MOU Fiscal Analysis: Bargaining Unit 6 (Corrections) (2024)

On Saturday, August 26, 2023, the administration released a proposedlabor agreement between the state and Bargaining Unit6 (Corrections).Unit6 consists of correctional officers, parole agents, and othercorrectional staff who provide custody, supervision, and treatment ofpeople in state custody. As of July 3, 2023, Unit6 members work underthe terms and conditions of an expired memorandum of understanding(MOU). Compensation costs for Unit6 members and their managersconstitute about one-third of the state’s General Fund state employeecompensation costs. Unit6’s current members are represented by theCalifornia Correctional Peace Officers Association (CCPOA). Thisanalysis of the proposed agreement fulfills our statutory requirementunder Section 19829.5 of the Government Code. The administration hasposted on the California Department of Human Resources’ (CalHR’s)website the agreement,a summaryof the agreement, and a summary of the administration’s estimates of theproposed agreement’s fiscaleffects.

Background

Unit6 in Context of StateWorkforce

Represents 10Percent of State Workforce.The monthly average size of the state workforce in 2022 was 252,300full-time equivalent employees. About 10percent of these employees werea member of Unit6.

Accounts for About One-Third of State General FundPayroll Costs. The annualized April 2023 state salary andsalary-driven benefit costs paid from the General Fund was$17.8billion. The salary and salary-driven costs for rank-and-file andaffiliated excluded employees for Unit6 constituted roughly one-thirdof these General Fund payroll costs.

Prison Costs

Number of People in Prison and on Parole Has Decreasedbut Costs Have Not. As Figure1 shows, the number ofpeople in state prison or on parole has decreased significantly over thepast 20 years such that the number of people in state prison or onparole in 2022 is about one-half the number in 2002. The statecorrectional population is projected to continue to decline somewhatthrough June 2027. The decline in prison population has allowed thestate to reduce prison capacity without violating a federalcourt-ordered limit on prison overcrowding. Specifically, in 2021, theCalifornia Department of Corrections and Rehabilitation (CDCR) completeda multiyear drawdown of people housed in contractor-operated prisons. Inaddition, the department deactivated various state-operated prisonfacilities since 2021. Specifically, CDCR deactivated Deuel VocationalInstitution in Tracy in 2021, California Correctional Center inSusanville in 2023, and eight yards at various prisons between 2021 and2023. However, despite these declines in the number of people in prisonand the number of facilities used to house them, CDCR spending generallyhas increased. Specifically, CDCR operational spending increased from$11.8billion in 2017‑18 to an estimated $14.8billion in 2022‑23—a25percent increase. With inflation during this period rising23percent, this means that growth in CDCR operational spending slightlyoutpaced inflation. The budget assumes that CDCR operational spendingwill decrease by $415.8million in 2023‑24 relative to 2022‑23 levels;however, this does not reflect any increased costs resulting from newlabor agreements. Employee compensation costs are a major driver in CDCRoperating costs. If the proposed Unit6 and other agreements areratified by the Legislature, costs will be higher than they were in2022‑23.

Number of People in Prison and on Parole Has DeclinedFaster Than Number of Unit6 Members. Over the past 20years, the number of Unit6 members has decreased as the state hasemployed fewer correctional staff. However, the decline in the number ofUnit6 members has been less than the decline in prison and parolepopulations. As Figure2 shows, while the prison and parole populationsdecreased by 50percent during the period, the number of Unit6 membersdecreased only 15percent. This trend is, in large part, related to afederal court order that required California to reduce prisonovercrowding. Specifically, despite the decline in the number of peoplein prison, the state had to maintain existing prison capacity, as wellas build and staff new prison capacity, in order to comply with thelimit.

Compensation Studies

Important Tool for Any Employer. Acompensation study aggregates and analyzes internal and external data sothat an employer can compare the compensation structure it offers towhat is provided by similar employers with similar employees in the samelabor market. Employers in both the public and private sectors commonlyconduct regular compensation studies to monitor changes in the labormarket. A well designed and executed compensation study is a valuabletool that provides a number of benefits, including helping employers(1)determine if they are compensating employees fairly and at a levelthat will attract skilled workers, (2)allocate limited resourcesefficiently and effectively by not paying employees more than isrequired to retain them, (3)identify internal equity issues regardingtheir compensations structure, and (4)establish a structure for theirdecision-making process when making changes to their compensationsstructure. In addition, for public employers, a compensation studybrings transparency to the decision-making process such that employees,policymakers, and the public all have the same information against whichto evaluate proposed changes in compensation.

Comparators and Methodology Key to Understanding Purposeand Usefulness of Compensation Study. Not all compensationstudies are equally relevant or helpful in assessing the issues weidentified above. Factors that affect the quality of a compensationstudy include (1)the similarity of jobs that are included in the studyfor comparison, (2)the extent to which the elements of compensationcompared capture the total compensation earned by employees, and (3)thesimilarity and relevance of employers selected for comparison.

State Law Requires General Salary Increases (GSIs) BeJustified… A GSI adjusts the entire salary range for aclassification such that all employees within that classificationreceive the pay increase. Section19826 of the Government Code specifies that CalHR shall establishsalary ranges for state classifications “based on the principle thatlike salaries shall be paid for comparable duties and responsibilities.”Further, the law requires that—when establishing or changing payranges—“consideration shall be given to the prevailing rates forcomparable service in other public employment and in private business.”These requirements necessitate that changes to state salaries bejustified based on comparisons to other comparable employers.

…And Requires CalHR to Conduct SalaryStudies. Since 1981, Section 19826 has required theadministration to submit to the Legislature and bargaining units areport containing the department’s findings related to salaries ofemployees in comparable occupations in private industry and othergovernmental agencies. Originally, the law required that this report besubmitted to the Legislature on or before January 10 of each year.Chapter465 of 2003 (SB624, Committee on Public Employment andRetirement) changed the frequency of this report such that the reportwas required to be submitted to the union and the Legislature at leastsix months before the end of the term of an existing MOU. Chapter39 of2023 (AB130, Committee on Budget) amended the section such that the lawnow requires that CalHR submit to the unions and Legislature a reportcontaining the department’s findings relating to the salaries ofemployees in comparable occupations in private industry and othergovernmental agencies (1)on February 1, 2025 and biennially thereafterfor 11 bargaining units and (2)on February 1, 2026 and bienniallythereafter for the remaining ten bargaining units (including Unit6). Ifthis requirement under law conflicts with provisions of a ratified MOU,the law specifies that the ratified MOU shall be controlling.

Annual Budget Act Imposes Additional Requirements ofTotal Compensation Studies. As the administrationindicated in its 2013total compensation study for Unit6, provisional language underCalHR’s budget item (Item 7501‑001‑0001) of the annual budget act“requires that in addition to salaries the report must include totalcompensation and geographic comparisons.” In the department’s totalcompensation reports for most bargaining units, these requirements arefulfilled by (1)comparing both salary and ancillary benefits offered bythe state and comparator employers and (2)evaluating how the state’stotal compensation compares with other employers statewide as well as infour regions across the state (specifically, the regions surrounding theSan Francisco Bay, Sacramento, Los Angeles, and San Diego).

EvaluatingState Correctional Officer Compensation

State Law Requires Administration to Take IntoConsideration Compensation Offered by Other Large Employers of PeaceOfficers in California. Section19827.1 consists of two paragraphs. The first paragraph expresseslegislative intent. Specifically, the first paragraph asserts that, atthe time the law was passed in 1986, (1)there existed a “historicproblem of recruitment and retention of peace officers in the Departmentof Corrections and the Department of Youth Authority” and that (2)“salaries must be improved and maintained by the state” to address the“continuing need to recruit new officers to fill vacancies, retainseasoned correctional peace officers to reduce turnover rates, andprovide comparability in pay to effectively compete with large peaceofficer employers and ensure necessary staffing levels.” The secondparagraph directs CalHR to “take into consideration the salary andbenefits of other large employers of peace officers in California.”

Last Unit6 Total Compensation Study Found StateCorrectional Officers Compensated High Above Market. Thelast Unit6 compensationstudy that CalHR submitted to the Legislature in compliance with therequirements under Section 19826 used data from 2013. That compensationstudy found that state correctional officers were compensation40.2percent above their local government counterparts and28.1percent above their federal government counterparts.

Expired MOU Requires CalHR to Discuss Section19826 Compensation Study Methodology With Union. Firstappearing in the 2016 Unit6 MOU, the expired Unit6 MOU includeslanguage related to the compensation study required by Section 19826.The expired MOU’s provision is Article 15.19 and requires that:

Within ninety (90)days of ratification of this MOU, the partiesagree to form a Joint Labor Management group who will meet to discussthe criteria, comparators and methodology to be utilized for [BargainingUnit] 6 in the next Total Compensation Report created pursuant toGovernment Code section 19826. The Joint Labor Management group will becomprised of no more than two (2)representatives from each of thefollowing: CCPOA, CalHR, CDCR and Department of Finance. The firstmeeting of the Joint Labor Management group will occur no later thaneighteen (18)months prior to the expiration of the MOU.

It is important to note that the text of Article 15.19 (1)doesnot relieve CalHR of the requirements established by Section 19826and the annual budget act related to the total compensation studyproduced by CalHR—including that the report be submitted toboth the Legislature and the union, (2)does not makeany reference to Section 19827.1, and (3)specifies that any discussionbetween the administration and the union related to the compensationstudy will occur before CalHR begins its compensationstudy.

No Compensation Study Provided to the Legislature in2018. Despite the statutory requirements to submit acompensation study to the Legislature prior to the expiration of the2016 MOU, none was provided. The administration states that it met withUnit6 as provided under Article 15.19 described above and that CalHRcompleted a compensation study based on the methodology agreed to byCCPOA and the administration. Although the administration provided thecompensation study to CCPOA in 2018, the Legislature did not receive it.CalHR stated that it had agreed not to submit to the Legislature thecompensation study until all of CCPOA’s questions and concerns had beenaddressed.

Since 2019, our office has asked on numerous occasions for theadministration to provide us a copy of the 2018 compensation study or toprovide us information about the methodology used in that study. Todate, the administration has refused to provide the study itself or toshare any information about the study’s methodology or findings. Theadministration asserts that the 2018 compensation study and allinformation related to it is confidential pursuant to Section7928.405 of the Government Code—a section from the California PublicRecords Act (CPRA). The administration states that this law classifiesas confidential any work, including draft reports, from a Joint LaborManagement Committee (JLMC). The administration views the 2018compensation study as a draft product of a JLMC process. Accordingly,the administration’s position means the Legislature is not privy to thedraft report or any information or documentation related to it.

2022 Unit6 CalHR CompensationStudy

Study Submitted After Statutory Deadline.The term of the expired MOU ended on July 2, 2023. As discussed above,Section 19826 of the Government Code before Chapter39 amended it inJuly 2023, required CalHR to submit its total compensation study for abargaining unit six months before the expiration of the bargainingunit’s MOU. To comply with state law at the time, CalHR should havesubmitted a Unit6 compensation study to CCPOA and the Legislature byJanuary 2023. While we do not know when CalHR submitted the study toCCPOA, the department did not meet its statutory deadline. The study wassubmitted to the Legislature in April 2023. This study was revised inAugust 2023.

Methodology and Report Product of JLMCProcess. Pursuant to Article 15.19 of the expired MOU, theparties discussed the methodology to be used to develop a new Unit6compensation study. Because the administration has not provided anyinformation about the 2018 compensation study, we do not know how themethodology or findings of the 2022 compensation study differs from themethodology or findings of the 2018 methodology. We also do not know howthe issues that prevented the 2018 compensation study from beingsubmitted to the Legislature were resolved to result in the release ofthe 2022 study.

Study Design and Findings

Stated Intent of Report. The reportspecifies that the findings of the report do not define the appropriatelevel of compensation for state correctional officers. Instead, thestated purpose is to compare the state’s total compensation costs withother local government employers in California.

Employers Surveyed. The report comparesemployer costs to pay for elements of compensation provided to statecorrectional officers with the costs incurred by six county employers tocompensate similar employees. The six counties included in the study arethe six counties that employ the largest number of peace officers.Specifically, the study compares the state’s compensation costs with thecosts incurred by the Counties of Los Angeles, Orange, Santa Clara,Sacramento, San Bernardino, and San Diego.

Classifications Compared. The survey askedeach county employer to report compensation costs related to specificclassifications. Figure3 shows the classifications that were used forcomparison.

Elements of Compensation Included. CalHRsurveyed the six counties to provide employer compensation cost data asof January 31, 2022 for the classifications indicated above. The reportseeks to compare separately the compensation cost of entry-levelcorrectional officers with entry-level deputy sheriffs (after graduatingfrom the academy) and full journey-level correctional officers with fulljourney-level deputy sheriffs. This distinction is important becauseemployees who have worked for the state or for one of the counties for asignificant number of years have higher compensation than new officerswho recently graduated from the academy. Newly hired employees typically(1)are in a lower step of the classification pay range (earning lowerbase salaries), which results in lower employer costs to salaries andany salary-driven benefits; (2)are not eligible for payments that arebased on length of service until they have worked for at least aspecified time; (3)typically are not eligible for payments based onspecial certifications or training as they have less experience thanmore senior employees; and (4)were first hired after 2013, meaning thatthey likely receive a lower pension benefit pursuant to statelaw. Below are the elements of compensation included in thestudy.

• Pay. The report includes base wages andspecified other payments to employees included as compensation. For basepay, the report assumes that entry-level employees are paid at thebottom step of their classification’s salary range and journey-levelemployees are assumed to be paid at the top step of theirclassification’s salary range. For the other payments included in thestudy—education pay, payments provided for certifications attained byemployees from the California Commission on Peace Officer Standards andTraining, and payments received by employees who have worked for theemployer for more years—the study assumes that entry-level employeesreceive the lowest available payment and journey-level employees receivethe highest available payment.

  See Also

  National Association of Government Employees - Service Employees International UnionCollective Bargaining Agreements (Union Contracts)

• Health, Dental, and Vision Benefits.The report assumes that both entry-level and journey-level employees areenrolled in employer-sponsored health, dental, and vision insurance withpolicy coverage for a family.

• Retirement Benefits. As we discuss ingreater detail later, the study includes employers’ costs towardspension benefits and retiree health benefits.

Methodology. CalHR developed anddistributed a survey to the six county employers to collect the employercosts to provide the specified elements of compensation. CalHR then tooka simple average of the employer costs across the six employers tocompare total compensation costs of the six employers with that of thestate.

Findings. Based on the comparators andmethodology used in the study, CalHR found that state correctionalofficer compensation lags the compensation provided to similar employeesby the six counties. This means that CalHR found that state correctionalofficers are compensated less than similar employees in the sixcounties. Specifically, the study (as revised) found that (1)thestate’s salaries (not including benefits) lag 28percent forentry-level employees and 10percent for full journey-level employeesand (2)the states’ total compensation (salary plus benefits)lags 33percent for entry-level employees and 23percent forfull journey-level employees.

Retirement Security

Factors That Affect Retirement Security.The amount of money that a person can expect to need in retirementdepends on a variety of factors that are unique to the individual’scirc*mstance. Some of the key factors to consider when assessingretirement security include: the individual’s expected lifespan, the ageat which an individual retires. the standard of living the individualexpects to live in retirement, the individual’s savings level uponretirement, and any employer-sponsored pension or other income benefit.A person’s level of retirement security depends in part on how much oftheir pre-retirement income can be replaced after retiring through acombination of what often is referred to as the “three-legged stool” ofretirement in the United States: (1)Social Security benefits,(2)employer-sponsored retirement plans, and (3)personal financialassets. There is no one-size fits all replacement ratio; however, anumber of researchers have identified that the replacement ratio for themedian individual is between 66percent and 75percent of preretirementincome. In general, lower-income workers would need a higher replacementratio because they would be expected to spend a higher proportion oftheir income on food, clothing, housing, transportation, health care,and other essentials.

Employer-Sponsored Retirement Plans. Thereare two broad categories of employer-sponsored retirement plans: definedbenefit plans and defined contribution plans. In both types of plans,employers and employees might make contributions towards the plan overthe course of employees’ careers. The primary difference between the twoplans is (1)who makes investment decisions and (2)who bears the riskof investment losses. In the case of a defined benefit plan, theemployer chooses how the funds are invested and bears all the risk ofinvestment loss—the employee is provided a guaranteed annuity inretirement. In the case of a defined contribution plan, the employeechooses how contributions are invested and bears all the risk ofinvestment losses. Unlike a defined benefit plan, there is noguarantee—either by the employer or by government—of assets held in adefined contribution plan.

Hybrid Employer-Sponsored Retirement Plans.Some employers offer employees a hybrid plan that combines elements oftraditional defined contribution and defined benefit plans. For example,a parallel hybrid plan provides employees both an employer-fundeddefined benefit pension and an employer-funded defined contributionplan. Typically, the defined benefit and defined contribution componentsof these types of plans are smaller than if the employer offered only adefined benefit or only a defined contribution plan. The amount of moneythat the employer contributes to each plan typically is based on anemployee’s total pay.

CorrectionalOfficer Retirement Income Benefits

Not Eligible for Social Security. WhenSocial Security was initially established in 1935, all federal, state,and local government employees were excluded from the program. Beginningin the 1950s, the program was changed to allow governments to enrollsome of their employees in the federal program. By 1991, the programcovered all federal employees and most state and local governmentemployees. Under federal law, state and local government employers maycontinue to exclude some employees from Social Security coverage, butonly if those employees are enrolled in a retirement plan that meetsfederal regulations requiring at least a specified level of benefits. InCalifornia, peace officers and teachers generally are excluded fromSocial Security.

Defined Benefit Pensions a Long-Standing and SignificantElement of Compensation in California State Employment.The state has included in its compensation package a defined benefitpension since 1932. The benefit, as it exists today, provides retiredstate employees a guaranteed annuity that is determined by (1)theemployee’s date of hire, (2)the number of years of service the employeehas upon retirement, and (3)the employee’s age at retirement. Thesebenefits are paid for through contributions towards two components ofthe benefit’s cost, discussed below.

• Normal Cost. The normal cost is theamount of money that actuaries determine must be set aside for thebenefit employees earn today so that the contribution and anyfuture investment returns on that contribution are sufficient to pay forthe benefit after the employee retires. Under the Public Employees’Pension Reform Act of 2013 (PEPRA), the state has a standard that stateemployees pay one-half of the normal cost of their pension benefit andthe state pays one-half of the normal cost.

• Unfunded Liability. When investmentreturns or other actuarial assumptions do not materialize (or actuarialassumptions change) such that actuaries determine there are notsufficient assets to pay for benefits earned in the past, theresulting shortfall is called the “unfunded liability.” Any unfundedliability is the employer’s responsibility.

Unit6 Employees Hired Before 2013 Receive Pension Basedon “3Percent at 50” Formula. The pension benefits earnedby state public safety employees—including Unit6 members who earn theirpension benefit under the state’s Peace Officers and Firefightersplan—are described in this publicationproduced by the California Public Employees’ Retirement System(CalPERS). Unit6 members hired before 2013 earn a pension benefit basedon what is referred to as the 3percent at 50 formula whereby anemployee earns 3percent of their final compensation for every year ofservice if they retire at the age of 50 years. Under this formula, themaximum income replacement ratio a retiree may receive is 90percent oftheir final compensation (defined as compensation over a 12-monthperiod) after attaining 30 years of service credit. According toinformation provided by CalHR, in the five fiscal years between 2017‑18and 2021‑22, the average Unit6 member retired at 55 years old with 23years of service and retired with a pension that replaced 68percent oftheir final compensation.

Unit6 Employees Hired After 2013 Receive Pension Basedon “2.5Percent at 57” Formula. Under PEPRA, employeeshired after 2013 receive a lower pension benefit that require employeesto work additional years in order to maintain the same level of benefitas employees who were hired before 2013. In the case of Unit6,employees hired after 2013 earn a pension under the 2.5percent at 57formula. Under this formula, employees who work for 40 years and areolder than 57 years may receive a pension that replaces 100percent oftheir final compensation (defined as compensation over a 36-monthperiod). However, an employee under this pension formula who retires at55 years old with 23 years of service would be eligible for a pensionthat replaces 54percent of their final compensation. In order toreceive the 68percent income replacement ratio received by averagerecent Unit6 retiree, a Unit6 member hired after 2013 would need towork until they are at least 57 years old and have 27 years ofservice.

Optional Employee-Funded Defined ContributionBenefit. Since 1974, the state has provided employees withan optional deferred compensation plan. The plan today is known asSavings Plus. Through Savings Plus, employees can open a 401(k) and/or a457(b) account and can choose to make contributions on a pre-tax orpost-tax basis to these accounts. Employees can then choose from avariety of investment options, including indexed and managed funds andtarget-date funds. The state has never made regular contributions torank-and-file employees’ Savings Plus accounts. (CalHR informs us thatthe state briefly contributed a small specified dollar amount toexcluded employees’ Savings Plus accounts in the early 2000s.) In 2017,we issued a report evaluatingthe Savings Plus program. As of May 2016, we reported that 60percent ofeligible state employees participated in the Savings Plus program. Whilewe do not know the statewide average participation rate today, CalHRinforms us that, as of July 31, 2023, 87percent of Unit6 members havea Savings Plus account and that 57percent of Unit6 members contributedto their Savings Plus account in July 2023 with an average contributionamount of $387 to a 457(b) account and $353 to a 401(k) account. Basedon the data CalHR provided us, far more Unit6 members have 457(b)accounts (20,241 members with accounts) than 401(k) accounts (4,599members with accounts). The administration indicates that the averagebalances of Unit6 457(b) and 401(k) accounts was $20,803 and $27,272,respectively.

Legislature Chose Not to Adopt Hybrid Plan When EnactingPEPRA. Under PEPRA, the Legislature established sweepingchanges to state pension benefits that reduced the benefits for futureemployees and established a standard that state employees pay one-halfof the normal cost to fund these benefits. However, the law retained thebasic structure of the state’s benefit in that the employer-fundedretirement income benefit consists only of a defined benefit pension.The Legislature could have adopted a hybrid plan, whereby the statecontributed money to both a defined benefit and a defined contributionelement of a retirement benefit, but it did not.

Proposed Agreement

Major Provisions

Term. The agreement would be in effect fromJuly 3, 2023 through July 2, 2025. This means that the agreement wouldbe in effect for two fiscal years: 2023‑24 and 2024‑25. This also meansthat the agreement will expire, and the administration presumably willbegin negotiating a new MOU, before the February 1, 2026 datewhen Section 19826 of the Government Code requires CalHR to submit tothe Legislature a new compensation study for Unit6.

GSIs. The agreement would provide a3percent GSI on July 1, 2023 and another 3percent GSI on July 1,2024.

One-Time $1,200 Payments in 2023 and Again in2024. The agreement would provide employees a $1,200payment in November 2023 and another $1,200 payment in November 2024.The stated purpose of this payment is to support employees’ health andwell-being. However, there is no requirement that the money be used tofurther this purpose.

Recruitment and Retention Payments. Theagreement would provide specified payments related to recruiting andretaining employees. Specifically, new and current Unit6 members whowork at Salinas Valley State Prison (SVSP) in Soledad; California StatePrison, Sacramento (SAC); or Richard J. Donovan (RJD) CorrectionalFacility in San Diego would be eligible to receive $5,000 payment onJuly 1, 2024 and another $5,000 payment on July 1, 2025. In addition,cadets who accept or choose to work at one of 13 facilities would beeligible to receive a $5,000 bonus payment payable in two payments($2,500 upon graduating from the academy and $2,500 30 days afterreporting to the institution).

Creation of Employer Funded Contributions to401(k). Effective with the November 2024 pay period, theagreement would provide that the state make a one-time contribution of$475 to a Savings Plus 401(k) plan on behalf of all permanent full-timeemployees who are active as of November 1, 2024. Effective with theJanuary 2025 period, the agreement would require the state to make amonthly contribution equivalent to 1percent of base pay to a SavingsPlus 401(k) plan.

State Contributions to Health Premiums. Theagreement would increase state contributions towards employee healthbenefits to maintain the current proportion of average premiums paid bythe state.

Increased Pay Differentials. The agreementwould increase various Unit6 pay differentials, including thenight/evening shift differential, weekend shift differential, andbilingual pay differential.

One-Time Leave Cash Out. Under the proposedagreement, all Unit6 member would be eligible to cash out up to 80hours of compensable leave in 2023. The administration estimates thatthis provision could increase state costs by as much as $25million. Theactual cost will depend on how many employees cash out leave and howmuch leave they choose to cash out.

Provisions FromPast Agreements Not Included

No Reopener if Other Units Get Higher PayIncreases. The expired Unit6 MOU included a provisionthat specified that CCPOA could choose to reopen that agreement ifanother bargaining were to have received a higher GSI in 2022‑23. As wediscussed in our August 2022 analysis of the Unit 2 agreementat the time, that particular reopener clause seemed to affect theadministration’s negotiating position with other bargaining units inthat none of the agreements provided GSIs higher than the Unit6 GSI in2022‑23. The proposed agreement does not appear to includes asimilar reopener clause.

No Provision Related to Compensation Study.The proposed agreement deletes Article 15.19 from the agreement. Thismeans that the proposed agreement includes no language related to theUnit6 compensation study or to Section 19286 of the Government Code.The administration states that it will use the same methodology infuture Unit6 compensations studies that it used for the 2022compensations study.

LAO Assessment

2018 Compensation Study

Disagree That 2018 Compensation Study Is ConfidentialUnder CPRA. We disagree with the administration’sassertion that the 2018 compensation study and all information relatedto it are confidential under the CPRA. The language of Article 15.19clearly stated that the JLMC process would occur before CalHRconducted its compensations study when it said that the parties woulddiscuss the criteria, comparators, and methodology to beutilized. Further, Article 15.19 states that the compensation studycompleted after the JLMC process would be “created pursuant toGovernment Code Section 19826.” Under Section 19826 of the GovernmentCode, CalHR is the sole author of the compensation study as the study isto report to the union and Legislature “the department’sfindings.” We would argue that the language of Article 15.19 does notmake the compensation study itself a product of the JLMC process—onlythe discussion of the methodology. As such, when CalHR submitted thecompensation study to CCPOA it also should have submitted it to theLegislature.

CPRA Issue Raises Broader Questions About JLMC Work andLegislative Deliberation. Most, if not all, MOUs includeat least one JLMC or similar management/labor workgroup. Theseworkgroups can be tasked with discussing a wide array of topics. Often,the topics of these workgroups are meant to be the initial assessment ofwhether something is feasible. For example, an MOU might establish aJLMC to assess the feasibility of consolidating classifications. Inthese cases, the working group often submits a report to specifiedindividuals (typically, the Director of CalHR) with the group’srecommendations, but the actual process of consolidating classificationsis left to the State Personnel Board process and the Legislature’sbudget review process (in the case of class consolidations that requireappropriations). In these cases, there is an opportunity for the publicand the Legislature to weigh in on the issue under consideration by theJLMC. However, as the 2018 compensation study reveals, there also areinstances where the JLMC may influence state policy without legislativeinsight. This is because the JLMC process generally is excluded frompublic disclosure under the CPRA. Consequently, unless there is aseparate policymaking process—like in the example regardingclassification consolidation—the administration may propose policychanges without sufficient justification. As the administration does notoffer justifications for things that are the product of the bargainingtable, neither the Legislature nor the public may have sufficientinformation to weigh the rationale for the proposed policy change.

2022 Unit6 Compensation Study

Study Flawed

As we discuss below, the study is flawed to the point that it is nothelpful in meeting its stated objective and we recommend policymakersnot use it to assess whether the state’s compensation package forcorrectional officers is appropriate to attract and retain qualifiedworkers. On the whole, the issues we discuss below likely result inoverstating competitor employer’s total compensation while understatingthe state’s total compensation; however, the flaws in the study raise somuch uncertainty that we cannot say that definitively.

Issues WithComparators and Survey Sample

Study Omits Overtime, a Substantial Component ofCompensation. Overtime has long constituted a significantsource of income for Unit6 members. CalHR’s 2013 Unit6 compensationstudy included overtime in its analysis and identified that the averageUnit6 member earned overtime pay equivalent to 15percent of theirwages. Overtime continues to be a major source of income for statecorrectional officers. In 2022, Unit6 members earned $547.8million inovertime payments and $2.2billion in gross regular pay. This means thatovertime payments in 2022 were equivalent to roughly 24percent of grossregular pay for Unit6 members. Overtime was excluded from CalHR’s 2022compensation study analysis despite (1)overtime consistently being amajor component of Unit6 compensation and (2)CalHR including overtimein its 2013 Unit6 compensation study and in its recent compensationstudies of most other bargaining units.

Survey Sample Not Representative of Where StateCorrectional Officers Work… The compensation studysurveyed the six counties that employ the most peace officers in thestate. This methodology results in a sample consisting mostly ofcounties that are part of large metropolitan regions in the state. Incontrast, most state prisons are located in rural parts of the statelocated far from major urban centers. As a result, the six countiessurveyed for the compensation study are not representative ofwhere state correctional officers work. While some state correctionalofficers work in four of the counties included in the survey, there arezero state correctional officers who work in the Counties ofOrange or Santa Clara. Thus, one-third of the compensation comparison inthe study is not actually directly competing with the state forworkers.

As Figure4 shows, only 18percent of Unit6 members work in one ofthe six counties included in the survey. If, instead, the survey wasbased on the six counties where the most Unit6 members work—theCounties of Kern, Kings, Riverside, Solano, Monterey, and Sacramento—thestudy would have included counties where more than 50percent of Unit6members work. (If the survey only included the two counties where thehighest numbers of Unit6 members work, the Counties of Kern and Kings,the sample would have been more representative than the sample used bythe administration as more than 25percent of Unit6 members work in oneof those two counties.)

…Reflects Regions With Much Higher Wages and Cost ofLiving Than Where Correctional Officers Work. Wages andthe cost of living vary significantly across the state. As Figure5shows, the six counties in the study have average wages that aresomewhat higher than the statewide average and far aboveaverage wages in the six counties with the highest concentration of Unit6 worksites (the Counties of Kern, Kings, Riverside, Solano, Monterey,and Sacramento). This means that the study includes counties in thestate with substantially higher wages than where most state correctionalofficers work. Furthermore, as Figure6 shows, the six counties in thestudy have far higher housing costs (a major component of the cost ofliving) than the six counties with the highest concentration of Unit6worksites.

Issues WithTreatment of Retirement Benefits

Study Uses Wrong Measure to Compare PensionBenefits. Using the total employer contribution ratetowards pension benefits is problematic when trying to evaluate thevalue of the pension benefit earned by employees today. This is becausethe total contribution rate paid by employers (1)might include a singleblended contribution rate towards normal cost and not distinguishbetween the value of benefits earned by different employees in the sameclassification, as is the case with at least the state; (2)includespayments towards unfunded liabilities that reflect costs associated withpension benefits earned in the past and that are affected bydecisions made by employers (for example, making supplemental pensionpayments) or pension boards (for example, assumed rates of return oninvestments not be realized) that are not related to the benefit earnedby employees today; and (3)does not capture any employer cost to thebenefit that is excluded from the contribution rate (for example,supplemental pension payments in excess of the contribution rate). Thenormal cost is driven by (1)the design of the pension benefit (in otherwords, the terms of the benefit) and (2)the actuarial assumptions usedto calculate normal cost. While different pension systems might usedifferent assumptions—for example, different assumptions related tofuture investment returns—that affect the normal cost, they also havedifferent policies—for example, different mixes of asset classes intheir investment portfolios. A pension board has a fiduciaryresponsibility to use actuarially sound assumptions consistent with itspolicies when determining employer contribution rates. As such, thenormal cost for the benefit earned by employees is the best estimate ofthe value of the employer-provided benefits earned today byemployees and therefore the best way to compare pension benefits acrossemployers. We discuss the specifics of the methodological issues relatedto pension benefits in the subsequent paragraphs.

Study Includes Employer Payments Towards UnfundedLiabilities to Value Pension Benefits… As we discussedabove, employers and employees each make contributions towards thenormal cost of a pension benefit. However, the unfunded liability is theemployer’s responsibility. In addition to experience (for example,lower-than-assumed investment returns) and assumption changes,employers’ actions also can increase or decrease unfunded liabilities.For example, an employer choosing to make supplemental pensionpayments—meaning they pay more than actuaries say is necessary—willdirectly reduce their unfunded liability with no effect on the benefitprovided to employees. When conducting compensation studies, includingthe 2022 Unit6 study, it is CalHR’s practice to include thetotal employer contribution rate (expressed as a percentage ofpay) paid by employers to fund employees’ pension benefits. This totalcontribution rate includes employers’ costs to both the normal cost andunfunded liabilities when determining the value of employees’ pensionbenefits. This means that the study reflects the cost both for pensionbenefits earned today as well as for pension benefits earned inthe past.

…Assumes Same Employer Contribution Rate for Entry-Leveland Journey-Level State Correctional Officers Despite Very DifferentBenefits… Under PEPRA, as we discussed above, statecorrectional officers hired after 2013 receive a lower benefit thanemployees hired before that date. To make state payroll lesscomplicated, CalPERS provides the state one employer contribution ratethat the state pays, regardless of which benefit an employee earns, thatis based on a blended normal cost. The compensation study uses thisblended employer rate to value the pension benefits earned by newerstate hires and journey-level state correctional officers. As such, thestudy assumes that the value of both pension benefits is equivalent to32.84percent of pay (19.14percent of this is the employer’s share ofthe blended normal cost). This results in the study undervaluing thebenefit earned by journey-level state correctional officers andovervaluing the benefit earned by entry-level employees. If the studyhad, instead, used the unblended employer share of normalcost to value the pension benefits earned by state correctionalofficers, the study would have assumed that entry level statecorrectional officer pension benefits were equivalent to 15.1percent ofpay and journey-level state correctional officer pension benefits wereequivalent to 22.1percent of pay. (We note that the study also assumesthat the County of Santa Clara pays the same contribution rate for bothentry-level and journey-level employees.)

…And Uses Data From Year When State Contributions toUnfunded Liability Was Temporarily Low, Distorting State’s PensionBenefit to Appear Less Valuable Overall. In recent years,the state has made a number of supplemental pension payments to CalPERS.These payments are in addition to the payments CalPERS identifies thestate must pay pursuant to state law and go directly towards paying downthe state’s unfunded liability. (In addition, it is the state’s policyto apply the Proposition2 debtrepayments towards the CalPERS unfunded liabilities.) As we describein The 2020‑21Spending Plan: Pensions, the 2019‑20 budget plan included a$2.5billion supplemental pension payment to CalPERS to reduce thestate’s long-term unfunded liabilities; however, the 2020‑21 budgetrepurposed this supplemental pension payment to insteadsupplant the state’s actuarially required contributions over amultiyear period beginning in 2020‑21 (due to anticipated budgetshortfalls). This action resulted in the portion of the state’scontribution rate that goes towards the unfunded liability to be lowerthan it otherwise would have been in 2021‑22, the year from which datawas pulled for the compensation study. To illustrate the temporaryeffect this had on the state’s contribution rates, this action resultedin the state’s contributions to Unit6 members’ pensions to total32.84percent of pay in 2021‑22, but the rate is 50percent of pay in2023‑24 (after the supplanting payment ended).

Study Treats Retirement Health and Retirement PensionBenefits Inconsistently. The state pays for retiree healthbenefits differently from how it pays for pension benefits. In the caseof retiree health benefits, the state pays a percentage of pay towardsnormal cost (specified in labor agreements and matched by employees) toprefund the benefit and it pays the unfunded liability on a“pay-as-you-go” basis where it pays out the claims cost for existingretirees. (The state has a significant unfunded liability associatedwith retiree health benefits. The most recent valuationof the benefit estimates the portion of the unfunded liabilityassociated with Unit6 to be about $10billion.) Unlike its treatment ofpensions, the compensation study does not include any portion of thestate’s payments towards retiree health unfunded liabilities. As weindicated above, we think it is better practice to only include thenormal cost when trying to value a retirement benefit; however, acompensation study also should be consistent. Had the compensation studybeen consistent with how it valued retirement benefits, it would haveincluded both the state’s contribution to Unit6 normal cost($136million) and the state’s payments towards Unit6 retirees’ claims($471million) that constitute the state’s payments towards the unfundedliability.

Study Does Not Accurately Reflect Value of Retiree HealthBenefits Provided by County Employers. The study indicatesthat all of the surveyed jurisdictions offer an employer-subsidizedretiree health benefit or some form of a retiree health savings orreimbursem*nt account. However, to establish a value for the benefit,CalHR only asked the employers if employers made prefundingcontributions towards the benefit. The state only recently beganprefunding retiree health benefits. Many local governments still do notprefund the benefit and, instead, make payments on a pay-as-you-go basisafter an employee retires. Of the six counties included in the survey,only two indicated that they make contributions towards the benefitduring employees’ careers (the Counties of Sacramento and SanBernardino). Accordingly, the study does not attribute any value toretiree health benefits and undervalues the total compensation earned byemployees of the Counties of Los Angeles, Orange, Santa Clara, and SanDiego.

Study Does Not Accurately Reflect Value of State RetireeHealth Benefit. Following the 2015‑16budget, the state established lower retiree health benefits for allfuture state employees in MOUs. For Unit6, the arrangement wasestablished in the MOU that wasratified in 2016, reducing the benefit for employees hired after 2017.Per the Unit6 MOU, the state and all Unit6 members each pay 4percentof pay to prefund the benefit, which is roughly one-half of the totalnormal cost for the benefit earned by employees hired before 2017. Thecompensation study uses the state’s 4percent of pay contribution forboth entry-level and journey-level employees, ascribing the same valueto the retiree health benefit to all Unit6 members. The state’sactuarial valuation of retiree health benefits calculates thetotal normal cost of the benefit for each bargaining unit. Thevaluation does not provide separate normal costs for the benefit foremployee hired before 2017 versus those hired after 2017;however, the normal cost for the benefit earned by new employeescertainly is lower than the normal cost for the benefit earned byemployees hired before 2017. Accordingly, the compensation studyovervalues the retiree health benefit earned by entry-level stateemployees and undervalues the retiree health benefit earned byjourney-level state employees.

Overall, Reliance on Employer Cost to Estimate Value ofBenefit Distorts Findings. While comparing employers’costs to provide compensation to employees makes the survey easier toadminister and complete, the comparisons can be inaccurate, particularlyin the case of retirement benefits. In addition, this methodology alsoignores any deductions that might be made from employees’ pay—reducingtheir salaries—to support the benefits provided to them as part of theirtotal compensation. For example, the study does not capture the effecton employees’ pay when they are required to contribute a portion oftheir salary to prefund a retirement benefit. Employee contributionstowards benefits directly reduce their pay. If two employees haveidentical compensation packages except one is required to contribute4percent of pay to prefund retiree health benefits while another doesnot, that contribution requirement lowers the employee’s pay, resultingin the employee who is required to contribute towards the benefitsreceiving a lower total compensation than the other employee. Toaccurately assess the relative attractiveness of employers’ suppliedcompensation packages to workers in the labor market, a study should sumthe total pay (including overtime, scheduled pay differentials, or otherpayments in addition to base pay), total insurance premiums (health,dental, and vision), and total normal cost of retirement benefits(pension and retiree health) and subtract from that the deductions frompay that employees make towards premiums and normal cost of retirementbenefits.

Study Not Helpful

For the reasons described above, we find that CalHR’s 2022 Unit6compensation study is not helpful in assessing how the state’s totalcompensation for state correctional officers compares with the sixcounties included in the study. Further, because the six countiesincluded in the study are not representative of where state correctionalofficers work and, instead, includes among the highest cost of livingregions of the state, we conclude that the study is not helpful inassessing the state’s position as an employer of correctional officersacross the state or where state correctional officers work. We recommendthe 2022 study not be used to evaluate whether or not thestate’s compensation for correctional officers is competitive.

Legislative Oversight

Legislative Oversight of State Compensation Policies Keyto Effective Oversight of State Spending. State employeecompensation is a significant portion of the cost of state governmentoperations, totaling more than $30billion (roughly one-half of which ispaid from the General Fund). In addition, the state has significantunfunded liabilities associated with retirement benefits for stateemployees’ and retirees’ past service (in excess of $70billion forpensions and $95billion for retiree health benefits). Changes inemployee compensation policies can have profound effects on the state’sexpenditures and long-term plans to address unfunded liabilities. Assuch, the Legislature’s ability to exercise a high degree of oversightover the state’s employee compensation policies is critical.

Compensation Studies Helpful Tool to Evaluate ProposedCompensation Policies. The Legislature regularly considerschanges to state employee compensation policies through the policy billprocess, the budget bill process, and through its role in consideringlabor agreements reached between the administration and state bargainingunits. A regularly occurring, well-designed, and well-executedcompensation study helps provide the Legislature a baseline from whichto assess (1)the state’s current position as an employer in the labormarket and (2)the effect that any proposed employee compensation policymight have on the state’s position as an employer.

Regular Total Compensation Studies Should Not Be Subjectof Bargaining Process. A compensations study shouldpresent a set of facts identified using a transparent methodology thatcan serve as a starting point in negotiations. A compensation study,itself, should not be the subject of negotiations. If a bargaining unitdisagrees with the methodology or findings of a CalHR compensationstudy, it can pay for its own compensation study to be conducted by athird party. (We note that Unit 2 [Attorneys] contracted with theUniversity of California at Los Angeles to conduct a study leading up tothe 2019 MOU.)Allowing compensations studies to be the subject of bargaining (1)opensthe door to inconsistent methodologies used to assess differentbargaining units’ compensation, which, in turn, makes compensationsstudies less helpful in identifying internal equity issues acrossbargaining units and (2)allows issues at the bargaining table toprevent a compensation study from being submitted to theLegislature.

Unit6 Compensation

Given the shortcomings of the 2022 compensation study, we look toother metrics to assess the state’s ability to recruit and retaincorrectional officers. We discuss those factors below. On the whole, wesee little evidence to suggest that the state’s ability to recruit andretain correctional officers has deteriorated such that the state is notan employer of choice for correctional officers in California.

Inflation and Unit6

Unit6 Base Pay Has Not Kept Pace With Inflation, butWell Above Pre-2006 Levels. As we discussed in our 2008analysis, CDCR experienced high vacancies and recruitment challengesfor correctional officers in the early 2000s that were addressed throughoperational changes as well as significant increases tocorrectional officer compensation provided by the Unit6 MOU that was ineffect from 2001 to 2006. At the time, we indicated that “the job ofstate correctional officer may now be the most sought after in theCalifornia economy” thanks to the increase in compensation. Controllingfor inflation, Figure7 shows that average Unit6 base payincreased by 18percent between 2003 and 2006 under the terms of the2001‑06 MOU. Since 2006, inflation has eroded the average Unit6 basepay such that real base pay in 2022 was almost 9percent lower than itwas in 2006. However, average real base pay remains more than 7percenthigher than it was in the early 2000s when the state last experiencedsignificant challenges recruiting correctional officers. (As we discussbelow, turnover may be contributing to the decline in the average basepay. With an increase in retirements in recent years—and an increase innew officers—average base pay declines reflect the lower tenure of staffas well to some extent.)

Proposed GSIs Close to Most Recent InflationLevels. The most recent (July) California Consumer PriceIndex was 3.1percent higher compared to the prior year. Since 2020,however, prices have risen 17percent. GSIs provided by prior agreementsto Unit6 did not keep pace with these increases, as noted above.Although the tentative agreement’s GSIs would maintain wages, they donot catch up to prior price increases.

Recruitmentand Retention of State Correctional Officers

Use 2013 Compensation Study as Benchmark.Although not perfect, the 2013 compensation study had far fewermethodological flaws than the 2022 compensation study. Consequently, weuse the 2013 study as our benchmark and look at recruitment andretention patterns to assess if the state’s position in the labor marketto attract and retain qualified employees has deteriorated significantlysince 2013, when CalHR found that state correctional officers werecompensated well above local government counterparts.

Number of Unit6 Members in Decline. As wediscussed earlier, state policy has changed in recent years to result ina decline in the state correctional population (including people inprison, and on parole) and the closure of state prison facilities. Thistrend has resulted in the number of Unit6 members to decrease over theyears. The number of Unit6 members reached a high-water mark of over32,500 members around 2008 and has steadily declined since then with26,000 members in 2013 and fewer than 24,500 members in 2022. This alsois illustrated by the fact that, as Figure8 shows, fewer correctionalofficers are graduating from the academy and entering the workforce thanare separating from state service.

Fewer Vacant Correctional Officer Positions Today Than in2013. The reduction in the number of state correctionalofficers is the result of changes in state policy and does not appear tobe due to challenges in filling established positions. Compared with thetime of the last compensation study, the share of state correctionalofficer positions that are vacant has decreased from 14.5percent inJanuary 2014 to 12.1percent in January 2022. On one hand, this suggeststhat CDCR is not experiencing greater challenges recruiting andretaining correctional officers than in 2013. On the other hand, prisonclosures have resulted in a substantial reduction in the number of statepositions. With fewer authorized positions, we would expect the vacancyrate to decrease. The fact that the vacancy rate has only dropped2percentage points might signal a recruitment or retention problem,however, as we discuss below, there are indicators pointing the otherway as well. (Moreover, Unit6 is unique in that its vacancy rate isdeclining, whereas for almost all other bargaining units, the vacancyrate has increased in recent years.)

Correctional Officer Academy Turns Away More Than90Percent of Qualified Applicants. The job of statecorrectional officer consistently is a sought-after job. Between 2013‑14and 2022‑23, CDCR received 372,998 applications to the correctionalofficer academy. Of these applications, 292,488 applications were fromapplicants who met the minimum qualifications. During this same timeperiod, the department accepted 17,530 applicants into the academy. Thismeans that CDCR accepted about 6percent of qualifiedapplicants to enroll in the academy to receive training to become acorrectional officer. Among all applications, qualified and notqualified, CDCR accepted about 5percent of applicants. (For context,the academy for the California Highway Patrol accepted 4percent ofqualified applicants in 2022‑23.) Figure 9 shows how the acceptance rate has fluctuated since 2016-17. There clearly is very high interestamong people to become state correctional officers. The high level ofinterest in the job despite its challenging working conditions likelyreflects that, compared with other jobs that have similar educationrequirements, the state provides correctional officers competitivesalaries and benefits as well as job security.

Evidence of Turnover Among Staff. There issome evidence that there has been elevated turnover among correctionalofficers since 2013 where more senior employees are being replaced byless experienced employees. While the factors that we discuss below showthat the bargaining unit is becoming younger and less experienced, theaverage correctional officer continues to be a mid-career correctionalofficer with more than a decade of experience. This suggests that theyounger workforce might not be an indication of a problem, but rathernatural turnover as employees retire.

• Fewer Years of Service Among Staff. Theaverage Unit6 member in 2022 had 11.4 years of service. This is aboutone year fewer years of service than the average Unit6 member had in2012. However, the average Unit6 member has about one more year ofservice than they did in 2008 when the average Unit6 member had 10.4years of service.

• Fewer Employees at Top Step. The shareof Unit6 members who are at the top step of the correctional officersalary range has decreased from 71percent in 2013 to 57percent in2021. This is consistent with the fact that state correctional officerstend to have fewer years of service today than they did in2013.

• Younger Workers. Over the past tenyears, the average Unit6 member has become younger. The share of Unit6members who are 40 years old or younger has increased 10percentagepoints form 42percent in 2012 to 52percent in 2022. The fastestgrowing age group during this period was 26 to 30 years old.

Any Retention Issues Likely More Attributable to FactorsOther Than Compensation. The turnover of statecorrectional officers in recent years likely is due to factors otherthan compensation. Figure10 shows that separations have been drivenprimarily by retirements; however, there was a notable increase in thenumber of resignations in 2021‑22. When a person resigns, theyvoluntarily end their employment without going into retirement. Theperson might seek employment with a different employer doing the samejob, change careers, or exit the workforce. If a person is dissatisfiedwith their job or with the level of compensation they receive for theirjob, they are more likely to resign. As such, a spike in resignationswarrants further investigation to understand the root cause of theresignations. As we discuss below, we do not think that compensation hasbeen the main driver leading to increased retirements and a spike inresignations.

• Aging Cohort of Correctional Officers DrivingRetirements. The average correctional officer retires atthe age of 55 years after having worked for the state for 23 years—thisstatistic is unchanged from 2013. This means that the average retiringcorrectional officer was hired at the age of 32 years. In the early andmid-2000s, the state hired a large number of new correctional officers.This created a cohort of correctional officers of a similar age. As thiscohort, and the officers hired before this cohort, became eligible forretirement, they have retired and have been replaced by new, youngercorrectional officers. The growth in retirements that CDCR hasexperienced in recent years likely is due more to the natural aging ofthe workforce rather than a response to Unit6 compensationlevels.

• Pandemic. The time period fromMarch2020 through September 2022 was a particularly turbulent time forstate prisons. The weekly cases of COVID-19per 100,000 in state prisons was far above levels seen in Californiabroadly during each of the waves of the pandemic. The threat to thehealth and safety of both people living in prisons and working inprisons resulted in the administration implementing a number ofpersonnel policies related to staff testing for the virus, mask wearing,and vaccination. Both the health risk itself and the administration’spolicies to address the health emergency may have driven the spike inresignations that occurred in 2021‑22 and could have been a contributingfactor for eligible employees to decide to retire.

Female Correctional Officers

2018 State Law Limits Use of Male Officers at FemaleInstitutions. In 2018, the Legislature approved and theGovernor signed Chapter174 (AB2550,Weber), adding Section2644 of the Penal Code. This law seeks to protect females in prisonfrom sexual assault, abuse, and other improper contact with malecorrectional officers. Specifically, the law prohibits—except inspecified emergency situations—male correctional officers from(1)conducting a pat down search of females in custody, (2)entering anarea inside the prison where females may be in a state of undress, or(3)being in an area where they can view females in custody in a stateof undress.

Few Female Correctional Officers. Theprofession of correctional officer historically has been dominated bymen. Since 2003, the share of Unit6 members who are women has steadilydeclined. Specifically, whereas 21percent of Unit6 members were womenin 2003, 17percent of Unit6 members were women in 2022. As we said in2019 when wereviewed the Unit6 MOU submitted for ratification that year, CDCR mightneed to recruit additional women correctional officers to work in itswomen’s prisons to maintain compliance with Section 2644.

2019 MOU Established Working Group to Develop RecruitmentStrategies for Female Staff. The 2019 MOU includeda provision that established a working group to develop strategies toenhance recruitment, transfer, and retention of female staff at women’sprisons. We asked CDCR to provide an update to us on the outcome of thisworking group. The department informed us that (1)the working group didnot meet and, consequently, did not produce any strategies to improverecruitment and retention of female staff but (2)the departmentindependently has implemented strategies. The strategies that CDCRindicated it has implemented to improve recruitment and retention ofwomen include targeted marketing; development of a website focused onwomen in CDCR; using women recruiters and ambassadors at recruitmentevents; recruiting at women-focused events (for example, the CentralValley Women’s Conference); partnering with women-focused organizations(for example, women’s athletics programs); and attending national andstate women’s conferences to learn new strategies to attract womenapplicants. Lastly, CDCR indicated that it signed onto the 30x30 pledge toimprove the representation of women in police recruits to 30percent by2030.

Women Disproportionately Rejected From AcademyApplication Process. Part of the challenge of hiringfemale correctional officers is due to the fact that more men apply tobecome correctional officers than women. For example, since 2011‑12, menconsistently have made up more than 66percent of the applicationsreceived for the academy with the highest share being in 2011‑12 when82percent of the applications were from men. In addition, however,something in the application screening process results in applicationsfrom women being more likely to be rejected. Specifically, as Figure11shows, in all of the past ten years, women have represented a smallershare of the number of people admitted to the academy than they did theshare of people applying for a position in the academy. As long as thistrend continues, the share of female correctional officers likely willcontinue to decline and put at risk CDCR’s compliance with Section 2644.CDCR indicated that one reason that women have been dropped out of theapplication process in the past is because women were more likely tofail the Physical Fitness Test element of the application process whereapplicants are required to carry weights in varying size to specificdistances to simulate carrying a stretcher during an emergency. Thedepartment informs us that, as of March2023, the Physical Fitness Testhas been removed from the applicant selection process; however, allcadets will still be required to pass the Physical Fitness Test at theacademy, but can do so in an environment where they can learn and bementored in developing the skills needed to pass the course. This couldresult in fewer female applicants being rejected from the academy.

The Proposed Agreement

Changes toRetirement Benefits Established by PEPRA

Agreement Fundamentally Enhances Unit6 RetirementBenefit. The agreement would change the employer-fundedretirement income benefit for Unit6 members from a defined benefitpension to a parallel hybrid plan whereby the state funds both a definedbenefit pension and a defined contribution plan. This fundamentallychanges the state’s retirement benefit. Such a change warrants seriousand extensive deliberation to work through issues and questions likethose below.

• What Problem Is The Proposal Trying toAddress? The defined benefit pension provided to new andsenior Unit6 members provides a substantial income replacement ratiothat allows the average retiring Unit6 members to replace nearly 70 oftheir income without regard to any personal savings or assets availableto the retiree. A new employee only needs to work four years longer thanmore tenured employees to receive the same level of benefit.

• With a New Employer-Funded Defined ContributionComponent, Should the Employer-Funded Defined Benefit ComponentDecrease? Hybrid pension plans where employees earn bothan employer-funded defined benefit pension and an employer-fundeddefined contribution plan typically include a somewhat less generousdefined benefit than employers who provide only a defined benefitpension.

• Does Establishing a Hybrid Retirement Plan for Unit6Raise Equity or Parity Issues With Other Bargaining Units?The state’s pension benefit is largely consistent across bargainingunits by providing a defined benefit pension that offers differentincome replacement levels depending on date of hire, whether an employeeis in Social Security, and the employee’s job. With an average base payof over $95,500, Unit6 is not a low-income bargaining unit. Incontrast, the average base pay for Unit 15 is about $45,000. As weindicated earlier, lower-income people typically need a higher incomereplacement ratio in retirement as a larger share of their income goestowards basic needs.

• Should There Be a Vesting Requirement for the State’sContribution? Employers generally can establish vestingrequirements that require employees to work for a specified amountof time before the employee has a right to employer contributions madeto a 401(k).

• With a Larger Share of Unit6 Utilizing Savings Plus457(b) Plans, Why Require the Employer Contribution to Go to a401(k)? Employees must pay Savings Plus maintenance feesfor each account they hold. An employee might want to minimize thesefees by maintaining only one account. With 85percent of Unit6 membersparticipating in a Savings Plus 457(b) plan (compared with 19percent inthe 401[k] plan), it would make sense to give employees an option tohave the state’s contribution go towards a 457(b) plan.

Location-Specific Bonuses

Administration Gives No Supporting Evidence That ThreeInstitutions Are “Hard to Fill.” The agreement identifiesSVSP, SAC, and RJD as hard to fill. The administration provides noevidence or justification to support this claim. Vacancy rates of theinstitutions do not support the claims. All three facilities havelower-than-average vacancy rates of correctional officer positions with11percent, 11percent, and 9percent vacancy rates, respectively, inJanuary 2022.

Administration Provides No Justification to CreateIncentive Payments for New Officers to Go to SpecifiedInstitutions. The administration provides no evidence orjustification to suggest that the incentive payments for new officers atspecified facilities are necessary to maintain an inflow of new recruitsto those institutions. The list of institutions includes seven of thefacilities with the most Unit6 positions (Kern Valley State Prison inDelano; SVP; San Quentin Rehabilitation Center; Substance AbuseTreatment Facility and State Prison in Corcoran; California Health CareFacility in Stockton; RJD; and California State Prison, Corcoran).However, it is not clear that these institutions are less desirable worksites for new recruits than other institutions. Vacancy data would seemto support including Pelican Bay State Prison in Crescent City (with a28percent vacancy rate), but several of the other institutions includedon the list have vacancy rates quite a bit lower than the averagevacancy rate for correctional officers across the department

Fiscal Effect

Agreement Will Contribute to Rising Costs to RunPrisons. As Figure12 shows, the administration estimatesthat the agreement would increase the state’s annual costs by more than$410million General Fund. If the provisions of the agreement wereextended to excluded employees affiliated with Unit6 (generally,managers and supervisors), the administration estimates that the state’sannual costs would be nearly $50million more. This is a significanteffect on the state’s finances. A number of members of the Legislatureregularly express concerns about the rising cost to administer stateprisons. If ratified, relative to the CDCR operational spending assumedin the budget in 2023‑24, the agreement would increase the cost to runstate prisons by nearly 3percent.

Legislature’s Role inBargaining Process

Legislature Is Ultimate Authority of Any LaborAgreement. Under the Ralph C. Dills Act, while theGovernor negotiates terms and conditions of employment with bargainingunits, the Legislature retains the ultimate authority to approve orreject agreements. The Legislature can reject an agreement either by(1)rejecting a tentative agreement that is submitted to the Legislaturefor ratification or (2)not appropriating sufficient funds to pay forthe terms of an MOU that the Legislature has already ratified.

Administration’s Delivery of Agreement Does Not Allow forSufficient Time for Legislative or Public Review. Theadministration submitted this agreement to the Legislature three daysbefore the budget committees heard the agreement. Giving the Legislaturesuch a constrained review period to review a proposal with suchsignificant fiscal and policy implications is inappropriate. Thepublic—including the members of the bargaining unit—also should have agreater opportunity to review the provisions of the agreement andprovide input to the Legislature.

Budget Change Proposals of Far Smaller Size Would RequireJustification From Administration, Legislative Deliberation, and PublicScrutiny. If ratified, the agreement will increase statecosts by hundreds of millions of dollars each year. When budgetproposals of far lesser value are submitted to the Legislature by theGovernor during the budget process, they are subject to public andlegislative review for a period of weeks or months, not days.

LAO Recommendations

Review How to Improve Access to Collective BargainingInformation. In order to improve legislative oversight ofthe state’s employee compensation policies, we recommend that theLegislature review how it can gain better access to informationdiscussed through the collective bargaining process. In particular, whenfuture agreements establish JLMC processes, we recommend that theLegislature seek clarification as to (1)what information the partieswill share with the Legislature and (2)when such information might beshared with the Legislature.

Establish Consistent Requirements for CompensationStudies of All Bargaining Units. While the compensationstudy that CalHR produces for other bargaining units is not perfect, itis helpful for understanding how the state’s total compensation compareswith that provided by other employers to similar employees acrossCalifornia. In contrast, compensation studies that look at only a smallhandful of select and unrepresentative samples—like Unit6 as well asthe annual salary survey of Unit 5—are not helpful in understandingwhether the state’s compensation policies are competitive. While therecan be separate unit-specific salary surveys or other compensationstudies, we recommend that the state’s regular total compensation reportestablished in Section 19826 of the Government Code use a consistentmethodology that allows for the Legislature to have better oversight ofthe workforce and the state’s compensation policies.

Consider Utilizing Third Party to Conduct CompensationStudies on Scheduled Basis Independent of BargainingCycle. We recommend that the Legislature consider removingfrom CalHR the responsibility of conducting the state’s regular totalcompensation studies and, instead, consider directing CalHR to contractout this responsibility to a third party that is independent from thecollective bargaining process. For example, the state could contractwith the University of California, like Unit 2 did in the past, toconduct the review.

Require Bargaining Cycle to Consider LegislativeCalendar. The parties regularly submit labor agreements tothe Legislature with a legislative deadline looming only days away. Thisis a long-standing problem and is not unique to this administration. Inthe case of this agreement, the parties reached agreement a week beforethe administration transmitted any documents to the Legislature—onlydays before the scheduled August 30 budget hearings. This timeconstraint is unnecessary. The legislative calendar is public and knownfar in advance. The legislative calendar and deadlines should be builtinto the administration’s planning such that the Legislature hassufficient time to consider labor agreements. As we have recommended inthe past, we recommend that the Legislature adopt a standing policy toreject (1)any agreement that affects the compensation of stateemployees in the July pay period that is submitted to the Legislatureafter June 2 and (2)any agreement that is submitted to the Legislaturefewer than two weeks before the end of session.