Case Title: Professional Engineers in Cal. Government v. Schwarzenegger

Citation: 50 Cal. 4th 989

Docket Number: S183411

State: california

Court: California Supreme Court

Date: 2010-10-04T00:00:00Z

Document:
1 
Filed 10/4/10 (this opn. precedes companion case, S181760, also filed 10/4/10) 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
PROFESSIONAL ENGINEERS IN 
 
 
CALIFORNIA GOVERNMENT, et al., 
 
 
 
Plaintiffs and Appellants, 
 
  
 S183411 
 
v. 
 
 
ARNOLD SCHWARZENEGGER, 
 
  
   Ct.App. 3 C061011 
as Governor, etc., et al., 
 
 
 
Defendants and Respondents; 
                   Sacramento County 
JOHN CHIANG, as State Controller, etc., 
 
     Super. Ct. No. 34-2008-80000126    
 
Defendant and Appellant.   
 
 
 ______________________________________  
 
CALIFORNIA ATTORNEYS, ADMINISTRATIVE   
LAW JUDGES AND HEARING OFFICERS IN  
 
STATE EMPLOYMENT, 
 
 
 
Plaintiff and Appellant, 
 
 
 
v. 
 
 
ARNOLD SCHWARZENEGGER, 
 
  
   Ct.App. 3 C061009 
as Governor, etc., et al., 
 
 
 
Defendants and Respondents; 
                   Sacramento County 
JOHN CHIANG, as State Controller, etc., 
 
     Super. Ct. No. 34-2009-80000134    
 
Defendant and Appellant.   
   
 
 ______________________________________  
 
SERVICE EMPLOYEES INTERNATIONAL  
 
UNION LOCAL 1000, 
 
 
 
Plaintiff and Appellant, 
 
 
 
v. 
 
 
ARNOLD SCHWARZENEGGER, 
 
  
   Ct.App. 3 C061020 
as Governor, etc., et al., 
 
 
 
Defendants and Respondents; 
                   Sacramento County 
JOHN CHIANG, as State Controller, etc., 
 
     Super. Ct. No. 34-2009-80000135    
 
Defendant and Appellant.   
   
 
 ______________________________________  
 
 
2 
On December 1, 2008 — faced with (1) a large current state budget deficit 
that was projected to grow to more than $40 billion by the end of the 2009-2010 
fiscal year, and (2) the very serious prospect that by as early as February 2009 the 
state would run out of cash to pay its ordinary expenses — the Governor of 
California declared a fiscal emergency, called the Legislature into special session, 
and submitted to the Legislature a comprehensive plan to address the budget 
problem. The Governor‟s budget plan included, among many other cost-saving 
features, two proposed statutory provisions that would direct the Department of 
Finance and the Department of Personnel Administration to implement, for the 
remainder of the 2008-2009 fiscal year and for the entire 2009-2010 fiscal year, a 
mandatory one-day-a-month unpaid furlough of most state employees employed 
by the executive branch, a proposal that would save the state approximately $37.5 
million per month by reducing by approximately 5 percent the wages paid to each 
of the affected employees. 
Two and one-half weeks later, on December 18, 2008, the Legislature 
passed its own proposed comprehensive budget legislation, comprising 15 separate 
budget-related bills.  Among many other differences from the Governor‟s 
proposal, the Legislature‟s alternative plan did not include the Governor‟s 
recommended furlough provision. 
On December 19, 2008, the Governor issued the executive order that lies at 
the heart of the present litigation, instructing the Department of Personnel 
Administration to implement, beginning on February 1, 2009, and continuing 
through June 30, 2010, a mandatory two-day-a-month unpaid furlough of most 
state workers employed in the executive branch.   
Shortly after the Governor‟s issuance of this executive order, a number of 
employee organizations — the recognized, exclusive bargaining representatives of 
a majority of the workers employed by the State of California — filed three 
 
3 
separate, but similar, lawsuits, contending that the Governor lacked authority to 
implement unilaterally an involuntary furlough of represented state employees that 
reduced such employees‟ hours and earnings by approximately 10 percent.  The 
trial court, acting on an expedited basis, treated the three cases as related, heard 
argument in the cases together, and thereafter issued a single ruling rejecting the 
broad attacks made by the employee organizations on the executive order and 
concluding that the Governor possessed the authority to impose the furlough in 
response to the fiscal emergency facing the state. 
The employee organizations (hereafter sometimes referred to as plaintiffs) 
appealed from the trial court‟s ruling.  After briefing in the Court of Appeal was 
completed and the three cases were consolidated for purposes of oral argument 
and decision, but before the Court of Appeal set the matter for oral argument or 
issued a decision, we exercised our authority pursuant to article VI, section 12, 
subdivision (a) of the California Constitution to transfer the consolidated matter to 
this court for oral argument and decision. 
For the reasons explained below, we conclude that, under existing 
constitutional provisions and statutes, the Governor on December 19, 2008, 
possessed authority to institute a mandatory furlough of represented state 
employees, reducing the earnings of such employees, only if specifically granted 
such unilateral authority in an applicable memorandum of understanding entered 
into between the state and the employee organization representing the affected 
employees.  Although there is considerable doubt whether the applicable 
memoranda of understanding granted the Governor such authority, we further 
conclude that even if the Governor lacked authority to institute the challenged 
furlough plan unilaterally, plaintiffs‟ challenge to the furlough plan now before us 
must be rejected.  In mid-February 2009 — shortly after the furlough program 
went into effect — the Legislature enacted, and the Governor signed, legislation 
 
4 
that revised the Budget Act of 2008 (2008 Budget Act) by, among other means, 
reducing the appropriations for employee compensation contained in the original 
2008 Budget Act by an amount that reflected the savings the Governor sought to 
obtain through the two-day-a-month furlough program.  The February 2009 
legislation further provided that the specified reduction in the appropriations for 
employee compensation could be achieved either through the collective bargaining 
process or through “existing administration authority.”  That phrase, in the context 
in which the revised budget act was adopted and in light of the provision‟s 
legislative history, reasonably included the furlough program that was then in 
existence and that had been authorized by the current gubernatorial administration.  
In particular, the bill analyses considered by the Legislature made specific 
reference to furlough-related reductions of employee compensation costs.  Under 
these circumstances, we conclude that the Legislature‟s 2009 enactment of the 
revisions to the 2008 Budget Act operated to ratify the use of the two-day-a-month 
furlough program as a permissible means of achieving the reduction of state 
employee compensation mandated by the act. 
Accordingly, we conclude that the 2009 budget legislation validated the 
Governor‟s furlough program here at issue, and reject plaintiffs‟ challenge to that 
program. 
I 
The California Constitution provides that “[t]he Legislature shall pass the 
budget bill by midnight on June 15 of each year” (Cal. Const., art. IV, § 12, 
subd. (c)(3)), but, as we noted in White v. Davis (2003) 30 Cal.4th 528, 533, “in 
recent years the timely adoption of the budget bill in California has proven to be 
the exception rather than the rule.”  Enactment of the initial 2008 Budget Act was 
an unusually difficult and protracted task and, instead of being passed by June 15, 
 
5 
2008, the budget bill that year was not enacted by the Legislature and signed into 
law by the Governor until September 23, 2008. 
Although the national and state economies already were in dire straits when 
the 2008 Budget Act finally was enacted, shortly thereafter the economy further 
deteriorated dramatically in light of the financial credit crisis and the resulting 
stock market collapse in October 2008 and a sharp decline in real estate values and 
consumer spending.  In early November 2008, the California Department of 
Finance reported that the state faced a revenue shortfall of $11.2 billion for the 
2008-2009 fiscal year and a much higher budget deficit by the end of the 2009-
2010 fiscal year, and further stated that “[i]f no action is taken to reduce spending, 
increase revenues, or a combination of both, the state will run out of cash in 
February and be unable to meet all of its obligations for the rest of the year.”  (Cal. 
Dept. of Finance, Rep., Governor‟s Budget, Special Session 2008-09, p. 1, at 
 [as of Oct. 4, 2010].) 
On November 6, 2008, the Governor published a letter addressed to all state 
employees, announcing that in order to cope with the state‟s worsening fiscal 
situation he would propose, among other spending reductions, a number of cuts 
related to state employees, including a one-day-a-month furlough of state 
employees that would result “in a pay cut of about 5 percent” but that would not 
“affect retirement and other benefits for which you are eligible.”  The letter 
declared that “[a]ll the actions we‟re proposing must first be approved by the 
Legislature.”1 
                                              
1  
The Governor‟s November 6, 2008, letter stated in relevant part: 
“Dear Valued State Worker, 
“During the six weeks since I signed our state budget, the mortgage crisis has 
(Footnote continued on next page) 
 
6 
On that same day (Nov. 6, 2008), the Governor called the Legislature into 
special session and submitted a package of proposed legislative measures to 
address the state‟s fiscal problems.2  The package included a proposal to add two 
new sections to the Government Code (proposed Gov. Code, §§ 19826.4, 
19826.45), provisions that would require the Department of Finance and the 
Department of Personnel Administration (DPA) to implement a program for a 
one-day-a-month furlough of state employees for the remainder of the 2008-2009 
                                                                                                                                                              
(Footnote continued from previous page) 
deepened, unemployment has increased and the stock market has dropped 
significantly.  As a result we are facing a projected $11 billion revenue shortfall 
this fiscal year. 
“. . .  I have called the Legislature into special session to address our fiscal 
emergency, and I am proposing a combination of economic stimulus measures, 
programs to keep Californians in their homes, revenue increases and spending 
reductions to address the real, immediate financial problems facing the state. 
“If approved by the Legislature, these spending reductions will impact our state 
workers. . . . 
“To achieve cost savings and protect vital state services, I am proposing the 
following measures: 
“Furloughs:  All state employees will be furloughed one day each month for the 
next year and half, a total of 19 days.  This will result in a pay cut of about 
5 percent.  The pay cut will not affect retirement and other benefits for which you 
are eligible. 
“[¶]  . . .  [¶] 
“These changes will save the state roughly $1.4 billion over two years.  I know 
these are not easy proposals, and I assure you we are working closely with union 
leadership to achieve results in the least painful way possible.  All the actions 
we’re proposing must first be approved by the Legislature.”  (Italics added.)  
2  
Although the special session proclamation specifically directed the 
Legislature to address the state‟s fiscal problems, the Governor did not declare a 
fiscal emergency under article IV, section 10, subdivision (f) of the California 
Constitution at that time. 
 
7 
fiscal year and for the entire 2009-2010 fiscal year.3  The Legislature, which was 
in the final days of the 2007-2008 regular legislative session, did not act on the 
Governor‟s proposed budget legislation, and the legislative session ended on 
November 30, 2008.  (Cal. Const., art. IV, § 3, subd. (a).) 
On December 1, 2008, after the newly elected legislators took office and 
the 2009-2010 regular legislative session began (Cal. Const., art. IV, §§ 2, 
subd. (a), 3, subd. (a)), the Governor issued a proclamation declaring a fiscal 
emergency pursuant to the provisions of article IV, section 10, subdivision (f) of 
the California Constitution, and calling the Legislature into special session as 
provided by that constitutional provision.  The Governor resubmitted to the 
Legislature the same comprehensive budget legislation that he had proposed the 
previous month, including the proposal to add specific provisions to the 
Government Code directing the implementation of a one-day-a-month furlough of 
state employees through the end of the 2009-2010 fiscal year.  (See Assem. 
Budget Com., Summary of Governor‟s Proposed Dec. 2008-09 Budget 
Adjustments (Dec. 2, 2008) p. 14.)  
The Legislature did not enact the Governor‟s proposed budget package but 
instead, on December 18, 2008, passed an alternative comprehensive budget 
package (comprising 15 separate budget-related bills).  The Governor expressed 
                                              
3 
As initially proposed, the legislation directed that the furlough program 
would commence on December 1, 2008, and end on July 1, 2010, a period of 
19 months, and would “not . . . exceed a total of 19 workdays. . . .” 
 
The proposed legislation was submitted to the Legislature by the 
Department of Finance and was transmitted to the Office of Legislative Counsel in 
a request for draft legislation.  That office formatted the proposals as draft 
legislation (RN [Request Number] 08 29145 and RN 08 29146), but the language 
proposed was not included in any bill that was formally introduced in the 
Legislature.   
 
8 
immediate disapproval of the Legislature‟s action and subsequently (on Jan. 6, 
2009) vetoed all 15 bills.4 
On December 19, 2008, the Governor issued the executive order here at 
issue.  (Governor‟s Exec. Order No. S-16-08 (Dec. 19, 2008).)  Citing the 
worsening financial crisis and the real possibility that the state would lack 
sufficient cash to meet its payroll and other obligations beginning in February 
2009, and asserting that “in the December 1, 2008 fiscal emergency extraordinary 
session, the Legislature failed to effectively address the unprecedented statewide 
fiscal crisis,” the executive order directed the DPA to adopt a plan — to be 
effective February 1, 2009, through June 30, 2010 — “to implement a furlough of 
represented state employees and supervisors for two days per month, regardless of 
funding source” (italics added) and also “to implement an equivalent furlough or 
salary reduction for all state managers, including exempt state employees, 
regardless of funding source.”  (Ibid.)  The order indicated that the furlough plan 
would include a limited exemption process.  After the Governor issued his order, 
the DPA notified the certified bargaining representatives of represented state 
employees of the Governor‟s order and offered to meet and confer with them over 
the impact of the furloughs.  Thereafter the DPA met with various bargaining 
units.   
Shortly after the executive order in question was issued, a number of 
employee organizations — recognized bargaining representatives for the majority 
of represented state employees — filed three separate actions, challenging the 
                                              
4   
Although the Legislature passed its alternative comprehensive budget 
legislation on December 18, 2008, that body did not immediately submit it to the 
Governor but held it pending further negotiations with the Governor.  After those 
negotiations broke down, the Legislature submitted the legislation to the Governor 
on January 6, 2009, and he immediately vetoed it.  
 
9 
validity of the Governor‟s executive order on a variety of grounds.  On 
December 22, 2008, Professional Engineers in California Government and 
California Association of Professional Scientists filed a petition for writ of 
mandate in the Sacramento Superior Court (No. 34-2008-80000126), naming the 
Governor, the DPA, and the State Controller as defendants and seeking an order to 
restrain implementation of the executive order.  On January 5, 2009, California 
Attorneys, Administrative Law Judges and Hearing Officers in State Employment 
(CASE) filed a similar petition in Sacramento Superior Court (No. 34-2009-
80000134), and on January 7, 2009, Service Employees International Union Local 
1000 (SEIU) also filed a similar petition in Sacramento Superior Court (No. 34-
2009-80000135). 
On January 9, 2009, the Director of the DPA sent a memo to all state 
departments, indicating that the unpaid furlough program would be implemented 
by a general closing of state government operations on the first and third Friday of 
each month, beginning on February 6, 2009.  For state operations that cannot close 
(such as prisons and hospitals), the memo indicated that agency heads could 
request approval from the DPA to use a “self-directed” furlough program for 
specific positions, under which employees either would choose two furlough days 
per month with the approval of their supervisors, or accrue two furlough days to 
be taken when feasible within two years following the conclusion of the furlough 
program.  The memo further stated:  “Salaries will be adjusted to reflect the 
unpaid furlough days, but benefits will remain the same (i.e., the furlough will not 
affect payouts for unused leave, service credit, health and retirement benefits, 
 
10 
etc.).”5  (DPA, State Employee Furlough per Governor‟s Executive Order S-16-08 
(Jan. 9, 2009)  
[as of Oct. 4, 2010] (January 9, 2009 DPA Furlough Memo).) 
Meanwhile, in the three pending Sacramento Superior Court actions, all 
parties stipulated to a briefing and hearing schedule that would permit the 
designated judge (Hon. Patrick Marlette) to hear the three cases together prior to 
February 1, 2009, the date on which the furlough program was scheduled to begin.  
On January 29, 2009, the trial court conducted a single hearing in all three cases, 
and on January 30 the court issued a single ruling denying all three petitions on the 
merits and ordering the State Controller (Controller) to comply with the executive 
order in the course of issuing pay warrants to the affected state employees.  
Thereafter, on February 11, 2009, the court entered a formal judgment denying the 
petitions.   
Plaintiffs and the Controller filed timely appeals in the Court of Appeal in 
all three cases.  On February 2, 2009, SEIU filed a petition for a writ of 
supersedeas in the Court of Appeal, requesting that the appellate court stay 
implementation of the furlough program pending appeal.  The appellate court 
denied the petition for supersedeas on February 27, 2009, and the Controller 
implemented the furlough order during the pendency of this appeal insofar as the 
order applied to the employees represented by plaintiff employee organizations.   
Meanwhile, the Controller had sent a letter to the trial court on February 3, 
2009, requesting that it clarify whether its January 30 ruling applied to persons 
employed in offices headed by independently elected constitutional officers (such 
                                              
5  
The January 9, 2009 DPA Furlough Memo also noted that “[t]he state 
continues to meet with representatives for state employees about the impact of this 
program and will notify you of any further developments.” 
 
11 
as the Attorney General and the Controller).  In response, the trial court, on 
February 4, 2009, issued an order stating that no issue regarding application of the 
executive order to employees of independently elected constitutional officers had 
been raised or litigated in the writ matters on which the court had ruled, and 
indicating that its ruling expressed no view regarding that issue.  The Controller 
subsequently informed the Governor that, in issuing salary warrants, he (the 
Controller) would not implement furloughs for the employees of the state‟s 
independently elected constitutional officers without a court order directing him to 
do so.   
On February 9, 2009, the Governor filed a petition for a writ of mandate in 
Sacramento Superior Court against the Controller, requesting an order compelling 
the Controller to implement furloughs for the independently elected constitutional 
officers.  (Schwarzenegger v. Chiang (No. 34-2009-80000158).)  On March 12, 
2009, the trial court ruled that the Controller must implement the Governor‟s 
furlough order with respect to employees who work for independently elected 
constitutional officers.  The Controller appealed from that ruling, and the trial 
court‟s order in that matter has been stayed by the appeal, which is currently 
pending in the Court of Appeal, Third Appellate District (C061648).6 
                                              
6  
Numerous additional lawsuits were filed challenging the validity of the 
December 19, 2008, furlough order as applied to the employees of particular 
agencies or entities.  One such action, pertaining to the validity of the furlough as 
applied to the employees of the State Compensation Insurance Fund, resulted in a 
published Court of Appeal decision affirming a trial court ruling that the furlough 
order could not validly be applied to such employees in light of the provisions of 
Insurance Code section 11873.  (California Attorneys, etc., v. Schwarzenegger 
(2010) 182 Cal.App.4th 1424, review granted May 19, 2010, S182581.)  We 
granted review in California Attorneys, etc. on May 19, 2010, and that matter is 
pending before us.  Because the resolution of that matter may be affected by our 
(Footnote continued on next page) 
 
12 
On February 19, 2009, after extended discussion and negotiation, the 
Legislature passed, and on February 20, 2009, the Governor signed, Senate Bill 
No. 2 (2009-2010 3d Ex. Sess.) (Senate Bill 3X 2), which revised the 2008 Budget 
Act in response to the fiscal emergency.  (Stats. 2009, 3d Ex. Sess. 2009-2010, 
ch. 2 (sometimes hereafter revised 2008 Budget Act).)  Section 36 of Senate Bill 
3X 2 added section 3.90 to the original 2008 Budget Act (Stats. 2008, ch. 268).  
Section 3.90, subdivision (a) provides in part:  “Notwithstanding any other 
provision of this act, each item of appropriation in this act . . . shall be reduced, as 
appropriate, to reflect a reduction in employee compensation achieved through the 
collective bargaining process for represented employees or through existing 
administration authority and a proportionate reduction for nonrepresented 
employees (utilizing existing authority of the administration to adjust 
compensation for nonrepresented employees) in the total amounts of $385,762,000 
from General Fund items and $285,196,000 from items relating to other funds.”  
As discussed below (post, at pp. 68-74), the amount of the reduction in 
appropriations for employee compensation set forth in section 3.90 reflected, 
among other proposed reductions, the reductions that the Governor proposed to 
achieve through the two-day-a-month furlough of state employees.7  Section 3.90, 
                                                                                                                                                              
(Footnote continued from previous page) 
decision in the present case, we have deferred further action in the CASE matter 
pending the finality of the present opinion. 
7 
In addition to the reductions in the appropriations for employee 
compensation that were attributable to furloughs, the reductions specified in 
section 3.90 also reflected the elimination of two state holidays and a revision of 
the method of calculating overtime — two other cost-saving measures proposed 
by the Governor but not imposed by the December 19, 2008, executive order.  
(See, post, at pp. 72-73.) 
 
13 
subdivision (a) also indicated the Legislature‟s intent to make similar reductions in 
employee compensation for the 2009-2010 fiscal year.8 
On the same date (Feb. 19, 2009) the Legislature enacted legislation 
amending the 2008 Budget Act (revising the budget for the 2008-2009 fiscal year), 
it also passed the initial version of the Budget Act of 2009 (Sen. Bill No. 1 (2009-
2010 3d Ex. Sess. (Senate Bill 3X 1), enacted as Stats. 2009, 3d Ex Sess. 2009-
2010, ch. 1), which set forth the budget for the 2009-2010 fiscal year (2009 
Budget Act).  The 2009 Budget Act included the reduced appropriations for state 
employee compensation proposed by the Governor, which reflected the savings 
generated by the two-day-a-month furlough plan, and included language in section 
3.90 of that act identical to language in the revised 2008 Budget Act, indicating 
that the reductions in employee compensation are to be achieved “through the 
collective bargaining process for represented employees or through existing 
administration authority and a proportionate reduction for nonrepresented 
employees (utilizing existing authority of the administration to adjust 
compensation for nonrepresented employees). . . .”  (Sen. Bill 3X 1, § 3.90, subd. 
(a).) 
The revised 2008 Budget Act and the initial 2009 Budget Act were signed 
into law on February 20, 2009, as part of a comprehensive budget package that 
included a number of proposed constitutional amendments that were to be put 
                                              
8  
A controversy exists concerning the interpretation of the language in the 
revised 2008 Budget Act that states the reduction in employee compensation is to 
be achieved “through the collective bargaining process for represented employees 
or through existing administration authority and a proportionate reduction for 
nonrepresented employees (utilizing existing authority of the administration to 
adjust compensation for nonrepresented employees).”  (Sen. Bill 3X 2, § 36.)  We 
explore that issue later in this opinion.  (Post, at pp. 68-74.) 
 
14 
before the voters at a special election to be held shortly thereafter.9  At that special 
election, held on May 19, 2009, the voters rejected most of the ballot propositions 
that were part of the budget package. 
                                              
9   
The Official Voter Information Guide for the May 19, 2009, Special 
Election contains a helpful overview (prepared by the Legislative Analyst‟s 
Office) of the then-current state budget problems and the resolution proposed by 
the February 2009 legislation.  (Voter Information Guide, Special Elec. (May 19, 
2009) Overview of the State Budget, pp. 8-9 (May 2009 Voter Guide).) 
 
The Legislative Analyst‟s overview states: 
 
“Recent State Budget Problems.  In recent years, state government has 
experienced major budgetary problems with the General Fund.  The state‟s budget 
problems have been due to a variety of factors — including large ups and downs 
in state revenues and the use of one-time solutions to support higher ongoing 
spending.  In late 2008, the state‟s budget problems got even worse as a result of 
the financial credit market crisis and the national recession.  By January 2009, it 
was projected that the state would face a $40 billion shortfall over 2008-09 and 
2009-10 if no corrective actions were taken. 
 
“February 2009 Budget Solutions.  In response, in February 2009, the 
Legislature and the Governor agreed on a budget package to bring the 2008-09 
and 2009-10 budgets back into balance.  With these changes, the state expects in 
2009-10 to bring in about $98 billion in revenues and spend about $92 billion.  
(The difference of about $6 billion between revenues and spending is being used 
to cover a year-end deficit in 2008-09 and build up a reserve account.)  This 
package included more than $40 billion in solutions. 
 
“Spending Reductions.  The package included about $15 billion in 
spending-related reductions.  The largest reductions related to kindergarten 
through twelfth grade schools, which experienced both reductions to core program 
funding and the deferral of payments to future years.  Reductions also included 
furloughing state workers, eliminating inflationary adjustments for many 
programs, and making other reductions in services. 
 
“Tax increases.  The package included about $12.5 billion in tax increases.  
Most of these higher taxes are the result of increased rates for the sales and use 
tax, vehicle license fee, and personal income tax. 
 
“Federal Funds.  The package also assumed receipt of more than $8 billion 
in federal funds from the recent economic stimulus law to help balance the budget. 
 
“Borrowing.  Finally, the package counted on $5 billion from the 
borrowing of future lottery profits. 
 
“Budget-Related Propositions.  As part of the February package, six 
(Footnote continued on next page) 
 
15 
After the May 19, 2009 election, the state‟s fiscal crisis continued to 
worsen.  On July 1, 2009, the Governor issued another executive order, instituting 
a third unpaid furlough day each month for state employees, to run from July 1, 
2009 to June 30, 2010.  (Governor‟s Exec. Order No. S-13-09 (July 1, 2009).) 
On July 24, 2009, the Legislature passed Assembly Bill No. 1 (2009-2010 
4th Ex. Sess.) (Assembly Bill 4X 1), which revised the 2009 Budget Act.  (Stats. 
2009, 4th Ex. Sess. 2009-2010, ch. 1.)  As enacted by the Legislature, Assembly 
Bill 4X 1 further reduced the appropriations for employee compensation and 
retained the same language regarding the manner in which the reductions were to 
be achieved as appeared in the revised 2008 Budget Act and the initial 2009 
Budget Act.  (Assem. Bill 4X 1, § 552 [amending § 3.90 of the 2009 Budget Act].)  
The Governor signed this bill into law on July 28, 2009.  The present litigation 
does not involve the validity of the third furlough day that was in effect from 
July 1, 2009 to June 30, 2010.   
The two-day-a-month furlough plan that began on February 1, 2009, and 
the subsequent third-day-a-month furlough plan that began on July 1, 2009, both 
terminated on June 30, 2010. 
On July 28, 2010 — a budget act for the 2010-2011 fiscal year not having 
been timely enacted and the state‟s serious budget problems continuing 
unabated — the Governor issued a new executive order, directing the DPA to 
implement a three-day-a-month furlough plan to begin on August 1, 2010, and to 
continue until “a 2010-11 budget is in place and the Director of the Department of 
Finance determines that there is sufficient cash to allow the State to meet its 
                                                                                                                                                              
(Footnote continued from previous page) 
propositions were placed on this ballot related to the budget. . . .”  (May 2009 
Voter Guide, supra, at pp. 8-9, italics added.) 
 
16 
obligations to pay for critical and essential services to protect public health and 
safety and to meet its payment obligations protected by the California Constitution 
and federal law.”  (Governor‟s Exec. Order No. S-12-10 (July 28, 2010) p. 2.)  
Prior to the first furlough day scheduled under the newly promulgated furlough 
plan, numerous employee organizations filed lawsuits in the Alameda Superior 
Court challenging the validity of the Governor‟s July 28, 2010, order.  
(Professional Engineers in California Government v. Schwarzenegger  
(No. RG1049800) and consolidated cases.)  On August 9, 2010, a judge of the 
Alameda Superior Court issued a temporary restraining order enjoining the 
Governor and other state officials from implementing the new executive order 
pending a hearing on the employee organizations‟ request for a preliminary 
injunction.  The Governor immediately appealed to the Court of Appeal from the 
trial court‟s ruling issuing the temporary restraining order, and sought a writ of 
supersedeas to stay the trial court‟s order pending resolution of the appeal.  After 
the Court of Appeal denied the stay, the Governor sought immediate review in this 
court.  On August 18, 2010, we granted the petition for review in that matter, 
deferred further action pending our resolution of the current proceeding, and 
stayed further superior court proceedings in that matter as well as the temporary 
restraining order that had been issued on August 9, 2010.  The current proceeding 
does not involve the validity of the Governor‟s July 28, 2010, executive order.  
II 
We now describe in somewhat greater detail the proceedings below. 
In each of the three Sacramento Superior Court cases, the petition filed by 
the employee organization sought (1) the issuance of a writ of mandate directing 
the Controller and the Governor not to implement the mandatory two-day-a-month 
unpaid furlough instituted by the Governor‟s December 19, 2008, executive order, 
and (2) a declaratory judgment stating that the executive order is invalid.  The 
 
17 
principal contention advanced in all three cases is that the Governor lacks 
authority to impose a mandatory unpaid furlough unilaterally — reducing the 
wages of the employees represented by the plaintiff employee organizations — 
and that such a measure may be adopted only by the Legislature.  Each petition 
asked the trial court to act expeditiously, before February 1, 2009, when the 
furloughs were scheduled to go into effect. 
The Governor and the DPA initially filed a demurrer to the petitions, 
arguing that the actions first should have been brought before the Public Employee 
Relations Board (PERB), and thereafter they filed an opposition to the petitions on 
the merits, relying (at that juncture) primarily on the contention that Government 
Code section 3516.5 provided the Governor with the authority to implement the 
furlough program in a fiscal emergency.10 
In contrast to the Governor and the DPA, the Controller, who also had been 
named as a defendant in each of the petitions, filed an answer concurring in 
plaintiffs‟ challenge to the Governor‟s executive order.  Like plaintiffs, the 
Controller maintained that the Governor lacks authority to reduce state employees‟ 
pay unilaterally through a mandatory furlough, arguing that only the Legislature 
possesses such authority. 
The trial court considered the matter on an expedited basis and, after 
conducting a single hearing, issued a ruling applicable to all three cases.  In its 
ruling, the court first overruled the demurrer to the petitions, concluding that the 
superior court properly could exercise jurisdiction over the actions.  Turning to the 
merits, the court then rejected plaintiffs‟ claim that the Governor and the DPA 
                                              
10  
Unless otherwise noted, all further statutory references are to the 
Government Code. 
 
18 
lacked authority to institute the challenged furlough plan.  In reaching its 
conclusion on the merits, the trial court relied primarily upon its interpretation of 
sections 19851 (a provision concerning workweek hours) and 19849 (a provision 
granting the DPA general authority to issue regulations “governing hours of work 
and overtime compensation”), as well as its determination that the applicable 
memoranda of understanding (MOU‟s) between the employee organizations in 
question and the state authorized the Governor and the DPA to take such action in 
a fiscal emergency.  As part of its ruling, the trial court explicitly ordered the 
Controller to comply with the Governor‟s furlough order.11 
 
Plaintiffs and the Controller filed timely appeals in the Court of Appeal.  
After the regular rounds of briefing were completed, that court issued an order 
consolidating the three cases for oral argument and decision, and shortly thereafter 
directed the parties to file supplemental briefs addressing a series of detailed 
questions.  After the rounds of supplemental briefing were completed, but before 
the Court of Appeal was prepared to set the consolidated matter for oral argument 
or issue a decision, we transferred the matter to this court (Cal. Const., art. VI, 
§ 12, subd. (a)), requested further supplemental briefing on two additional 
issues,12 and held oral argument on September 8, 2010. 
                                              
11 
In the course of its decision, the trial court noted that, at the hearing, 
counsel for SEIU had raised the claim that the Governor‟s order amounted to an 
unconstitutional impairment of contract.  Because this impairment-of-contract 
claim had not been raised in any of the petitions, the trial court declined to rule on 
that claim.  In the briefs filed in this court, a number of plaintiffs also advance an 
unconstitutional-impairment-of-contract claim, but because the impairment-of-
contract issue was not raised in any of the petitions and was not ruled upon by the 
trial court, we conclude the issue is not properly before us.   
12 
We requested supplemental briefing addressing the following questions: 
 
“1.  What effect, if any, does Government Code section 19996.22 — which 
provides in part that „[a]ny employee . . . who has been required, by the appointing 
(Footnote continued on next page) 
 
19 
III 
We begin with a brief overview of the general provisions of the California 
Constitution and the California statutes relating to state finances and the state 
budget. 
Under the California Constitution, the Legislature and the Governor share 
responsibility for the state‟s finances and its budgeting process.  The Governor is 
assigned the responsibility of submitting to the Legislature each year in early 
January a proposed balanced budget for the upcoming fiscal year (which runs from 
July 1 to June 30).  (See Cal. Const., art. IV, § 12, subd. (a) [“[w]ithin the first 10 
days of each calendar year . . .”].)  The Legislature considers the proposed budget, 
engages in negotiations among its members and with the Governor, and is 
obligated to pass a budget bill for the upcoming fiscal year “by midnight on June 
15 of each year.”  (Cal. Const., art. IV, § 12, subd. (c)(3).)  The Constitution 
further provides that the Legislature may not send to the Governor for 
consideration, and the Governor may not sign into law, a budget bill that does not 
provide for a balanced budget.  (Cal. Const., art. IV, § 12, subd. (f).)  After the 
                                                                                                                                                              
(Footnote continued from previous page) 
power, . . . to involuntarily reduce his or her worktime contrary to the intent of this 
article . . . may file a grievance with the department‟ — have on the validity of the 
Governor‟s December 19, 2008, executive order instituting a mandatory furlough 
on state employees? 
  
“2.  What effect, if any, does the provision of the revised 2008 Budget Act 
that reduced the appropriations for employee compensation for the 2008-09 fiscal 
year in an amount comparable to the savings sought to be achieved by the 
Governor‟s furlough order (Stats. 2009, 3d Ex. Sess. 2009-2010, ch. 2, § 36 (Sen. 
Bill 3X 2, § 36), passed by the Legislature and approved by the Governor on 
Feb. 20, 2009) have on (1) the validity of the Governor‟s executive order, and/or 
(2) the remedy, if any, to which the petitioning employee organizations may be 
entitled in these actions?”  
 
20 
Legislature acts, the Governor is authorized to reduce or eliminate one or more 
specific items of appropriation through exercise of the “line-item veto,” and those 
gubernatorial reductions take effect unless the Legislature by a two-thirds vote 
overrides the Governor‟s veto regarding a specific item.  (Cal. Const., art. IV, 
§ 10, subd. (e).)  The Constitution also specifies that the Controller, in approving 
payments from the state treasury, is authorized to make only those expenditures 
for which there is an available appropriation.  (Cal. Const., art. XVI, § 7.) 
The Constitution further provides that “[t]he Legislature may control the 
submission, approval, and enforcement of budgets and the filing of claims for all 
state agencies.”  (Cal. Const., art. IV, § 12, subd. (e).)  The Legislature has 
adopted statutes authorizing the Department of Finance to exercise general 
supervisory authority over the state‟s financial and business policies, including 
obtaining the necessary information to monitor expenditures and revenues during 
the fiscal year.  (§§ 13070, 13320, 13337.)  In addition, section 13337.5 provides 
that “[t]he annual Budget Act shall not provide for projected expenditures in 
excess of projected revenues” and further that “it is the intention of the Legislature 
that in the event, after enactment of the Budget Act, revised estimates of expected 
revenues or expenditures, or both, show that expenditures will exceed estimated 
revenues, expenditures should be reduced or revenues increased, or both, to ensure 
that actual expenditures do not exceed actual revenues for that fiscal year.” 
Until 2004, however, there was no specific provision establishing a 
procedure for dealing with a situation in which, in the course of a fiscal year, it 
became apparent that the expenditures originally anticipated and authorized under 
the existing budget substantially would exceed the estimated revenues that the 
state would obtain during the fiscal year. 
In the primary election held on March 2, 2004, a ballot measure was put 
before the voters that directly addressed the type of midyear fiscal emergency that 
 
21 
led to the executive order challenged in the present case.  That measure, appearing 
on the ballot as Proposition 58, proposed adding a new provision — article IV, 
section 10, subdivision (f) (hereafter article IV, section 10(f)) — to the California 
Constitution.  The voters approved the measure at that election, adding the 
provision to our state Constitution. 
Under article IV, section 10(f), if the Governor determines in the midst of a 
fiscal year that there is likely to be a substantial unanticipated budget deficit for 
that fiscal year, he or she may declare a fiscal emergency, call a special legislative 
session to deal with the emergency, and submit proposed legislation to address the 
problem.  The provision also specifies that if the Legislature fails to enact 
legislation within 45 days to address the fiscal emergency, the Legislature may not 
act on any other bill and cannot recess until it passes such legislation.13 
                                              
13  
Article IV, section 10(f) provides in full: 
 
“(1)  If, following the enactment of the budget bill for the 2004-05 fiscal 
year or any subsequent fiscal year, the Governor determines that, for that fiscal 
year, General Fund revenues will decline substantially below the estimate of 
General Fund revenues upon which the budget bill for that fiscal year, as enacted, 
was based, or General Fund expenditures will increase substantially above that 
estimate of General Fund revenues, or both, the Governor may issue a 
proclamation declaring a fiscal emergency and shall thereupon cause the 
Legislature to assemble in special session for this purpose.  The proclamation shall 
identify the nature of the fiscal emergency and shall be submitted by the Governor 
to the Legislature, accompanied by proposed legislation to address the fiscal 
emergency. 
 
“(2)  If the Legislature fails to pass and send to the Governor a bill or bills 
to address the fiscal emergency by the 45th day following the issuance of the 
proclamation, the Legislature may not act on any other bill, nor may the 
Legislature adjourn for a joint recess, until that bill or those bills have been passed 
and sent to the Governor. 
 
“(3)  A bill addressing the fiscal emergency declared pursuant to this 
section shall contain a statement to that effect.” 
 
22 
In the present case, on December 1, 2008, the Governor invoked the 
provisions of article IV, section 10(f), called a special session, and submitted 
proposed legislation.  The Legislature did not enact the Governor‟s proposed 
legislation but instead passed an alternative budget package on December 18, 
2008 — legislation that the Governor ultimately vetoed on January 6, 2009. 
On December 19, 2008, citing a worsening fiscal situation and maintaining 
that during the fiscal emergency special session “the Legislature failed to 
effectively address the unprecedented statewide fiscal crisis,” the Governor issued 
the executive order at issue in this case, directing implementation of a two-day-a-
month unpaid furlough of state workers employed in the executive branch, to 
begin on February 1, 2009, and run through June 30, 2010.  Thereafter, on 
February 19, 2009, the Legislature adopted, and on February 20, 2009, the 
Governor signed, a revised 2008 Budget Act (Stats. 2009, 3d Ex. Sess. 2009-2010, 
ch. 2) and an initial 2009 Budget Act (id., ch. 1), which reduced the appropriations 
for state employee compensation to a level proposed by the Governor — a level 
that included reductions attributable to the furlough program. 
In light of this chronology, we believe it is useful to analyze the issues 
presented in this case by posing two broad questions.  First, on December 19, 
2008, did the Governor possess authority to impose unilaterally a mandatory two-
day-a-month unpaid furlough for state employees by issuing an executive order?  
Second, did the Legislature‟s enactment in February 2009 of the revised 2008 
Budget Act and the initial 2009 Budget Act affect the validity of the Governor‟s 
executive order or the remedy that the employee organizations may be entitled to 
obtain in the present proceeding?  We begin our analysis with the first of these two 
questions. 
 
23 
IV 
Plaintiffs contend the Governor lacked the authority to impose unilaterally, 
through his December 19, 2008 executive order, a mandatory unpaid furlough on 
state workers.  Plaintiffs maintain it was well understood at the time the Governor 
issued this executive order that such action could be undertaken only by, or with 
the concurrence of, the Legislature. 
A 
Plaintiffs first point to article IV, section 10(f), noting that this provision 
clearly contemplates that, in the event of a midyear fiscal emergency, the 
Governor can propose remedial measures, but that such proposals will take effect 
only if adopted by the Legislature and signed into law.  Plaintiffs emphasize in this 
regard that resolution of a serious budget problem invariably implicates a myriad 
of fundamental policy decisions and tradeoffs, and they maintain that article IV, 
section 10(f) accurately recognizes that under the traditional separation-of-powers 
principles embodied in the California Constitution (art. III, § 3) it is for the 
Legislature to fashion an appropriate solution to a fiscal emergency through the 
passage of legislation — legislation that is then subject to the Governor‟s veto 
authority. 
It is true that article IV, section 10(f) was proposed and adopted in 2004 in 
response to a perceived need for a new procedure to deal with midyear fiscal 
emergencies, and that this provision recognizes that ordinarily the Governor will 
be unable to solve the problem alone and that a solution to such a fiscal emergency 
generally will require the Legislature‟s enactment of new legislation.  The 
circumstance that article IV, section 10(f) recognizes that the Legislature 
ordinarily will play a key role in resolving a midyear state budget crisis, however, 
does not signify that the Governor lacks authority to undertake any unilateral 
actions to conserve funds and cut state expenditures in response to a fiscal 
 
24 
emergency.  No one argues, for example, that, in response to a midyear fiscal 
emergency, the Governor could not delay discretionary spending on public works 
projects or could not (at least with regard to those executive employees under his 
direct control) freeze hiring (leaving unfilled those vacant positions for which 
funds had been appropriated).  In the present case the Governor essentially is 
arguing that instituting a mandatory unpaid furlough of state employees, similar to 
not filling vacancies, is one of the measures that he lawfully could institute 
unilaterally. 
B 
Plaintiffs respond that there is clear and abundant evidence that, prior to the 
Governor‟s issuance of the initial furlough order on December 19, 2008, it was 
well understood that a mandatory furlough of state employees (encompassing a cut 
in employee wages) could not be imposed by the Governor unilaterally.  Initially, 
plaintiffs point out that the Governor himself, in his November 6, 2008, letter to 
state employees, explicitly recognized the need for legislative concurrence when 
he first announced his intention to propose a one-day-a-month unpaid furlough of 
state employees to deal with the state‟s fiscal crisis.  Moreover, plaintiffs also note 
that in the comprehensive budget legislation submitted by the Governor to the 
Legislature on November 6, 2008, he proposed that it adopt new statutory 
provisions that would direct the Department of Finance and the DPA to implement 
such a furlough.  Further, plaintiffs observe that when, on December 1, 2008, the 
Governor formally declared a fiscal emergency pursuant to article IV, 
section 10(f) and called a special session of the Legislature to address that 
emergency, he again submitted a comprehensive budget proposal that included the 
same statutory provisions by which the Legislature would mandate the 
implementation of the furlough program.  Plaintiffs maintain that all of these 
actions constituted an unambiguous acknowledgement on the part of the Governor 
 
25 
that legislative action was required before a furlough could be imposed.  Finally, 
plaintiffs point out that the present Governor is not the first California governor to 
recognize that, under existing California law, the Governor lacks the authority 
unilaterally to reduce state employee earnings even in a fiscal emergency.  
Plaintiffs note that in the early 1990‟s, in response to a similar state fiscal 
emergency, Governor Wilson had proposed a ballot measure that would have 
afforded the Governor of California at least some unilateral authority to act in this 
area — a measure that failed to win the support of a majority of the voters at the 
November 1992 election.14 
Of course, neither the position taken by the Governor in his November 6, 
2008, letter to state employees, nor his proposal that the Legislature adopt 
provisions directing the implementation of a furlough, constitutes a legally 
controlling determination that the Governor lacks authority to impose such a 
furlough unilaterally.  In defending his December 19, 2008, executive order in the 
present litigation, the Governor, noting the absence of any definitive judicial 
                                              
14  
The 1992 initiative measure — the Government Accountability and 
Taxpayer Protection Act of 1992 (GATPA) —addressed a number of perceived 
structural problems in the state-budget process.  The measure, which appeared on 
the November 1992 ballot as Proposition 165, would have authorized the 
Governor to declare a midyear fiscal emergency “whenever at the end of any fiscal 
quarter revenues are 3 percent less than forecast, expenses are 3 percent more than 
forecast, or revenues are 1 1/2 percent less and expenses are 1 1/2 percent more 
than forecast.”  (League of Women Voters v. Eu (1992) 7 Cal.App.4th 649, 653-
654 [describing Prop. 165].)  In addition to authorizing the Governor to reduce 
other expenses unilaterally during a fiscal emergency, the measure provided that 
“[d]uring a state of fiscal emergency, the Governor would be empowered to 
reduce salaries of state employees not covered by a collective bargaining 
agreement by up to 5 percent or impose equivalent furloughs.  (GATPA, § 5.)” (Id. 
at p. 654)  As noted above, the voters rejected Proposition 165 at the November 
1992 election. 
 
26 
ruling, advances a number of grounds to support his claim that he possesses the 
unilateral authority to impose such a mandatory furlough. 
C 
The Governor initially maintains that his authority to institute unilaterally 
the challenged furlough program derives from the broad language of article V, 
section 1 of the California Constitution, which provides in full:  “The supreme 
executive power of this State is vested in the Governor.  The Governor shall see 
that the law is faithfully executed.”  The Governor contends the power to furlough 
state employees in the face of a fiscal emergency is an inherent part of his 
constitutional authority as the state‟s chief executive.  
In advancing this argument, however, the Governor fails to cite any judicial 
decision or other supporting authority holding or suggesting that the power under 
the California Constitution to establish or revise the terms and conditions of state 
employment, even in a fiscal emergency, resides in the Governor (or any other 
executive officer or entity) rather than in the Legislature.  To the contrary, the 
following is well established:  (1) Under the California Constitution it is the 
Legislature, rather than the Governor, that generally possesses the ultimate 
authority to establish or revise the terms and conditions of state employment 
through legislative enactments, and (2) any authority that the Governor or an 
executive branch entity (such as the DPA) is entitled to exercise in this area 
emanates from the Legislature‟s delegation of a portion of its legislative authority 
to such executive officials or entities through statutory enactments.  (See, e.g., 
Pacific Legal Foundation v. Brown (1981) 29 Cal.3d 168, 181-196; State Trial 
Attorneys’ Assn. v. State of California (1976) 63 Cal.App.3d 298, 303; accord, 
Marine Forests Society v. California Coastal Com. (2005) 36 Cal.4th 1, 31-42 
 
27 
[under the Cal. Const., the Legislature, not the Governor, possesses general 
authority to appoint executive officers].)15   As this court explained in Pacific 
Legal Foundation v. Brown, supra, 29 Cal.3d 168, 188: “[T]he . . . authority to set 
salaries [of public employees] has traditionally been viewed as a legislative 
function, with ultimate authority residing in the legislative body.”  Furthermore, as 
we discuss in the next part of this opinion, it is similarly well established that the 
foregoing general principle applies equally in a fiscal emergency.  Accordingly, 
the Governor‟s authority to issue the December 19, 2008, furlough order cannot be 
supported simply by reference to the broad language of article V, section 1 of the 
Constitution. 
D 
The Governor alternatively contends that his authority to institute the state 
employee furlough program arises from a number of statutory provisions, 
                                              
15  
A limitation on the Legislature‟s constitutional authority over the terms and 
conditions of state employment is imposed by the civil service provisions of article 
VII, sections 1 through 4, of the California Constitution, which grant the State 
Personnel Board the authority to enforce and administer the directives of the civil 
service statutes.  (See State Personnel Bd. v. Department of Personnel Admin. 
(2005) 37 Cal.4th 512.)  This court‟s decision in Pacific Legal Foundation v. 
Brown, supra, 29 Cal.3d 168, explains, however, that the Legislature, rather than 
the State Personnel Board (or, now, the DPA), possesses the ultimate authority 
over all of the terms and conditions of employment other than those relating to the 
civil service “ „merit principle,‟ ” including terms and conditions relating to the 
wages and hours of state employees.  (Id. at pp. 181-193.)  Quoting from the ballot 
argument supporting the measure that added the civil service provision to the 
California Constitution in 1934, in Pacific Legal Foundation v. Brown we 
observed:  “Having established [the] „merit principle‟ as a matter of constitutional 
law, and having established a nonpartisan Personnel Board to administer this merit 
principle, the constitutional provision left the Legislature with a ‘free hand’ to 
fashion ‘laws relating to personnel administration for the best interests of the 
State.’ ” (Id. at p. 184, fn. omitted, italics added.)   
 
28 
maintaining in this regard that there is no judicial decision in point holding the 
Governor is not statutorily authorized to impose such a furlough program, 
particularly in the context of a fiscal emergency.  Although there is no California 
case precisely in point, two Court of Appeal decisions that arose out of a state 
fiscal emergency comparable to the circumstances that engendered the executive 
order in the present case — Department of Personnel Administration v. Superior 
Court (Greene) (1992) 5 Cal.App.4th 155 (Greene) and Tirapelle v. Davis (1993) 
20 Cal.App.4th 1317 (Tirapelle) — provide considerable guidance regarding the 
issues now before us.  As we shall see, the decision in Greene dealt with proposed 
changes to the terms and conditions of employment of represented employees (that 
is, those state employees who are covered by the Ralph C. Dills Act (§§ 3512-
3524 (hereafter the Dills Act))16 and who have chosen an exclusive representative 
to appear on their behalf in negotiations with the state), whereas the decision in 
Tirapelle concerned proposed changes affecting nonrepresented employees (that 
is, all other state employees).  Because of the relevance of these two decisions, we 
believe it is useful to review them in some detail before addressing the specific 
statutory provisions relied upon by the Governor. 
1 
The litigation in Greene, 5 Cal.App.4th 155, arose out of what the Court of 
Appeal described as “an unprecedented budgetary crisis at the outset of fiscal year 
1991-1992, with expenditures projected to exceed revenues by more than $14 
billion.”  (Id. at p. 163.)  In response to this fiscal situation, the Budget Act of 
                                              
16  
When initially enacted in 1977, this legislation governing the collective 
bargaining process between certified employee organizations and the state was 
referred to as the State Employer-Employee Relations Act (SEERA) (Former 
§ 3524, as enacted Stats. 1977, ch. 1159, § 4, p. 3760), but in 1986 it was renamed 
the Ralph C. Dills Act.  (§ 3524, as amended by Stats. 1986, ch. 103, § 1, p. 237.) 
 
29 
1991 (1991 Budget Act), as enacted by the Legislature and signed by the 
Governor, included a provision that imposed a reduction of $351 million in the 
appropriations for employee compensation.  The provision, however, did not 
specify how that reduction in employee compensation was to be achieved.17 
After the 1991 Budget Act was enacted, the DPA (in its role as the 
bargaining representative for the state) and various employee organizations 
representing state employees met and conferred in an attempt to reach an 
agreement on salaries and other terms and conditions of employment.  At the time 
of those negotiations, the prior MOU‟s — that is, the public sector equivalent of 
collective bargaining agreements — between these employee organizations and 
the state had expired, but the parties continued to negotiate in good faith for 
several months in the hope of reaching agreement on new memoranda of 
understanding.  By early November 1991, however, the parties had reached an 
impasse in negotiations, and on November 5, 1991, the DPA notified the 
employee organizations that, although the state would continue to maintain the 
status quo as to many of the terms and conditions of employment set forth in the 
expired MOU‟s, with regard to two items — salaries and health benefits — the 
state, beginning on November 12, 1991, unilaterally would implement the terms 
                                              
17 
The relevant provision of the 1991 Budget Act states:  “Notwithstanding 
any other provision of this act, each item of appropriation in this act shall be 
reduced, as appropriate, to reflect a $351,000,000 reduction in General Fund 
employee compensation items.  [¶]  The Director of Finance shall allocate the 
necessary reductions to each item of appropriation to accomplish the reductions 
required by this section.  [¶]  This section shall not apply to appropriations made 
by Items 0110-001-001 [appropriations to the Senate], 0120-011-001 
[appropriations to the Assembly], and 0160-001-001 [appropriations to the 
Legislative Counsel Bureau] of Section 2.00 of this act.”  (Stats. 1991, ch. 118, 
§ 3.90, p. 1277.) 
 
30 
set forth in its final offer, cutting the current salaries of the state employees 
represented by the employee organizations by 5 percent and reducing the 
employer‟s contribution rates for health care premiums for such employees to the 
amounts specified in the state‟s final offer. 
Two employee organizations immediately challenged in superior court the 
DPA‟s actions, and the trial court, after a hearing, concluded that under the 
governing statutory provisions the DPA lacked authority unilaterally to reduce 
either wages or health benefits of represented state employees.  With regard to 
wages, the trial court held that section 19826, subdivision (b) expressly precluded 
the DPA from unilaterally reducing the wages of represented employees.  With 
regard to health benefits, the trial court concluded that, in the absence of an 
applicable MOU, the regular formula for state contributions to health care 
premiums set forth in section 22825.1 applied and precluded the state from 
decreasing its contribution rates. 
On appeal, the Court of Appeal agreed with the trial court‟s determination 
that the DPA lacked authority unilaterally to reduce the wages of represented 
employees, but disagreed with the trial court‟s conclusion with respect to health 
benefits. 
In analyzing the validity of the DPA‟s action regarding wages, the appellate 
court in Greene, supra, 5 Cal.App.4th 155, initially explained that, in contrast to 
most other collective bargaining statutes, the Dills Act is a “ „supersession 
statute‟ ” (Greene, at p. 174), meaning that when a provision of an MOU conflicts 
with an otherwise applicable statutory provision governing the terms and 
conditions of employment, the provision of the MOU generally “supersedes” or 
prevails over the terms of the otherwise applicable statute, without any need for 
 
31 
further legislative approval of the conflicting MOU provision. (§ 3517.6)18  
Because at that time the Dills Act contained no provision specifically addressing 
the question of what effect the expiration of an MOU would have on the terms and 
conditions set forth in the MOU, the court in Greene concluded that — once an 
MOU had expired — the terms and conditions of that MOU were no longer in 
force, and consequently that “[a]ny of the numerous statutory provisions specified 
in section 3517.6 which were superseded by conflicting terms in a subsisting 
MOU are no longer superseded once the MOU expires and those provisions then 
go into effect.”  (Greene, supra, at p. 176.)19 
                                              
18  
As the court explained in Greene:  “Prior to the enactment of the Dills Act 
in 1977, state employees‟ wages, hours, and working conditions were determined 
by numerous provisions of the Government Code.  For example, former section 
18001 (now § 19824 . . .) governed the frequency of pay, former section 18025 
(now § 19853 . . .) governed state holidays and former section 18854 (now 
§ 19832 . . .) governed merit salary adjustments.  The Dills Act, in section 3517.6, 
now expressly permits DPA and the state employee unions to supersede the above 
statutory provisions and more than 120 others governing state employees‟ wages, 
hours and working conditions by agreeing to MOU‟s which conflict with these 
provisions.”  (Greene, supra, 5 Cal.App.4th at p. 175.) 
19  
Under other collective bargaining statutes, the expiration of a collective 
bargaining agreement or an MOU has a different effect.   
 
Under the provisions of the National Labor Relations Act governing the 
collective bargaining process in the private sector (29 U.S.C. § 158 et seq.) and 
under the provisions of the California statutory schemes governing the collective 
bargaining or meet-and-confer process between local governments and their 
employees (§§ 3500-3510 [Meyers-Milias-Brown Act]) and between school 
districts and their employees (§§ 3540-3549.3 [Educational Employment Relations 
Act]), when a collective bargaining agreement or MOU expires the parties 
generally are required to maintain the status quo under the terms and conditions of 
the expired agreement during the period in which the parties continue to bargain in 
good faith on a new agreement, but once the parties reach an impasse in 
negotiations the employer generally is permitted unilaterally to implement its 
“last, best offer” with regard to particular terms and conditions of employment.  
(Greene, supra, 5 Cal.App.4th at pp. 188-189 [citing cases].) 
(Footnote continued on next page) 
 
32 
Because in that case the MOU‟s of the affected employee organizations had 
expired, the Court of Appeal in Greene, supra, 5 Cal.App.4th 155, looked to the 
terms of the general statute concerning the DPA‟s authority with respect to the 
salaries of state employees — section 19826 — to determine whether the DPA had 
authority, under the circumstances presented, unilaterally to reduce the salaries of 
the employees in question. 
The court in Greene, supra, 5 Cal.App.4th 155, pointed out that section 
19826 draws a clear distinction between the DPA‟s authority with regard to 
represented employees  as contrasted with its authority with regard to 
nonrepresented employees.  With regard to nonrepresented employees, the DPA, 
under section 19826, subdivision (a) is authorized to “establish and adjust salary 
ranges for each class of position in the state civil service,” but with regard to 
represented employees, section 19826, subdivision (b) provides that 
“[n]otwithstanding any other provision of law, the department shall not establish, 
adjust, or recommend a salary range for any employees in an appropriate unit 
where an employee organization has been chosen as the exclusive representative 
pursuant to Section 3520.5.”20 
                                                                                                                                                              
(Footnote continued from previous page) 
 
As we explain below (post, pp. 61-63), several years after the decision in 
Greene, supra, 5 Cal.App.4th 155, the Dills Act was amended to change the rules 
that apply upon expiration of an MOU.  (See § 3517.8, enacted by Stats. 2000, 
ch. 879, § 2.)  The decision in Greene, however, rested upon the provisions of the 
Dills Act that were in effect at the time of that decision. 
20  
At the time Greene was decided, section 19826 provided in full: 
 
“(a)  The [DPA] shall establish and adjust salary ranges for each class of 
position in the state civil service subject to any merit limits contained in 
Article VII of the California Constitution.  The salary range shall be based on the 
principle that like salaries shall be paid for comparable duties and responsibilities.  
In establishing or changing such ranges consideration shall be given to the 
(Footnote continued on next page) 
 
33 
The court in Greene concluded that “[t]he plain language of section 19826 
supports the respondent court‟s conclusion the DPA may not unilaterally decrease 
salaries for represented employees.”  (Greene, supra, 5 Cal.App.4th at p. 174.)  
Further, after reviewing the structure and legislative history of the Dills Act, the 
court explained:  “Given that this statute denies DPA the power unilaterally to set 
salaries, the Legislature must have intended that unresolved wage disputes return 
to the Legislature for final determination.” (Greene, at p. 182.) 
The DPA argued in that case that it was unreasonable to interpret the 
relevant statutes to preclude the DPA from acting unilaterally with regard to wages 
when a reduced budget appropriation (triggered by a large projected budget 
shortfall) created a need to reduce wages and when the parties had bargained to 
                                                                                                                                                              
(Footnote continued from previous page) 
prevailing rates for comparable service in other public employment and in private 
business.  The department shall make no adjustments which require expenditures 
in excess of existing appropriations which may be used for salary increase 
purposes.  The department may make a change in salary range retroactive to the 
date of application for such change. 
 
“(b)  Notwithstanding any other provision of law, the department shall not 
establish, adjust, or recommend a salary range for any employees in an appropriate 
unit where an employee organization has been chosen as the exclusive 
representative pursuant to Section 3520.5. 
 
“(c)  On or before January 10 of each year, the department shall submit to 
the parties meeting and conferring pursuant to Section 3517 and to the Legislature, 
a report containing the department‟s findings relating to the salaries of employees 
in comparable occupations in private industry and other governmental agencies. 
 
“(d)  If the provisions of this section are in conflict with the provisions of a 
memorandum of understanding reached pursuant to Section 3517.5, the 
memorandum of understanding shall be controlling without further legislative 
action, except that if such provisions of a memorandum of understanding require 
the expenditure of funds, the provisions shall not become effective unless 
approved by the Legislature in the annual Budget Act.”  (Stats. 1983, ch. 1258, 
§ 1.4, pp. 4979-4980.) 
 
34 
impasse over the wage issue.  The court in Greene explained, however:  “[G]iven 
that DPA‟s and the unions‟ authority to set salaries derives from a legislative 
delegation, it is not at all absurd that the Legislature would reserve its authority to 
act in the event of a stubborn wage dispute. . . .  Considering also the highly 
political nature of this dispute, it makes further sense that it will be ultimately 
resolved in the political branch.  Our conclusion is consistent with the Dills Act, 
which represents only a limited delegation of the Legislature‟s salary-setting 
function, and includes numerous provisions suggesting the Legislature intended to 
retain final determination of state salaries.”  (Greene, supra, 5 Cal.App.4th at 
p. 182.)  Finally, rejecting the DPA‟s suggestion that the conclusion reached by 
the Court of Appeal “shuts out the Governor (i.e., DPA) from the process of 
establishing state salaries” (ibid.), the court in Greene pointed out that “[t]he 
Governor retains his veto power over any subsequent wage legislation.”  (Ibid.) 
At the same time the Court of Appeal upheld the trial court‟s determination 
that the DPA lacked authority, even at impasse, to reduce unilaterally the wages of 
represented employees, the appellate court reached a contrary conclusion 
regarding the validity of the DPA‟s proposed reductions in employer contributions 
to health care premiums.  As noted, the trial court had concluded that, in the 
absence of an applicable MOU, the state employer‟s contributions to health care 
premiums were governed by section 22825.1, the general statute prescribing the 
amount of employer contributions in the absence of a conflicting MOU.  The 
Court of Appeal, however, concluded that section 22825.15 — a narrower, more 
specific statutory provision enacted “during the height of the 1991-1992 budget 
crisis” and sent to the Governor as part of an urgency measure just days before the 
Legislature sent him the 1991 Budget Act (Greene, supra, 5 Cal.App.4th at 
p. 190) — was intended to apply in these circumstances, and that under this statute 
the contribution rates for health care premiums regarding represented employees 
 
35 
were to be determined through “ „the collective bargaining process.‟ ”  (Ibid.)  
Furthermore, the Court of Appeal found that, in light of the specific context in 
which section 22825.15 was enacted, the term “collective bargaining process” as 
used in that statute properly should be interpreted to permit the DPA, after the 
parties have bargained to impasse, to implement its last, best, and final offer.  
(Greene, at p. 191 [“the Legislature intended that the issue of health premium 
contribution rates would be resolved by DPA, through negotiations, if possible, 
but failing that, through unilateral action”].) 
In rejecting the trial court‟s conclusion that the two potentially applicable 
statutes should be harmonized by interpreting the provisions of section 22825.15 
to permit the parties to negotiate contribution rates but, failing agreement, to 
require the state to comply with the ordinarily applicable contribution rates set 
forth in section 22825.1, the Court of Appeal observed that section 22825.15 
“contains undebatable evidence the Legislature intended it to supersede the 
provisions of section 22825.1.”  (Greene, supra, 5 Cal.App.4th at p. 192.)  
Moreover, the Court of Appeal explained that in view of the context in which 
section 22825.15 was adopted, the result produced by the trial court‟s reasoning 
could not have been intended.  The court in Greene stated in this regard: “Given 
that section 22825.15 was enacted as urgency legislation to address the $14 billion 
budget shortfall, it is inconceivable the Legislature intended to have the parties 
engage in collective bargaining only to have the most favorable [health care 
premium contribution] formula [from the employees‟ perspective] apply in the 
absence of an agreement.”  (Greene, at p. 192.) 
Accordingly, the Court of Appeal in Greene, supra, 5 Cal.App.4th 155, 
reversed the judgment rendered by the trial court insofar as it restrained the DPA 
from changing the state‟s contribution to the health care premiums of represented 
employees, but affirmed the judgment insofar as it restrained the DPA from 
 
36 
unilaterally implementing the proposed 5 percent pay cut for represented 
employees. 
2 
The Court of Appeal‟s decision in Tirapelle, supra, 20 Cal.App.4th 1317, 
like its decision in Greene, supra, 5 Cal.App.4th 155, arose in the wake of the 
state‟s 1991 fiscal emergency and the enactment of the provision in the 1991 
Budget Act that reduced the appropriations for state employee compensation by a 
specified amount but did not direct how that reduction should be achieved.  (See 
ante, at p. 29, fn. 17.)  Unlike Greene, however, Tirapelle involved the validity of 
a 5 percent salary reduction that the DPA proposed to apply to nonrepresented 
state employees — that is, state employees not covered by the collective 
bargaining provisions of the Dills Act.  Thus the validity of the DPA‟s action did 
not call for interpretation or application of the provisions of the Dills Act, but 
rather turned on the proper interpretation and application of the DPA‟s authority 
with regard to nonrepresented employees. 
The legal proceeding in Tirapelle, supra, 20 Cal.App.4th 1317, resulted 
from a conflict between the DPA and the Controller.  At the outset of the 1991-
1992 fiscal year, the DPA announced that a 5 percent salary reduction for certain 
nonrepresented state employees would take effect immediately.  The Controller 
initially implemented those reductions, but in September 1991 announced he 
would cease implementing them and would repay the affected employees the sums 
that previously had been withheld, based upon his determination that the DPA 
lacked authority to impose the salary reductions.  The DPA responded by filing the 
underlying action in Tirapelle, seeking a writ of mandate to compel the Controller 
to implement the salary reductions.  A number of employee organizations 
 
37 
intervened, supporting the Controller‟s action.21  After holding a hearing, the trial 
court granted the relief sought by the DPA, and the Controller and the intervening 
employee organizations appealed. 
On appeal, after carefully reviewing the respective roles played by the 
Department of Finance, the DPA, and the Controller (Tirapelle, supra, 20 
Cal.App.4th 1317, 1320-1324, 1327-1335), the Court of Appeal addressed the 
principal contention advanced by the Controller and the employee organizations: 
that the DPA, in imposing an across-the-board 5 percent reduction in salaries for 
nonrepresented employees, had exceeded its authority under section 19826, 
subdivision (a) to establish and adjust the salaries of nonrepresented employees.22 
Earlier in its opinion, the court in Tirapelle, supra, 20 Cal.App.4th 1317, 
explained that because the 1991 Budget Act had reduced the appropriations for 
state employee compensation without explicitly directing how such reductions 
should be implemented, the DPA was confronted with a difficult choice.  The 
court observed:  “There are limited means by which employee compensation can 
be reduced so as to stay within employee compensation budget allotments.  The 
available means fall into the broad categories of reducing the size of the work 
force, reducing the compensation payable on a per-employee basis, or some 
                                              
21  
The nonrepresented employees whose salaries were at issue in Tirapelle, 
supra, 20 Cal.App.4th 1317, were managerial and supervisory employees.  
Although excluded from collective bargaining under the Dills Act, such 
employees are permitted under other statutory provisions to form employee 
organizations that may represent them in employment relations with the state.  
(§ 3525 et seq. [Bill of Rights for State Excluded Employees].)  In light of these 
provisions, the Court of Appeal in Tirapelle agreed with the trial court that it was 
appropriate to permit the employee organizations to intervene on behalf of their 
members.  (Tirapelle, at p. 1327, fn. 14.) 
22  
The version of section 19826, subdivision (a) then in effect is set forth in 
full, ante, at pages 32-33, footnote 20. 
 
38 
combination thereof.”  (Tirapelle, at p. 1324.)  The court then explained:  “The 
DPA asserts that the employee compensation allotment reductions of the Budget 
Act of 1991 raised the specter of significant employee layoffs.  It therefore 
determined to attempt to reduce salaries in order to minimize the need for layoffs.  
The salary reduction target chosen by the DPA was 5 percent per employee.”  
(Ibid.) 
In challenging the validity of the DPA‟s action in light of the provisions of 
section 19826, subdivision (a) the Controller asserted, among other contentions, 
that “the DPA took its salary reduction actions out of a general concern for the 
state‟s fiscal condition and that the state‟s fiscal condition is a matter for the 
Legislature rather than the DPA to resolve.”  (Tirapelle, supra, 20 Cal.App.4th at 
p. 1336.)  In responding to this argument, the court in Tirapelle explained:  “In 
1945, when public employee salaries were determined by the State Personnel 
Board, former section 18850, the predecessor to section 19826, included the 
state‟s financial condition in the list of factors to be considered in setting salaries. 
[Citation.]  That factor was deleted from former section 18850 in 1949.  [Citation.]  
We may assume for purposes of argument that a general concern over the state‟s 
financial condition is not an appropriate factor for the DPA to consider but such an 
assumption does not advance the position of the Controller or the interveners.  
Here, the DPA was concerned with specific legislative reductions of the allotments 
and appropriations available for employee compensation and that is a matter that 
the DPA certainly must consider.”  (Id. at pp. 1336-1337, fn. 25, italics added.) 
One of the intervener employee organizations in Tirapelle argued 
alternatively that “the power to establish and adjust salary ranges granted to the 
DPA by section 19826, subdivision (a), does not include the authority to adjust 
salaries within the ranges thus set,” and therefore that the DPA lacked authority to 
reduce the salaries of those employees whose prior salary would be within the new 
 
39 
range established by the DPA.  (Tirapelle, supra, 20 Cal.App.4th at p. 1342.)  The 
court in Tirapelle emphatically rejected this contention, noting that although salary 
levels for state employees have been set by long-standing practice as a range, the 
DPA traditionally has possessed and exercised authority to establish and adjust 
salaries within such ranges.  (Id. at pp. 1342-1343.) 
In sum, the Court of Appeal in Tirapelle, supra, 20 Cal.App.4th 1317, 
concluded that the Controller and interveners had failed to establish a lawful basis 
for the Controller‟s blanket refusal to implement the DPA‟s 5 percent salary 
reductions with regard to exempt and nonrepresented state employees.  
Accordingly, the court in Tirapelle affirmed the trial court‟s judgment in favor of 
the DPA.23 
3 
Although the circumstances underlying the decisions in Greene and 
Tirapelle differ in a number of respects from those present in the case now before 
us, those decisions nonetheless provide useful analytical guidance for our 
                                              
23  
Although the Court of Appeal in Tirapelle, supra, 20 Cal.App.4th 1317, held 
that the Controller‟s blanket refusal to implement the DPA salary reductions for 
nonrepresented employees was improper, at the same time the court cautioned that it 
was “unnecessary, and indeed unwarranted, for [the appellate court] to determine 
whether with respect to any particular department, agency, or employee the DPA 
has exceeded its authority.”  (Id. at p. 1341.)  The court explained in this regard:  
“The precise limits of the DPA‟s discretion, and the manner in which it must be 
exercised, cannot be determined in the abstract without reference to a specific 
department or agency or, in fact, to a specific employment position.  The grant of 
discretionary authority to the DPA is general in nature and it can certainly be limited 
or circumscribed in its exercise by specific provisions of law applicable to an 
employing power.  Accordingly, the nature of the DPA‟s approval authority is not 
necessarily uniform throughout the state, but may vary in accordance with the 
amount of supervisory authority granted or denied to specific departments and 
agencies.”  (Id. at pp. 1340-1341, fns. omitted.) 
 
40 
resolution of the instant dispute.  First, both of these appellate decisions 
demonstrate that, even in a fiscal emergency, the question whether the Governor 
or the DPA possesses the authority unilaterally to alter the wages or other terms 
and conditions of employment of state employees depends upon a close and 
careful interpretation of the applicable statutory provisions.  Second, the decision 
in Greene makes clear that, particularly with respect to represented state 
employees, the Legislature has demonstrated a special interest in retaining 
(through the budget process or otherwise) ultimate control over the salary and 
wages of such employees.  Third, the decisions in both Greene and Tirapelle 
reveal that legislative provisions contained within a budget act (or in bills 
accompanying or in close proximity to that act) often provide the key to 
determining how reductions in employee compensation mandated by a budget act 
must or may be implemented. 
We shall refer to the Greene and Tirapelle decisions in discussing a number 
of contentions advanced by the parties. 
V 
As noted above, the Governor contends that his executive order imposing a 
mandatory furlough on state employees is supported by several statutory 
provisions.  In his initial opposition filed in the trial court, the Governor relied 
primarily upon section 3516.5 (a provision of the Dills Act), and less directly upon 
sections 19851, subdivision (a) and 19849 (which, respectively, set forth (1) the 
general state policy with regard to the workweek of state employees, and (2) the 
authority of the DPA to issue general regulations relating to hours of work and 
overtime).  In upholding the validity of the Governor‟s action, the trial court relied 
primarily upon sections 19851, subdivision (a) and 19849.  Accordingly, we turn 
first to those provisions and then discuss section 3516.5. 
 
41 
A 
Section 19851, subdivision (a) reads in full:  “It is the policy of the state 
that the workweek of the state employee shall be 40 hours, and the workday of 
state employees eight hours, except that workweeks and workdays of a different 
number of hours may be established in order to meet the varying needs of the 
different state agencies.  It is the policy of the state to avoid the necessity for 
overtime work whenever possible.  This policy does not restrict the extension of 
regular working-hour schedules on an overtime basis in those activities and 
agencies where it is necessary to carry on the state business during a manpower 
shortage.” 
It is somewhat ironic that both the Governor and plaintiffs contend the first 
sentence of section 19851, subdivision (a) supports their diametrically opposed 
positions in this case.  As we explain, we conclude that the statute, properly 
understood, does not support either party‟s position, but instead simply is not 
relevant to the type of mandatory unpaid furlough program at issue in the present 
proceeding. 
The initial sentence of section 19851, subdivision (a) establishes a general 
state policy of a 40-hour workweek and an eight-hour day, but also provides that 
“workweeks and workdays of a different number of hours may be established in 
order to meet the varying needs of the different state agencies.”  Contrary to the 
Governor‟s argument, in our view the plain language of the provision cannot 
reasonably be interpreted to authorize the furlough plan instituted by the 
Governor‟s executive order.  The furlough plan at issue does not establish 
different hours “to meet the varying needs of the different state agencies,” but 
rather imposes an across-the-board rule that applies to virtually all executive 
branch agencies, regardless of their varying needs. 
 
42 
The trial court suggested in its ruling that the furlough plan in question 
could be brought within the language of section 19851, subdivision (a) on the 
theory that, in light of the state‟s fiscal problems, the furlough met the needs of all 
state agencies by minimizing the risk they would run out of funds before the end 
of the fiscal year and as a result be unable to meet their statutorily mandated 
functions.  The statutory language, however, speaks of “the varying needs of the 
different state agencies” (ibid., italics added), demonstrating that the statute 
contemplated that the length of workweeks or workdays could be varied based on 
the particular functions and needs of individual agencies, and was not intended to 
encompass a rule or regulation that changed the length of the workweek for all, or 
virtually all, executive branch agencies. 
Moreover, when related statutory provisions and administrative regulations 
are considered, it is apparent that the furlough program at issue in this case has no 
effect on the “workweek” as that term is employed in section 19851.  The related 
statutes and regulations reveal that the principal purpose served by the designation 
of a normal “workweek” in section 19851 is to establish the number of hours that 
an employee may be required to work in a given week before the employee is 
entitled to receive overtime compensation for additional hours worked during that 
week.  (See, e.g., §§ 19843, 19844, 19844.1, 19845, 19846, 19849, 19849.4 [all 
relating to overtime compensation]; Cal. Code Regs., tit. 2, § 599.700 
[“ „Overtime‟ is authorized time worked in excess of regularly scheduled 
workweek”].)  (Similarly, the designation of a normal “workday” in section 
19851, subdivision (a) defines the number of hours an employee may be required 
 
43 
to work in a day before the employee may be entitled to receive overtime 
compensation for additional hours worked that day.)24 
The legislative history of section 19851 fully supports this understanding of 
the statute, which traces its roots to section 73 of the State Civil Service Act, 
initially enacted in 1943.  (Stats. 1943, ch. 1041, § 1, pp. 2976-2977.)  That statute 
required the State Personnel Board to determine and establish the normal 
workweek for each class of state employees for which a monthly salary range was 
fixed, providing that “[f]or purposes of determining eligibility for overtime 
compensation” the State Personnel Board “shall allocate, and reallocate as the 
needs of the service require,” each such class into “(1) [c]lasses with a normal 
work week of 40 hours;  [¶]  (2) [c]lasses with a normal work week of 44 hours;  
[¶]  (3) [c]lasses with a normal work week of 48 hours;  [¶]  [and] (4) [c]lasses 
which can not be included in any plan for payment of overtime because:  [¶]  
(a) [w]hile requiring at least 40 hours per week, the duties and responsibilities are 
such that they do not adapt themselves to a maximum number of hours per 
week[, or]  [¶]  (b) [t]he performance of duties is required on a part-time and 
intermittent basis and does not amount to a maximum of 40 hours per week.” 
In 1945, the provisions of section 73 of the State Civil Service Act were 
transferred to former section 18020 of the Government Code.  (Stats. 1945, 
                                              
24  
Section 19852, approving a four-day workweek for state employees, is 
consistent with this interpretation of section 19851.  Section 19852 authorizes the 
Governor “to require that the 40-hour workweek established as the state policy in 
Section 19851 shall be worked in four days in any state agency or part thereof.”  
This provision, authorizing an alternative four-day 40-hour workweek, overrides 
section 19851 insofar as the latter statute otherwise would entitle an employee 
who completes a 40-hour workweek in four days to overtime compensation for the 
additional hours (beyond eight hours a day) that the employee regularly works 
under such a schedule.  (Accord, Lab. Code, § 511, subd. (b).)  
 
44 
ch. 123, § 1, p. 536.)  As originally enacted in 1945, former section 18020 
provided: “For the purpose of determining eligibility for overtime compensation, 
the State Personnel Board shall establish the normal work week for each class in 
the State civil service. . . .”  The statute then set forth the same three-tier 
workweek schedule — 40 hours, 44 hours, and 48 hours — contained in the earlier 
provision.  At the same time, the Legislature enacted former section 18021, which 
provided that “[e]very State employee compensated on a monthly basis required 
and ordered to work in excess of a normal work week as established by the State 
Personnel Board for his class . . . shall receive overtime compensation for all such 
overtime.”  (Stats. 1945, ch. 123, § 1, p. 536.) 
In 1947, former section 18020 was modified to eliminate the prior 
introductory clause referring to overtime compensation and to substitute the term 
“work week” for “normal work week” (Stats. 1947, ch. 1304, § 2, p. 2841), but 
former section 18021, as also amended in 1947, continued to provide that 
“[s]alaried state employees . . . shall, if required and ordered to work in excess of 
the hours prescribed for the group, receive overtime compensation for all such 
overtime work” (id., § 3, p. 2842).   
In 1955, former sections 18020 and 18021 again were amended in a single 
enactment.  (Stats. 1955, ch. 1787, §§ 1, 2, pp. 3295-3296.)  At that time, the 
Legislature added to former section 18020 the statutory language presently 
contained in the first sentence of section 19851 — that is, the language 
establishing, as a matter of state policy, that a 40-hour workweek  (rather than the 
prior three-tier scheme — 40 hours, 44 hours, and 48 hours) generally would 
constitute the workweek for state employees, but also providing that “workweeks 
of a different number of hours may be established in order to meet the varying 
needs of the different state agencies.”  At the same time, former section 18021 was 
amended to provide that (1) for each class or position for which the State 
 
45 
Personnel Board established a monthly or annual salary, the board shall establish 
and adjust “workweek groups” and assign each class or position to such a group, 
and (2) the board, “after considering the needs of the state service and prevailing 
overtime compensation practices, may establish workweek groups of different 
lengths or of the same length but requiring different methods of recognizing or 
providing compensation for overtime.”  Accordingly, under the 1955 legislation, 
the establishment and adjustment of workweeks for state employees under former 
sections 18020 and 18021 continued to be related to the determination of such 
employees‟ eligibility for overtime compensation. 
In 1974, former sections 18020 and 18021 again were amended in a single 
enactment.  (Stats. 1974, ch. 1368, §§ 2, 3, pp. 2962-2963.)  As a result, former 
section 18020 established the eight-hour day as the generally applicable workday 
of state employees, but also recognized that workdays of a different number of 
hours could be established to meet the varying needs of different state agencies.  
Former section 18021, in turn, was amended to authorize the State Personnel 
Board to provide “for the payment of overtime in designated classes for work 
performed after the normal scheduled workday or normal scheduled workweek.”  
(Stats. 1974, ch. 1368, § 3, p. 2963.) 
In 1981, the Legislature adopted comprehensive legislation (Stats. 1981, 
ch. 230, § 55, pp. 1168-1232) that added section 19815 to the Government Code, 
creating the DPA, and section 19816, transferring to that department (among other 
functions) “the duties, purposes, responsibilities, and jurisdiction exercised by the 
State Personnel Board with respect to the administration of salaries, hours and 
other personnel-related matters, training, performance evaluations, and layoffs and 
grievances.”  The 1981 legislation also transferred the provisions of former section 
18020, relating to the workweek of state employees, to a newly enacted section 
19851, and transferred the provisions of former section 18021 to a newly enacted 
 
46 
section 19843.  Thus, whereas section 19851 now sets forth the general state 
policy with regard to the workweek and workday of state employees, section 
19843 currently directs the DPA to establish and assign to a workweek group each 
class or position in state employment for which a monthly or annual salary range 
is established.  Section 19843 further provides:  “The department, after 
considering the needs of the state service and prevailing overtime compensation 
practices, may establish workweek groups of different lengths or of the same 
length but requiring different methods of recognizing or providing compensation 
for overtime.  The department may also provide for the payment of overtime in 
designated classes for work performed after the normal scheduled workday or 
normal scheduled workweek.” (§ 19843, subd. (a).) 
This legislative history confirms that the purpose underlying section 
19851‟s designation of a “workweek” for state employees is to establish the 
number of hours an employee must work before potentially becoming eligible for 
overtime compensation. 
The furlough program instituted by the Governor does not purport to alter 
the “workweek” of the affected state employees, as that term is used in section 
19851.  In weeks that include a mandatory furlough day, a state employee‟s 
“workweek,” for purposes of section 19851, remains at 40 hours, and the 
employee is entitled to overtime compensation only if he or she works more than 
40 hours during that week.  The DPA‟s own internal memoranda advising other 
state agencies regarding the proper application of the furlough confirm that this is 
the case.  (See DPA, Mem. to Personnel Management Liaisons (hereafter DPA 
PML Memo) No. 2009-007 (Feb. 3, 2009) p. 2; DPA PML Memo No. 2009-010 
(Feb. 11, 2009) p. 1; DPA PML Memo No. 2009-030 (July 8, 2009) p. 1 [all 
available at  [as of 
Oct. 4, 2010]].) 
 
47 
Other statutes that encompass situations in which employees work less than 
a full 40-hour week for reduced compensation refer to the applicable program as 
one involving “reduced worktime,” and do not suggest that the employee‟s 
reduced schedule constitutes the employee‟s “workweek” for purposes of section 
19851. (See §§ 19996.19-19996.29 [Reduced Worktime Act].)  Viewed in context, 
the provisions of section 19851, subdivision (a) simply were not intended to apply 
to the type of unpaid furlough at issue in the present case.  Thus, we disagree with 
the trial court‟s conclusion that section 19851, subdivision (a) reasonably may be 
interpreted to provide the Governor and the DPA with the authority to institute the 
mandatory unpaid furlough program in question. 
At the same time, we also reject the contention, advanced by a number of 
plaintiffs, that the provisions of section 19851, subdivision (a) properly should be 
interpreted to preclude the Governor from adopting the furlough program at issue.  
These plaintiffs, relying upon the history of section 19851, subdivision (a) that we 
briefly have summarized (ante, at pp. 43-46), contend that the statute should be 
interpreted to permit the DPA to adopt only varying work schedules that provide 
for workweeks of more than 40 hours, but not to authorize the DPA to adopt a 
workweek of less than 40 hours.  In our view, however, nothing in either the 
language or the history of section 19851, subdivision (a) suggests that in an 
appropriate circumstance — for example, when a particular type of employment is 
particularly stressful or arduous and a shorter workweek is considered necessary 
for the health of the employee or the safety of the public — the DPA would not be 
authorized to establish a normal workweek of less than 40 hours.  Furthermore, as 
already explained, the term “workweek” as employed in section 19851, 
subdivision (a) simply refers to the maximum numbers of hours an employee may 
be required to work before becoming eligible for overtime compensation; it does 
not guarantee a minimum number of hours that a state employer must permit an 
 
48 
employee to work.  Thus, just as section 19851, subdivision (a) cannot properly be 
interpreted as authorizing the Governor to impose the furlough here at issue, the 
provision also cannot properly be interpreted as prohibiting the Governor from 
imposing such a furlough.  The statute simply does not address the furlough 
situation. 
The trial court was mistaken for an additional reason in concluding that 
section 19851, subdivision (a) authorized the Governor‟s furlough order.  
Subdivision (b) of that statute explicitly provides that “[i]f the provisions of this 
section are in conflict with the provisions of a memorandum of understanding 
reached pursuant to Section 3517.5, the memorandum of understanding shall be 
controlling without further legislative action . . . .”  (§ 19851, subd. (b).)  Thus, 
with respect to represented state employees who are covered by an applicable 
MOU — like the employees on whose behalf the present litigation was brought — 
the Governor‟s furlough program would be authorized and valid only if the MOU 
granted the Governor or the DPA the authority unilaterally to impose such a 
program without the prior agreement of the affected employee or his or her 
certified bargaining representative.  In such an instance, it would be the MOU, 
rather than section 19851, subdivision (b) that would constitute the source of the 
Governor‟s authority to act. 
Finally, it is our view that the trial court‟s heavy reliance upon the 
workweek provisions of section 19851, subdivision (a) as providing authority for 
the Governor‟s furlough order, fails to take adequately into account the 
circumstance that the reduction in workdays mandated by this order was neither 
the primary purpose nor the primary effect of the order.  It is clear from the 
situation in which the executive order was issued that the purpose of the furlough 
program here at issue was to reduce state expenses by reducing the state funds 
paid to state employees.  The two-day-a-month furlough was adopted not because 
 
49 
there was a lack of work or a reduced need for state services that reasonably called 
for a reduction in workdays, but rather as a means to reduce the state‟s payroll 
expenses in light of the state‟s fiscal problems.  Focusing upon the aspect of the 
program that reduced the number of days the affected employees were permitted 
to work fails to give adequate consideration to the substantial reduction in the 
wages or earnings of state employees that constituted the primary effect of the 
furlough program on the employees in question.  Although the Governor‟s 
decision to achieve the desired reduction in state employee compensation expenses 
through a mandatory unpaid furlough rather than through a simple pay cut 
afforded some mitigating benefits to employees, in the final analysis the reduction 
in the wages earned by the affected employees — and the corresponding savings 
obtained by the state — were the most significant changes in the terms and 
conditions of employment effectuated by the Governor‟s executive order.  Nothing 
in section 19851, subdivision (a) purports to provide the Governor or the DPA 
with the authority to impose a unilateral across-the-board reduction of state 
employees‟ wages or earnings in this fashion. 
In sum, for all of the above reasons, we conclude the trial court erred in 
ruling that the provisions of section 19851, subdivision (a) authorized the 
Governor to institute unilaterally the challenged furlough program. 
B 
In upholding the Governor‟s action, the trial court also relied upon 
section 19849.  Subdivision (a) of that statute provides in full:  “The [DPA] shall 
adopt rules governing hours of work and overtime compensation and the keeping 
of records related thereto, including time and attendance records.  Each appointing 
power shall administer and enforce such rules.”  (§ 19849, subd. (a).) 
 
50 
As is evident from the language of this statute, it does not purport to grant 
the DPA additional substantive authority over the hours state employees work or 
the wages they earn, but simply authorizes the DPA to adopt administrative rules 
that the employing state agency is to enforce, including recordkeeping rules 
related to hours of work and overtime compensation.  The trial court, having 
concluded that section 19851, subdivision (a) provided the substantive authority 
for the Governor and the DPA to reduce the hours state employees would be 
permitted to work, determined that the Governor‟s December 19, 2008, executive 
order directing the DPA to implement the furlough program constituted a “rule” 
within the meaning of section 19849, subdivision (a) and thus was a permissible 
means of instituting the program. 
Because we have concluded that section 19851 does not authorize the 
Governor or the DPA to institute the challenged furlough program, section 19849 
clearly does not independently provide the Governor or the DPA with such 
authority.25 
C 
In addition to relying upon sections 19851 and 19849, the Governor also 
contends that section 3516.5 — a provision contained in the Dills Act — provides 
support for his authority to issue the December 19, 2008, executive order 
instituting the furlough program.  We conclude that section 3516.5 does not 
provide such authority. 
This statute provides in full:  “Except in cases of emergency as provided in 
this section, the employer shall give reasonable notice to each recognized 
                                              
25  
Moreover, like section 19851, section 19849 explicitly provides that the 
statute may be superseded by an applicable MOU.  (§ 19849, subd. (b).) 
 
51 
employee organization affected by any law, rule, resolution, or regulation directly 
related to matters within the scope of representation proposed to be adopted by the 
employer, and shall give such recognized employee organizations the opportunity 
to meet and confer with the administrative officials or their delegated 
representatives as may be properly designated by law. 
“In cases of emergency when the employer determines that a law, rule, 
resolution, or regulation must be adopted immediately without prior notice or 
meeting with a recognized employee organization, the administrative officials or 
their delegated representatives as may be properly designated by law shall provide 
such notice and opportunity to meet and confer in good faith at the earliest 
practical time following the adoption of such law, rule, resolution, or regulation.” 
(§ 3516.5) 
In their briefing on appeal, plaintiffs initially question whether the term 
“emergency” in section 3516.5 was intended to encompass a fiscal emergency like 
that addressed in article IV, section 10(f), or instead was intended to apply only to 
the type of emergencies referred to in section 3523 (another section of the Dills 
Act), which lists such instances as “an act of God, natural disaster, or other 
emergency or calamity affecting the state, and which is beyond the control of the 
employer or recognized employee organization . . . . ”  (§ 3523, subd. (d).)  There 
is no need to resolve this point in the present case, however, because even if we 
assume that the “emergency” provision of section 3516.5 reasonably should be 
interpreted to include a fiscal emergency, we conclude the statute‟s plain language 
makes it clear that the provision was not intended to, and does not, constitute a 
source of substantive authority for the state to take any particular type of action 
regarding the terms and conditions of employment.  
By its terms, the first paragraph of section 3516.5 simply provides that, as a 
general matter, when state employees are represented by a recognized employee 
 
52 
organization, the employer is required to provide the organization with notification 
and an opportunity to meet and confer before the employer implements any law, 
rule, resolution, or regulation directly relating to matters within the scope of 
representation.  The second paragraph of section 3516.5 recognizes an exception 
to the requirement of prior notice and an opportunity to meet and confer, which 
comes into play “[i]n cases of emergency.”  The employer, in such circumstances, 
may implement the proposed action without first notifying the employee 
organization and giving it an opportunity to meet and confer on the matter, but still 
must notify and meet and confer with the organization regarding the action as soon 
as practical. 
Neither the first nor the second paragraph of section 3516.5 purports to 
provide a source of authority for a state employer to take any particular type of 
substantive action in either a nonemergency or emergency situation.  Instead, the 
statute, reasonably interpreted, simply provides that when an employer possesses 
the authority from some other source to take a particular type of action relating to 
matters within the scope of representation, the employer ordinarily must notify and 
meet and confer with the employee organization before taking such action, but in 
an emergency may take the action and thereafter notify and meet and confer with 
the organization as soon as practical.  Accordingly, we conclude that section 
3516.5 cannot properly be interpreted as providing the Governor with authority to 
institute the mandatory unpaid furlough program here at issue.26 
                                              
26  
The Court of Appeal‟s decision in Greene, supra, 5 Cal.App.4th 155, 
discussed above, is consistent with this conclusion.  As we have seen, the Greene 
case, like the present matter, arose in the context of a fiscal emergency, and the 
5 percent pay cut that the DPA proposed to implement in Greene was aimed at 
reducing state expenses to avert a significant budgetary shortfall.  Nonetheless, the 
court did not suggest in Greene that, by virtue of the provisions of section 3516.5, 
the fiscal emergency itself provided authority for the DPA to take its proposed 
(Footnote continued on next page) 
 
53 
VI 
Although we have concluded that none of the specific statutes relied upon 
by the Governor — sections 19851, 19849, and 3516.5 — provides the Governor 
the authority to institute unilaterally a mandatory unpaid furlough of state 
employees by executive order, we consider whether such authority may arise from 
some other source. 
This authority conceivably could derive from one or more of the numerous 
statutory provisions enacted by the Legislature that grant the DPA, or a particular 
appointing agency, administrative discretion over various aspects of state 
employment.  (See, e.g., §§ 19816, 19816.10.)27  As noted above, no one disputes 
                                                                                                                                                              
(Footnote continued from previous page) 
action.  The court, in determining whether the DPA was authorized to take the 
proposed action, instead looked to other statutes governing the authority of that 
department.  As we have seen, the court concluded in Greene that, under the 
applicable statutes, the DPA lacked authority to reduce unilaterally the wages of 
represented employees, even in the midst of a fiscal emergency. 
27  
Section 19816 specifies:  “(a) Except as provided by Section 19816.2 
[relating to the State Personnel Board‟s responsibility for assuring consistency 
with merit employment principles], the [DPA] succeeds to and is vested with the 
duties, purposes, responsibilities, and jurisdiction exercised by the State Personnel 
Board with respect to the administration of salaries, hours, and other personnel-
related matters, training, performance evaluations, and layoffs and grievances.  [¶]  
(b) The [DPA] succeeds to and is vested with the duties, purposes, responsibilities, 
and jurisdiction exercised by the California Victim Compensation and 
Government Claims Board with respect to the administration of miscellaneous 
employee entitlements.  [¶]  (c) The [DPA] succeeds to and is vested with the 
duties, purposes, responsibilities, and jurisdiction exercised by the Department of 
Finance with respect to the administration of salaries of employees exempt from 
civil service and within range salary adjustments.” 
 
Section 19816.10 provides:  “(a) In order to secure substantial justice and 
equality among employees in the state civil service, the [DPA] may provide by 
rule for days, hours and conditions of work, taking into consideration the varying 
needs and requirements of the different state agencies and the prevailing practices 
(Footnote continued on next page) 
 
54 
that the state may take some unilateral steps relating to state employment in the 
event of a fiscal emergency in order to reduce future expenditures of state funds — 
for example, choosing not to fill vacant positions for which compensation already 
has been appropriated, or encouraging state employees voluntarily to take unpaid 
leave.  The question presented here is whether any provision affords the Governor 
or the DPA authority to reduce expenditures during a fiscal emergency by 
imposing a mandatory reduction of the work hours and wages of state employees. 
In examining this question, it is important to recognize that the Legislature 
has enacted a statutory provision that explicitly authorizes a state employer to “lay 
off” state employees for “lack of . . . funds.”  Section 19997 provides in this 
regard:  “Whenever it is necessary because of lack of work or funds, or whenever 
it is advisable in the interests of economy, to reduce the staff of any state agency, 
the appointing power may lay off employees pursuant to this article and 
department rule.”28  The statutory provisions following section 19997 prescribe 
                                                                                                                                                              
(Footnote continued from previous page) 
for comparable services in other public employment and in private business.   [¶]  
(b)  If the provisions of this section are in conflict with the provisions of a 
memorandum of understanding reached pursuant to Section 3517.5, the 
memorandum of understanding shall be controlling without further legislative 
action, except that if such provisions of a memorandum of understanding require 
the expenditure of funds, the provisions shall not become effective unless 
approved by the Legislature in the annual Budget Act.” 
28  
The circumstance that section 19997 grants the authority to lay off 
employees for lack of funds to “the appointing power” (rather than to the DPA or 
some other entity or executive officer) highlights one of the complications that 
arise in discussing the authority that the state possesses to take actions or to make 
decisions in its role as an employer.  In the public sphere, questions may arise 
over whether an action that the state is entitled to undertake in its role as an 
employer may be approved or undertaken (1) exclusively by the executive branch 
or, alternatively, exclusively by the legislative branch, (2) by either of those two 
branches, or (3) only with the concurrence of both branches.  Further, in instances 
(Footnote continued on next page) 
 
55 
the procedure by which such layoffs are to be implemented — generally following 
a reverse seniority protocol — and additionally provide that the order in which 
such layoffs are made can be modified by the provisions of an MOU (unless the 
State Personnel Bd. finds the terms of the MOU to be inconsistent with the merit 
principles embodied in art. VII of the Cal. Const.).  (See §§ 19997.2-19997.14, 
3517.6, subd. (b).)29 
There is no comparable statute, however, that explicitly authorizes the 
Governor, the DPA, or an appointing authority in the executive branch unilaterally 
to reduce state employees‟ wages, or to reduce state employees‟ hours and wages, 
due to a lack of funds.  (Cf. §§ 68106, subd. (b)(3), 68108.) 
                                                                                                                                                              
(Footnote continued from previous page) 
in which it is clear that an action may be undertaken unilaterally by the executive 
branch, further questions may arise over which public official or entity within the 
executive branch is authorized to determine whether to act, and, if so, in what 
manner and to what degree.  (See, e.g., Tirapelle, supra, 20 Cal.App.4th at 
pp. 1337-1342 [discussing division of authority between the DPA and other 
executive branch agencies].) 
 
In addressing the question whether the Governor or the DPA possesses the 
authority unilaterally to impose a mandatory unpaid furlough on state employees 
to address a substantial budget problem, our focus, in this part of our discussion, is 
upon whether the Governor or the DPA, as part of the executive branch, had 
authority to act without the concurrence of the Legislature, and not upon which 
official or entity within the executive branch may have authority to decide whether 
to impose such a mandatory furlough (as opposed to other cost-savings measures) 
on persons employed by a particular executive-branch constitutional officer or 
agency.  We express no view on this latter issue — an issue presented in several 
cases now pending in the lower courts. 
29  
Although the provisions governing the procedure by which such layoffs are 
to be implemented may be superseded by the terms of an MOU, the applicable 
statutes do not permit the provisions of section 19997 itself — the basic statute 
authorizing the appointing authority to lay off employees because of a lack of 
funds — to be superseded by an MOU.  (See § 3517.6, subd. (b).)   
 
56 
Indeed, the only current statutory provision specifically addressing the 
subject of whether an executive-branch employer may require state employees to 
work a reduced work schedule for a reduced salary or wage clearly provides no 
support for the Governor‟s position.  In the Reduced Worktime Act (§§ 19996.19-
19996.29), initially enacted in 1981, the Legislature sought to encourage state 
agencies to provide an opportunity for those employees who wished to reduce 
their worktime in exchange for a reduction in wages to do so voluntarily.  
(§§ 19996.19, subd. (a)(7), (8), 19996.21.)  At the same time, one provision of that 
legislation — section 19996.22, subdivision (a) — specifies that “[a]ny employee 
who is being coerced, or who has been required, by the appointing power, a 
supervisor, or another employee, to involuntarily reduce his or her worktime 
contrary to the intent of this article, . . . may file a grievance with the [DPA].”  
(Italics added.)  We recognize that the Reduced Worktime Act was not enacted 
with the circumstance of a state fiscal emergency in mind, and we agree with the 
Governor‟s contention that section 19996.22, subdivision (a) was not intended, 
and reasonably should not be interpreted, to prohibit the state from instituting an 
across-the-board mandatory unpaid furlough of all persons employed by the 
executive branch as a cost-saving measure in such an emergency.  But although 
we agree that such a furlough is not “contrary to the intent of [the Reduced 
Worktime Act]” (§ 19996.22, subd. (a)) and thus that section 19996.22 should not 
be interpreted to prohibit the imposition of a mandatory unpaid furlough on state 
employees, this interpretation of the statute still leaves the Governor without an 
affirmative source authorizing him to take such action unilaterally.30 
                                              
30  
Section 19996.25 — another provision of the Reduced Worktime Act — 
provides that if the provisions of that act are in conflict with the provisions of an 
MOU, the MOU shall be controlling.  Accordingly, it appears that the parties to an 
(Footnote continued on next page) 
 
57 
It may be suggested that because a state employer possesses authority under 
section 19997 to lay off employees due to a lack of funds, it logically should 
follow that the state may impose an involuntary unpaid furlough on state 
employees on the theory that a furlough is a less drastic step than a layoff.  This 
suggestion, however, overlooks the circumstance that the provisions authorizing a 
layoff for lack of funds specifically prioritize how these layoffs are to be imposed.  
Whereas such layoffs impose a very significant burden on a smaller number of 
employees with the least seniority, an involuntary unpaid furlough reduces the 
earnings of all affected state employees, most of whom would not suffer any direct 
economic burden if other employees are laid off.  Because, as discussed above, the 
principal effect of an involuntary unpaid furlough on state employees is the 
reduction in the employees‟ salaries or earnings, we conclude that the Governor‟s 
or the DPA‟s authority unilaterally to institute such a furlough properly must be 
evaluated by considering whether  the Governor or the DPA possesses the 
authority unilaterally to reduce state employee salaries or wages as a cost-saving 
measure. 
As noted above in our discussion of the Court of Appeal decisions in 
Greene, supra, 5 Cal.App.4th 155, and Tirapelle, supra, 20 Cal.App.4th 1317 
                                                                                                                                                              
(Footnote continued from previous page) 
MOU could authorize the state to implement an involuntary unpaid furlough 
program, perhaps as an alternative to layoffs under section 19997. 
 
In another instance, the collective bargaining process constituted the 
impetus for the state‟s adoption of a personal-leave program — available to 
nonrepresented employees — under which employees voluntarily agree to receive 
reduced compensation in exchange for personal-leave credit.  (See § 19996.3.)  
Section 19996.3, subdivision (b)(2) required the DPA to ensure that the program 
“is generally equitable and is consistent with the personal leave program provided 
to employees covered by memoranda of understanding” reached under the Dills 
Act. 
 
58 
(ante, at pp. 27-39), under section 19826 — the statutory provision governing the 
DPA‟s authority to establish and adjust state employee salaries — the authority 
that the Legislature has granted to the DPA with regard to state employee salaries 
differs significantly depending upon whether the employees fall within the 
category of nonrepresented employees or of represented employees.31  With 
respect to nonrepresented employees, the DPA‟s salary-related authority is set 
forth in section 19826, subdivision (a) which lists the factors to be considered by 
the DPA in establishing and adjusting the salaries of such employees.  With 
respect to represented employees, by contrast, section 19826, subdivision (b) 
provides that the DPA shall not establish or adjust the salaries of such employees 
through the process applicable to nonrepresented employees.  This provision 
instead leaves the establishment and adjustment of the salaries of represented 
employees to be determined through the collective bargaining (or meet-and-
confer) process established by the Dills Act. 
The trial court in this matter, in rejecting plaintiffs‟ challenge to the 
furlough program, suggested that the program did not implicate the provisions of 
section 19826, on the theory that (1) this statute applies only to the DPA‟s 
authority to establish and adjust “salary ranges,” and (2) the furlough order at issue 
did not affect the employees‟ “salary ranges” or “rate of pay.”  Past cases 
establish, however, that the DPA‟s authority under section 19826 extends to the 
establishment and adjustment of salaries within salary ranges as well as to the 
setting of maximum and minimum salaries (Tirapelle, supra, 20 Cal.App.4th at 
pp. 1342-1343), and the statute uniformly has been understood to be the source of 
                                              
31  
There has been no significant change in the language of section 19826 
subsequent to the decision in Greene, supra, 5 Cal.App.4th 155.  (See, ante, 
pp. 32-33, fn. 20 [quoting § 19826].) 
 
59 
the DPA‟s authority to recommend or impose across-the-board salary raises or 
salary cuts for state employees.  (Tirapelle, at pp. 1342-1343; Pacific Legal 
Foundation v. Brown, supra, 29 Cal.3d at pp. 189-192.) 
Furthermore, even though the mandatory furlough program did not alter an 
affected state employee‟s hourly rate of pay, the furloughs clearly did significantly 
reduce the wages or salary that a full-time state employee earns from his or her 
job — the monetary sum that obviously matters most to employees seeking to pay 
their rent or mortgages and support their families.  Although the furlough may not 
have led the DPA formally to change the minimum and maximum dollar amounts 
set forth in its posted salary range for each individual state employee position (a 
forbearance consistent with the objective of not affecting future retirement 
benefits), as a result of the furlough the affected full-time state employees in such 
positions no longer were permitted to receive the full-time salary assigned to their 
position, but instead received only a lower salary, reflecting the reduction 
attributable to the furlough.  Accordingly, in this practical sense, the furlough did 
“adjust” both the salary range and the salary pursuant to which full-time 
employees actually were compensated.32  In view of both the purpose and the 
                                              
32  
Section 18550 provides that “[a] „full-time‟ position or appointment is a 
position or appointment in which the employee is to work the amount of time 
required for the employee to be compensated at a full-time rate.”  And the DPA‟s 
own regulations, after defining “ „salary range‟ ” as “the minimum and maximum 
rate currently authorized for the class” (Cal. Code Regs., tit. 2, § 599.666.1, 
subd. (a), italics added), go on to provide that the “ „rate‟ for employees 
compensated on a monthly basis is any one of the full dollar amounts found within 
the salary range and for employees compensated on a daily or hourly basis any one 
of the dollar and cents amounts found within the salary range.”  (Id., § 599.666.1, 
subd. (c); see also id., § 599.669 [“The salary range for each class represents the 
rate of pay for full-time monthly employment unless the pay plan specifically 
states otherwise.”].) 
 
Because the overwhelming majority of full-time state employees are 
(Footnote continued on next page) 
 
60 
effect of the mandatory unpaid furlough plan here at issue, we conclude that, in the 
absence of some other source of authority to implement a plan involving a 
reduction of both worktime and pay, the authority or lack of authority of the 
Governor or the DPA unilaterally to institute the program must be determined 
under the provisions of section 19826.33 
Although there is considerable reason to question whether the DPA‟s 
general authority to establish and adjust the salaries of nonrepresented employees 
under section 19826, subdivision (a) affords that entity the authority to impose 
unilaterally a mandatory unpaid furlough that reduces the wages or salaries of 
                                                                                                                                                              
(Footnote continued from previous page) 
compensated on a monthly, rather than a daily or hourly basis (see Cal. Dept. of 
Finance, Salaries and Wages 2010-2011, passim, at  [as of Oct. 4, 2010]), a state 
employee‟s “full-time rate” generally refers to the employee‟s full-time salary, 
rather than the employee‟s hourly rate of pay. 
33 
Although the trial court suggested that the furlough plan did not affect the 
salaries of state employees and did not implicate the DPA‟s authority to establish 
and adjust salary ranges under section 19826, the DPA itself, in numerous internal 
memoranda, repeatedly has acknowledged that the plan involved the DPA‟s 
authority to “adjust” salaries.  Thus, for example, in the initial January 9, 2009, 
memorandum setting forth the means by which the furlough would be 
implemented, the Director of the DPA expressly stated that “[s]alaries will be 
adjusted to reflect the unpaid furlough days, but benefits will remain the same 
(i.e., the furlough will not affect payouts for unused leave, service credit, health 
and retirement benefits, etc.).”  (Jan. 9, 2009 DPA Furlough Memo, supra, italics 
added.) Similarly, in the February 3, 2009, memorandum regarding the furlough 
program sent to personnel management liaisons, the Chief Deputy Director of the 
DPA stated:  “We will adjust salaries to affect two non-work days.  The 
adjustment applies only to the employee‟s base salary.” (DPA PML Memo No. 
2009-007 (Feb. 3, 2009) p. 3, at  [as of Oct. 4, 2010].) 
 
61 
nonrepresented employees in order to mitigate an anticipated budget shortfall,34 in 
the present case we need not resolve the question of the scope of the DPA‟s 
authority with respect to nonrepresented employees, because here the challenge to 
                                              
34  
As discussed above (ante, at pp. 23-24), there is considerable evidence 
suggesting that prior to the time the Governor issued the December 19, 2008, 
executive order, it was generally understood that under the current state of 
California law, a governor could not implement such a measure unilaterally.  In 
addition to the present Governor‟s own statements and actions consistent with this 
understanding, in recent years a number of Governors have proposed ballot 
measures or statutory provisions that would have revised California law to provide 
the Governor with some authority to make this type of midyear reduction in state 
employee compensation, but to date the voters have not approved any of these 
measures.  (See, e.g., Prop. 165, Gen. Elec. (Nov. 3, 1992) § 5; Prop. 76, Gen. 
Elec. (Nov. 7, 2005) § 4; § 13312 [discussed, post, at pp. 78-79, fn. 38].) 
 
Moreover, in Pacific Legal Foundation v. Brown, supra, 29 Cal.3d at 
pages 189-191 and footnotes 12 to 14, this court listed numerous instances in 
which the Legislature has demonstrated its interest in retaining ultimate control 
over across-the-board changes in the salaries and wages of all state employees, by 
frequently rejecting salary recommendations of the State Personnel Board.  That 
historical experience casts doubt on the proposition that the existing statutes grant 
the Governor, even in a fiscal emergency, the authority unilaterally to reduce 
employee wages by an amount the Governor concludes is appropriate. 
 
Furthermore, as noted above, in Tirapelle, supra, 20 Cal.App.4th 1317, the 
Court of Appeal pointed out that, although the predecessor to section 19826, 
subdivision (a) at one time had included the state‟s financial condition in the list of 
factors to be considered in setting salaries, that factor subsequently was deleted 
from the statute and has not been reinserted.  In light of that legislative history, the 
court in Tirapelle “assume[d] for purposes of argument that a general concern over 
the state‟s financial condition is not an appropriate factor for the DPA to consider 
. . . .”  (Id. at p. 1336-1337, fn. 25.)  In Tirapelle, however, the DPA acted to 
reduce the salaries of nonrepresented and exempt employees after the Legislature 
already had enacted a budget act that reduced the appropriations available for 
employee compensation, and the court held that in light of that enactment, the 
reduced appropriations were “a matter that the DPA certainly must consider.”  
(Ibid.)  In the present case, of course, the Governor and the DPA acted before the 
Legislature enacted revisions to the 2008 Budget Act that reduced the 
appropriations for employee compensation contained in the original act. 
 
62 
the Governor‟s executive order has been brought only on behalf of represented 
state employees.  As we shall explain, with regard to represented employees we 
are of the view that clearly, unless the Governor or the DPA had been granted the 
authority unilaterally to impose a mandatory unpaid furlough on affected 
represented employees by the terms of an applicable MOU, the Governor and the 
DPA lacked authority unilaterally to institute such a furlough through the 
December 19, 2008, executive order with respect to those employees. 
As demonstrated by the Court of Appeal‟s decision in Greene, supra, 5 
Cal.App.4th 155, the scope of the Governor‟s (and the DPA‟s) authority over the 
wages and hours of represented state employees is governed by the provisions of 
the Dills Act.  Under the circumstances of the present case, one of the most 
relevant provisions of that act is section 3517.8, which was added in 2000, several 
years after the Court of Appeal‟s decision in Greene, and which significantly 
changed the effect of the expiration of an MOU under the Dills Act. 
As we have seen, in Greene, supra, 5 Cal.App.4th 155, the Court of Appeal 
concluded that when an MOU expired, all of the statutory provisions relating to 
the terms and conditions of state employment that had been superseded by the 
MOU once again became effective and thereafter governed the employer-
employee relationship until a new MOU was agreed upon and became effective.  
(Greene, at pp. 174-178.)  In addition, the court in Greene concluded that even 
when, as in that case, the parties had negotiated to a point of impasse, the DPA 
was not entitled to implement its final offer with regard to employee wages; 
instead, the appellate court held, under those circumstances the Dills Act left the 
resolution of the wage issue to the Legislature.  (Greene, at pp. 178-182.) 
Section 3517.8 significantly altered the effect of the expiration of an MOU 
under the Dills Act from that described in Greene.  This statute currently provides 
in full: 
 
63 
“(a)  If a memorandum of understanding has expired, and the Governor and 
the recognized employee organization have not agreed to a new memorandum of 
understanding and have not reached an impasse in negotiations, subject to 
subdivision (b), the parties to the agreement shall continue to give effect to the 
provisions of the expired memorandum of understanding, including, but not 
limited to, all provisions that supersede existing law, any arbitration provisions, 
any no strike provisions, any agreements regarding matters covered in the Fair 
Labor Standards Act of 1938 (29 U.S.C. Sec. 201 et seq.), and any provisions 
covering fair share fee deduction consistent with Section 3515.7. 
“(b)  If the Governor and the recognized employee organization reach an 
impasse in negotiations for a new memorandum of understanding, the state 
employer may implement any or all of its last, best, and final offer.  Any proposal 
in the state employer‟s last, best, and final offer that, if implemented, would 
conflict with existing statutes or require the expenditure of funds shall be 
presented to the Legislature for approval and, if approved, shall be controlling 
without further legislative action, notwithstanding Sections 3517.5, 3517.6, and 
3517.7.  Implementation of the last, best, and final offer does not relieve the 
parties of the obligation to bargain in good faith and reach an agreement on a 
memorandum of understanding if circumstances change, and does not waive rights 
that the recognized employee organization has under this chapter.” 
In this case all parties agree that, on December 19, 2008, when the 
Governor issued his executive order directing the DPA to implement a mandatory 
two-day-a-month unpaid furlough plan, the terms and conditions of employment 
of the state employees represented by each of the plaintiff employee organizations 
were governed by an applicable MOU.  Although each of the MOU‟s had expired, 
under section 3517.8 the terms of the expired MOU remained in effect, because 
the parties had not reached an impasse in their negotiations over a new MOU. 
 
64 
Because at the time the Governor issued his executive order the terms and 
conditions of employment of represented state employees were governed by the 
provisions of the then-applicable MOU‟s, the Governor and the DPA lacked 
authority (independent of that provided by the MOU‟s) unilaterally to change the 
terms and conditions of employment covered by the MOU‟s.  As explained above, 
under the provisions of section 3517.6, the terms and conditions embodied in an 
MOU supersede most of the general statutory provisions that govern the terms and 
conditions of state employment in the absence of an MOU, including, among 
many other statutes, the following:  section 19851 (the workweek provision relied 
upon by the Governor), section 19849 (the provision giving DPA general authority 
to promulgate employment-related regulations), and section 19826 (governing the 
DPA‟s authority to establish and adjust salary ranges).  Under the Dills Act, it is 
clear that an MOU, once approved by the Legislature (either directly — see 
§ 3517.5 — or through the appropriation of sufficient funds to pay the agreed-
upon employee compensation), governs the wages and hours of the state 
employees covered by the MOU. 
There can be little question that the issue whether an employee‟s wages 
may be reduced by the implementation of a mandatory furlough (and, if so, by 
what amount and with what input from the recognized employee organization) lies 
at the heart of the matter of “wages, hours, and other terms and conditions of 
employment” that are the subject of an MOU.  Accordingly, we conclude that 
under the Dills Act a state employer‟s unilateral authority to impose such a 
furlough on represented employees (in the absence of an impasse) is governed by 
the terms of the applicable MOU, rather than by any general statutory provision 
that applies in the absence of an MOU. 
For all of the above reasons, we find unpersuasive the Governor‟s 
contention that either the constitutional authority granted to him by the California 
 
65 
Constitution or the existing statutory provisions pertaining to the terms and 
conditions of state employment granted him or the DPA the authority unilaterally 
to impose a mandatory unpaid furlough on state employees. 
VII 
A 
As noted above, although the trial court relied primarily upon 
sections 19851 and 19849 in ruling that the Governor possessed authority to 
impose the furloughs, the court additionally found that several provisions 
contained in the applicable MOU‟s also authorized the employer to impose 
furloughs unilaterally in emergency situations.  In reaching the latter conclusion, 
the trial court relied in significant part on its conclusion that the MOU‟s 
incorporated the provisions of section 19851 relating to workweeks (which the 
trial court viewed as authorizing the mandatory unpaid furloughs), and in part on 
certain language included within the so-called “State‟s Rights” clauses contained 
in some (but not all) of the relevant MOU‟s. 
In our view, the trial court‟s finding that the MOU‟s here at issue 
authorized the Governor unilaterally to reduce the hours and wages of covered 
employees in response to a burgeoning budget deficit is quite problematic.  First, 
in view of our determination that the trial court erred in finding that the provisions 
of section 19851 relating to workweeks provide the Governor with the authority to 
institute mandatory unpaid furloughs, that court‟s reliance upon the MOU‟s 
general reference to section 19851 is likewise erroneous.  Second, the trial court‟s 
discussion of the “State‟s Rights” clauses in the MOU‟s failed to take into account 
 
66 
significant language contained in those clauses that appears to undermine the trial 
court‟s interpretation of the provisions.35 
                                              
35  
One of the “State‟s Rights” clauses upon which the trial court relied was 
section 3.1.B of the MOU between the state and plaintiff CASE.  That section of 
the CASE MOU provides in full: 
 
“To the extent consistent with law and this MOU, the rights of the State 
include, but are not limited to, the exclusive right to determine the mission of its 
constituent departments, commissions, and boards; set standards of service; train, 
direct, schedule, assign, promote, and transfer its employees; initiate disciplinary 
action; relieve its employees from duty because of lack of work, lack of funds, or 
for other legitimate reasons; maintain the efficiency of state operations; determine 
the methods, means and personnel by which State operations are to be conducted; 
take all necessary actions to carry out its mission in emergencies; and to exercise 
complete control and discretion over its organization and the technology of 
performing its work.  The State has the right to make reasonable rules and 
regulations pertaining to employees consistent with this MOU provided that any 
such rule shall be uniformly applied to all affected employees who are similarly 
situated.” 
 
The trial court pointed to the language in this section permitting the state to 
“relieve its employees from duty because of lack of work, lack of funds, or for 
other legitimate reasons,” but failed to take note of the introductory clause of 
section 3.1.B — “[t]o the extent consistent with law and this MOU” (italics 
added) — which suggests that the “State‟s Rights” clause was not intended to 
override all of the other, more specific provisions of the MOU governing wages, 
hours, and other terms and conditions of employment.  Moreover, the clause 
recognizing the state‟s right to relieve its employees from duty because of “lack of 
funds” — the clause relied upon by the trial court — reasonably can be interpreted 
to refer only to the state‟s authority, under section 19997, to lay off employees for 
lack of funds.  As will be recalled, section 19997 is one of the few statutes dealing 
with the terms and conditions of employment that is not subject to supersession 
under the Dills Act.  (See ante, p. 55, fn. 29.) 
 
Two separate provisions of the MOU in question (§§ 10.2, 10.3) explicitly 
address the question of furloughs.  Section 10.2 provides in relevant part that 
“[w]henever the State determines it is necessary to lay off employees, the State 
and the Union shall meet in good faith to explore alternatives to laying off 
employees such as . . . voluntary reduced work time . . . .”  (Italics added.)  Section 
10.3 provides that “[t]he State may propose to reduce the number of hours an 
employee works as an alternative to layoff.  Prior to the implementation of this 
alternative to a layoff, the State will notify and meet and confer with the Union to 
(Footnote continued on next page) 
 
67 
Nonetheless, even if the trial court erred in finding that the parties‟ MOU‟s 
authorized the Governor‟s unilateral action, and thus even if that court should have 
concluded that the Governor lacked authority to impose his mandatory furlough 
program unilaterally by executive order, we conclude for the reasons discussed 
below (relating to the Legislature‟s subsequent action on the Governor‟s budget 
proposal) that plaintiffs are not entitled to an order setting aside or invalidating the 
furlough program.  (See, post, pt. VIII, pp. 68-80.) 
B 
In addition to the portions of section 3517.6 listing the numerous statutes 
that are superseded (without further legislative action) by the existence of a 
conflicting provision in an applicable MOU, subdivision (b) of that statute 
contains another clause that is relevant to the issue before us.  It provides in part:  
“If any provision of the memorandum of understanding requires the expenditure of 
funds, those provisions of the memorandum of understanding may not become 
effective unless approved by the Legislature in the annual Budget Act.”  
Section 3517.7 follows up on the latter clause, declaring that “[i]f the Legislature 
does not approve or fully fund any provision of the memorandum of understanding 
which requires the expenditure of funds, either party may reopen negotiations on 
                                                                                                                                                              
(Footnote continued from previous page) 
seek concurrence of the usage of this alternative.” 
 
The trial court‟s ruling does not appear to give adequate consideration to 
these specific provisions of the MOU, or to assess how these provisions 
reasonably should be interpreted in light of the common understanding (at the time 
the parties entered into the MOU) of the Governor‟s authority or lack of authority 
to impose such furloughs.  (See, e.g., Los Angeles City Employees Union v. City of 
El Monte (1985) 177 Cal.App.3d 615, 623 [ordinary “custom and usage” must be 
considered in interpreting the terms of an MOU].) 
 
In light of all of these circumstances, the trial court‟s reliance upon the 
“State‟s Rights” clauses in the MOU‟s is at the least open to serious question. 
 
68 
all or part of the memorandum of understanding.  [¶]  Nothing herein shall prevent 
the parties from agreeing and effecting those provisions of the memorandum of 
understanding which have received legislative approval or those provisions which 
do not require legislative action.”  By virtue of these provisions in the Dills Act, 
the Legislature retained its ultimate control (through the budget process) over 
expenditures of state funds required by the provisions of an MOU.  (See, e.g., 
Pacific Legal Foundation v. Brown, supra, 29 Cal.3d at p. 178 [“under [section 
3517.6], virtually all salary agreements are subject to prior legislative approval”].) 
In the present case, by enacting appropriations for employee compensation 
in the initial 2008 Budget Act (Stats. 2008, ch. 268, enacted Sept. 2008) that were 
consistent with the higher level of compensation at which the employees were 
being paid before the furlough was implemented, the Legislature approved that 
level of compensation.  Thus, at the time the Governor issued the December 19, 
2008, executive order, the represented employees were working under a 
legislatively approved MOU that provided for the payment of wages without the 
two-day-a-month (approximately 10 percent) reduction instituted by the Governor.  
Accordingly, unless the MOU‟s specifically authorized the mandatory unpaid 
furlough imposed by the executive order, it would appear that at that time the 
executive order was not valid. 
VIII 
For the reasons that follow, however, we conclude that on February 19 
and 20, 2009, when the Legislature enacted, and the Governor then signed, 
legislation revising the 2008 Budget Act, the validity of the mandatory furlough 
program fundamentally changed.  The new legislation explicitly reduced the 2008-
2009 fiscal year appropriation for state employee compensation to a level 
reflecting the reduced compensation to be paid to employees under the Governor‟s 
furlough plan.  By reducing the appropriation for employee compensation, the 
 
69 
Legislature no longer had “fully funded” the provisions of the MOU‟s supporting 
the higher level of pay that previously had been approved, and thus, under sections 
3517.6 and 3517.7, the provisions of the applicable MOU‟s that supported the 
higher level of pay the employees had been receiving prior to the implementation 
of the furloughs no longer were effective.  (Cf. White v. Davis, supra, 30 Cal.4th 
at pp. 572-573.)  Furthermore, as we shall explain, it is reasonable to interpret 
language in the relevant provision of the new budget legislation as a legislative 
endorsement of the two-day-a-month furlough plan — as one permissible method 
of achieving the reduction in employee compensation mandated by the revised 
budget legislation, thereby validating the plan that the Governor lacked authority 
to impose unilaterally. 
A 
As we explained above in the statement of facts (ante, at pp. 11-12), the 
legislation that revised the budget applicable to the 2008-2009 fiscal year 
(Sen. Bill 3X 2) effectuated a reduction in the appropriations for employee 
compensation by adding a provision to the 2008 Budget Act.  (Sen. Bill 3X 2, 
§ 36.) 
Section 36 of Senate Bill 3X 2 provides in full: 
“Section 3.90 is added to the Budget Act of 2008, to read:   
“Sec. 3.90.  (a) Notwithstanding any other provision of this act, each item 
of appropriation in this act, with the exception of those items for the California 
State University, the University of California, Hastings College of the Law, the 
Legislature (including the Legislative Counsel Bureau), and the judicial branch, 
shall be reduced, as appropriate, to reflect a reduction in employee compensation 
achieved through the collective bargaining process for represented employees or 
through existing administration authority and a proportionate reduction for 
nonrepresented employees (utilizing existing authority of the administration to 
 
70 
adjust compensation for nonrepresented employees) in the total amount of 
$385,762,000 from General Fund items and $285,196,000 from items relating to 
the other funds.  It is the intent of the Legislature that General Fund savings of 
$1,024,326,000 and other fund savings of $688,375,000 in the 2009-10 fiscal year 
shall be achieved in the same manner described above.  The Director of Finance 
shall allocate the necessary reduction to each item of appropriation to accomplish 
the employee compensation reductions required by this section. 
“(b) The Department of Personnel Administration shall transmit proposed 
memoranda of understanding to the Legislature promptly and shall include with 
each such transmission estimated savings pursuant to this section of each 
agreement. 
“(c) Nothing in this section shall change or supersede the provisions of the 
Ralph C. Dills Act (Chapter 10.3 (commencing with Section 3512) of Division 4 
of Title 1 of the Government Code).” 
As noted above (ante, at p. 12, fn. 8), the parties disagree as to the meaning 
of one passage in this section—the clause providing that the reduction in employee 
compensation shall be “achieved through the collective bargaining process for 
represented employees or through existing administration authority and a 
proportionate reduction for nonrepresented employees (utilizing existing authority 
of the administration to adjust compensation for nonrepresented employees) . . . .”  
As we shall explain, there are actually two separate areas of disagreement with 
regard to this clause.  We shall discuss each area of disagreement in turn. 
First, SEIU and the Controller assert that by this language the Legislature 
directed that the reductions be achieved for represented employees only through 
the collective bargaining process, and that the reference to “existing administration 
authority” applied only to nonrepresented employees.  The Governor, by contrast, 
maintains that under this clause “[r]eductions in employee compensation were to 
 
71 
be achieved through the collective bargaining process for represented employees 
or existing administration authority, with a proportionate reduction for 
nonrepresented employees.”  Although the phrasing of this provision is less than 
precise, we conclude that the Governor‟s interpretation is the more reasonable. 
A close reading of the specific language of this clause suggests that the first 
part of the clause — “achieved through the collective bargaining process for 
represented employees or through existing administration authority” — sets out 
alternative means for achieving the reductions for represented employees, whereas 
the second part of the clause — “and a proportionate reduction for nonrepresented 
employees (utilizing existing authority of the administration to adjust 
compensation for nonrepresented employees)” — establishes the means for 
achieving the reductions for nonrepresented employees.  This interpretation, 
unlike SEIU‟s and the Controller‟s proposal, prevents the final parenthetical 
clause “(utilizing existing authority of the administration to adjust compensation 
for nonrepresented employees)” from being unnecessary and redundant. 
Second, the parties also disagree as to the proper interpretation of the 
phrase “existing administration authority.”  Plaintiffs and the Controller contend 
that this phrase should be interpreted to permit the reductions to be achieved only 
through layoffs (or attrition) and not through furloughs.  The Governor, by 
contrast, contends that the phrase should be interpreted to include the two-day-a-
month furlough plan. 
On its face, the phrase “existing administration authority” is ambiguous. On 
the one hand, the phrase could be interpreted to mean that the Legislature intended 
to permit the reductions in employee compensation to be achieved through 
furloughs only in the event the appellate courts ultimately determined that the 
Governor or the DPA had the authority under existing statutes to impose furloughs 
unilaterally — that is, only if the appellate courts decided that the trial court 
 
72 
correctly had concluded the existing statutory provisions granted the Governor and 
the DPA authority to impose furloughs without legislative concurrence.  
Alternatively, the term “existing administration authority,” as employed in section 
3.90 of the revised 2008 Budget Act, could be interpreted to mean that the 
Legislature intended to permit the mandated reductions in employee compensation 
to be achieved through the then-existing furlough plan whether or not the appellate 
courts ultimately determined that the Governor or the DPA possessed the authority 
to impose furloughs unilaterally.  Because, at the time the February 2009 budget 
legislation was enacted, the two-day-a-month furlough plan already was in 
existence, having been proposed and put in place — that is, authorized — by the 
existing gubernatorial administration, the furlough plan reasonably could be 
described as a means to achieve the mandated reduction in employee 
compensation through “existing administration authority.” 
As past cases establish, “if the statutory language may reasonably be given 
more than one interpretation, „ “ „ “courts may consider various extrinsic aids, 
including the purpose of the statute, the evils to be remedied, the legislative 
history, public policy, and the statutory scheme encompassing the statute.” ‟ ” ‟ ”  
(Shirk v. Vista Unified School Dist. (2007) 42 Cal.4th 201, 211; see, e.g., Coalition 
of Concerned Communities, Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 
737.)  For a number of reasons, we conclude that the term “existing administration 
authority,” as employed in the February 20, 2009, budget legislation, most 
reasonably is understood as embodying a legislative decision to permit the 
mandated reductions in employee compensation to be achieved through the then-
existing furlough plan. 
First, the legislative history of the provision in question clearly and 
explicitly establishes that the reductions in appropriations for employee 
compensation that were included in the bill reflected the two-day-a-month 
 
73 
furloughs.  Both the Senate and the Assembly floor analyses of Senate Bill 
3X 2 — material that was available to the legislators at the time they were 
considering the budget legislation — describe in similar language the various 
changes that the bill would make to the 2008 Budget Act, and indicate that the 
source of the analyses was the author of the bill, Senator Ducheny, the chair of the 
Senate Budget Committee.  In describing the provision in the bill relating to state 
employee compensation, the Senate bill analysis states:  “Control Section 3.90 that 
reflects reductions across all budget areas to reduce employee compensation costs 
related to furloughs, the elimination of two state holidays, and minor changes to 
overtime calculations.”  (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading 
analysis of Sen. Bill 3X 2 (2009-2010 3d Ex. Sess.) as amended Feb. 14, 2009, 
par. 22, italics added.)  The comparable passage in the Assembly bill analysis 
states:  “Reflects reduction across all budget areas to reduce employee 
compensation costs related to furlough[s], the elimination of two state holidays, 
and minor changes to overtime calculations.”  (Assem. Com. on Budget, Analysis 
of Sen. Bill 3X 2 (2009-2010 3d Ex. Sess.) as amended Feb. 14, 2009, 2d par. 12, 
p. 3, italics added.)  This history makes it abundantly clear the Legislature 
contemplated that the reduction in appropriations for employee compensation set 
forth in section 3.90 could be achieved through the furlough plan that was then in 
existence. 
Second, aside from the furlough plan, the only other available “existing 
administration authority” through which the state could have achieved the very 
substantial reduction in the appropriations for employee compensation mandated 
by the February 2009 budget legislation was the authority provided by section 
19997, permitting a state appointing authority to “lay off” state employees 
“[w]henever it is necessary because of lack of funds . . . , or whenever it is 
advisable in the interests of economy, to reduce the staff of any state agency . . . .”  
 
74 
In our view it is not reasonable to suggest that the Legislature intended to compel 
the state, in the absence of a mutually agreed-upon collective bargaining 
resolution, to resort to layoffs of a significant percentage of state employees rather 
than to permit the state to utilize the furlough plan that was then already in use, 
particularly when the legislative history makes no reference to such layoffs. 
Third, although at the time the revised budget act was adopted on 
February 20, 2009, the trial court‟s judgment upholding the validity of the 
furlough program already had been appealed and the Legislature could not have 
known how the appeal ultimately would be resolved, it is reasonable to assume 
that body recognized that the reduction in employee compensation mandated by 
the revised 2008 Budget Act would have to be implemented prior to a final 
resolution of the appeal.  We conclude that, in view of the exigent circumstances 
facing the Legislature, it intended to permit the then-existing furlough program to 
be used as an alternative to other means that might be agreed upon through the 
collective bargaining process, without regard to whether the appellate courts 
ultimately determined that the Governor or the DPA possessed the authority to 
impose an unpaid furlough program unilaterally. 
Accordingly, we conclude that the phrase “existing administration 
authority” — as used in section 36 of Senate Bill 3X 2 — was intended to 
encompass the then-existing furlough program.  By enacting this provision, the 
Legislature, through the exercise of its own legislative prerogative, authorized the 
substantial reduction in the appropriations for employee compensation, mandated 
in the revised budget legislation, to be achieved through the two-day-a-month 
furlough plan. 
B 
Plaintiffs contend, however, that because section 3.90, subdivision (c) of 
the revised 2008 Budget Act (added by Sen. Bill 3X 2, § 36) provides that 
 
75 
“[n]othing in this section shall change or supersede the provisions of the Ralph C. 
Dills Act,” the provisions of section 3.90, subdivision (a) must be interpreted to 
permit the reduction in employee compensation for represented employees to be 
achieved only through the collective bargaining process and not alternatively 
through the challenged furlough program.  Although, as we have discussed above, 
the Dills Act does not permit the Governor or the DPA unilaterally to impose a 
mandatory unpaid furlough for represented employees (in the absence of an 
authorizing provision in an applicable MOU, unless the parties have reached an 
impasse in negotiations), nothing in the Dills Act precludes the Legislature from 
adopting such a furlough plan through a legislative enactment as one method of 
reducing the compensation of state employees when such cuts are found necessary 
and appropriate in light of the state‟s fiscal condition.  (See, e.g., Greene, supra, 5 
Cal.App.4th 155, 186-193 [upholding application of budget-related statute that, as 
interpreted, permitted the DPA unilaterally to implement its final offer regarding 
reductions in the state employer‟s contributions to represented employees‟ health 
care premiums]; Stationary Engineers Local 39 (2009) PERB Dec. No. 2085-S 
[34 PERC ¶ 24, p. 97] [“We find nothing in the language or legislative history of 
[§ 3517.8] to indicate the Legislature intended to limit its authority to legislate 
changes in terms and conditions of employment during the period when DPA is 
bargaining with a recognized employee organization following the expiration of an 
MOU”]; AFSCME Local 2620 (2008) PERB Dec. No. 1978-S [32 PERC ¶ 148, 
p. 577] [“The Dills Act . . . does not preclude the Legislature itself from 
unilaterally adopting, enacting or implementing terms and conditions of 
employment which, if implemented by DPA without legislative direction, would 
have been an unfair practice if not negotiated”].)  If, as we have concluded, the 
Legislature agreed to permit the reduction in the appropriations for employee 
compensation embodied in the revised 2008 Budget Act to be achieved either 
 
76 
through the collective bargaining process or through the two-day-a-month 
furlough plan, the adoption of such a legislative provision did not operate to 
change or supersede the provisions of the Dills Act.36 
C 
Plaintiffs further contend that even if the provisions of section 3.90, 
subdivision (a) of the revised 2008 Budget Act are interpreted to authorize the use 
of the furlough plan as one permissible alternative means of achieving the 
                                              
36  
On or about February 24, 2009, the DPA and SEIU (one of the plaintiffs in 
this litigation) reached agreement upon new MOU‟s (covering the period from 
July 1, 2008 to June 30, 2010) for numerous bargaining units represented by 
SEIU.  (See, e.g., Bargaining Unit 1 ([SEIU, Local 1000]) Tentative Agreement 
07-01-08 to 06-30-10, at  [as of Oct. 4, 2010].)  A provision included in the new MOU‟s 
(entitled New Mandatory Personal Furlough Leave Program) would have reduced 
the number of mandatory unpaid furlough days for employees covered by the 
agreements to one day a month. 
 
The furlough provision included in the new SEIU MOU‟s did not take 
effect immediately, because the proposed reduction of furlough days required the 
expenditure of funds for which no appropriation had been made by the 
Legislature.  (See § 3517.6, subd. (b).)  A bill that would provide legislative 
approval of the new SEIU MOU‟s was introduced in the Assembly on 
February 26, 2009, and was amended on March 23, 2009, to refer explicitly to the 
furlough program contained in the MOU‟s.  (Assem. Bill No. 964 (2009-2010 
Sess.) §§ 5, 6 (Assembly Bill 964).)  That bill proposed to appropriate more than 
$9.4 million to augment the appropriation for state employee compensation for the 
2008-2009 fiscal year.  (Assem. Bill 964, § 7.)  On May 4, 2009, however, 
Assembly Bill 964, as amended on March 23, 2009, failed to obtain the two-thirds 
affirmative vote necessary for passage. 
 
The proposed legislation seeking approval of the new SEIU MOU‟s 
demonstrates that any solution to the reduction in appropriations for employee 
compensation contained within the revised 2008 Budget Act and the 2009 Budget 
Act arrived at through the collective bargaining process, and providing treatment 
for represented employees more favorable than that afforded by the two-day-a-
month furlough plan, would become effective only if new legislation, 
appropriating additional funds for such purposes, were enacted into law. 
 
77 
reduction in employee compensation mandated by that section, the Legislature 
was prohibited by the “single subject” rule embodied in article IV, section 9 of the 
California Constitution from enacting such a proposal as part of the budget act 
itself, and could do so only through passage of a separate “trailer bill” or some 
other independently enacted legislative measure.  We disagree. 
Prior decisions have stated that “ „ “ „the budget bill may deal only with the 
one subject of appropriations to support the annual budget‟ ”, and thus “ „may not 
constitutionally be used to grant authority to a state agency that the agency does 
not otherwise possess‟ ” or to „ “substantively amend [] and chang[e] existing 
statute law.‟ ” ‟ ”  (Planned Parenthood Affiliates v. Swoap (1985) 173 
Cal.App.3d 1187, 1199 (Planned Parenthood) [quoting Association for Retarded 
Citizens v. Department of Developmental Services (1985) 38 Cal.3d 384, 394, 
which in turn was quoting 64 Ops.Cal.Atty.Gen. 910, 917 (1981)].)  Section 3.90, 
however, unlike the budget act provisions at issue in Planned Parenthood and a 
number of other cases (see, e.g., Planned Parenthood, supra, 173 Cal.App.3d 
1187, 1190, fn. 1; California Lab. Federation v. Occupational Safety and Health 
Stds. Bd. (1992) 5 Cal.App.4th 985, 991, fn. 4; Homen v. Gomez (1995) 37 
Cal.App.4th 597, 599-600), does not substantively amend or change any existing 
statutory provision or expand or restrict the substantive authority of any state 
agency, and cannot reasonably be described as a substantive policy change 
“masquerading as [a] Budget Act provision[].”  (California Lab. Federation, 
supra, 5 Cal.App.4th at p. 996.)37 
                                              
37  
In Planned Parenthood, supra, 173 Cal.App.3d 1187, the budget act 
provision at issue effectively amended existing statutes to prohibit the state Office 
of Family Planning from making state funds available to any clinic “ „which 
performs, promotes, or advertises abortions. . . .‟ ”  (Id., at p. 1191, fn. 1)  In 
California Lab. Federation v. Occupational Safety and Health Stds. Bd., supra, 5 
(Footnote continued on next page) 
 
78 
In particular, section 3.90 of the revised 2008 Budget Act does not alter the 
provisions of Government Code section 19826 or purport to grant the Governor or 
the DPA authority to impose unpaid furloughs unilaterally, but rather embodies 
the Legislature‟s determination that the two-day-a-month furlough plan is a 
permissible means by which the specific reductions set forth in section 3.90 may 
be implemented.38  Section 19826 places no limitation upon the Legislature’s 
                                                                                                                                                              
(Footnote continued from previous page) 
Cal.App.4th 985, the budget act provision amended the private attorney general 
fee statute (Code Civ. Proc., § 1021.5) to limit the amount that could be recovered 
under that statute from state agencies.  In Homen v. Gomez, supra, 37 Cal.App.4th 
597, the budget act provision amended the existing prison visitation policy to 
prohibit family visitation by persons convicted of specified crimes.  (See also 
Association for Retarded Citizens v. Department of Developmental Services, 
supra, 38 Cal.3d at pp. 391-394 [court declined to interpret budget act provision in 
a manner that (1) would have reduced the services that developmentally disabled 
persons had a right to receive at state expense under the preexisting Lanterman 
Developmental Disabilities Services Act (Welf. & Inst. Code, §§ 4500-4846), and 
(2) would have fundamentally altered the respective responsibilities of the state 
Department of Developmental Services and of local regional centers under this 
legislation; the court explained that such an interpretation of the budget act 
provision would raise serious constitutional questions under the single subject 
rule].) 
38   
Other legislation, enacted at the same time as part of the February 2009 
budget package, makes it quite clear that the Legislature did not intend to grant the 
Governor or other executive officials ongoing authority, even in a fiscal 
emergency, to reduce appropriations for employee compensation that had been 
agreed to in an MOU. 
 
In September 2008, as part of an earlier budget package, the Legislature 
added a new provision, section 13312, to the Government Code.  That statute, as 
originally enacted, provided that, commencing with the 2008-2009 fiscal year, if, 
after the annual budget act was enacted, the Director of Finance determined that 
the fiscal year budget was likely to be substantially out of balance, the Director of 
Finance could reduce General Fund items of appropriations, subject to a number 
of conditions and exceptions set forth in the provision.  (Stats. 2008, ch. 751, § 33, 
eff. Sept. 30, 2008.)  As part of the budget package adopted in February 2009, the 
Legislature amended section 13312, adding, as an additional category of 
(Footnote continued on next page) 
 
79 
authority to increase or reduce the pay or salaries of state employees, and section 
3.90 simply represents an exercise of the Legislature‟s reserved authority over 
state-employee compensation.  Past budget acts have included similar provisions 
directing that an increase in appropriations for employee compensation set forth in 
the budget act be implemented in a particular manner specified by the Legislature, 
even when the DPA or its predecessor (the State Personnel Board) would not have 
had authority to make those particular salary adjustments itself under the existing 
statutory provisions (see Pacific Legal Foundation v. Brown, supra, 29 Cal.3d at 
pp. 190-191 & fns. 13-14 [citing budget provisions]),39 and those budget act 
provisions never have been viewed as violating the single subject rule. 
                                                                                                                                                              
(Footnote continued from previous page) 
appropriations that the Director of Finance was not permitted to reduce under the 
provision, appropriations for “[a]ny collective bargaining agreement with a 
recognized state employee organization.”  (§ 13312, subd. (b)(1)(I), enacted by 
Stats. 2009-2010 3d Ex. Sess., ch. 4, § 2, eff. Feb. 20, 2009.)  Thus, although the 
Legislature was willing, as part of the comprehensive budget package enacted in 
February 2009, to afford the Director of Finance some ongoing authority to reduce 
appropriations in order to deal with a developing midyear budget deficit, the 
Legislature was unwilling, even in such circumstances, to grant unilateral 
authority to this official to reduce the agreed-upon employee compensation 
embodied in an MOU. 
 
Although the amended version of section 13312 was enacted, and was 
signed into law on February 20, 2009, that statute never became operative.  As 
amended, section 13312 specified that it would become operative only if one of 
the constitutional amendments that was to be placed on the ballot in an upcoming 
special statewide election was approved by the voters.  (See § 13312, subd. (g).)  
At the special election held on May 19, 2009, the proposed constitutional 
amendment was rejected by the voters, and thus section 13312 never became 
operative. 
39 
For example, in 1969 a budget act provision specified that “special inequity 
salary adjustments” for that budget year were to be conferred only upon those 
employees who were in occupational groups that were earning 7 percent or more 
below the prevailing data and whose monthly salary did not exceed $950 (Stats. 
(Footnote continued on next page) 
 
80 
The Legislature‟s use of  the term “existing administration authority” to 
encompass the existing furlough plan as a permissible means of budget reduction 
is not inconsistent with our conclusion that the Governor and the DPA lacked 
authority to impose such furloughs under the existing general statutory provisions.  
As explained above, the context in which section 3.90 was adopted makes plain 
the Legislature‟s intent to authorize the furlough plan whether or not the 
Governor‟s or the DPA‟s unilateral authority to impose furloughs ultimately was 
vindicated on appeal.  The Legislature exercised its own authority to ratify 
furloughs, and did not need to expand or modify preexisting executive authority in 
order to do so.  Moreover, to the extent the language of section 3.90 is ambiguous 
in this regard, our decision in Association for Retarded Citizens v. Department of 
Developmental Services, supra, 38 Cal.3d at p. 394, demonstrates that this 
provision should not be interpreted to expand or modify the Governor‟s or the 
DPA‟s authority, under preexisting statutes, in a manner that would raise 
constitutional questions under the single subject rule. 
We conclude that the budget act provision here at issue concerns only 
“ „ “ „the one subject of appropriations to support the annual budget‟ ” ‟ ” 
(Planned Parenthood, supra, 173 CalApp.3d at p. 1199) and not more than one 
subject. 
                                                                                                                                                              
(Footnote continued from previous page) 
1969, ch. 355, item 297.1, pp. 784-785), and in 1976 the budget act prescribed a 
$70 per month salary increase for all state employees other than those employed 
by the California Highway Patrol (who were provided a $120 per month increase).  
(Stats. 1976, ch. 341, § 15, p. 938.)  
 
81 
D 
Accordingly, we conclude that the provisions of section 3.90, added by the 
revised 2008 Budget Act in February 2009, authorized the state to implement the 
reduction in employee compensation mandated by that section through the two-
day-a-month unpaid furlough program that already had been implemented at the 
direction of the Governor. 
IX 
Although, for the reasons discussed above, we disagree with much of the 
trial court‟s reasoning, in light of the legislative measures enacted after the trial 
court‟s ruling we conclude that plaintiffs are not entitled to the relief sought in this 
litigation.  Accordingly, the judgment rendered by the trial court, denying the 
relief sought in these mandate proceedings, is affirmed.  The parties shall bear 
their own costs on appeal. 
 
 
 
 
 
 
 
 
 
GEORGE, C. J. 
WE CONCUR: 
 
KENNARD, J. 
BAXTER, J. 
WERDEGAR, J. 
CHIN, J. 
MORENO, J. 
 
1 
 
 
 
 
 
 
 
 
CONCURRING OPINION BY CORRIGAN, J. 
 
 
 
I concur.  I am in full agreement with the conclusion that the Legislature 
endorsed the Governor‟s furlough plan in the budget legislation at issue.  I also 
agree that, by reducing the appropriation for employee compensation, the 
Legislature rendered ineffective the pay provisions in the expired memoranda of 
understanding, which had been extended by statute.  (Gov. Code, §§ 3517.6, subd. 
(b), 3517.8, subd. (a).1)  I take a slightly different view, however, on the meaning 
of “existing administration authority” in section 3.90, subdivision (a) of the 
revised 2008 Budget Act.  (Stats. 2009, 3d Ex. Sess. 2009-2010, ch. 2, § 36, 
adding § 3.90 to the original 2008 Budget Act (Stats. 2008, ch. 268).  See maj. 
opn., ante, at p. 12.)  Furthermore, I do not agree that section 19826, subdivision 
(b) bars the Department of Personnel Administration (DPA) from implementing 
furloughs.  If it did, we would have a single-subject problem.  The Legislature has 
retained considerable authority over matters of state employee compensation, but 
it is not free to disregard statutory restrictions and grant agencies new authority in 
a budget bill. 
 
 As explained in the majority opinion, it is clear from the context of the 
budget negotiations at the end of 2008 and the beginning of 2009 that the 
Legislature adopted the savings realized by the Governor‟s furlough plan.  But it is 
important to note that when it took this action, the Legislature did not create new 
                                              
1  
Further statutory references are to the Government Code. 
 
2 
administrative authority out of whole cloth, or rely entirely on an executive order 
that was without legal support.  DPA has statutory jurisdiction — i.e., “existing 
administration authority” — over the salaries and hours of state employees.  
(§§ 19816, subd. (a), 19849; Gilb v. Chiang (2010) 186 Cal.App.4th 444, 465; 
Tirapelle v. Davis (1993) 20 Cal.App.4th 1317, 1322.)  For reasons stated in the 
majority opinion, the executive branch lacks unilateral authority to implement 
furloughs.  However, when the Legislature authorized the furlough program, it did 
not enlarge DPA‟s administrative functions.  This is significant, because the 
single-subject rule requires that a budget bill deal only with the one subject of 
appropriations to support the annual budget.  It may not constitutionally grant 
authority to a state agency that the agency does not otherwise possess, or amend 
existing statutory law.2  (Association for Retarded Citizens v. Department of 
Developmental Services (1985) 38 Cal.3d 384, 394; California Lab. Federation v. 
Occupational Safety & Health Stds. Bd. (1992) 5 Cal.App.4th 985, 991; Planned 
Parenthood Affiliates v. Swoap (1985) 173 Cal.App.3d 1187, 1199; see also 
Homan v. Gomez (1995) 37 Cal.App.4th 597, 599-600.)  
 
The majority holds that the trial court erred when it ruled that the furlough 
plan did not implicate section 19826, subdivision (b), which provides that DPA 
“shall not establish, adjust, or recommend a salary range for any employees” 
represented by a union.  However, if this statute prohibits the salary adjustments 
resulting from furloughs, then by removing that prohibition section 3.90 would 
indeed grant authority to DPA that it did not otherwise possess and would change 
existing statutory law, in violation of the single-subject rule as framed in the cases 
cited above.  I am not persuaded by the majority‟s declaration that existing statutes 
                                              
2  
This does not mean agencies cannot gain the authority to take action in 
their sphere of operations as a result of budget provisions; of course that is a 
routine effect of appropriations or reductions in spending.  It does mean that the 
Legislature cannot enlarge the scope of agency authority in a budget bill. 
 
3 
place no limitation on the Legislature‟s reserved authority over state employee 
compensation.  The single-subject rule says otherwise.  Just as the Legislature was 
not free to disregard the statutes governing services for the developmentally 
disabled in Association for Retarded Citizens v. Department of Developmental 
Services, supra, 38 Cal.3d 384, it was not free in this case to disregard the statutes 
governing employee compensation.  The Legislature‟s authority to reduce 
appropriations for employee compensation is broad, but its authority to create new 
programs like the furlough plan is subject to existing statutory restrictions. 
 
  In my view, the trial court reached the correct conclusion on the 
applicability of section 19826, subdivision (b).  This statute is concerned with 
salary ranges, and furloughs do not affect ranges.  The ranges remain in place, and 
salaries return to their ordinary levels when the furlough program expires.  
Certainly, furloughed employees consider the ordinary levels to represent their 
true salaries.  Employees hired during a furlough period would not be informed 
that their salary was the reduced amount resulting from furloughs.  Rather, they 
would naturally be told, and would understand, that their salary was the higher 
amount that would normally be paid.  While furloughs result, as a practical matter, 
in a temporary salary reduction, they are not the same thing as the five percent 
salary cuts that the Greene court deemed a violation of section 19826, subdivision 
(b).  (Department of Personnel Administration v. Superior Court (Greene) (1992) 
5 Cal.App.4th 155, 174.)  Under the furlough program, salaries remain the same 
for purposes of benefits calculations, and indeed for determining the amount of 
paychecks in accordance with the reduction in hours worked.  Accordingly, I 
would hold that section 19826, subdivision (b)‟s bar against adjustment of salary 
ranges does not apply to furloughs. 
 
For the reasons stated above, I concur in the result reached by the majority 
opinion.  
 
 
 
 
 
 
 
 
 
CORRIGAN, J. 
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Professional Engineers in California Government v. Schwarzenegger 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding XXX 
Review Granted 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S183411 
Date Filed: October 4, 2010 
__________________________________________________________________________________ 
 
Court: Superior 
County: Sacramento 
Judge: Patrick Marlette 
 
__________________________________________________________________________________ 
 
Counsel: 
 
Law Offices of Brooks Ellison and Patrick J. Whalen for Plaintiffs and Appellants California Attorneys, 
Administrative Law Judges and Hearing Officers in State Employment. 
 
Paul Harris and Anne M. Giese for Plaintiff and Appellant Service Employees International Union Local 
1000. 
 
Gerald A. James; Altshuler Berzon, Stephen P. Berzon and Danielle Leonard for Plaintiffs and Appellants 
Professional Engineers in California Government and California Association of Professional Scientists. 
 
Reed Smith, Harvey L. Leiderman and Jeffrey R. Rieger for Teachers‟ Retirement Board of the California 
State Teachers‟ Retirement System as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Kelly Vent as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Richard J. Chivaro, Ronald V. Placet, Shawn D. Silva, Ana Maria Garza; Remcho, Johansen & Purcell, 
Robin B. Johansen and Margaret R. Prinzing for Defendant and Appellant. 
 
K. William Curtis, Warren C. Stracener, Linda A. Mayhew, Will M. Yamada; Kronick, Moskovitz, 
Tiedemann & Girard, David W. Tyra, Kristianne T. Seargeant and Meredith H. Packer for Defendants and 
Respondents. 
 
Edmund G. Brown, Jr., Attorney General, Gordon B. Burns, Deputy State Solicitor General, Jonathan K. 
Renner, Assistant Attorney General, James M. Humes Stephen P. Acquisto and Mark R. Beckington, 
Deputy Attorneys General, for California Constitutional Officers as Amicus Curiae. 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Patrick J. Whalen 
Law Offices of Brooks Ellison 
1725 Capitol Avenue 
Sacramento, CA  95811 
(916) 448-2187 
 
Anne M. Giese 
1801 14th Street 
Sacramento, CA  95811 
(916) 554-1279 
 
Gerald A. James 
455 Capitol Mall, Suite 501 
Sacramento, CA  95814 
(916) 446-0400 
 
Robin B. Johansen 
Remcho, Johansen & Purcell 
201 Dolores Avenue 
San Leandro, CA  94577 
(510) 346-6200 
 
David W. Tyra 
Kronick, Moskovitz, Tiedemann & Girard 
400 Capitol Mall, 27th Floor 
Sacramento, CA  95814 
(916) 321-4500