Interim Study on State Employee Compensation Held at Capitol

Paying state employees a wage that is more competitive in the open market has been a discussion topic for years at the state Capitol.

And while most sessions ended with just lip service on the topic, the 2013 Legislative session could result in raises state employees have been requesting.

Members of the House and executive branch met October 23 at the Capitol to learn about state employee compensation and discuss ways to address the issue. The study, IS40 State Employee Compensation, was requested by Rep. Leslie Osborn.

Rep. Osborn opened the study saying that it was not counterintuitive for conservatives to seek a solution to the issue of state employee compensation.

“A quality workforce is essential in providing core services to Oklahoma citizens,” Osborn said.

OPEA is recommending two steps to the state employee compensation problem. First, all state employees who meet standards will be provided with a performance payment of at least $1,000. Secondly, over the next three years, all state jobs will be brought to at least 90 percent of market. In addition to the 90 percent, a matrix would be established to provide performance pay.

Preston Doerflinger, the Director of the Office of Management and Enterprise Services and the Secretary of Finance, said recognizing the state is competing in the open market is key.

“If we are going to recruit and retain the best and brightest employees to work for the state of Oklahoma, we have to recognize that we aren’t paying our employees anything near what they can make in the private sector,” Doerflinger said.

Doerflinger stated that the basic job should be paid according to the market, approaching 85 percent entry level, with benefits considered to complete total compensation comparable to market value. In addition to market compensation, a pay for performance matrix should be implemented to compensate better employees and “rock stars.”

“Given the complexity of state government, there is no logical reason why it should work,” Doerflinger said. “There is one single reason that it does work and that is conscientious people showing up every day to do a good job in their respective places. We have some really great state employees working for us and it bothers me that they are frequently discouraged and thrown under the bus. If you stop and think about showing up for a job every day when you don’t particularly feel appreciated it is pretty demoralizing.

“We know that every single expense our state employees experience has increased and to put it in a finance term, their revenue hasn’t. A lot of state employees really do believe in public service. But if there’s a job that pays 20 grand more, none of us are immune to that and we are going to explore what provides best for our families.”

State Treasurer Ken Miller echoed the challenges to keep qualified employees. Miller indicated his agency was not only losing employees to the private sector, but also to other state agencies.

“We don’t need to see public employees as our enemies,” Miller said. “We need to see them as our teammates in meeting the needs and demands of our citizens. I am very proud of the team that we have in the State Treasurer’s office.

“It is a good place to get on your resume if you are a finance major or an accounting major. We used to have career employees; the average now is six to eight years. We want to move beyond that six to eight years that we keep employees by treating them as teammates and partners in service delivery. But we can’t keep them if we don’t pay them what we need to retain them.”

OPEA Executive Director Sterling Zearley said he reviewed market and turnover data and made recommendations.

“In order to maintain a quality workforce the state should be competitive with the market,” Zearley said. “Since 2009, the state has lost 3,800 employees. State employees that remain are doing more with less and serving the state well. Several state leaders have claimed, ‘We need to run the state like a business.’ How many private companies would stay in business if they pay their employees like this?”

Lucinda Meltabarger, Director of the Human Capital Management Division of the Office of Management and Enterprise Services, presented data from the state’s annual compensation study. According to the study, average state employee pay was five percent of market in 2008 and has fallen to 19 percent in 2011. While benefits are thought to be lucrative for state employees, she indicated that the change in the benefit allowance would bring the health insurance plan closer to market and that leave actually began to fall behind market at seven years.

Mike Patterson, Deputy Director of the Department of Transportation, discussed the recruitment and retention challenges at ODOT, especially in the Transportation Equipment Operator series.

“The biggest turnover rate is in heavy equipment operators, who come to us with only a high school education,” Patterson said. “The entry level has a 43 percent turnover rate. We train them and then they go to the energy sector. We have 273 unfilled positions.

“ODOT is the other university in Oklahoma. We get people ready for the private sector.”

“For this study, we have brought a diverse group together,” Rep. Osborn said. “We all can come to an agreement that our compensation package and the overall way we pay state employees needs to be changed. When you look at we are losing kids in foster care, when you look at the facilities for the disabled and veterans, when you look at how many people we have staffing our prisons; we are perilously close to things happening that are dangerous. We have core services that are very important. I think it is time to address this. I will absolutely be running legislation on this and I appreciate your support and input.”

Others within the House of Representatives are supporting her quest to raise state employee pay.

“I commend you (Rep. Osborn) for bringing this issue forward and I look forward to seeing what you have, said Rep. Earl Sears, Chairman of the House Appropriations Committee. I will be willing to work with you. We need to put together a well-thought out plan.

“Let us not leave here today without acknowledging that the 34,000 employees who serve this state do a phenomenal job.”

OPEA will be working with Rep. Osborn to craft legislation on state employee compensation. At the close of the meeting several other legislators pledged to support and coauthor the legislation.

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