the Greene and Tirapelle decisions in discussing a number of contentions advanced by the parties.
As noted above, the Governor contends that his executive order imposing a mandatory furlough on state employees is supported by several statutory provisions. In his initial opposition filed in the trial court, the Governor relied primarily upon section 3516.5 (a provision of the Dills Act), and less directly upon sections 19851, subdivision (a) and 19849 (which, respectively, set forth (1) the general state policy with regard to the workweek of state employees, and (2) the authority of the DPA to issue general regulations relating to hours of work and overtime). In upholding the validity of the Governor's action, the trial court relied primarily upon sections 19851, subdivision (a) and 19849. Accordingly, we turn first to those provisions and then discuss section 3516.5.
Section 19851, subdivision (a) reads in full: "It is the policy of the state that the workweek of the state employee shall be 40 hours, and the workday of state employees eight hours, except that workweeks and workdays of a different number of hours may be established in order to meet the varying needs of the different state agencies. It is the policy of the state to avoid the necessity for overtime work whenever possible. This policy does not restrict the extension of regular working-hour schedules on an overtime basis in those activities and agencies where it is necessary to carry on the state business properly during a manpower shortage."
It is somewhat ironic that both the Governor and plaintiffs contend the first sentence of section 19851, subdivision (a) supports their diametrically opposed positions in this case. As we explain, we conclude that the statute, properly understood, does not support either party's position, but instead simply is not relevant to the type of mandatory unpaid furlough program at issue in the present proceeding.
The trial court suggested in its ruling that the furlough plan in question could be brought within the language of section 19851, subdivision (a) on the theory that, in light of the state's fiscal problems, the furlough met the needs of all state agencies by minimizing the risk they would run out of funds before the end of the fiscal year and as a result be unable to meet their statutorily mandated functions. The statutory language, however, speaks of "the varying needs of the different state agencies" (ibid., italics added), demonstrating that the statute contemplated that the length of workweeks or workdays could be varied based on the particular functions and needs of individual agencies, and was not intended to encompass a rule or regulation that changed the length of the workweek for all, or virtually all, executive branch agencies.
The legislative history of section 19851 fully supports this understanding of the statute, which traces its roots to section 73 of the State Civil Service Act, initially enacted in 1943. (Stats. 1943, ch. 1041, § 1, pp. 2976-2977.) That statute required the State Personnel Board to determine and establish the normal workweek for each class of state employees for which a monthly salary range was fixed, providing that "[f]or purposes of determining eligibility for overtime compensation" the State Personnel Board "shall allocate, and reallocate as the needs of the service require," each such class into "(1) [c]lasses with a normal work week of 40 hours; [¶] (2) [c]lasses with a normal work week of 44 hours; [¶] (3) [c]lasses with a normal work week of 48 hours; [¶] [and] (4) [c]lasses which can not be included in any plan for payment of overtime because: [¶] (a) [w]hile requiring at least 40 hours per week, the duties and responsibilities are such that they do not adapt themselves to a maximum number of hours per week[, or] [¶] (b) [t]he performance of duties is required on a part-time and intermittent basis and does not amount to a maximum of 40 hours per week."
In 1945, the provisions of section 73 of the State Civil Service Act were transferred to former section 18020 of the Government Code. (Stats. 1945, ch. 123, § 1, p. 535.) As originally enacted in 1945, former section 18020
In 1947, former section 18020 was modified to eliminate the prior introductory clause referring to overtime compensation and to substitute the term "work week" for "normal work week" (Stats. 1947, ch. 1304, § 2, p. 2841), but former section 18021, as also amended in 1947, continued to provide that "[s]alaried state employees . . . shall, if required and ordered to work in excess of the hours prescribed for the group, receive overtime compensation for all such overtime work" (Stats. 1947, ch. 1304, § 3, p. 2842).
In 1955, former sections 18020 and 18021 again were amended in a single enactment. (Stats. 1955, ch. 1787, §§ 1, 2, pp. 3295-3296.) At that time, the Legislature added to former section 18020 the statutory language presently contained in the first sentence of section 19851—that is, the language establishing, as a matter of state policy, that a 40-hour workweek (rather than the prior three-tier scheme—40 hours, 44 hours, and 48 hours) generally would constitute the workweek for state employees, but also providing that "workweeks of a different number of hours may be established in order to meet the varying needs of the different state agencies." At the same time, former section 18021 was amended to provide that (1) for each class or position for which the State Personnel Board established a monthly or annual salary, the board shall establish and adjust "workweek groups" and assign each class or position to such a group, and (2) the board, "after considering the needs of the state service and prevailing overtime compensation practices, may establish workweek groups of different lengths or of the same length but requiring different methods of recognizing or providing compensation for overtime." Accordingly, under the 1955 legislation, the establishment and adjustment of workweeks for state employees under former sections 18020 and 18021 continued to be related to the determination of such employees' eligibility for overtime compensation.
In 1974, former sections 18020 and 18021 again were amended in a single enactment. (Stats. 1974, ch. 1368, §§ 2, 3, pp. 2962-2963.) As a result, former section 18020 established the eight-hour day as the generally applicable workday of state employees, but also recognized that workdays of a
In 1981, the Legislature adopted comprehensive legislation (Stats. 1981, ch. 230, § 55, pp. 1168-1232) that added section 19815 to the Government Code, creating the DPA, and section 19816, transferring to that department (among other functions) "the duties, purposes, responsibilities, and jurisdiction exercised by the State Personnel Board with respect to the administration of salaries, hours, and other personnel-related matters, training, performance evaluations, and layoffs and grievances." The 1981 legislation also transferred the provisions of former section 18020, relating to the workweek of state employees, to a newly enacted section 19851, and transferred the provisions of former section 18021 to a newly enacted section 19843. Thus, whereas section 19851 now sets forth the general state policy with regard to the workweek and workday of state employees, section 19843 currently directs the DPA to establish and assign to a workweek group each class or position in state employment for which a monthly or annual salary range is established. Section 19843 further provides: "The department, after considering the needs of the state service and prevailing overtime compensation practices, may establish workweek groups of different lengths or of the same length but requiring different methods of recognizing or providing compensation for overtime. The department may also provide for the payment of overtime in designated classes for work performed after the normal scheduled workday or normal scheduled workweek." (§ 19843, subd. (a).)
This legislative history confirms that the purpose underlying section 19851's designation of a "workweek" for state employees is to establish the number of hours an employee must work before potentially becoming eligible for overtime compensation.
Other statutes that encompass situations in which employees work less than a full 40-hour week for reduced compensation refer to the applicable program as one involving "reduced worktime," and do not suggest that the employee's reduced schedule constitutes the employee's "workweek" for purposes of section 19851. (See §§ 19996.19-19996.29 [Reduced Worktime Act].) Viewed in context, the provisions of section 19851, subdivision (a) simply were not intended to apply to the type of unpaid furlough at issue in the present case. Thus, we disagree with the trial court's conclusion that section 19851, subdivision (a) reasonably may be interpreted to provide the Governor and the DPA with the authority to institute the mandatory unpaid furlough program in question.
At the same time, we also reject the contention, advanced by a number of plaintiffs, that the provisions of section 19851, subdivision (a) properly should be interpreted to preclude the Governor from adopting the furlough program at issue. These plaintiffs, relying upon the history of section 19851, subdivision (a) that we briefly have summarized (see, ante, at pp. 1026-1028), contend that the statute should be interpreted to permit the DPA to adopt only varying work schedules that provide for workweeks of more than 40 hours, but not to authorize the DPA to adopt a workweek of less than 40 hours. In our view, however, nothing in either the language or the history of section 19851, subdivision (a) suggests that in an appropriate circumstance—for example, when a particular type of employment is particularly stressful or arduous and a shorter workweek is considered necessary for the health of the employee or the safety of the public—the DPA would not be authorized to establish a normal workweek of less than 40 hours. Furthermore, as already explained, the term "workweek" as employed in section 19851, subdivision (a) simply refers to the maximum numbers of hours an employee may be required to work before becoming eligible for overtime compensation; it does not guarantee a minimum number of hours that a state employer must permit an employee to work. Thus, just as section 19851, subdivision (a) cannot properly be interpreted as authorizing the Governor to impose the furlough here at issue, the provision also cannot properly be interpreted as prohibiting the Governor from imposing such a furlough. The statute simply does not address the furlough situation.
The trial court was mistaken for an additional reason in concluding that section 19851, subdivision (a) authorized the Governor's furlough order. Subdivision (b) of that statute explicitly provides that "[i]f the provisions of
Finally, it is our view that the trial court's heavy reliance upon the workweek provisions of section 19851, subdivision (a) as providing authority for the Governor's furlough order, fails to take adequately into account the circumstance that the reduction in workdays mandated by this order was neither the primary purpose nor the primary effect of the order. It is clear from the situation in which the executive order was issued that the purpose of the furlough program here at issue was to reduce state expenses by reducing the state funds paid to state employees. The two-day-a-month furlough was adopted not because there was a lack of work or a reduced need for state services that reasonably called for a reduction in workdays, but rather as a means to reduce the state's payroll expenses in light of the state's fiscal problems. Focusing upon the aspect of the program that reduced the number of days the affected employees were permitted to work fails to give adequate consideration to the substantial reduction in the wages or earnings of state employees that constituted the primary effect of the furlough program on the employees in question. Although the Governor's decision to achieve the desired reduction in state employee compensation expenses through a mandatory unpaid furlough rather than through a simple pay cut afforded some mitigating benefits to employees, in the final analysis the reduction in the wages earned by the affected employees—and the corresponding savings obtained by the state—were the most significant changes in the terms and conditions of employment effectuated by the Governor's executive order. Nothing in section 19851, subdivision (a) purports to provide the Governor or the DPA with the authority to impose a unilateral across-the-board reduction of state employees' wages or earnings in this fashion.
In sum, for all of the above reasons, we conclude the trial court erred in ruling that the provisions of section 19851, subdivision (a) authorized the Governor to institute unilaterally the challenged furlough program.
In upholding the Governor's action, the trial court also relied upon section 19849. Subdivision (a) of that statute provides in full: "The [DPA] shall adopt rules governing hours of work and overtime compensation and the keeping of records related thereto, including time and attendance records. Each appointing power shall administer and enforce such rules." (§ 19849, subd. (a).)
As is evident from the language of this statute, it does not purport to grant the DPA additional substantive authority over the hours state employees work or the wages they earn, but simply authorizes the DPA to adopt administrative rules that the employing state agency is to enforce, including recordkeeping rules related to hours of work and overtime compensation. The trial court, having concluded that section 19851, subdivision (a) provided the substantive authority for the Governor and the DPA to reduce the hours state employees would be permitted to work, determined that the Governor's December 19, 2008, executive order directing the DPA to implement the furlough program constituted a "rule" within the meaning of section 19849, subdivision (a) and thus was a permissible means of instituting the program.
Because we have concluded that section 19851 does not authorize the Governor or the DPA to institute the challenged furlough program, section 19849 clearly does not independently provide the Governor or the DPA with such authority.
In addition to relying upon sections 19851 and 19849, the Governor also contends that section 3516.5—a provision contained in the Dills Act— provides support for his authority to issue the December 19, 2008, executive order instituting the furlough program. We conclude that section 3516.5 does not provide such authority.
This statute provides in full: "Except in cases of emergency as provided in this section, the employer shall give reasonable written notice to each recognized employee organization affected by any law, rule, resolution, or regulation directly related to matters within the scope of representation proposed to be adopted by the employer, and shall give such recognized employee organizations the opportunity to meet and confer with the administrative officials or their delegated representatives as may be properly designated by law.
By its terms, the first paragraph of section 3516.5 simply provides that, as a general matter, when state employees are represented by a recognized employee organization, the employer is required to provide the organization with notification and an opportunity to meet and confer before the employer implements any law, rule, resolution, or regulation directly relating to matters within the scope of representation. The second paragraph of section 3516.5 recognizes an exception to the requirement of prior notice and an opportunity to meet and confer, which comes into play "[i]n cases of emergency." The employer, in such circumstances, may implement the proposed action without first notifying the employee organization and giving it an opportunity to meet and confer on the matter, but still must notify and meet and confer with the organization regarding the action as soon as practical.
Neither the first nor the second paragraph of section 3516.5 purports to provide a source of authority for a state employer to take any particular type of substantive action in either a nonemergency or emergency situation. Instead, the statute, reasonably interpreted, simply provides that when an employer possesses the authority from some other source to take a particular type of action relating to matters within the scope of representation, the employer ordinarily must notify and meet and confer with the employee organization before taking such action, but in an emergency may take the
Although we have concluded that none of the specific statutes relied upon by the Governor—sections 19851, 19849, and 3516.5—provides the Governor the authority to institute unilaterally a mandatory unpaid furlough of state employees by executive order, we consider whether such authority may arise from some other source.
This authority conceivably could derive from one or more of the numerous statutory provisions enacted by the Legislature that grant the DPA, or a particular appointing agency, administrative discretion over various aspects of state employment. (See, e.g., §§ 19816, 19816.10.)
Indeed, the only current statutory provision specifically addressing the subject of whether an executive branch employer may require state employees to work a reduced work schedule for a reduced salary or wage clearly provides no support for the Governor's position. In the Reduced Worktime Act (§§ 19996.19-19996.29), initially enacted in 1981, the Legislature sought to encourage state agencies to provide an opportunity for those employees who wished to reduce their worktime in exchange for a reduction in wages to do so voluntarily. (§§ 19996.19, subd. (a)(7), (8), 19996.21.) At the same time, one provision of that legislation—section 19996.22, subdivision (a)— specifies that "[a]ny employee who is being coerced, or who has been required, by the appointing power, a supervisor, or another employee, to involuntarily reduce his or her worktime contrary to the intent of this article, . . . may file a grievance with the [DPA]." (Italics added.) We recognize that the Reduced Worktime Act was not enacted with the circumstance of a state fiscal emergency in mind, and we agree with the Governor's contention that section 19996.22, subdivision (a) was not intended, and reasonably should not be interpreted, to prohibit the state from instituting an across-the-board mandatory unpaid furlough of all persons employed by the executive branch as a cost-saving measure in such an emergency. But although we agree that such a furlough is not "contrary to the intent of [the Reduced Worktime Act]" (§ 19996.22, subd. (a)) and thus that section 19996.22 should not be interpreted to prohibit the imposition of a mandatory unpaid furlough on state employees, this interpretation of the statute still leaves the Governor without an affirmative source authorizing him to take such action unilaterally.
The trial court in this matter, in rejecting plaintiffs' challenge to the furlough program, suggested that the program did not implicate the provisions of section 19826, on the theory that (1) this statute applies only to the DPA's authority to establish and adjust "salary ranges," and (2) the furlough order at issue did not affect the employees'"salary ranges" or "rate of pay."
Furthermore, even though the mandatory furlough program did not alter an affected state employee's hourly rate of pay, the furloughs clearly did significantly reduce the wages or salary that a full-time state employee earns from his or her job—the monetary sum that obviously matters most to employees seeking to pay their rent or mortgages and support their families. Although the furlough may not have led the DPA formally to change the minimum and maximum dollar amounts set forth in its posted salary range for each individual state employee position (a forbearance consistent with the objective of not affecting future retirement benefits), as a result of the furlough the affected full-time state employees in such positions no longer were permitted to receive the full-time salary assigned to their position, but instead received only a lower salary, reflecting the reduction attributable to the furlough. Accordingly, in this practical sense, the furlough did "adjust" both the salary range and the salary pursuant to which full-time employees actually were compensated.
As demonstrated by the Court of Appeal's decision in Greene, supra, 5 Cal.App.4th 155, the scope of the Governor's (and the DPA's) authority over the wages and hours of represented state employees is governed by the provisions of the Dills Act. Under the circumstances of the present case, one of the most relevant provisions of that act is section 3517.8, which was added in 2000, several years after the Court of Appeal's decision in Greene, and which significantly changed the effect of the expiration of an MOU under the Dills Act.
As we have seen, in Greene, supra, 5 Cal.App.4th 155, the Court of Appeal concluded that when an MOU expired, all of the statutory provisions relating to the terms and conditions of state employment that had been superseded by the MOU once again became effective and thereafter governed the employer-employee relationship until a new MOU was agreed upon and became effective. (Greene, at pp. 174-178.) In addition, the court in Greene concluded that even when, as in that case, the parties had negotiated to a point of impasse, the DPA was not entitled to implement its final offer with regard to employee wages; instead, the appellate court held, under those circumstances the Dills Act left the resolution of the wage issue to the Legislature. (Greene, at pp. 178-182.)
Section 3517.8 significantly altered the effect of the expiration of an MOU under the Dills Act from that described in Greene. This statute currently provides in full:
"(a) If a memorandum of understanding has expired, and the Governor and the recognized employee organization have not agreed to a new memorandum of understanding and have not reached an impasse in negotiations, subject to subdivision (b), the parties to the agreement shall continue to give effect to the provisions of the expired memorandum of understanding, including, but not limited to, all provisions that supersede existing law, any arbitration provisions, any no strike provisions, any agreements regarding matters covered in the Fair Labor Standards Act of 1938 (29 U.S.C. Sec. 201 et seq.), and any provisions covering fair share fee deduction consistent with Section 3515.7.
In this case all parties agree that, on December 19, 2008, when the Governor issued his executive order directing the DPA to implement a mandatory two-day-a-month unpaid furlough plan, the terms and conditions of employment of the state employees represented by each of the plaintiff employee organizations were governed by an applicable MOU. Although each of the MOU's had expired, under section 3517.8 the terms of the expired MOU remained in effect, because the parties had not reached an impasse in their negotiations over a new MOU.
There can be little question that the issue whether an employee's wages may be reduced by the implementation of a mandatory furlough (and, if so, by what amount and with what input from the recognized employee organization) lies at the heart of the matter of "wages, hours, and other terms and
For all of the above reasons, we find unpersuasive the Governor's contention that either the constitutional authority granted to him by the California Constitution or the existing statutory provisions pertaining to the terms and conditions of state employment granted him or the DPA the authority unilaterally to impose a mandatory unpaid furlough on state employees.
As noted above, although the trial court relied primarily upon sections 19851 and 19849 in ruling that the Governor possessed authority to impose the furloughs, the court additionally found that several provisions contained in the applicable MOU's also authorized the employer to impose furloughs unilaterally in emergency situations. In reaching the latter conclusion, the trial court relied in significant part on its conclusion that the MOU's incorporated the provisions of section 19851 relating to workweeks (which the trial court viewed as authorizing the mandatory unpaid furloughs), and in part on certain language included within the so-called "State's Rights" clauses contained in some (but not all) of the relevant MOU's.
In our view, the trial court's finding that the MOU's here at issue authorized the Governor unilaterally to reduce the hours and wages of covered employees in response to a burgeoning budget deficit is quite problematic. First, in view of our determination that the trial court erred in finding that the provisions of section 19851 relating to workweeks provide the Governor with the authority to institute mandatory unpaid furloughs, that court's reliance upon the MOU's general reference to section 19851 is likewise erroneous. Second, the trial court's discussion of the "State's Rights" clauses in the MOU's failed to take into account significant language contained in those clauses that appears to undermine the trial court's interpretation of the provisions.
In addition to the portions of section 3517.6 listing the numerous statutes that are superseded (without further legislative action) by the existence of a conflicting provision in an applicable MOU, subdivision (b) of that statute contains another clause that is relevant to the issue before us. It provides in
In the present case, by enacting appropriations for employee compensation in the initial 2008 Budget Act (Stats. 2008, ch. 268, enacted Sept. 2008) that were consistent with the higher level of compensation at which the employees were being paid before the furlough was implemented, the Legislature approved that level of compensation. Thus, at the time the Governor issued the December 19, 2008, executive order, the represented employees were working under a legislatively approved MOU that provided for the payment of wages without the two-day-a-month (approximately 10 percent) reduction instituted by the Governor. Accordingly, unless the MOU's specifically authorized the mandatory unpaid furlough imposed by the executive order, it would appear that at that time the executive order was not valid.
For the reasons that follow, however, we conclude that on February 19 and 20, 2009, when the Legislature enacted, and the Governor then signed, legislation revising the 2008 Budget Act, the validity of the mandatory furlough program fundamentally changed. The new legislation explicitly reduced the 2008-2009 fiscal year appropriation for state employee compensation to a level reflecting the reduced compensation to be paid to employees under the Governor's furlough plan. By reducing the appropriation for employee compensation, the Legislature no longer had "fully funded" the provisions of the MOU's supporting the higher level of pay that previously had been approved, and thus, under sections 3517.6 and 3517.7, the provisions of the applicable MOU's that supported the higher level of pay the employees had been receiving prior to the implementation of the furloughs no longer were effective. (Cf. White v. Davis, supra, 30 Cal.4th at pp. 572-573.)
As we explained above in the statement of facts (see, ante, at p. 1005), the legislation that revised the budget applicable to the 2008-2009 fiscal year (Sen. Bill 3X 2) effectuated a reduction in the appropriations for employee compensation by adding a provision to the 2008 Budget Act. (Sen. Bill 3X 2, § 36.)
Section 36 of Senate Bill 3X 2 provides in full:
"Section 3.90 is added to the Budget Act of 2008, to read:
"Sec. 3.90. (a) Notwithstanding any other provision of this act, each item of appropriation in this act, with the exception of those items for the California State University, the University of California, Hastings College of the Law, the Legislature (including the Legislative Counsel Bureau), and the judicial branch, shall be reduced, as appropriate, to reflect a reduction in employee compensation achieved through the collective bargaining process for represented employees or through existing administration authority and a proportionate reduction for nonrepresented employees (utilizing existing authority of the administration to adjust compensation for nonrepresented employees) in the total amounts of $385,762,000 from General Fund items and $285,196,000 from items relating to the other funds. It is the intent of the Legislature that General Fund savings of $1,024,326,000 and other fund savings of $688,375,000 in the 2009-10 fiscal year shall be achieved in the same manner described above. The Director of Finance shall allocate the necessary reduction to each item of appropriation to accomplish the employee compensation reductions required by this section.
"(b) The Department of Personnel Administration shall transmit proposed memoranda of understanding to the Legislature promptly and shall include with each such transmission estimated savings pursuant to this section of each agreement.
"(c) Nothing in this section shall change or supersede the provisions of the Ralph C. Dills Act (Chapter 10.3 (commencing with Section 3512) of Division 4 of Title 1 of the Government Code)."
First, SEIU and the Controller assert that by this language the Legislature directed that the reductions be achieved for represented employees only through the collective bargaining process, and that the reference to "existing administration authority" applied only to nonrepresented employees. The Governor, by contrast, maintains that under this clause "[r]eductions in employee compensation were to be achieved through the collective bargaining process for represented employees or existing administration authority, with a proportionate reduction for nonrepresented employees." Although the phrasing of this provision is less than precise, we conclude that the Governor's interpretation is the more reasonable.
A close reading of the specific language of this clause suggests that the first part of the clause—"achieved through the collective bargaining process for represented employees or through existing administration authority"—sets out alternative means for achieving the reductions for represented employees, whereas the second part of the clause—"and a proportionate reduction for nonrepresented employees (utilizing existing authority of the administration to adjust compensation for nonrepresented employees)"—establishes the means for achieving the reductions for nonrepresented employees. This interpretation, unlike SEIU's and the Controller's proposal, prevents the final parenthetical clause "(utilizing existing authority of the administration to adjust compensation for nonrepresented employees)" from being unnecessary and redundant.
Second, the parties also disagree as to the proper interpretation of the phrase "existing administration authority." Plaintiffs and the Controller contend that this phrase should be interpreted to permit the reductions to be achieved only through layoffs (or attrition) and not through furloughs. The Governor, by contrast, contends that the phrase should be interpreted to include the two-day-a-month furlough plan.
On its face, the phrase "existing administration authority" is ambiguous. On the one hand, the phrase could be interpreted to mean that the Legislature intended to permit the reductions in employee compensation to be achieved
First, the legislative history of the provision in question clearly and explicitly establishes that the reductions in appropriations for employee compensation that were included in the bill reflected the two-day-a-month furloughs. Both the Senate and the Assembly floor analyses of Senate Bill 3X 2—material that was available to the legislators at the time they were considering the budget legislation—describe in similar language the various changes that the bill would make to the 2008 Budget Act, and indicate that the source of the analyses was the author of the bill, Senator Ducheny, the chair of the Senate Budget Committee. In describing the provision in the bill relating to state employee compensation, the Senate bill analysis states: "Control Section 3.90 that reflects reductions across all budget areas to reduce employee compensation costs related to furloughs, the elimination of two state holidays, and minor changes to overtime calculations." (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Sen. Bill 3X 2
Second, aside from the furlough plan, the only other available "existing administration authority" through which the state could have achieved the very substantial reduction in the appropriations for employee compensation mandated by the February 2009 budget legislation was the authority provided by section 19997, permitting a state appointing authority to "lay off" state employees "[w]henever it is necessary because of lack of ... funds, or whenever it is advisable in the interests of economy, to reduce the staff of any state agency ...." In our view it is not reasonable to suggest that the Legislature intended to compel the state, in the absence of a mutually agreed-upon collective bargaining resolution, to resort to layoffs of a significant percentage of state employees rather than to permit the state to utilize the furlough plan that was then already in use, particularly when the legislative history makes no reference to such layoffs.
Third, although at the time the revised budget act was adopted on February 20, 2009, the trial court's judgment upholding the validity of the furlough program already had been appealed and the Legislature could not have known how the appeal ultimately would be resolved, it is reasonable to assume that body recognized that the reduction in employee compensation mandated by the revised 2008 Budget Act would have to be implemented prior to a final resolution of the appeal. We conclude that, in view of the exigent circumstances facing the Legislature, it intended to permit the then existing furlough program to be used as an alternative to other means that might be agreed upon through the collective bargaining process, without regard to whether the appellate courts ultimately determined that the Governor or the DPA possessed the authority to impose an unpaid furlough program unilaterally.
Plaintiffs further contend that even if the provisions of section 3.90, subdivision (a) of the revised 2008 Budget Act are interpreted to authorize the use of the furlough plan as one permissible alternative means of achieving the reduction in employee compensation mandated by that section, the Legislature was prohibited by the "single subject" rule embodied in article IV, section 9 of the California Constitution from enacting such a proposal as part of the budget act itself, and could do so only through passage of a separate "trailer bill" or some other independently enacted legislative measure. We disagree.
In particular, section 3.90 of the revised 2008 Budget Act does not alter the provisions of Government Code section 19826 or purport to grant the Governor or the DPA authority to impose unpaid furloughs unilaterally, but rather embodies the Legislature's determination that the two-day-a-month furlough plan is a permissible means by which the specific reductions set forth in section 3.90 may be implemented.
We conclude that the budget act provision here at issue concerns only "`"`the one subject of appropriations to support the annual budget'"'" (Planned Parenthood, supra, 173 Cal.App.3d at p. 1199) and not more than one subject.
Although, for the reasons discussed above, we disagree with much of the trial court's reasoning, in light of the legislative measures enacted after the trial court's ruling we conclude that plaintiffs are not entitled to the relief sought in this litigation. Accordingly, the judgment rendered by the trial court, denying the relief sought in these mandate proceedings, is affirmed. The parties shall bear their own costs on appeal.
Kennard, J., Baxter, J., Werdegar, J., Chin, J., and Moreno, J., concurred.
I concur. I am in full agreement with the conclusion that the Legislature endorsed the Governor's furlough plan in the budget legislation at issue. I also agree that, by reducing the appropriation for employee compensation, the Legislature rendered ineffective the pay provisions in the expired memoranda of understanding, which had been extended by statute. (Gov. Code, §§ 3517.6, subd. (b), 3517.8, subd. (a).)
As explained in the majority opinion, it is clear from the context of the budget negotiations at the end of 2008 and the beginning of 2009 that the Legislature adopted the savings realized by the Governor's furlough plan. But it is important to note that when it took this action, the Legislature did not create new administrative authority out of whole cloth, or rely entirely on an executive order that was without legal support. DPA has statutory jurisdiction—i.e., "existing administration authority"—over the salaries and hours of
The majority holds that the trial court erred when it ruled that the furlough plan did not implicate section 19826, subdivision (b), which provides that DPA "shall not establish, adjust, or recommend a salary range for any employees" represented by a union. However, if this statute prohibits the salary adjustments resulting from furloughs, then by removing that prohibition section 3.90 would indeed grant authority to DPA that it did not otherwise possess and would change existing statutory law, in violation of the single-subject rule as framed in the cases cited above. I am not persuaded by the majority's declaration that existing statutes place no limitation on the Legislature's reserved authority over state employee compensation. The single-subject rule says otherwise. Just as the Legislature was not free to disregard the statutes governing services for the developmentally disabled in Association for Retarded Citizens v. Department of Developmental Services, supra, 38 Cal.3d 384, it was not free in this case to disregard the statutes governing employee compensation. The Legislature's authority to reduce appropriations for employee compensation is broad, but its authority to create new programs like the furlough plan is subject to existing statutory restrictions.
In my view, the trial court reached the correct conclusion on the applicability of section 19826, subdivision (b). This statute is concerned with salary ranges, and furloughs do not affect ranges. The ranges remain in place, and salaries return to their ordinary levels when the furlough program expires.
For the reasons stated above, I concur in the result reached by the majority opinion.
"Dear Valued State Worker,
"During the six weeks since I signed our state budget, the mortgage crisis has deepened, unemployment has increased and the stock market has dropped significantly. As a result, we are facing a projected $11 billion revenue shortfall this fiscal year.
". . . I have called the Legislature into special session to address our fiscal emergency, and I am proposing a combination of economic stimulus measures, programs to keep Californians in their homes, revenue increases and spending reductions to address the real, immediate financial problems facing the state.
"If approved by the Legislature, these spending reductions will impact our state workers. . . .
"To achieve cost savings and protect vital state services, I am proposing the following measures:
"Furloughs: All state employees will be furloughed one day each month for the next year and half, a total of 19 days. This will result in a pay cut of about 5 percent. The pay cut will not affect retirement and other benefits for which you are eligible. [¶] . . . [¶]
"These changes will save the state roughly $1.4 billion over two years. I know these are not easy proposals, and I assure you we are working closely with union leadership to achieve results in the least painful way possible. All the actions we're proposing must first be approved by the Legislature." (Italics added.)
The proposed legislation was submitted to the Legislature by the Department of Finance and was transmitted to the Office of Legislative Counsel in a request for draft legislation. That office formatted the proposals as draft legislation (RN [Request Number] 08 29145 and RN 08 29146), but the language proposed was not included in any bill that was formally introduced in the Legislature.
The Legislative Analyst's overview states:
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"1. What effect, if any, does Government Code section 19996.22—which provides in part that `[a]ny employee . . . who has been required, by the appointing power, . . . to involuntarily reduce his or her worktime contrary to the intent of this article . . . may file a grievance with the department'—have on the validity of the Governor's December 19, 2008, executive order instituting a mandatory furlough on state employees?
"2. What effect, if any, does the provision of the revised 2008 Budget Act that reduced the appropriations for employee compensation for the 2008-09 fiscal year in an amount comparable to the savings sought to be achieved by the Governor's furlough order (Stats. 2009, 3d Ex. Sess. 2009-2010, ch. 2, § 36 (Sen. Bill 3X 2, § 36), passed by the Legislature and approved by the Governor on Feb. 20, 2009) have on (1) the validity of the Governor's executive order, and/or (2) the remedy, if any, to which the petitioning employee organizations may be entitled in these actions?"
"(1) If, following the enactment of the budget bill for the 2004-05 fiscal year or any subsequent fiscal year, the Governor determines that, for that fiscal year, General Fund revenues will decline substantially below the estimate of General Fund revenues upon which the budget bill for that fiscal year, as enacted, was based, or General Fund expenditures will increase substantially above that estimate of General Fund revenues, or both, the Governor may issue a proclamation declaring a fiscal emergency and shall thereupon cause the Legislature to assemble in special session for this purpose. The proclamation shall identify the nature of the fiscal emergency and shall be submitted by the Governor to the Legislature, accompanied by proposed legislation to address the fiscal emergency.
"(2) If the Legislature fails to pass and send to the Governor a bill or bills to address the fiscal emergency by the 45th day following the issuance of the proclamation, the Legislature may not act on any other bill, nor may the Legislature adjourn for a joint recess, until that bill or those bills have been passed and sent to the Governor.
"(3) A bill addressing the fiscal emergency declared pursuant to this section shall contain a statement to that effect."
Under the provisions of the National Labor Relations Act governing the collective bargaining process in the private sector (29 U.S.C. § 158 et seq.) and under the provisions of the California statutory schemes governing the collective bargaining or meet-and-confer process between local governments and their employees (§§ 3500-3510 [Meyers-Milias-Brown Act]) and between school districts and their employees (§§ 3540-3549.3 [Educational Employment Relations Act]), when a collective bargaining agreement or MOU expires the parties generally are required to maintain the status quo under the terms and conditions of the expired agreement during the period in which the parties continue to bargain in good faith on a new agreement, but once the parties reach an impasse in negotiations the employer generally is permitted unilaterally to implement its "last, best offer" with regard to particular terms and conditions of employment. (Greene, supra, 5 Cal.App.4th at pp. 188-189 [citing cases].)
As we explain below (post, pp. 1038-1039), several years after the decision in Greene, supra, 5 Cal.App.4th 155, the Dills Act was amended to change the rules that apply upon expiration of an MOU. (See § 3517.8, enacted by Stats. 2000, ch. 879, § 2.) The decision in Greene, however, rested upon the provisions of the Dills Act that were in effect at the time of that decision.
"(a) The [DPA] shall establish and adjust salary ranges for each class of position in the state civil service subject to any merit limits contained in Article VII of the California Constitution. The salary range shall be based on the principle that like salaries shall be paid for comparable duties and responsibilities. In establishing or changing such ranges consideration shall be given to the prevailing rates for comparable service in other public employment and in private business. The department shall make no adjustments which require expenditures in excess of existing appropriations which may be used for salary increase purposes. The department may make a change in salary range retroactive to the date of application for such change.
"(b) Notwithstanding any other provision of law, the department shall not establish, adjust, or recommend a salary range for any employees in an appropriate unit where an employee organization has been chosen as the exclusive representative pursuant to Section 3520.5.
"(c) On or before January 10 of each year, the department shall submit to the parties meeting and conferring pursuant to Section 3517 and to the Legislature, a report containing the department's findings relating to the salaries of employees in comparable occupations in private industry and other governmental agencies.
"(d) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if such provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act." (Stats. 1983, ch. 1258, § 1.4, pp. 4979-4980.)
Section 19816.10 provides: "(a) In order to secure substantial justice and equality among employees in the state civil service, the [DPA] may provide by rule for days, hours and conditions of work, taking into consideration the varying needs and requirements of the different state agencies and the prevailing practices for comparable services in other public employment and in private business. [¶] (b) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if such provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act."
In addressing the question whether the Governor or the DPA possesses the authority unilaterally to impose a mandatory unpaid furlough on state employees to address a substantial budget problem, our focus, in this part of our discussion, is upon whether the Governor or the DPA, as part of the executive branch, had authority to act without the concurrence of the Legislature, and not upon which official or entity within the executive branch may have authority to decide whether to impose such a mandatory furlough (as opposed to other cost-savings measures) on persons employed by a particular executive-branch constitutional officer or agency. We express no view on this latter issue—an issue presented in several cases now pending in the lower courts.
In another instance, the collective bargaining process constituted the impetus for the state's adoption of a personal-leave program—available to nonrepresented employees—under which employees voluntarily agree to receive reduced compensation in exchange for personal-leave credit. (See § 19996.3.) Section 19996.3, subdivision (b)(2) required the DPA to ensure that the program "is generally equitable and is consistent with the personal leave program provided to employees covered by memoranda of understanding" reached under the Dills Act.
Because the overwhelming majority of full-time state employees are compensated on a monthly, rather than a daily or hourly, basis (see Cal. Dept. of Finance, Salaries and Wages 2010-2011, passim, <http://www.dof.ca.gov/budget/historical/2010-11/salaries_and_wages/> [as of Oct. 4, 2010]), a state employee's "full-time rate" generally refers to the employee's full-time salary, rather than the employee's hourly rate of pay.
Moreover, in Pacific Legal Foundation v. Brown, supra, 29 Cal.3d at pages 189-191 and footnotes 12 to 14, this court listed numerous instances in which the Legislature has demonstrated its interest in retaining ultimate control over across-the-board changes in the salaries and wages of all state employees, by frequently rejecting salary recommendations of the State Personnel Board. That historical experience casts doubt on the proposition that the existing statutes grant the Governor, even in a fiscal emergency, the authority unilaterally to reduce employee wages by an amount the Governor concludes is appropriate.
Furthermore, as noted above, in Tirapelle, supra, 20 Cal.App.4th 1317, the Court of Appeal pointed out that, although the predecessor to section 19826, subdivision (a) at one time had included the state's financial condition in the list of factors to be considered in setting salaries, that factor subsequently was deleted from the statute and has not been reinserted. In light of that legislative history, the court in Tirapelle "assume[d] for purposes of argument that a general concern over the state's financial condition is not an appropriate factor for the DPA to consider . . . ." (20 Cal.App.4th at pp. 1336-1337, fn. 25.) In Tirapelle, however, the DPA acted to reduce the salaries of nonrepresented and exempt employees after the Legislature already had enacted a budget act that reduced the appropriations available for employee compensation, and the court held that in light of that enactment, the reduced appropriations were "a matter that the DPA certainly must consider." (Ibid.) In the present case, of course, the Governor and the DPA acted before the Legislature enacted revisions to the 2008 Budget Act that reduced the appropriations for employee compensation contained in the original act.
The trial court pointed to the language in this section permitting the state to "relieve its employees from duty because of lack of work, lack of funds, or for other legitimate reasons," but failed to take note of the introductory clause of section 3.1.B—"[t]o the extent consistent with law and this MOU" (italics added)—which suggests that the "State's Rights" clause was not intended to override all of the other, more specific provisions of the MOU governing wages, hours, and other terms and conditions of employment. Moreover, the clause recognizing the state's right to relieve its employees from duty because of "lack of funds"—the clause relied upon by the trial court—reasonably can be interpreted to refer only to the state's authority, under section 19997, to lay off employees for lack of funds. As will be recalled, section 19997 is one of the few statutes dealing with the terms and conditions of employment that is not subject to supersession under the Dills Act. (See, ante, at pp. 1034-1035, fn. 29.)
Two separate provisions of the MOU in question (§§ 10.2, 10.3) explicitly address the question of furloughs. Section 10.2 provides in relevant part that "[w]henever the State determines it is necessary to lay off employees, the State and the Union shall meet in good faith to explore alternatives to laying off employees such as ... voluntary reduced work time ...." (Italics added.) Section 10.3 provides that "[t]he State may propose to reduce the number of hours an employee works as an alternative to layoff. Prior to the implementation of this alternative to a layoff, the State will notify and meet and confer with the Union to seek concurrence of the usage of this alternative."
The trial court's ruling does not appear to give adequate consideration to these specific provisions of the MOU, or to assess how these provisions reasonably should be interpreted in light of the common understanding (at the time the parties entered into the MOU) of the Governor's authority or lack of authority to impose such furloughs. (See, e.g., Los Angeles City Employees Union v. City of El Monte (1985) 177 Cal.App.3d 615, 623 [220 Cal.Rptr. 411] [ordinary "custom and usage" must be considered in interpreting the terms of an MOU].) In light of all of these circumstances, the trial court's reliance upon the "State's Rights" clauses in the MOU's is at the least open to serious question.
The furlough provision included in the new SEIU MOU's did not take effect immediately, because the proposed reduction of furlough days required the expenditure of funds for which no appropriation had been made by the Legislature. (See § 3517.6, subd. (b).) A bill that would provide legislative approval of the new SEIU MOU's was introduced in the Assembly on February 26, 2009, and was amended on March 23, 2009, to refer explicitly to the furlough program contained in the MOU's. (Assem. Bill No. 964 (2009-2010 Sess.) §§ 5, 6 (Assembly Bill 964).) That bill proposed to appropriate more than $9.4 million to augment the appropriation for state employee compensation for the 2008-2009 fiscal year. (Assem. Bill 964, § 7.) On May 4, 2009, however, Assembly Bill 964, as amended on March 23, 2009, failed to obtain the two-thirds affirmative vote necessary for passage.
The proposed legislation seeking approval of the new SEIU MOU's demonstrates that any solution to the reduction in appropriations for employee compensation contained within the revised 2008 Budget Act and the 2009 Budget Act arrived at through the collective bargaining process, and providing treatment for represented employees more favorable than that afforded by the two-day-a-month furlough plan, would become effective only if new legislation, appropriating additional funds for such purposes, were enacted into law.
In September 2008, as part of an earlier budget package, the Legislature added a new provision, section 13312, to the Government Code. That statute, as originally enacted, provided that, commencing with the 2008-2009 fiscal year, if, after the annual budget act was enacted, the Director of Finance determined that the fiscal year budget was likely to be substantially out of balance, the Director of Finance could reduce General Fund items of appropriations, subject to a number of conditions and exceptions set forth in the provision. (Stats. 2008, ch. 751, § 33, eff. Sept. 30, 2008.) As part of the budget package adopted in February 2009, the Legislature amended section 13312, adding, as an additional category of appropriations that the Director of Finance was not permitted to reduce under the provision, appropriations for "[a]ny collective bargaining agreement with a recognized state employee organization." (§ 13312, subd. (b)(1)(I), enacted by Stats. 2009-2010, 3d Ex. Sess. 2009-2010, ch. 4, § 2, eff. Feb. 20, 2009.) Thus, although the Legislature was willing, as part of the comprehensive budget package enacted in February 2009, to afford the Director of Finance some ongoing authority to reduce appropriations in order to deal with a developing midyear budget deficit, the Legislature was unwilling, even in such circumstances, to grant unilateral authority to this official to reduce the agreed-upon employee compensation embodied in an MOU.
Although the amended version of section 13312 was enacted, and was signed into law, on February 20, 2009, that statute never became operative. As amended, section 13312 specified that it would become operative only if one of the constitutional amendments that was to be placed on the ballot in an upcoming special statewide election was approved by the voters. (See § 13312, subd. (g).) At the special election held on May 19, 2009, the proposed constitutional amendment was rejected by the voters, and thus section 13312 never became operative.
