Do you hear what I hear? No, it’s not a Christmas carol. It’s the sound of silence. The sound of legislators, out of Bismarck and back in their home districts. The sound of crossover.
It’s kind of a nice sound. Not that I don’t appreciate the musky vibrato of a legislator’s timbre or the refined soprano qualities of the combined voices of the many, many lobbyists on hand this session. But after the activity of this session thus far, a little break in between is well-needed, as we wait until next week, when the Legislature returns and bills move across to the opposite chambers for consideration.
So it’s the calm before the storm, and in this week’s NDPEA Legislative Update (sound of trumpets), I want to talk primarily about employee compensation. We’re at a crossroads – at crossover – as the House has passed HB 1015, which deals with state worker compensation, and drastically alters the plan put forward in the governor’s budget proposal. I’d like to walk you through those differences, and together, maybe we can figure out why the House is acting as they are.
HB 1015 – Employee Compensation Bill
The governor’s budget plan called for enough funds to give employees a salary increase in the range of 3 percent to 5 percent, for classified and non-classified employees, depending on performance measures. In the House version, that range was decreased to 2-4 percent. I expect that the House will reduce the appropriation for Higher Education professionals similarly.
Additionally, the governor’s proposal allocated additional funds to provide up to 4 percent raise to those employees in the first quartile of range, and 2 percent for those in the second quartile of range, both in 2013 and 2014. The House version cut the market policy increase dramatically, providing just 2 percent for those in the first quartile of range, and only in 2013. This virtually eliminates this much-needed market component of the compensation plan. Compression issues in compensation have become a very real problem in all agencies. Workers who have been in their jobs for years make the same as those who just started. The governor’s plan addresses this issue, and brings employee compensation closer to in line with the market summaries of the Hay Study, and the House plan virtually ignores the issue.
The overall goal of the governor’s budget proposal is to spread employee compensation around a Market Policy Point set at 100 percent of market. The House lowers this to an MPP spread around 95 percent of market.
Why? What message does it send to the public workers that keep our state running when you willingly say to them, “We want to pay you less than market. Just because.” Our state is in incredibly strong fiscal shape currently. If you’re going to get compensation to 100 percent of the market, a.k.a. paying workers exactly what they’re worth, now is the time to do so. By not doing so, and choosing an arbitrary number such as 95 percent, you say to all state workers, “We know what you are worth. We have the money to give it to you. We just don’t want to.”
Some state agencies are currently dealing with 20 percent turnover. There are literally hundreds of state jobs that are open right now, because we aren’t getting the applicants to fill them. Gov. Dalrymple’s proposal intends to address this issue and make the state of North Dakota competitive again in attracting and retaining quality workers. The House intends to preserve the status quo, continue a system of revolving-door workers, just because.
Additionally, the governor called for increasing contribution to the NDPERS plan for retirement by 2 percent, both in 2014 and 2015. One percent each year would come from the workers, and the other 1 percent would be from the state. The Senate passed this recommendation. The House, meanwhile, calls for no contribution increase by either the state or the employees during the biennium.
Why? This action flies in the face of the overwhelming evidence provided by actuarial analysis done by the Employee Benefits Program Committee that find that the retirement fund will stabilize and return to fully funded status with these increases in contributions, which were first called for in 2011. By delaying these increases in contributions, the House is deliberately sabotaging the retirement fund and negatively impacting the state’s bond rating.
Have I mentioned studies? Because the House wants to study a whole lot of items. The House amendment calls for an interim study on the “process of appropriating funds for salaries and wages, and the state’s classification system.” Also, the House wants another interim study done on “the feasibility and desirability of establishing a maximum state contribution to the cost of state employee health insurance premiums.”
Why? The 61st Legislature conducted a study of classification and compensation. The 62nd Legislature then extended the contract to implement study recommendations, and finished by passing a bill directing implementation of the findings of the Hay Study, but allocating zero dollars for implementation.
Our Legislature does study after study after study of employee compensation, hoping desperately to find a study that will tell them they’ve done a good job with competing with the private market in compensation. And they can’t find that study, because they haven’t. It’s time to accept the findings of this latest study on compensation, and follow its recommendations. That means following the path laid forward by the governor. And so we need to ask the Senate to strip these provisions from the House’s version of the compensation bill, return it to its original intent, and do the fair and responsible action that Gov. Dalrymple has called on them to do.
Please contact your Senator, and tell him or her that our state workers provide the highest quality services for every citizen of this state, and for us to continue to do so, the state has to be willing to walk the path envisioned by the governor’s plan, and fix the inequities that have existed for too long in compensation. When our workers are paid fairly for their worth, at 100 percent of the market, then we can get to work in filling the vacancies that exist in the workforce, and retaining our quality workers who want only to assist this state and make it the quality place to live and work that it deserves to be.
Higher Education Funding Bill
A big story in the headlines this week was the defeat, then subsequent revisiting and passage of an amendment to the higher education funding bill, which designates $845,000 for the buyout of Chancellor Hamid Shirvani, in the event that the state Board of Higher Education should choose to get rid of him.
In plain terms, this amendment is meant to be a very direct message to Shirvani that he is on thin ice with the Legislature, and that some members of that body would like nothing more than to get rid of him, less than a year into his efforts to reform the University System. NDPEA stands firmly behind the faculty and staff of our public universities in North Dakota, and the students they serve. Continual upheaval in the chancellor's office is probably not going to provide much stability toward the goal of improving the state of higher education in our state.
House Bill 1362 - Medicaid Expansion Bill
One bright spot from last week is that the House did manage to pass HB 1362, which will expand Medicaid. This is a step in the right direction that will provide health care coverage to an estimated 20,500-32,000 uninsured North Dakotans. We will keep a close eye on this bill as it heads to the Senate, and be sure to read this letter of support that NDPEA signed onto, along with a number of other groups, in support of Medicaid expansion.
Senate Bill 2336 - Oil Extraction Tax Bill
Finally, it is important to note that SB 2336 passed the Senate overwhelmingly. This was the bill that seeks to reduce the oil extraction tax in North Dakota in a way that will cost the state almost $600 million in revenue over the first five years alone. This bill should meet minimal resistance in the House and pass easily. I think I smell an initiated measure coming along. If we can’t trust the Legislature to properly tax this industry, we may have to look to the people.
Until next week, enjoy all the sweet, sweet silence radiating out of the halls of the Legislature at the Capitol. And, please, be ready for a very hectic, very eventful second half of this legislative session. Our entire organization will have to stand firm and united, and be proactive in pursuing the fair treatment of all our public workers in the state of North Dakota.
NDPEA Executive Director