Articles

THE HARD TRUTH ABOUT FURLOUGHS:

Origin: 

The City threatens layoffs every year as part of its “poverty” claim when discussing contracts with its employees’ unions.  During the James Hahn administration the concept of furloughs in lieu of layoffs was introduced by the SEIU-Butcher.  Neither furloughs nor layoffs occurred at the time, but the table was set.

 Budget for 2008-09: 

The City once again pleaded poverty and a need to cut salary expenditures, primarily through staff reductions.  The SEIU-Butcher lobbied for “voluntary” furloughs instead.  Our weak-kneed Council readily agreed as they could embrace it without alienating anyone or making any hard decisions.  EAA warned the council that the amount actually saved would be so small as to be ignored in balancing the budget.  Of course, EAA was correct, and the savings did not come close to its claimed amount.  Voluntary furloughs did, however, delay dealing with the salary expenditures and helped make the 2009-10 deficit even worse than originally feared.

 Budget for 2009-10: 

The City once more pleaded poverty.  This time it appears there is a very real problem.   Since the magnitude changes daily and the real finances are cleverly hidden, we may never know the actual shortfall, but it is significant.  Once again, due to the SEIU-Butcher’s lobbying, rather than actually making the hard decisions, the City bought into an expensive and illegal enhanced retirement program (ERIP) in lieu of furloughs or layoffs.  Then, with the urging of the SEIU-Butcher, the City implemented illegal mandatory furloughs against the one union (EAA) that stood up to protect the LACERS system for its members, both now and in the future.  EAA warned the City that an ERIP financed by the remaining employees was not viable for LACERS, which already had financial woes.  Since this ERIP is now falling apart at the seams, after knowledgeable financial experts analyzed the costs and savings, thus confirming EAA’s warnings, the budget hole has gotten even deeper.

 Salary Budget Results for 2009-10: 

As noted in the articles on “Shared Sacrifice” negotiations, available on the EAA website, the City has calculated EAA’s “share” of the sacrifice as $56.3 million and that furloughs already taken have “saved” more than $4 million of that amount. 

On the other hand, every pay period results in an additional cost of $6 million for the salaries of the COCU who are not taking furloughs.  They are therefore at least $18 million in the hole!  Estimates are now that the ERIP, even if somehow adopted over sound financial advice, would not take effect until October at the earliest.  The COCU will be so far in the hole by then that even the most optimistic ERIP projections could not bail them out. 

This leaves the hard decisions back where they began – with City Council.  The sooner the Council gets down to business and actually does their job of eliminating contracting of City employees’ work, stopping the fee waivers, and addressing the (lack of) need for many of their programs.  Of course, this will make them unpopular with many of their campaign contributors and may adversely affect their next run for office.  But for once, they will be working for the benefit of their real employers-the citizens of Los Angeles.