Time for a comprehensive wage study for State employees!

AnneMacriTestimony

TESTIMONY OF ANNE MACRI
MAINE STATE EMPLOYEES ASSOCIATION, SEIU LOCAL 1989
BEFORE THE JOINT STANDING COMMITTEE ON LABOR AND HOUSING
March 25, 2019, Cross Office Building 202
IN SUPPORT OF LD 1214

Senator Bellows, Representative Sylvester, members of the Committee On Labor and Housing , my name is Anne Macri, Deputy General Counsel, representing the Maine State Employees Association, SEIU Local 1989. MSEA-SEIU is a labor union representing over 13,000 members statewide. I am here today to testify in favor of LD 1214, a Resolve to Conduct a Comprehensive Study of the Compensation System for State Employees.

I have worked at MSEA for over 8 years, and in that time, I have represented State employees in dozens of reclassification and range change appeals, I have advised employees on hundreds of requests to review employees’ classifications and/or range, and I have participated in a number of recruitment and retention committee reviews of State classifications. I have become intimately familiar with the State’s classification and compensation system, and I am here today to tell you that it is badly broken.

The State’s current compensation and classification system was implemented in approximately 1975. The system was designed to allow jobs that are substantively very different to be compared to each other and compensated equitably based on objective features of the positions. The plan was intended to have “consistent interpretation and application statewide” and required active management, which included regular reviews and updates. For instance, under 5 MRSA § 7061, paragraph 4, subparagraph A, the implementation of the classification system “shall provide for periodic updating of job descriptions at least every 5 years to accurately reflect current duties and responsibilities of each job classification.” In addition, the Director of the Bureau of Human Resources is required, by statute, to provide annual reports that include data such as turnover rates by job classification, the total number and disposition of reclassification requests, and the number of vacancies and the reason for the those vacancies, as well as the length of time required to fill each vacancy. 5 MRSA § 7036 (13). Similarly, civil service rules require the Director of Human Resources to “make or cause to be made such comparative studies as deemed appropriate of factors affecting the levels of salaries in the classified service.” Chapter 18, Section 389, chapter 5(2)(B).

However, these statutorily required reviews, reports, and updates have not happened with any consistency and, as a result, the classification and compensation system has tipped badly out of balance over the last forty-plus years. The primary vehicle for change has been the reclassification process, whereby either management or employees file a Functional Job Analysis form, or FJA, requesting a reevaluation of an employee’s classification or pay range. Management-initiated FJAs are often associated with a prospective reorganization of the relevant work unit and are proposed by a subdivision of a department. Employee-initiated FJAs are filed by either individual employees or as a class and are based on changes to the employees’ tasks and responsibilities over time. Employees file FJAs at the department level, at which point the department reviews and, in some cases, responds to them. Eventually, the Bureau of Human Resources receives the request, interviews employees and supervisors about the job and any changes that have occurred, and then issues a determination on the request. If BHR denies an employee-initiated FJA, employees have a right to appeal the denial to arbitration. 

Thus, many of the changes to the classification system that have occurred over the last forty-plus years have been accomplished through an adversarial process of arbitrating appeals of employee-initiated requests. Combined with a lack of routine, organized reviews of classifications, this piecemeal process has resulted in a system utterly lacking internal cohesion.

Similarly, the compensation system is rife with imbalances and inequities. The current compensation system is a closed environment, meaning that while it is intended to ensure balance within a large system that includes many very disparate jobs, external factors like market conditions, similar positions in the private or public sector, and issues relating to recruitment and/or retention are specifically excluded from consideration in determining the applicable levels of base pay. This framework,  combined with serious recruitment and retention problems in State government over the last decade, has led to a dramatic increase in the use of stipends and statutory wage increases to attempt to keep the State competitive. Although often well-intentioned and undeniably necessary, these tools have also created unintended consequences and have, at times, contributed to compression and imbalances within the compensation system. For instance, although the law enforcement raises that were passed by statute in 2016 were badly needed to address serious staffing shortages, they were structured in such a way that the base pay of some employees is now higher than that of their direct supervisors.

At the same time, the compensation system has suffered after a lack of active management over the last forty-plus years and is now straining at the seams. When employees or management seek range changes, arbitrary boundaries now often limit the ability of classes to be evaluated accurately. The failure to consistently and routinely review classes has created situations where a proper evaluation of the current state of a classification could result in the class leapfrogging over supervisors or related classes that are badly out of date. As of today, over 160 classifications in the Executive Branch have not been evaluated since before 1980 – and of those, one hundred classifications have not been evaluated since 1975. Some of the classifications included in that list are highly paid jobs where recruitment and retention are an ongoing problem, but there is little room for upward movement because of the design of the system. In 2017, former Governor LePage attempted to address these overdue reviews by instituting a review of all Executive Branch classifications in three months. However, that initiative was conducted without following the typical procedures and with a troubling lack of transparency, including with the employees affected. MSEA requested information about the results more than a year ago, and we have yet to receive that information.  

Accordingly, the State’s pay system has become a complicated morass of disparate salary schedules, stipends, differentials, and other quirks, many of which are tied directly to the classification system, creating unexpected and sometimes unintended consequences when employees promote or reclassify. The system also suffers from compression, which has impacted employees’ ability and willingness to promote. In certain circumstances, employees can be paid more than their supervisors or could actually suffer a pay cut by taking a promotion.   

The study proposed in this bill is not simply about compensation. One of the major weaknesses of the current structure is that in many areas of state government, there is little to no room for meaningful advancement for employees. Last fall, MSEA conducted a wide-ranging survey of Executive Branch employees. One key area of concern that was identified as a result was a lack of promotional opportunities and lack of room for advancement for employees. 52% of respondents told us that they did not feel they had sufficient opportunities to advance or promote. Many also identified a lack of opportunities for advancement as a reason that co-workers had left state service or that the employees themselves were considering leaving. The classification system is one reason for this: in many areas of state government, the career ladder either provides very limited opportunities for advancement or the only way to advance is to become a supervisor, which many employees aren’t interested in. The current classification system provides little incentive for employees to continue to grow within their positions, particularly when they have reached the end of the payscale or there are no advancement opportunities available. We believe there are options for restructuring the classification system that could allow employees continued opportunities and incentives to advance, promote and grow within their positions.

It may be suggested that this is an issue that should be addressed through collective bargaining. However, the system at this point is so broken that fixing it is simply not achievable through bargaining alone. Moreover, past attempts at addressing the system through collective bargaining have only exacerbated the issues. In the mid-2000s, MSEA and the State attempted to address these issues through a collectively bargained process and conducted comprehensive pay studies for each of MSEA’s four bargaining units, beginning with the Administrative Services unit. This initial study was completed and implemented in 2006, resulting in a modified Hay scale for determining compensation levels in the Admin Unit, the restructuring of some classifications into “job families,” and adjusting pay in order to close the gap between public sector and private sector employment. However, following the implementation of the Admin pay study, the process broke down, and the studies for the remaining three bargaining unit were never completed. Thus, while the study eased some of the immediate disparities internal to the Admin unit, it also created additional compression and imbalances between the Admin Unit and the other bargaining units. For instance, we have seen multiple situations in which employees’ duties dramatically increase, resulting in a reclassification to a position in a different bargaining unit at a higher pay range, yet the employees will lose money or become red-lined because the payscales are not aligned between the various bargaining units. Furthermore, the Admin study was designed to work within the existing classification and compensation system, a system we believe is broken beyond repair.

What we seek at this point in time is to bring in a neutral third-party to revisit and review the entire structure of the compensation and classification systems in order to determine whether they are still serving the needs of the State as an organization, an employer and a workforce.

One of the statutory purposes of the existence of the Bureau of Human Resources is to establish and maintain “a civil service system with sufficient flexibility to adopt new technologies, procedures and policies in order to respond quickly and effectively to the needs of state agencies and employees[.]’” 5 MRSA § 7033, paragraph 1(G). The civil service system’s current classification and compensation plan are not meeting this standard. They are outdated, out of balance and lack the necessary flexibility to enable the State to recruit and retain the best and brightest. We believe that a new system is necessary, but in order to determine what should replace it, we need data. We need to have a clearer picture of the problem and what alternatives are available. How do other large employers in Maine structure their compensation and classification systems? How have other states and municipalities solved this problem? What are current best practices that will allow the State to attract and retain a strong, well-qualified workforce? We believe the study proposed in this bill would provide the people of Maine and their representatives in both the Legislature and the Executive Branch with the necessary data to make informed, thoughtful choices about how to build a modern, flexible, adaptable system that will serve the State well into the future.      

Updated: March 25, 2019 — 2:51 pm