50% of 50% of
average salary = $14,157 $20,667 = 6 mo. 50% total cost, current
positionOMCE Statement for Legislative Joint Budget Hearing on the State Workforce
February 4, 2009
Thank you for the opportunity to appear before you to discuss our concerns with Governor Paterson’s proposals related to the state workforce.
This testimony is submitted on behalf of the Organization of NYS Management/Confidential Employees, known as OMCE, which is the labor organization that represents the State’s employees designated as managerial or confidential.
The Organization of NYS Management/Confidential Employees (OMCE) is the labor organization created by, and for, management/confidential (M/C) employees who are not permitted by the Taylor Law to be represented by an employee organization in collective negotiations. OMCE’s primary purpose is to represent the collective point of view of M/C employees and to offer specific support and assistance designed to meet the employment-related needs of individual M/C employees. The majority of these M/C employees are career civil servants who obtained their positions through competitive testing.
On November 12, 2008, Governor Paterson released his $15.32 billion 2-year budget deficit cost savings proposals, which included significant proposed cuts to state workforce compensation and benefits.
While 4 of the 5 workforce proposals would affect the entire state workforce, one proposal specifically targeted the state’s management and confidential employees by rescinding immediately payments for vacation leave time these M/C employees gave up because they were unable to use them (Vacation Exchange Payments). This program had been approved by the Budget Director earlier in the year.
This program is typically used by long-term career public servants who are responsible for managing the state’s programs, as well as those in administrative support positions. Employees use these payments to pay their taxes, tuition bills, fuel oil bills, other bills, holiday spending – in other words it all goes right into the economy – as well as providing payroll tax revenue.
In response to the Governor’s request, OMCE submitted a series of alternative cost cutting measures that would produce savings and at the same time advance other goals, such as reducing contracting out, reducing patronage jobs, utilizing alternate work schedules, reducing duplication and overlapping responsibilities among state agencies, freezing purchases of new autos, furniture and other non-essential “wishes” among others. (See Below)
While we all acknowledge that the state is facing a serious financial situation, we don’t believe that the proposals to deny state employees their contractual and statutorily provided salary increase, to impose another salary deferral and to increase the amount employees and retirees pay for health insurance are the right way to approach the problem. We are opposed to these proposals, but fully prepared to work with the Governor and Legislature to identify and implement alternate proposals.
Prior to the release of these budget proposals, state agencies had to absorb 3.5% and 7% cuts in agency funding. Does anyone believe this does not affect employees? A hard hiring freeze was imposed last year (7/30/08), which means real staffing restrictions on career civil service positions and the need for working employees to absorb much more work and responsibility.
Those employees most needed to ensure the continuity of state government, to ensure that the work gets done and who are responsible for developing solutions, new programs and policies, are the very same employees who have been targeted to share the most sacrifice – I refer to the M/C employees – who historically have had their salary and other compensation increases withheld when the state faces budget deficits – they have again been used by the administration as a symbol, our members would say scapegoat, when the Governor denied payment of their Vacation Exchange payments – two weeks before they were to be paid and despite the fact that money would have immediately gone into the economy, even after OMCE proposed equivalent savings options.
Our focus today will be on two other concerns: Agencies continue to contract out, in our view inappropriately and unnecessarily, when state employees should be doing the work and proposed agency mergers, consolidations and restructuring.
Contracting Out
One example is a contract negotiated by the Civil Service Department with a private contractor for a Health Insurance Dependent Audit. In last year’s approved budget, positions at Civil Service for health insurance auditing were approved, but unfortunately never filled. Instead of making the case and asking the assistance of the unions and employee organizations to get the necessary approval to fill those positions, or work with the Office of the State Comptroller (OSC) to get those audits done, the Civil Service Department decided to do a contract. We estimate that the cost to do these audits with staff would be $1 million – and would result in building a permanent audit capacity to generate revenue, rather than the $4.5 million the contract will cost for a one-time, very specific audit. Cost effective? I think not!
Many contracts are awarded to out-of-state companies (Heat Hotline – Maryland, Fringe Benefit Management – Florida, Child Support Collection – Texas, Eye Med – an Italian company). We can’t say that this is inappropriate across the board, but we can state our hope that New York State based companies are not disadvantaged in the contracting process, because the costs of doing business in other states are lower than they are here in New York. Further, recent reports from our members that they received inaccurate, incomplete information from Fringe Benefits Management and Eye Med, once again puts us in the position of having to act as a watchdog, since the state agencies that are responsible for oversight don’t.
OMCE has participated in litigation against Express Scripts, a former Prescription Benefit Manager, and United HealthCare (UHC), a health insurance provider in the NYS Health Insurance Program (NYSHIP) Empire Plan, citing their unacceptable and fraudulent business practices. The recent $350 million settlement of the United Healthcare class action litigation will require reimbursement to our affected members who were harmed by UHC’s use of inaccurate usual and customary rates. The Attorney General’s settlement with United Healthcare and other insurers calls for the development of a new database that will accurately reflect usual and customary rates.
The point here is that the state agencies responsible for negotiating and overseeing these contracts did nothing about these improper practices. OMCE, CSEA, NYSUT and NYSPIA joined with the AMA against UHC, to protect our members’ interests and ensure that members and the state were not being disadvantaged. Devoting specific state employee audit staff to regular reviews of these contracts would no doubt improve our identification of these improper practices.
Mergers, Consolidations and Restructurings
The Governor’s budget proposes a variety of agency mergers, consolidation and restructurings.
In our proposals submitted to the Governor for cost savings actions, OMCE proposed that agency consolidations should be considered.
Although many of the jobs that may be lost over time will be M/C positions in personnel, budget, finance and other administrative specialties, we support consolidation where it makes sense (e.g. Offices of the Welfare Inspector General and Medicaid Inspector General, and the Economic Development Agencies). We must, however, state our very grave concerns that the specific proposal regarding the consolidation of the Economic Development Agencies is the wrong way to accomplish the merger – making the Empire State Development Corporation, a “public benefit” corporation accountable only to its Board and with no public disclosure or oversight, the preeminent and controlling entity in the Economic Development arena is backwards. The consolidation should make the Department of Economic Development, which is a statutory state government agency accountable to the Governor and the people, the controlling entity – we need to have professional qualified staff making evidence-based decisions, not political appointees making political decisions. We need to protect and celebrate the work done by our professional career public servants, not denigrate and dismiss their work and threaten them with losing their jobs.
On January 22, the State Investigation Commission (SIC) released the report of its investigation of the five different investigations of “Troopergate.” The Commission recommends “a proposal for consolidation of three New York State government agencies that have jurisdiction over similar issues and conduct concurrent investigations. It is the Commission’s belief that consolidation of these agencies will not only be more cost-effective, but will provide greater efficiency in the way public corruption and misconduct is investigated in New York State.”
While I am not sure if the SIC proposal is the best alternative, clearly there needs to be restructuring and consolidation of the investigative agencies and elimination of the unnecessary, duplicative work of the type that this report references.
We would also argue that the “agency” needs to be independent and that the investigative staff needs to be career professionals – hired and retained based on merit – so that their accountability and loyalty is to the people of the state, not a particular appointing authority.
We need to question why the procurement activities that have been effectively carried out by the Office of General Services should be removed from that agency. There has been no reason given why establishing it as a separate entity is desirable or needed. Is it just to create a new Executive level position?
Further, why do we need to create a non-profit corporation for the Office of Cyber Security & Critical Infrastructure Coordination? The privatization of government is very troublesome, especially when it involves a critical government function – protecting the people.
And, do we really need to spend $500,000 to create a new Office of Volunteerism in the Office of Children and Family Services – when current employees are in danger of being laid off, other important programs and services have been cut and the non-profit sector harnesses volunteer services?
Investment in the career public service workforce is what’s needed – we need to be able to provide appropriate and necessary training and better manage the resources we have. Savings can and should be achieved by reducing the ranks of the political appointees. Over the past 6 – 12 months, we have seen an alarming number of agency submissions to the Civil Service Commission seeking non-competitive or exempt classification for current competitive class positions. This is wrong – it should not be encouraged or allowed! There should be no layoffs of career employees, unless there is a prior significant reduction – and no new hiring of – political appointees.
At this time of severe economic strain, with increased demands on government programs and services, we should be doing everything possible to most effectively use our workforce to serve all New Yorkers who need help, not reduce the workforce and the help we can provide.
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January 11, 2009
Honorable Senator Steve Saland
4260 Albany Post Road
Suite #1
Hyde Park, NY 12538
Dear Senator:
I am respectfully requesting your support to prevent the passage of a proposal made by Governor Paterson to eliminate the Department of Economic Development , a State Government Agency, in the upcoming 2009/2010 Executive Budget. I have been an employee with this Agency for over 30 years.
Within the Governor’s Executive Budget proposal, Governor Paterson is proposing to eliminate the Department of Economic Development (DED) and transfer its funding resources and responsibilities to the Urban Development Corporation, dba Empire State Development Corporation (ESDC), a public benefit entity. The Governor’s justification for this decision is to eliminate duplicative job functions and incur an $11 million savings in taxpayer dollars. Senator Saland, the Governor’s proposal is inconclusive to show any measurable benefit by eliminating the DED.
The Department of Economic Development is a New York State Government Agency. DED is a taxpayer funded Agency that is accountable to the State Comptroller’s Office and ultimately, the Governor. This Agency’s mission is to promote economic growth within the State which is accomplished by encouraging domestic and foreign business into the State and the promotion of the tourist trade via the “I Love NY” tourism effort. Contrary, the Empire State Development Corporation is a public benefit enterprise that is accountable to their Board of Directors with private sector leadership. This Corporation’s core mission is to also encourage economic growth within the State, however, accomplishes this through real estate development and providing financial assistance to businesses and local government by means of the issuance of bonds, loans and grants. The ESDC may have similar intentions to stimulate the economic status of this State, however, operates primarily as an independent financial conduit.
Currently, the DED’s executive level staff are Democratic appointments salaried by the ESDC. The experienced DED employees are exempt from the decision making process that affect major program missions. Since 2007, this administration has devastated the professional level civil servant positions to absorb the appointments from the former and current Governor’s office. The DED was then divided into an Upstate and Downstate organization. Two Chairmen were appointed by former Governor Spitzer to direct each organization. Both appointees have since left and DED is now under the directions of a Commissioner in ESDC’s New York City office, a President located in DED’s regional office in Rochester and a Chairman located in Buffalo, also the CEO of M&T Bank. Both Commissioner and President are salaried by ESDC (the Commissioner is on DED’s payroll for $1.00). The Chairman does not draw a salary from either entity. This structure insults the integrity of State Government and what it represents.
Senator, it is my opinion that the intentions behind the Governor’s proposal is not to benefit the taxpayer. The intentions are geared to enhance the patronage appointments; eliminate unionized employees and circumvent Legislative/State Comptroller oversight on contract opportunities; aid to localities and other miscellaneous contractual spending.
Senator, I would sincerely appreciate the opportunity to meet with you regarding this matter. I will be contacting your office within the next few days to schedule an appointment. The Department of Economic Development must remain as a statutory State Agency to be administered by professional civil servant employees whose loyalty remains when administrations change.
Thank you.
Sincerely,
Mary Ann (Dusty) Perrine
188 Church Ave
Germantown, NY 12526
518-537-4563
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OMCE Proposals for Budget Savings Measures
Workforce
1. Re-evaluate agency requests to Civil Service and Budget for the creation or re-establishment of EXEMPT class positions. Such as:
· DHCR-Department of Housing and Community Renewal
4 additional positions of Assistant Commissioner in the Office of Rent Administration. Utilize the best practices of succession planning and upgrade existing high level experienced managers into these positions. Any backfilling of vacated positions should follow the current budget guidelines on such hiring.
· Commission of Quality Care and Advocacy
Advocacy Specialist 3 and Advocacy Specialist 5. Positions such as these are prime positions for career mobility opportunities for state employees who possess these special skills and/or have a background of advocacy.
2. Encourage agencies to explore, promote and expand the use of VRWS (Voluntary Reduction in Work Schedules), telecommuting and other forms of alternate work schedules pursuant to all applicable collective bargaining agreements, law rule and regulation. Significant savings can be realized in this area. Unfortunately recent agency experiences have shown a reluctance to embrace these measures as proven cost savings initiatives. Indeed the Alternative Work Schedule guidelines recently published by Civil Service did little to revive interest in this issue.
NYSHIP-New York State Health Insurance Program
1. Review the efficacy of allowing the establishing of a consultant contract to perform an Employee Benefits Eligibility Audit. The audit would ensure that State and participating municipal employees and their dependents receive only the benefits for which they are eligible as NYSHIP program participants’ legal dependants.
The original idea proposed (see Executive Budget Agency Budget submission for 08-09) was for funds to be allocated to the Department of Civil Service/Employee Benefits Division to develop an increased internal capacity to perform this and other such audits. Regardless of the terms of this contract, the need for developing this internal capacity or better using this capacity where it already exists (State Comptroller’s office for one) is paramount.
2. Establish the “Debit Card” component for the Medical Flexible Spending Accounts program. Such a “paperless” option will increase participation in this pre-tax program and the state, as the employer, will see additional savings for those payroll costs that are salary based (like FICA etc.).
3. Increase the audit supervision and contractor compliance for the component parts of the NYSHIP program and seek legal recovery where necessary. As stakeholders in the program the unions and OMCE have led the way in litigating NYSHIP contractors. The Office of the Attorney General followed our lead and instituted corollary suits against Express Scripts and United Health Care. This is NOT about who sues first but about “who’s minding the store”. Settlement discussions at all levels are now occurring and should bring the state upwards of $200 million or more in revenue/outstanding claims settlements. Again, ongoing NYSHIP internal compliance audit and review must be strengthened.
4. Reduce or eliminate NYSHIP’s discretionary advertising spending. The need for billboard, bus and public TV program sponsorship in this time of fiscal austerity must be reviewed. Employees and employers eligible for NYSHIP programs get the message from many fine internal publications.
Workforce
M/Cs must be treated no less well--should not be treated differently than other employees with regard to compensation and benefits—no salary or other withholdings for M/Cs only.
1. Reestablish and reinforce “State as a single employer” policy.
A. Re-evaluate Department of Civil Service processes and procedures for managing the workforce such as the:
1. Decentralization of staffing and testing responsibilities to agencies from Civil Service Department.
2. Focus on recruitment instead of career mobility, (which is critically important in a period of fiscal crisis).
3. Need to identify staffing and talent needs, evaluate current staff talents, identify matches that can be made, identify and prescribe training needed.
4. Need for a comprehensive plan from CSD of how to manage any possible workforce reorganization given decentralized staffing.
B. We should manage the State workforce through turnover and the hiring freeze. No layoffs should be necessary. Turnover = 14% in classified service and 10% in all categories.
1. Hiring freeze must apply to political appointees too.
2. A talent management computer based human resource system needs to become the principal mechanism for redeploying, retraining and rehiring the workforce. In short, agency missions define human resource needs. These needs are identified for requisite talents (knowledge, skills, experience). Employees talents are identified, stored (and updated), and matched to job needs (job orders). Talent deficiencies should be remedied through short term and long term training using internal and external training resources. Upon successful completion of the remedy, the employee achieves permanent status. This initiative appears to be compliant with current law, rule, regulation and practice. Result will be an employee redeployment system that functions at all times and not just during a crisis
2. Consider exempting OMH, OMRDD, OCFS, SUNY Medical Centers direct care staff from hiring freeze.
3. Continue to reduce number and use of consultants and contractors. Use state employees and provide any training that might be required.
4. OMCE proposes a new Succession Planning Incentive which would pair a retiree with a successor eligible for appointment to the position being vacated. The retiree (mentor) would work, under Section 212, 50% time at 50% pay for 6 months; the successor would work 50% time in current position and 50% time in the vacated position and would be trained to perform that vacated job. Potential savings if no back fill could reach $65, 000 per pair. (See attachment)
C. Charge Task Force on retiree health insurance to identify cost saving options without reducing /eliminating coverage or increasing or imposing additional contributions, (e.g. explore implementation of 2 person coverage category, coordinating prescription drug purchases with other programs, possible Medicare Advantage Plan savings, cash buyouts to employees who agree to be covered under a spouse’s or domestic partner’s health insurance.
Non Workforce
1. Taxation Issues:
A. Collect taxes on cigarettes, fuel and consumer goods purchased on Indian reservations by non-Indians.
B. Support additional taxes on high wage earners.
C. Collect outstanding taxes -- explore whether businesses with tax warrants filed against them are getting tax breaks.
D. Consider circuit breaker
2. Public Administration:
A. Actively work to encourage local government shared services, and move toward mergers and consolidations. The Government Law Center is working with the Department of State and provides technical assistance to local governments.
B. Expand and encourage use of BOCES for central administrative functions for school districts, e.g., purchasing, computer services.
C. Reduce duplication and/or overlapping responsibilities, e.g., many agencies doing investigations, duplicating what other agencies are doing---OSC, Tax, A/G, SIG, Public Integrity, OMIG, Agency IG -- and IGs doing inappropriate work, e.g. labor relations.
D. Review numerous and growing number of agency hotlines, for possible consolidation or elimination- -- explore alternatives such as support for 211 to do initial screenings and referrals so state agency staff are working with those who appropriately need that agency/program’s services.
E. Review / possibly reduce funding for projects like AMD (AMD spin off funded by Abu Dhabi), Albany County Convention Center (revisit PILOT payments instead for Albany), Empire Zones
F. Stop renovating offices for high level staff and new appointees; stop leasing equipment, furniture, etc. -- use OGS surplus furniture/equipment. Don’t lease new cars for agency heads unless warranties expired; review need for and use of cell phones, blackberries, treos, pda’s if employees have more than one of these devices,
G. Encourage local governments to participate in NYSHIP, state procurement and purchasing and other programs if more cost effective than their current local practices.
ATTACHMENT
Succession Planning Incentive
Purpose:
To provide a human resource management tool that provides for defined future personnel and program needs while affording significant savings to the employer without any need for reductions in the current workforce or public services.
Savings:
It is estimated that 2500 – 3000 such incentives would be offered. New York State, as the employer, could save as much as $200 million.
Method:
This will be an agency driven process. All plans must be submitted to and approved by a majority of a committee comprised of the Director of DOB, the Commissioner of Civil Service and the Director of GOER or their respective designees. An agency will seek volunteers from appropriate employees anticipating retirement, and from those eligible or assuming eligibility for ultimate advancement to the position being vacated by the retiree (hereafter referred to as the mentor).
Upon retirement, the mentor will agree to return to work under Section 212 of the R&SS Law on a 50% schedule at 50% pay for 6 months. The successor employee would continue working in their current position for 50% of the time at 50% of that position’s salary and would work for that same 6 month period alongside the mentor employee receiving training for the mentor position. The successor employee would receive 50% of the appropriate targeted position’s salary while working half time in that position.
The mentor employee will train the successor employee per an agency approved plan. Time spent in this position by the successor employee will be prorated appropriately toward any applicable probationary period. The employer will save half the salary and fringes for the successor employee’s present position for 6 months, plus savings on the salary and fringes for the mentor employee (which fall from approximately 45% to 24% (see chart).
This job sharing will provide hands on mentored succession planning that is real, as well as giving the State significant savings with minimal human resource and program disruption.
At the completion of the 6 month Section 212 appointment, the mentor will have their FAS recalculated to reflect the Section 212 salary as if received in their greatest salaried year used in the FAS calculation. Their retirement allowance will then be actually re-calculated to reflect those increases.
Additionally, the mentor will have the option to purchase up to the 6 months service (prorated) as additional service time. Such additional credits, if purchased, could not exceed the maximum service credits for retirement under the applicable laws and regulations.
Savings Analysis:
Assumptions:
3000 Succession Plans created in State Workforce (6000 participants).
$56,628 = average salary
$82,667 = average total compensation (all fringes)
24% = (percentage of average salary for Section 212 employee fringes)
1st 6 Months of Plan
Salary Mentor: = (6 months of ($56,628) average salary x 1/2 (.50%))
$14,157 = Mentor average salary for 6 months 1/2 time
$ 3,400 = Fringes for Section 212 employee (24%)
$17,557 = Avg. Total Cost for Mentor
Successor Candidate: $41,334 = Total 6 month average cost (1/2 current position ($20,667)) + (1/2 target position (20,667)).
$58,892 = Total salary cost for 1 Initiative {6 months §212, 6 month employee)
$82,667 = 2 positions total cost for 6 months
-$58,892 = Succession Planning (1 pair) total cost
$23,775 = Savings – 1st 6 months
2nd Six Months
$82,667 = 2 positions, 1/2 year total cost
$41,334 = New target position/50% of annual total cost
$41, 334 = Net saving for next six months (assume no back fill)
$23,775 = Savings during six month succession plan
$41,334 = Savings 6 month total cost for 1 less position
$65,000 = Per Plan Total Savings (Rounded)
Savings Analysis (Continued):
Assumption: [Based on Civil Service, DOB and OSC Data)
3000 plans enacted within the State Workforce
$56,628 = average salary state workforce (08-09)
$82,667 = average total compensation (includes all fringes @ 46%)
24% = fringe benefits % of salary for those employees on §212 waiver
1st 6 Months of Plan
Mentor Successor Employee
50% of 50% of
average salary = $14,157 $20,667 = 6 mo. 50% total cost, current
position
24% fringe benefit costs = $ 3,400 $20,667 = 50% total cost, target position
6 month cost for mentor = $17,557 $41,334 = total 6 mo. total average cost
$82,667 = average 6 month total cost for 2 positions state workforce
- $58,892 = average 6 month total cost for 1 Succession Plan (2 employees)
2nd Six Months
$0.00 = Mentor cost
$41,334 = 2nd 6 month total cost for Succession in Target position
12 Month Cost
$58,892 = 1st 6 month Total cost Succession Plan
$41,334 = 2nd 6 month Total cost Succession Plan
$100,226 = TOTAL cost for 1 Succession Plan
Savings
$165,334 = Total Cost 12 month for 2 state workforce
-$ 100,226 = Total Cost 12 month for1 Succession Plan
$ 65,000 = Savings to Employer – Per Succession Plan (rounded)
Projection:
$65,000 = Savings to Employer per Succession Plan
x 3000 = Enacted Succession Plans
$195,000,000 = Projected possible savings (rounded)
Summary:
Appropriate section of Retirement and Social Security Law and possibly others will need to be amended to allow for the mentor employees FAS recalculation and optional purchase of service credits outlined in this proposal.
It is assumed that all pertinent Civil Service law, rule and regulation for the selection of successor participants will be followed where applicable.
Given a 10% attrition rate for all state employment (235,000) in all branches (14% in classified service), there would be a 23,500 FTE turnover. Given that fact, it is entirely possible to manage this initiative without any forced separations of service.