PROFESSIONAL ENGINEERS IN CALIFORNIA GOVT. v. SCHWARZENEGGER

g 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 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."

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." The statutory provisions following section 19997 prescribe 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 Board 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).)

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 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.

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).)

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.)

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 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.

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 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.

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 (see, ante, at pp. 1016-1023), 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. 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.

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, at p. 1019, fn. 20 [quoting § 19826].)

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 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. In view of both the purpose and the 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.

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." (Italics added.) 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 f — 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 compensated on a monthly, rather than a daily or hourly, basis (see Cal. Dept. of Finance, Salaries and Wages 2010-2011, passim, http://www.dof.ca.gov/budget/historical/ 2010-11/salaries_an d_wages/ [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.

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 reflect two non-work days. The adjustment applies only to the employee's base salary." (DPA PML Memo No. 2009-007, supra, p. 3 http://www.dpa.ca.gov/personnel- policies/pmls/index.htm [as of Oct. 4, 2010], italics added.)

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 nonrepresented employees in order to mitigate an anticipated budget shortfall, 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 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 discussed above (see, ante, at pp. 1012-1013), 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. 1050-1051, 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[dl for purposes of argument that a general concern over the state's financial condition is not an appropriate factor for the DPA to consider. . . ." ( 20 Cal.App.4th at pp. 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.

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:

"(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.

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 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 significant language contained in those clauses that appears to undermine the trial court's interpretation of the provisions. 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. 1043-1052.)

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 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 MOLT' (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, at pp. 1034-1035, 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 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 [ 220 Cal.Rptr. 411] [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.

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 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 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 (see, ante, at p. 1005), 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 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 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 (see, ante, at p. 1006, 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 "[Reductions in employee compensation were to 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 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 [ 64 Cal.Rptr.3d 210, 164 P.3d 630]; see, e.g., Coalition of Concerned Communities, Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 737 [ 21 Cal.Rptr.3d 676, 101 P.3d 563].) 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 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, p. 4, par. 22, italics added.) The comparable passage in the Assembly bill analysis states: "Reflects reductions 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, p. 3, 2d par. 12, 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. . . ." 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 "[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 [section 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 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.

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 07-01-2008 to 06-30-2010 http://www.dpa.ca.gov/ bargaining/contracts/index.htm [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.

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 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] [e]xisting statute law.'"'" ( Planned Parenthood Affiliates v. Swoap (1985) 173 Cal.App.3d 1187, 1191 [ 219 Cal.Rptr. 664] ( Planned Parenthood) [quoting Association for Retarded Citizens v. Department of Developmental Services (1985) 38 Cal.3d 384, 394 [ 211 Cal.Rptr. 758, 696 P.2d 150], 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, 1191, fn. 1; California Lab. Federation v. Occupational Safety Health Stds. Bd. (1992) 5 Cal.App.4th 985, 991, fn. 4 [ 7 Cal.Rptr.2d 399]; Homen v. Gomez (1995) 37 Cal.App.4th 597, 599-600 [ 43 Cal.Rptr.2d 647]), 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.)

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 Health Stds. Bd., supra, 5 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].)

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. Section 19826 places no limitation upon the Legislature's 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]), and those budget act provisions never have been viewed as violating the single subject rule.

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 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, 3d Ex. Sess. 2009-2010, 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.

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. 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.)

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 page 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 Cal.App.3d at p. 1199) and not more than one subject.

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.

Kennard, J., Baxter, J., Werdegar, J., Chin, J., and Moreno, J., concurred.