June Interim Committees Examine Public Employee Affairs

UPEA field staff member Christy Cushing attended the Government Operations and Political Subdivisions Interim Committee Meeting on Wednesday June 17, 2009. The following is an update of the discussion:

State Employee Compensation – Briefing

Policy Analyst Benjamin Christensen reviewed slides describing the three parts within state employee compensation, which include employees, salary and compensation spending. Most notable, Christensen said that over the past ten years, the number of state employees has decreased from .896% to .764% in 2009. Currently the average state employee makes $44,903 and the average costs of benefits (i.e. health insurance and leave) are $23,908.

Over the last ten years, state employee compensation has barely risen above inflation; whereas, county employees’ compensation has risen 15-24% above inflation. Jeff Herring and Debbie Cragun from DHRM discussed some of the issues with state employee compensation.

Herring noted that “employees are typically viewed as a cost,” and asked “how do we maximize a return on our investment.” Herring continued to explain the need to balance compensation and benefits to employees. State employees’ compensation is benefit driven, not pay, and in order to compete and draw applicants, we need to design a compensation package that will attract and retain employees.

Cragun noted that DHRM is mandated by statute to complete an annual survey and compile data, researching state employee compensation and benefits packages. To complete this annual research, DHRM uses both local and regional comparative data. The 2008 salary survey showed that “state employees’ salary ranges are -9.9% below market” and “actual average salaries are 13.9% below market.” Below-market compensation perpetuates the issues of compression.

Cragun said, “compression occurs when you have a large percentage of your workforce at the lower end of the salary range.” She added, “Employees are not moved through salary ranges as intended. In the private sector, within three to five years of employment, employees should be at midpoint in pay; yet 72% of the State’s workforce are below midpoint” with an average of 10.6 years of service.”

Utah’s highly educated, highly skilled, and highly certified workforce continue to be significantly underpaid and undervalued.

Cragun asked, “With the worker shortage looming on the horizon and non-competitive wages, who will fill these jobs?”

Herring said, “In this economy, there is not an issue of high turnover, however when the economy turns around, our older workforce will retire and it will be more challenging to recruit and retain state employees, resulting in a substandard workforce, solutions should include balancing compensation for the workforce as a whole…we must be concerned with both salary ranges and actual pay.”

Co-Chair Rep. Frank noted that the Committee would carefully look at the data, as the legislature values its employees and knows they could be working elsewhere.

Four-day Work Week for State Employees Program – Update

Jeff Herring, Executive Director of DHRM gave an overview for a survey about the 4/10 work week. Herring explained that “government is in existence to serve the taxpayer” and there are certain “factors that will be involved as to whether or not [the 4-10 Initiative] will be continued and/or modified.”

The employee surveys from July 2008, November 2008, and May 2009 show that the majority of state employees preferred the 4/10 work week. In addition, since the 4-10 work weeks’ inception, overall leave usage decreased 5.3%, overtime pay decreased 18.2%, and comp time decreased 19.7%. The overall estimated approximate cost savings averages out to $1,108,598.

Nevertheless, Herring said that there needs to be more “focus on customer service and partners (League of Counties and Towns, and individual Counties) and get data from them to see about keeping or modifying” the four day work week.

Consolidation of State Agency Functions

Rep. Wayne Harper discussed the ways to consolidate the Department of Health, Human Services, Environmental Quality, and Workforce Services into either three or one agency(s). Rep. Harper said that there are duplicate services being offered at these four state agencies.

Rep. Harper presented the example of an average citizen trying to claim and acquire unemployment benefits and how he/she must go from agency to agency to acquire those benefits.

Rep. Bigelow, who is a member of the Govt. Ops Committee asked Rep. Harper how he proposed addressing the extensive effort required to research consolidating theses four large state agencies, which, he said, “demands attention from the Executive Branch.”

Rep. Harper said he hoped to get some small working groups together from the Executive Directors of DOH, DHS, DWS, and DEQ with the Governor’s Office and legislative staff to discuss consolidation in detail.

Co-Chair Rep. Hunsaker asked Rep. Harper if he proposed “to identify specific or general savings” with consolidating the four agencies. Rep. Harper said the intent is to realize specific savings based on the elimination of appointed positions.

In addition, Rep. Harper said that the Committee Members should look into consolidating the administrative services within the Department of Community and Culture. He believes this task would be easier than consolidating DOH, DHS, DWS, and DEQ.

Rep. Janice Fisher, a member of the Govt Ops. Committee noted that she does not believe that “bigger is better by combining” and that the idea of consolidating agencies makes her nervous, especially if the sole purpose is for efficiency. Rep. Fisher continued to say that she would “hate to combine departments and lose skilled people. We should look at the efficiencies, but need to be very, very careful.”

UPEA will continue to monitor Rep. Harper’s proposal to consolidate the DOH, DHS, DWS, and DEQ.

Workforce Services and Community and Economic Development Interim Committee

UPEA staff member Todd Losser attended the Workforce Services and Community and Economic Development Interim Committee today at 2:00 p.m. A presentation by Executive Director Kristen Cox, Jon Pierpont, and Steve Cuthbert was given to the Committee for an update on the new Eligibility Services Division and eREP computer system update.
The goals of the division are to have a centralized division, standardized workload, reduced cost, and to meet customer needs. The division was created through a new design and business model and will be operating June 22nd. Employees will have timely feedback on their performance and will be monitored more closely. Skills testing will take place every year to ensure employees are meeting the required skills to do their job. UPEA will continue to monitor the new Eligibility Division.

UPEA's Involvement with DSPD

UPEA has had numerous conversations with DSPD employees who are members, legislators and DSPD administrators. Those who are receiving UPEA communiqués should know that UPEA has been involved since March 26th when DSPD Executive Director, Alan Ormsby, met with supervisors to address budget cuts. A day after that meeting, Ormsby issued a memo that detailed options for fixing the DSPD budget while maintaining services to DSPD clients. One of the key issues to emerge from that memo was a so-called last minute budget cut:

“Then the last day they decided to replace 2.5 million dollars in funding for the State Hospital. And the way they did that is they took that money out of the rest of the Department. So the Department got cuts--the Executive Director’s office got cut $650,000; ORS got cut about a million; Aging Services got cut about $265,000, and DSPD got cut $607,000. Legislators may not have recognized exactly what that meant. The way they made us take the cuts were pretty drastic. They took $106,000 out of administration (State Office), and then they took $501,000 out of support coordination, and they targeted it that way, and that is probably the hardest thing. If we could have balanced the $607,000 cut across USDC and across services, we could have handled that fairly easily. Cut was pointed. Some speculate it may have been a slap to Lisa Michelle Church, and others have speculated it may have been due to simple ideology. Rep. Dougal has always been for smaller government & may have thought he needed to do more to shrink Human Services.” (Excerpt from DSPD March 26th Memo).

Subsequently, UPEA began contacting allies in the Health and Human Services Joint Appropriations subcommittee. This committee is responsible for HHS budgets. We did not contact Rep. Christine Johnson because she does not belong to this subcommittee. We contacted Rep. Paul Ray, who said the committee would examine the issue. On Wednesday, May 20th, UPEA issued an email stating that funding had been restored, thanks to legislative allies. However, Ormsby contacted UPEA the next day stating that the funding restoration was to fix a math error. DSPD employees were in the same predicament of losing their jobs.

UPEA has played a direct role in representing DSPD employees to the legislature, news media and policy-makers. Members and non-members alike may meet with UPEA any time to discuss our measures and future options. If employees would like to meet with a UPEA representative, please call me directly to schedule a time: 801-264-8732 ext. 209.

Also, UPEA will be monitoring, among other issues, item 3 on the HHS interim meeting agenda for Wednesday, June 17th. Lisa Michelle Church is requesting policy guidance in light of budget reductions for DSPD. Here is the agenda: http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2009&Com=INTHHS
I’ll issue a report to all members when I know more.

Thanks!

ORS Admin. Says Agency is Hopeful for 2010

Despite recent cuts during the 2009 1st Special Session of the State Legislature, the Office of Recovery Services is hopeful that they can manage cuts without significant layoffs. ORS administration said that the legislature has increased the amount of money it is willing to draw from federal stimulus money without using General Fund money. However, the agency will still implement changes to accomodate mounting budget cuts.

DSPD Funding Restored, ORS Stunted by Cuts

The UPEA staff have been monitoring today's Interim and 1st Special Session of the 2009 Legislature. Prior to today, UPEA met with policymakers to discuss the loss of funding in DSPD that resulted in a loss of Federal Match funds. UPEA is happy to report that the funding cut during the session has been restored by House Bill 1003. UPEA would like to thank Rep. Paul Ray, the Governor's Office, and other members of the committee who helped with this issue.

UPEA is concerned that the Office of Recovery Services will lose a significant portion of their funding with Senate Bill 1004 (see lines 214-219). UPEA has been putting in calls with legislators and ORS. We will update members when we know more.

Question of Privatization

In the last hours of the 2009 Legislative session, the legislature passed an amendment to reduce DSPD’s budget by $600,000. Last week, DSPD supervisors and directors met to discuss their options. Many employees were aware of the deliberations. Subsequently, the supervisors decided to release minutes from the meeting outlining options that included converting line staff at DSPD to private coordinators.

Members immediately notified UPEA about the issue and media called to find out what was going on. As of now, the privatization issue is a proposal in its early stages. UPEA does not believe DSPD can be privatized without legislative action. However, UPEA is scheduling meetings with DHS and the governor’s office to assess the situation. Here is what we know, directly from Lisa-Michelle Church’s office:

• During the past few years, an increasing number of Disabilities caseworkers (support coordinators) have opted to leave the agency and work as private caseworker providers. Medicaid regulations and Division of Services for People with Disabilities’ rule authorize this option. Since September 2008, 25 Division employed support coordinators quit to become private support coordinators. The Division is in the process of determining whether accelerating the trend toward private support coordination makes sense in light of the budget cuts.
  
• No decisions have been made in terms of level or a time line for privatizing the support coordination services. The Division’s focus is on preservation of services within the fiscal constraints and mainlining quality of service.
  The Division is looking at the possibility of privatizing support coordination services due to a 2.8 million dollar general fund budget. Medicaid requirements allow any willing provider to participate. The state would be following national trends toward privatizing these services.
  
• In the planning process, the Division will be engaging various stakeholders. We recognize employees are anxious as we move forward with the discussions but this should not be interpreted as privatization so much as balancing the “any willing provider” portion of Medicaid against fiscal limits presented by budget cuts.

UPEA opposes privatization because it would reduce or eliminate employee benefits and decrease services to the public it serves. We will update employees as we find out more.

Last days on the hill

We are entering the final days of a very difficult Legislative session.

House Joint Resolution 29, Legislative Direction to the Public Employees' Benefit and Insurance Program sponsored by Representative Brad Dee passed the House of Representatives late Wednesday afternoon with a 57 yes; 14 no; 4 absent vote. This resolution will change the employer/employee split on the health insurance premium from a 98/2 to a 95/5 split. The health insurance increase is $17.3 million with $6 million funded through PEHP reserves; $6 million funded by increasing the employer/employee split in premium; and the rest of the increase funded by adjusting the benefits within the plans.

UPEA had encouraged its members to contact their legislators about funding the entire health insurance increase. The legislature chose to adjust the employees’ share of premium in lieu of suspending the 1.5% contribution into employees’ 401(k) fund and did not mandate furloughs throughout state government. Several options were discussed regarding the PEHP increase including placing high deductibles and creating out of pocket minimum and maximum amounts on health insurance. Other alternatives that were discussed would have been a greater burden on the employee. While this is not the best-case scenario it is certainly a better outcome than was originally considered by the Legislature.

During the floor debate, Representative King asked the sponsor of the bill if he had communicated with UPEA regarding HJR29. Representative Dee indicated that House leadership had met with UPEA regarding the health insurance increase.

Senate Bill 195 - Senator Dan Liljenquist has indicated he will withdraw Senate Bill 195, Public Employee Defined Contribution Amendments, which would suspend the 1.5% state 401(k) match for all state employees for one year. However, the bill has been placed on the Senate second reading calendar and circled. UPEA will continue to watch this bill.
Thank you for your telephone calls and emails to legislators.

Surprise! HB 451 & Updates

House Bill 451, sponsored by Brad Dee, R-Ogden, requires the state to bid out its health insurance program for state employees every two years. The bill appeared on the House Floor yesterday, as the house was finishing up its regularly scheduled bills. The house suspended its rules to bring the bill to the floor without first having heard it in a committee.

The bill caught many legislators off-guard, but still passed 51-22. UPEA is analyzing the impact of the bill. It could create a paradigm for fitting benefits to costs in contrast to the current system which tries to preserve benefits. Currently, PEHP determines how the benefit will be adjusted to fit a funding shortfall. Many legislators feel that they have no input on the benefit adjustments with PEHP. The bill is currently in Senate Rules for further consideration. UPEA anticipates that the sponsor will send the bill to interim study.

UPDATE
The legislature has discussed options regarding the $17.3 million increase in health insurance. UPEA has maintained an ongoing dialogue with PEHP and the legislature regarding health care options. At this time, the legislature has discussed using $6.3 million from PEHP reserves and taking the employer/employee split from 98/2 to 95/5.

UPDATE
As of today, house leadership is scrapping employee furloughs. Instead, representatives have been back-filling their base-budget to reduce the need for furloughs. However, due to program cuts in various departments, agencies may reduce personnel.