As the state of California descends into a major revenue shortfall and budget deficit for the 2024-2025 fiscal year, local public agencies are on high alert to minimize the impact of an economic slowdown on local funding. Coming off the heels of the COVID-19 pandemic and high inflation, California public agencies have already weathered recent, severe revenue shortfalls and increased, unbudgeted emergency costs for critical services. In response to wages not keeping up with inflation, California labor groups have escalated labor activity, and employers throughout the state have faced an unprecedented number of labor strikes.

This “perfect storm” combination of severe revenue shortfalls and increased emergency services has required public agencies to come up with creative alternatives to reduce costs to avoid extreme measures such as lay-offs.  This in turn has called on labor relations managers to be ever more strategic around downsizing techniques, rules related to reductions in force, and creative alternatives to downsizing, Management must be prepared to work with labor organizations on  cost-saving measures such as hiring freezes, early retirement incentives, furloughs, the reduction or deferment of certain benefits, and layoffs (as a last resort).  The objective is to negotiate and effect cost reduction and downsizing measures that will ensure the continued delivery of essential public services during this public health emergency.

The purpose of this workbook is to identify options for reducing personnel-related expenditures and provide the guidance needed to help develop and implement those options during these challenging economic times.

Topics Include:

• Downsizing
  • Permanent Change Versus Temporary Relief
• Developing the Implementation Plan
  • Checklist for Downsizing Alternatives
  • Checklist of Legal and Bargaining Considerations
• Implementing the Downsizing Program
• Early Retirement Incentives
  • ADEA and FEHA Compliant Incentives
  • Preparing Enforceable ADEA Waivers in Connection with an Early Retirement Incentive
  • “Golden Handshake” for CalPERS Agencies
  • “Golden Handshake” for ’37 Act Employers

• Reducing Retirement Costs
  • Vested Rights
  • Terminating Contract with CalPERS or Under CERL
  • Retiree Medical Benefits Through CalPERS
  • Retiree Medical for ’37 Act Agencies

• Employment After Retirement
  • Reduced Worktime for Partial Service Retirement – CalPERS Local Agencies
  • Post-Retirement Employment Without Reinstatement

• Furloughs
  • The Duty to Meet and Confer Over Work Furloughs
  • Furloughs and FLSA Implications
  • Furloughs and Pension Implications
  • Outside Employment

• Layoffs
  • Practical Problems Associated with Layoffs
  • Legal Concerns Associated with Layoffs

• Municipality-Wide Actions To Address Budget Issues
  • Increasing Tax Revenue Through Voter Supported Tax Initiatives
  • Pension Reform at the Ballot Box
  • Declaration of Fiscal Emergency
  • Municipal Bankruptcy – Is It Ever the Right Option?

• Negotiating During Lean Economic Times
  • Develop a Negotiating Strategy
  • Preparation for Negotiations is Essential to Success
  • Conditions Needed for Successful Negotiations During Lean Economic Times
  • Are You at Impasse?
  • Rules for Unilateral Implementation