OAKLAND – Lawyers representing unions and a few government agencies pounded away at Gov. Arnold Schwarzenegger's furlough policy for nearly five hours in Alameda Superior Court on Monday.
They argued the policy is illegally harming the government, that it's an executive overreach, a violation of minimum wage laws and irrational because it applies to nearly all state workers – even those whose pay reduction doesn't directly help California's deficit-ridden general fund.
"The Terminator can sweep the machine guns and count the bodies, friend or foe, later," said Harvey Liederman, who was representing the California Public Employees' Retirement System and the California State Teachers' Retirement System.
Both systems pay staff from investment returns, and officials can't use the funds' money for short-term general fund loans. "CalPERS and CalSTRS are collateral damage," he said.
Judge Frank Roesch listened to arguments in four cases brought by unions representing more than 130,000 state workers, including correctional officers, attorneys and clerical staff. He asked questions of all sides and didn't issue a decision.
That could come in a few days or a few weeks.
"I'll have something for you in the mail," he told attorneys at the end of each oral argument session.
Several lawyers argued that departments whose payroll dollars come from outside the state's deficit-prone general fund should be exempt from furloughs, since the state receives no direct benefit from reducing the pay of those employees.
The Schwarzenegger administration says nearly every "special fund" department's money is available for short-term borrowing by the general fund and therefore they must run lean.
Also, Schwarzenegger attorney David Tyra said, deciding furlough policy based on payroll funding source would destroy "labor parity" and create untenable tensions in the workplace.
One employee might be furloughed while another doing the same work in the same department might not be, based on how they're paid.
"To avoid this, (the governor decided) I'll have a 'shared pain approach' to furloughs," Tyra said. "That was a reasonable act of discretion by the governor as that state's employer."
Among the other arguments Roesch heard: Attorney Gregg Adam said furloughs violate wage laws because some employees, such as correctional officers, work but don't get full pay in lieu of furlough time off at a later date.
Unionized correctional officers have more than 1 million deferred furlough hours on the books, and much of that probably won't be claimed by June 30, 2012, the deadline for state workers to take their furlough time or lose it.
Tyra said the Department of Corrections and Rehabilitation has put policies in place to burn down furlough hours and should be able to clear the books by the 2012 deadline. And since the reduced pay is ultimately matched by commensurate time off, he said no law is being broken.
After the 2012 deadline, employees with unclaimed furlough time can "file a claim for nonpayment of wages," Tyra said.
Adam Zapala, representing the doctors and dentists union, said state law requires careful consideration of each department's needs before reducing employee hours and that the governor can't impose changes that hurt the government's ability to render services.
"It belies common sense – people are waiting longer for their disability checks."
Tyra dismissed such concerns as trying to "rewrite the executive order," and said that if Roesch did so it would violate the separation of executive and judicial powers.
Schwarzenegger in February started furloughing state workers two days each month, then added a third "Furlough Friday" in July. Each furlough day reduces state workers' pay by roughly 5 percent.
The administration says the policy will save $2.2 billion in payroll costs this fiscal year. The general fund, already $7 billion in the red for the current year and a projected $7 billion more down in 2010-11, will realize about $1.3 billion of those immediate savings.
Critics note it's not clear how much the furloughs will cost the state in lost productivity, deferred vacations and other intangible human costs.
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