More states tackling public employee reforms

by Melissa Maynard, Stateline Staff Writer

The campaign to recall Wisconsin Governor Scott Walker for his anti-union initiatives was the most talked-about issue on the state labor front this spring. Walker, who sponsored legislation banning collective bargaining for most public workers, survived his recall election on June 5, emboldening fellow Republicans who remain eager to do battle with unions.

But while the Wisconsin campaign was attracting national attention, important developments for state workers were proceeding with less fanfare elsewhere in the country. Most notably, Arizona, Colorado and Tennessee passed sweeping overhauls of their civil service systems, which govern hiring and firing practices and offer the only avenue for grievances to be resolved in states where collective bargaining is banned.

These were moves of major proportions. State civil service systems were designed to ensure that employees would be hired based on their merits, rather than political affiliations, and would be shielded from political influence. Due process and grievance and appeal procedures were put into place to guarantee that rank-and-file employees wouldn’t be fired every time there was a shift in party control.

Supporters of civil service change argued, however, that state personnel codes have been riddled with archaic and cumbersome rules that make it difficult to hire and retain a talented workforce. Arizona Governor Jan Brewer said the existing system served to benefit the least productive employees while failing to reward and incentivize the best. She said the existing grievance system was so cumbersome that agency managers were keeping problem employees around just so that they didn’t have to deal with it.

Brewer made civil service changes her top priority in the 2012 legislative session, and she succeeded in getting them enacted. The changes will gradually transition the state away from a traditional civil service structure towards an “at will” system that mirrors private sector companies. Agency managers will have flexibility to hire and fire employees as they choose, and reward star employees with bonuses and pay increases without legislative approval.

The legislation will automatically eliminate civil service protections — including the ability to file a grievance or appeal disciplinary actions — for new hires and some current employees. Anyone who accepts a raise, a promotion or a transfer to another position in state government will convert to “at will” status. This means that state workers, whose salaries have been frozen since 2008, will have a difficult decision to make in October about whether to accept a scheduled 3.75 percent bonus. If they accept this one-time bonus, they will go to “at will” and permanently give up their current job protections. The governor’s office expects that, under the new law, 82 percent of the workforce would become “at will” within the next four years, compared to 26 percent currently.

Matthew Benson, director of communications for Brewer, says the governor is confident that the 35,000 workers who make up the state’s bureaucracy will remain isolated from politics. “These are the people who, administration through administration, keep state government operating,” he says. “We don’t see that changing. These positions by and large have nothing to do with politics. We don’t see a future administration coming in and clearing out the state workforce by bringing in their friends.”

End of Bumping

Changes to the personnel systems in Colorado and Tennessee will end, or at least minimize, a practice known as “bumping.” Bumping allows employees whose positions are being eliminated to force others with less seniority into lower positions, or even out of the workforce altogether. The resulting chain reaction can undo years of training and push employees into positions that are a poor fit for their skills.

A major focus of Tennessee’s civil service legislation was bringing more flexibility to the way the state recruits and hires workers, in preparation for an influx of new employees. Almost 40 percent of Tennessee’s workforce will become eligible for retirement in the next five years.  The legislation also streamlines the appeals process and overhauls the performance evaluation system for employees. Performance evaluations will be tied to pay and used as the primary consideration in layoffs.

“For decades, employment decisions in state government have been based solely on seniority with job performance never being considered, and employees have either received modest, across the board pay increases or nothing at all,” Republican Governor Bill Haslam said when he signed the bill in April. “No one has been able to convince me that is a good way to manage our employees or serve our taxpayers.”

Colorado Governor John Hickenlooper is pursuing additional civil service changes, but they will require a vote of the people because many of the existing civil service rules are part of the state’s constitution. The legislature voted to put a package of changes on the ballot in November that would give the state more flexibility in how it evaluates and hires job applicants. State agencies are currently required to choose from among the top three scorers on a competitive test; the new system would permit a more analytical approach under which the state could pick from the top six finalists.

Right-To-Work

Meanwhile, Indiana was enacting a controversial “right-to-work” law aimed at curtailing the influence of unions in private sector employment. The law makes it illegal for businesses and unions to negotiate contracts that require all employees — including those who do not wish to be union members — to pay union fees as a condition of their employment.

As pro-union protesters from around the state descended upon the Indiana Capitol, Democrats stalled the right-to-work bill for a few weeks by denying the House the quorum necessary to conduct business. Ultimately the legislation passed by a comfortable margin, making Indiana the 23^rd state to enact such a law and the first to do so in the industrial Midwest. To date this year, legislators in 19 other states have introduced some form of right-to-work legislation, but Indiana has been the only state to enact it. New Hampshire Governor John Lynch, a Democrat, has vetoed a similar right-to-work bill.

Pension Issues

States continued to make changes to the retirement and health care benefits that they have historically provided to their workforces. “There has been a lot of uncertainty among employees as pension legislation has been making its way through state legislatures,” says Leslie Scott, director of the National Association of State Personnel Executives. “There’s a little more stability this year as far as maintaining employment, but changes in benefits are now the major issue.”

Pension legislation asking workers to chip in more toward their retirement income was enacted in states controlled by Democrats as well as those dominated by Republicans. New York Governor Andrew Cuomo, a popular Democrat, shepherded legislation that asks new workers to contribute more toward their pensions and to work longer before retiring.

States continued to experiment with cash balance and hybrid retirement plans that function more like a 401(k) than a traditional pension. The plans transfer some of the risk to workers when pension investments don’t make money, but allow more portability if workers choose not to spend their entire careers in state government. Louisiana Governor Bobby Jindal, a Republican, signed legislation last week that creates a mandatory cash balance plan for new employees. Virginia and Kansas passed similar overhauls of their pension systems earlier this spring.

After Wisconsin

The most intriguing questions following Walker’s recall survival in Wisconsin may play out in states with powerful public sector unions and strong collective bargaining rights. Now that the recall election is over and Walker has kept his job, many expect a heightened level of activity in state legislatures around labor issues. Gary Chaison, professor of industrial relations at Clark University, says he expects to see a slew of bills that would have the cumulative effect of severely weakening unions by eroding their infrastructure and limiting the scope of bargaining negotiations.

“I think state legislatures are going to be tremendously emboldened,” he says. “Most state legislatures now are sitting on a bill that would limit [union] dues payments. Most state legislatures are just waiting to bring that out. They can always tell their unions, ‘You may not like it, but it could be a lot worse.’”

In Michigan, however, voters this fall will consider a ballot measure that fights back against recent legislative challenges to union power by putting public sector collective bargaining rights in the state’s constitution. It is designed to void anti-collective bargaining bills already enacted by the Republican-controlled legislature and signed by Republican Governor Rick Snyder. One of the laws in question, which passed earlier this spring, makes it illegal for school districts to collect union dues. It is also a preemptive strike against future legislation, including a right-to-work bill that has some support in the legislature but is opposed by the governor.

California voters will consider a ballot measure in November that would prohibit governments from deducting union dues from workers’ paychecks if the money will be used for political purposes.

Maine controversy

Labor relations in Maine have proven to be particularly thorny under Republican Governor Paul LePage, and the legislature has shown some interest in limiting current collective bargaining rights. This spring the legislature ended collective bargaining for family childcare providers paid by the state who are currently represented by the Maine State Employees Association. The LePage administration has been unable to reach an agreement with that union, the largest representing state workers, since its previous contracts expired in July 2011. The union has three pending complaints before Maine’s state labor board.

The governor stirred up controversy by calling the middle tier of state employees “about as corrupt as you can be” in an April 26 town hall meeting. A follow-up letter he sent to state employees didn’t do much to help smooth things over. After acknowledging that many state workers are doing “great things for the people of Maine,” the governor wrote that other employees, for whatever reason, “have not come on board. Roadblocks have been put up, hurdles have been thrown in the way, and information has not been passed along to senior management … In my opinion it shows that they have been corrupted by the bureaucracy.”

Stateline.org is a nonpartisan, nonprofit news service of the Pew Center on the States that reports and analyzes trends in state policy.