OPEA Executive Director Sterling Zearley told the House General Government Subcommittee on Government Modernization that turnover is costing Oklahoma taxpayers approximately $85 million. The estimate, which is calculated by the Office of Personnel Management annually, is considered a conservative number.
The Subcommittee convened a hearing October 14, for an interim study on the “Impact of cost and implications of state employee turnover.
“We can’t keep going down this road,” said Zearley. “Turnover in Oklahoma state government is 13.5 percent, compared to 8.2 percent for state and local government nationally.
“But, that is not the whole story,” he told the panel. “There are classifications with turnover rates are so high, the quality of services can be compromised. Recently, we learned the turnover rate for patient care assistants at the Norman Veterans Center was 95 percent. We must do better than that for our veterans.”
OPEA unveiled a first step to solving the turnover problem, in the State Employee Turnover Reduction Act. The proposed legislation would require state employees be provided with a 2.5 percent pay increase each year until turnover costs fall below $40 million. This would not exclude the need for the legislature to provide an across-the-board pay raise for state employees.
“State employees are feeling the crunch of the economy and the rising cost of insurance,” said Zearley. “The top priority when the legislature returns in 2009 must be to grant a pay raise for state employees.”
Zearley echoed the data presented by OPM that state employee pay had consistently tracked more than 10 percent below market in the past 10 years. He also indicated that compensation for unclassified employees had increased almost twice as much as classified workers.
“Even though agencies have the statutory authority to increase salaries through pay movement mechanisms, classified employees are limited to legislative pay raises,” said Zearley. “Agencies have not been provided with funding for the pay movement mechanisms.
“It’s like having a check with no money in the bank,” he said.
Another important point in OPEA’s presentation was a comparison of the state employee longevity plan and step increases for other jobs.
Total Increase after 10 Years
Highway Patrol Steps (7 years) $23,836
Oklahoma Teacher Steps $ 4,350
Federal Employee Steps $10,580
Oklahoma State Employee Longevity $ 1,062
The longevity schedule for state employees has not been changed in 20 years.
Jeanette Rice, the senior vice president for corporate and human resources at American Fidelity Assurance Company, gave a report from the Governor’s Task Force on State Employee Compensation. She outlined the recommendations of the task force, which completed its work in January 2008.
“The state needs a total compensation plan, which must be communicated to employees,” said Rice. “Pay adjustments should be made regularly based on what is happening in the economy.”
According to Rice, the state should plan ahead at least five years for total compensation, benefits and salary.
“State agencies cannot recruit new employees based on hope that the legislature will provide pay raises,” Zearley emphasized. “What do you tell new employees who want to know about career progression and when they will receive pay raises?”
Zearley did not concur with Rice when she indicated that defined benefit, or pension plans are losing their popularity.
“Defined benefit plans are still the norm in the public sector,” said Zearley. “Only one state, Alaska, has discontinued its pension plan for a 401(k)-type plan. With the recent problems in the stock market, I don’t think that is a viable option.”
The Secretary for Human Resources, Oscar Jackson, answered questions from the panel about initiatives in other states.
“States that have been successful in the human resource area are making a long-term commitment to their employees,” said Jackson. “Most of what we would want to do has a price tag.”
Following the hearing Zearley spoke with several reporters about the need to address state employee pay in the next legislative session.
“We are pleased Representative Wright has brought the issue forward this early in the process through this interim study,” said Zearley. “Several of the panelists agreed with OPEA that we must have a long-term plan to address state employee pay in Oklahoma. As so many veteran workers reach retirement, the state will need to recruit and retain the next generation of career state workers.”
