House Press Release on Interim Study on State Employee Compensation

The House interim study on state employee compensation was held this morning at the state capitol. OPEA, among others, testified about the need to address state employee compensation. We are assembling a detailed report on all the testimony from our recording. In the meantime, below is the House press release on the morning. Obviously, with almost three hours of testimony, there is much more detail to come.

House Studies State Employee Compensation

OKLAHOMA CITY – State Rep. Leslie Osborn said conservative policy should include fair compensation for a quality state employee workforce.

“A well-compensated workforce that is efficient is a reasonable idea for a fiscal conservative to look at,” Osborn, R-Mustang. “As lawmakers, we are responsible for the recruitment and retention of the highest performing members of the workforce to deliver core state services.”

Oklahoma Secretary of Finance and Revenue Preston Doerflinger said he opposes across-the-board pay increases and longevity-based pay, but supports an appropriate level of compensation based on performance appraisals, and believes it is necessary to recruit high performers.

Doerflinger said lawmakers should strive to pay state employees 75-85 percent of the private sector market value of their position in order to be competitive.

The state has consistently lost ground on competitive compensation, according to Lucinda Meltabarger, state administrator of human capital management. As of fiscal year 2011, classified state employees are paid about 19.17 percent below market value.

Meltabarger said not all positions are paid equally in relation to the market. For example, IT professionals are paid about $20,000 more at certain local oil companies than at the state, she said.

An ideal turnover rate might be about 5 percent, Meltabarger said. According to Ron Wilson, state director of talent management, the fiscal year 2011 voluntary turnover rate for classified state employees was approximately 10 percent. The state loses $68 million annually due to turnover, he said.

Meltabarger recommended a more thorough study of state benefits to get a sense of their true value to potential employees rather than their cost to the state.

Oklahoma Department of Transportation Deputy Director and Chief Financial Officer Mike Patterson said it is difficult to recruit for the agency’s positions requiring the highest level of training or education. Highly trained agency employees are generally paid between 25-40 percent below the market value of their positions.

Oklahoma Treasurer Ken Miller said his office has trouble recruiting employees. He said as conservative lawmakers continue to reduce the size of state government, some of the savings should be used to recruit quality employees.

Jonathan Small, policy analyst for the Oklahoma Council of Public Affairs, said the state’s retirement system is outdated and encourages early retirement. Small recommended that the state move to a defined contribution plan for all new state employees. Another factor that affects turnover is employment security, especially with unclassified positions.

“I definitely agree that there are a number of jobs and classifications that need pay raises,” said Small.

“However, we need to understand that we will never be able to match private sector pay. I think we should try to get close as we restructure our benefit design.”

Small recommended statutory changes that would increase the flexibility agency heads have to provide compensation on a per job, per employee basis; allow for one-time bonuses; modernize the state benefit structure; and remove onerous barriers to compensation systems based on performance. Small specifically highlighted the need for competitive pay and benefits for corrections employees.

Oklahoma Public Employees Association Executive Director Sterling Zearley noted that entry-level child welfare specialists are paid on average at 23 percent below the market and that corrections officers begin at $11.83 per hour while an oil field worker is generally paid $25 per hour.

Zearley said he believes state employee pay should be 90 percent of market value, partially because benefits have been gradually reduced. He said he agrees with proposals to modernize benefits and move towards a performance-based system.

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