Furloughs likely for unions that have not reached contract agreements with Schwarzenegger administration

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California is expected to save about $1.5 billion in state employee compensation due to renegotiated union contracts and new furlough plans in the state budget expected to be approved by lawmakers Thursday.

The Legislature is expected to authorize furloughs for those bargaining units that have not reached new deals with Gov. Arnold Schwarzenegger’s administration.

The administration has now reached contract agreements with seven state bargaining units, covering about 132,000 state employees. The prison guards union is the largest-remaining bargaining unit without a contract.

Schwarzenegger on Thursday heralded an agreement with the state’s largest public-employee union, SEIU local 1000 -- the linchpin of the governor’s plans for pension reform.

‘This agreement continues our progress toward critically needed pension reform and, along with the previously reached union agreements, will help address the state’s soaring retirement costs,’ Schwarzenegger said in a statement. ‘Unfunded retirement benefits for government employees are a huge problem because, as these costs rise, the state has less and less money for the programs that Californians depend on. Not only will this agreement address long-term unsustainable costs, it also brings necessary relief to California’s taxpayers in the current budget with additional savings in employee pay. I commend SEIU for being a part of the solution to these problems.’

Schwarzenegger had made pension reform a prerequisite for his signature on a state budget deal. The Legislature is expected to pass a budget plan Thursday.

Schwarzenegger’s finance director, Ana Matasantos, said the new agreement would save the state $383 million in the current budget year.

The new contract agreement repeals for new hires expanded benefits given to state workers by the Legislature in 1999. It will increase the retirement age for most employees to be eligible for full pension benefits and require current workers to pay an additional 3% of their pre-tax salary to their pensions. It also rolls back the number of paid state holidays from 14 to 12.

-- Anthony York in Sacramento