May Revision of the 2021 – 2022 State Budget: End of Pay Reductions and Deferrals

Posted: 5/14/2021

Governor Newsom released his May Revise of the state budget on May 14, 2021. The budget includes a projected $75.7 billion surplus. The historic $267.8 billion budget ($196.8 billion general fund) includes $24.4 billion in reserves, with $15.9 billion in the state’s rainy day fund.

In his budget summary, the Governor notes that last year state employees “stepped up at a time of uncertainty” by deferring scheduled pay increases and pay reductions through the Personal Leave Program. Although the Governor notes long-term financial risk remains high, the higher-than-anticipated tax revenue and additional federal funds have drastically improved the near-term picture. With that backdrop, the budget proposal contains a few highlights of importance to ACSS members:

  • Instructs CalHR to discuss the end of the Personal Leave Program 2020 program AND an end to deferring scheduled pay increases
  • Includes a $1.5 billion additional one-time supplemental payment to CalPERS for state plans (to pay down liabilities and save state employer pension costs)
  • Includes a one-time $616 million payment to keep on pace to pre-fund retiree health benefits (which makes up for the employee contribution which was suspended this fiscal year to mitigate the PLP pay reduction )

The updated budget proposal kicks off legislative deliberation over the budget plan with a June 15 deadline for the legislature to send a budget to the Governor. It also kicks off discussions and collective bargaining with CalHR over ending the PLP 2020 program and ending the deferral of salary increases which many ACSS members were slated to receive July 1, 2020 and July 1, 2021.

ACSS will continue our discussions over the next few weeks with CalHR over excluded employee pay increases and will use the opportunity created by the budget surplus to address long-standing pay and benefit issues. We will keep you apprised as the excluded pay plan for the fiscal year beginning July 1, 2021 comes into focus.

The Governor’s complete budget summary can be found here:

Budget Summary (ca.gov)