Legislative Joint Budget Hearings on the State Workforce

February 10, 2010

Testimony submitted by OMCE President Barbara Zaron

Thank you for the opportunity to appear before you, on behalf of OMCE and the management/confidential employees (M/C) we represent, to discuss our concerns with Governor Paterson’s Executive Budget proposals related to the state workforce and state government reorganization.

While there are several areas of the budget that concern us, I am going to focus today on the one issue that is the highest priority for Management/Confidential employees; that is the payment of the salary increases, performance advances (steps), longevity and merit payments that were taken from them in 2009-10 and the payment of these increases to be paid this April.

Agency mergers, consolidations, restructurings, transfer of functions--none of these have generated the level of concern or the outrage that M/Cs express about being treated unfairly and their demand that they be paid in accordance with the statutory “contract” made with the M/Cs as well as union-represented employees.

OMCE, the Organization of NYS Management/Confidential Employees, Inc. is the labor organization that represents the state’s management and confidential (M/C) employees, who are prohibited by the Taylor Law from collective bargaining. OMCE represents the collective point of view of M/C employees and offers specific support and assistance to meet the employment-related needs of individual member M/C employees. The majority of M/C employees are career civil servants who obtained their position through competitive examination, not the “governor’s people.”

The latest polls indicate the Governor’s approval ratings have dropped again. A poll of M/C employees would show an even lower approval rating - - a definite vote of NO CONFIDENCE. Legislators’ approval ratings by M/Cs will not be much better if you don’t stand up for them and help us reverse the unfair treatment of M/Cs by the administration.

Approximately 94% of the state workforce is unionized. There are approximately 12,000 M/C employees (6% of the workforce) who are not represented by a union. Many years ago, Governor Rockefeller promised M/C employees they would be treated “no less well” than other state workers, but since his administration this has not been the case. M/C employees, under every governor have borne the brunt of budget reductions, salary and benefit withholdings. M/Cs are told they need to share the sacrifice and they are willing to share. M/Cs are not willing to bear the full cost of the “required workforce savings.” Many times a day, M/Cs tell us they would understand withholding their increases if increases were withheld from all other employees. They do not understand why they have to bear the entire sacrifice.

In his 2010 State of the State address, Governor Paterson made the following statements:

“The moneyed interests, many of them here today as guests, have got to understand that their days of influence in this Capitol are numbered.”

“They have routinely demanded special treatment without regard to others. Well no one person or group is above any others or more deserving of any more hardship and pain.”

“The reality is that there is no moral high ground on trampling on others to get there and there is nothing lower than engaging in the currency of influence to the detriment of other New Yorkers that don’t have the same representation.”

So why have M/Cs been singled out?

The Governor has also said, “Judge me by what I say, not what I do.” We are forced to judge him by both - - and as far as his treatment of M/C employees, it’s not a pretty picture. M/C s have been singled out last year and this year to lose the same salary increases that union represented employees were paid. This is certainly inconsistent with the Governor’s statements.

And yes we acknowledge that legislators and judges have not had salary increases in 12 years, these inequities are also wrong. We should work together to fix the system.

For the FY 2009-2010 budget, the Governor proposed the following actions that would affect the workforce:

Layoff of approximately 8500 employees; 5 day salary deferral; passage and implementation of Tier V; employee and retiree payment of Medicare Part B premiums; sliding scale increased payments by retirees of health insurance; facility closures; and, withholding salary increases from the entire workforce.

All employee organizations objected to these proposals. The Governor proceeded to do undue harm to the M/C employees by: 1) withholding payment of previously approved Vacation Exchange payments 2 weeks prior to payment, and 2) withholding payment of previously approved 2009 3% salary increases, performance advances, longevity and merit payments one week after his Budget Division announced payment would be made, concurrent with agreement on the 2009-10 budget. 

Only M/C employees were not paid, all union represented employees with contracts in place were paid their increases. The restoration of these withheld funds is still an open issue under discussion with the Paterson administration.

Now the Governor, for FY 2010-2011, again rescinds the salary increases of state M/C employees while asking the unions to negotiate workforce savings of $250 million general fund, $483 million all funds. Also proposed are salary deferral (lag payroll), delay or reduction of the April 1, 2010 4 % general salary increase, requiring employees and retirees to pay 10 % of the Medicare Part B premium for individual coverage and 25% for dependent coverage. The Governor also proposes facility and ward closures, merger of select state entities, offices and agencies.

With regard to the proposed salary deferral and reduction or delay of the 4% salary increase, the unions have said NO - - we won’t give up what we’ve negotiated - - and nothing happens. M/Cs say no -- we CAN”T AFFORD to give up our increases but we’re willing to work with you to identify savings and the Governor says NO, you, who make up 6% of the workforce, will sacrifice for all. This is wrong!  Why is this allowed?

We agree with the unions that the state needs to reduce contracting out and use of temporary service agencies. We also know that this will not happen overnight.  However, it is not fair to take two years of salary increases from M/Cs and none from the rest of the workforce. The obvious answer is to restore the M/C withholdings---that’s what we hear every day from outraged M/Cs who are losing $6000 to $10,000, and from M/C secretaries who are losing $1500 to $2000 as compared to their union colleagues.

What happened to the merit in the civil service merit system? Career ladders have been destroyed. Transitional employment opportunities dashed. The classification and compensation system is a travesty.

As representatives of the M/C employees we understand full well the financial challenges facing the state and the importance of appropriately and effectively meeting those challenges. The Governor’s actions against M/C employees is not the way to solve the problem!  Six percent of the workforce cannot absorb all the savings that the Governor wants from the whole workforce.  And we have engaged in serious negotiation with the administration to identify savings to fund these increases (savings proposals we submitted over the past 15 months are attached, figures have not been updated) - - so far without resolution. M/C s should not have to fund their statutorily provided raises when the rest of the workforce is not required to do so!  M/Cs have consistently expressed their willingness to share in fixing the State’s financial problems but insist every employee be treated equally. One comment recently received, “This is not a corporate state where you can treat people differently according to the ruler’s whim.”

 We have written to and discussed these issues with legislators. We need your support to right this wrong - - and to ensure that the state’s programs and agencies are run by competent, career management and their confidential staff.  These are taxpayers and your constituents. They deserve your full support.

Impact of Not Paying M/C Increases

Employees:  Loss of $6,000-$10,000 in salary; reduction in final average salary used for pension calculation; reduction in purchasing power which means loss of tax revenue to the state; difficulty/inability to fulfill financial commitments - - possible need for state services.

Program and Agency Operations:  Effective operation of agencies is hampered by agencies losing experienced M/Cs to retirement, M/Cs requesting demotion/assignment to PEF and/or CSEA represented positions to earn higher salaries; PEF and CSEA represented employees refusing promotion/assignment to M/C positions (confirmed in confidential conversations with agency heads); critical M/C vacancies are not approved for filling; agencies such as OMRDD and OMH and Health facilities and hospitals face possible loss of accreditation - - which translates into reduced funding. In addition, the state’s classification and compensation system has been so skewed that it has become a sham and will take a major comprehensive overhaul to make it viable.

M/C employees should not be treated as political pawns to be used as cannon fodder by any administration seeking to reduce its financial commitment to any other employees.  M/Cs are sick of it! They are outraged! They are tired of the games being played with their lives and livelihood!

What We Propose

We have been talking to the Paterson administration and have proposed savings; over $1.5 billion last year and more this year:

Eliminate 300 exempt class political appointee positions - - to save $30 million, which could fund the 2010 M/C 4% salary increase.

Approval of OMCE’s proposal to restore lost M/C compensation through a “one paycheck rolling pay date” deferred (lag) payroll. The funds included in the 2010-2011 budget for M/C performance advances, longevity and merit payments must remain in the budget and be paid as part of this proposal (attached). Essentially M/Cs would be funding their own increases (which is another source of outrage).

Ensure that M/Cs are treated fairly and equitably—this would require changing the pay bill statutory language that allows the Budget Director to withhold salary increases. Withholding has only been applied to M/Cs although withholding authority also exists in union pay bills.

Ø     The Budget Director’s authority to negate increases authorized in statute must be tied to some form of defined fiscal reality. When actual revenue benchmarks are not met (for example, actual revenues are less than 90% of projected revenues), then and only then should such actions by a budget director be permitted - - and only if it is applied across the board to the entire workforce. Salary increases would be paid when revenues increase beyond the threshold.

We have three additional legislative proposals drafted to address this problem:

Ø     Amending Civil Service Law to allow an individual M/C employee to seek financial redress through an expedited review and determination (180 days) for an Occupational Pay Differential (OPD) whenever the difference, in actual base salary, between the M/C supervisor and those supervised is less than 10%.

Ø     Amending the Retirement and Social Security Law to provide 2 years of retirement service credit for M/C employees who were not paid their salary increases, performance advances, longevity and merit payments.

Ø     Modifying the 2010-11 state budget to include sufficient funds to pay the M/C 2009-10 and 2010-11 salary increases, performance advances, longevity and merit payments and requiring through statutory language that they be paid.

Benefits Reduction Proposals

The Governor again this year proposed that employees and retirees be required to pay a portion of the Medicare Part B premium - - 10% for individual and 25% for dependent coverage. We cannot embrace this proposal. M/C s cannot afford any more.

The Governor also proposes that the State should have the option to self-insure all or parts of the New York State Health Insurance Plan (NYSHIP). While we believe it is prudent and worthwhile to explore the feasibility of self-insuring, it is imperative that any plan to do so contain all the protections currently required by the State Insurance Department, that all state insurance rules and regulations must apply and that full compliance with ERISA rules and regulations is assured. Saving the state money is important; it does not outweigh the need to protect our employees and retirees.

OMCE is committed to obtaining real and positive resolution of this issue. We need your action and support to make it so.  Thank you.