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To soften blow of state worker pay cuts, California might suspend $2,600 health deductions

Sacramento Bee logoSacramento Bee 5/16/2020 By Wes Venteicher, The Sacramento Bee

Gov. Gavin Newsom’s administration could offer some relief from potential pay cuts for state workers by temporarily eliminating one of the paycheck deductions workers see each month, according to an Association of California State Supervisors web post.

Newsom this week proposed reducing state workers’ pay by 10 percent on Thursday in a budget that aims to reckon with a projected $54 billion deficit.

California Human Resources Department Director Eraina Ortega told the association the state could ease the pain a little by pausing workers’ monthly contributions toward the health benefits they receive in retirement, according to the post.

The association represents managers and others who aren’t part of the rank and file workforce. CalHR plans to link pay reductions for supervisors and managers to the pay reductions of their associated bargaining units, according to the post.

Most state employees pay roughly $2,600 per year toward the benefit, although the amount varies by salary and bargaining unit, according to a State Controller’s Office report. Public safety workers, who typically retire earlier than other employees, pay much more.

The deduction shows up as “CERBT” on state worker pay checks, which stands for California Employers’ Retiree Benefit Trust Fund.

It’s a fairly new deduction for most California state workers. California Highway Patrol officers began paying it in 2009.

Former Gov. Jerry Brown insisted that unions agree to the deduction in contracts his administration negotiated. The Professional Engineers in California Government accepted it in a 2015 agreement. Workers represented by other unions, including SEIU Local 1000, began paying the deduction in 2018.

Workers and their employers each pay the same amount toward the fund each month.

The retiree benefits are massively underfunded. At the end of fiscal year 2018, the state had about $874 million set aside for retiree health care benefits, and it had liabilities of about $85.6 billion for the benefits, according to the controllers’ report.

The supervisors’ association’s executive director and attorney spoke with Ortega and Deputy Director Paul Starkey Thursday morning, according to the post.

“This does not come near offsetting the proposed reduction in take home pay, but it is a helpful mitigating step,” the association said in its post.

CalHR declined to comment, saying it does not discuss confidential negotiations with bargaining units.

Newsom’s proposed pay cut will go through the collective bargaining process if possible, but the administration would seek authority from the state Legislature to reduce pay anyway in July if bargaining fails, according to Newsom’s proposal.


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