State officials confirmed Friday that most state employees will begin swallowing a 5 percent cut in take-home pay beginning with paychecks issued at the end of this month.

The state, in the absence of a budget, can't increase the pay of its workers, regardless of previously agreed-upon contracts, said Marty Morgenstern, director of the Department of Personnel Administration.

Because workers' retirement payments were already programmed to increase by 5 percent this month, without the previously agreed-upon raise, workers will take a hit of that amount.
Officials within the state controller's office confirmed Friday that they don't have the power to pay workers more without authorization from Morgenstern.

Unless a state spending plan is approved soon, a state worker making $50,000 a year can expect to see his or her yearly take-home pay drop to $47,684. Some 131,000 state workers can expect to take the hit.

While that bad news applies to rank-and-file state workers, managers and supervisors face a different scenario.

Department of Personnel Administration officials recently offered employees not covered through the collective bargaining process an extra paid day off a month as compensation for the 5 percent pay cut they have been forced to take.

Some elected officials, including Gov. Gray Davis and a handful of legislators, have been taking voluntary pay reductions -- though the result has been largely symbolic because of the size of the state budget deficit. Davis also had asked his top advisers to take a 5 percent pay cut.

Assuming the union-negotiated raises -- 5 percent for most workers and around 7 percent for public safety officers -- are not negotiated away in the current round of talks, state workers will eventually receive the money, officials said.

"I'm sure they would want to get their money as soon as possible -- I would if I were a union member -- but unfortunately we need a budget," Morgenstern said.

Union officials representing state workers said the state has an obligation to fulfill agreed-upon contracts.

"We negotiated a deal, and it wasn't contingent on a budget being available," said Perry Kenny, president of the California State Employees Association. Kenny said his group would file a formal grievance.

Jim Hard, civil service division director of the state employee union, said the move would hurt morale and urged the Legislature to pass a budget that includes tax increases.

Building maintenance worker Joseph O'Connor wasn't happy that workers would have to pay for the additional benefits costs "out of our pocket," but generally took the news in stride.

He said he is grateful to keep his job in the face of the state's massive budget shortfall.

"I'm not going to worry about 5 percent," O'Connor said. "They'll give it back to us if and when it gets better."

Al Engle, a vocational instructor at Corcoran State Prison, said he'd rather have a safe job than the 5 percent.

"If it means the difference between keeping your job or not keeping your job, I would put the raise off for a year," Engle said. He said he and several others within his department are among the 9,000 state workers who have received notice the state might not need them.

The state and union officials continue to negotiate, but Morgenstern admitted that getting contracts signed is harder without a budget deal. The state is asking workers to put off pay increases -- part of an effort to save $470 million -- but thus far the unions representing state workers have rejected the request.

Unlike union-represented state workers, supervisors have little ability to influence their pay and benefits. Morgenstern offered them the perk Monday.

With the increased paid leave, supervisors with 25 years of experience would earn 36 paid days off a year, up from 24. Those "bankable" days could be used or cashed out upon retirement. Beginning state workers or supervisors earn just over 10 paid days off annually.

While some supervisors were grateful to get the extra time off, others said they'd prefer the money. "I'm surprised," said Vicky Dulaney, a supervisor at the State Library. "I think it's better than what I expected to get, which is nothing. I could probably use the raise, but I'm willing to take the day off."

But Dorothy Benjamin, a supervisor in the Department of Water Resources, said the day off wouldn't help many managers because they cannot afford to take the time off. She said most have a lot of vacation and sick leave accrued anyway. "I want my money," she said. "I'm a supervisor, and I have to work."