Tying state pay to performance brings double benefit

Gov. Bobby Jindal and advocates of more efficient government in Louisiana can get two-for-one if the State Civil Service Commission follows through with revisions to its pay scales by the end of this year.

As the magnitude of Louisiana’s projected budget deficits for the next few years became clearer this past year, talk emerged about saving money through a more rational application of existing compensation rules. Presently, almost every classified employee receives a flat four percent raise annually if money is available because almost all are rated as satisfactory, while almost none are discharged to unsatisfactory performance. It has been recommended that pay increases be more closely correlated to gradations in performance and that evaluation be conducted utilizing more realistic standards.

This system of greater validity and flexibility might have avoided the need not to give any raises at all, as its current incarnation made it essentially an all-or-nothing proposition. Besides saving money, this debate also triggered reform proposals that would tie performance more closely to salary increases, the results of which were revealed by State Civil Service Director Sharon Templet.

Of the five, the best of them is the most complicated, where performance and market rates determine amounts. Unfortunately, its complexity likely will prove too confusing too employees and thereby reduce its motivational appeal for better output. Any of the other four plans, which would create at least three gradation and/or offer bonuses, would be an improvement over the current regime, as long as unsatisfactory performers get no raise, satisfactory-only-rated employees a very minimal one, and other gradations tied to higher evaluation levels are significantly different in their larger proportions given.

Happily, there may be another benefit to the implementation of one of these plans, which would go into effect next July 1. Frankly, a non-trivial portion of the roughly 62,000 classified employees in the state (about two-thirds of the total full-time equivalent state employees) know they will get little under the new system as for years, possibly their entire careers, they have eked out as little effort as possible to barely maintain adequacy while being assured of a fat four percent jump every year. Now that their raises, if any, would more faithfully reflect the amount of effort they are willing, or perhaps even only able, to put out, those who are advanced in their careers will not stick around – especially since they will be able to retire at nearly their entire current pay level, as potential state pensions for them are determined largely by their current salary level which wouldn’t go up much.

In short, this will encourage early retirements of the least capable employees and assist with another cost-savings idea, broached by Treasurer John Kennedy, of using attrition to cut as a goal of 5,000 jobs each over the next three years. Implement this new performance plan, and there will be no problem in meeting this aspiration. This is because the large majority of employees are in a retirement system that pays on the three consecutive designated by an employee as their base for calculation of their pension – usually their last three years prior to retirement because their pay is the almost always highest in this period. Bring on a new system, and a wave of retirements will hit the state bureaucracy cresting in June, 2011. All 15,000 would suggest a savings of around $600 million a year from then on (although it would aggravate the unfunded accrued liability situation of the pension fund.)

In the end, more rational use of fewer funds with better service will result from implementation of a new plan along the suggested lines. The Commission needs to act affirmatively on this and Jindal to approve it as soon as possible.