New Report Calls Efficacy Of Furloughs Into Question

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Analysis: "High cost of furloughs"

University News Editor Angelica Dongallo talks with reporter Melody Ng about a study published which analyzes the effects of a furlough.

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State-mandated furloughs may not be as financially effective as anticipated, according to a UC Berkeley study released Thursday.

The report from the UC Berkeley Labor Center said furloughs­­­-imposed on state employees since July in an effort to decrease the state budget deficit-may actually reduce productivity in state employees and offset intended gains.

Gov. Arnold Schwarzenegger instated a furlough program for 193,000 state employees, requiring them to take three furlough days per month from July 1 to June 30, 2010. The furloughs result in a pay cut of 13.8 percent-or seven weeks' worth-of an employee's annual salary.

The governor estimates the furlough program will save the state about $1.3 billion for the 2009-10 fiscal year. However, the UC Berkeley study said the program will only net an estimated savings of $738 million for the general fund during that time.

The study estimates a $2 billion reduction in wages and benefits for employees under the statewide program during the 2009-10 fiscal year.

Ken Jacobs, chair of the labor center and the study's author, said the decrease in employees' salaries and benefits could increase stress and lower their morale, which could then reduce productivity and increase possible work errors.

"When people are worrying about paying the bills, it's going to have an impact on their performance on the job," Jacobs said. The study suggests having only one furlough day per month.

Jacobs said furloughs in revenue-generating departments, like the Franchise Tax Board, will result in a further loss of $363 million in tax collections.

"They're furloughing people paid on federal dollars, and the state is losing federal revenue," he said. "Furloughing people whose job is to bring money into the state makes problems worse."

Schwarzenegger's furlough program differs from the UC system program that began on Sept. 1. Under the university furlough program, most university employees are required to take furlough days on a graduated scale, depending on their income level.

According to UC spokesperson Steve Montiel, applying the study to the UC system's furlough program is "like comparing apples to oranges."

The salary reduction for UC Berkeley faculty and staff caused by furloughs is roughly 4 to 10 percent.

Jacobs said UC Berkeley is not affected financially by furloughs to the same extent as on the state-level because the campus is only furloughing employees paid with UC funds.

However, he said while furloughs are preferable to layoffs, the campus should expect some faculty and staff to leave in the face of furloughs.

"In an academic institution, the potential for losing highly productive people is maybe even greater than it is for the state," Jacobs said.


Contact Melody Ng at [email protected]

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