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LA state worker compensation issues still need fixing

With publication of the federal government’s 2012 pay tables comes a reminder about how much remains to be done in Louisiana concerning streamlining, right-sizing, and improving efficiency in the state’s bureaucracy.

On the positive side of the ledger, at least the state is not following the federal government example of Pres. Barack Obama’s policy that puts more emphasis on growing government than in setting up an environment for success in expanding private sector job opportunities and wage levels. Despite a couple of cost-of-living pay freezes for federal employees, their wage growth continues at a higher rate than that of the private sector, just not increasing as much as it had previously. Other forms of compensation remain more generous than ever compared to the private sector, and these civil servants know it, decreasing their low voluntary turnover rates even further that are much below that of the private sector’s.

At least in Louisiana, which, unlike the federal government, must live within means as it cannot use debt for operating budgets except in extraordinary circumstances, the Gov. Bobby Jindal Administration with the Legislature’s cooperation has started state government on a healthier diet.

By the close of fiscal year 2011, the state’s full-time employee headcount had dropped 11 percent from the last few months of his predecessor’s administration to just over 80,000, and most state employees had not received a (cost-of-living disguised as a “merit” increase) raise the previous year or will this upcoming fiscal year. Further, the state is taking baby steps with the chance that they will become adult-sized in the future in reforming the system to make it more efficient.

Still, it’s clear much work lies ahead to create a Louisiana civil service appropriate to the state’s resources, the claims made on the state’s taxpayers, and in creating best use of the people’s money. Private sector pay rates from 2006 have gained 2.1, 3.9, 1.6, 1.2, and 1.2 percent while rates of change for pay of all state employees have increased in the five prior fiscal years respectively 3.3, 9.7, 3.5, 2.9, and 0.5 percent – only with the pay freeze have state employees not seen substantially higher increases than workers in the private sector.

While defenders of the current system will claim higher increases are justified because public sector pay in the state is lower than it should be relative to the private sector that assertion rests on largely useless and self-serving studies. And when looking at all aspects of compensation, including health and retirement benefits, and comparing this to the private sector, Louisiana state employees clearly enjoy a gravy train. Therefore, bringing salary under control is just one aspect of reforming the system.

Gallantly, such an attempt came this past session to slow down the state’s mushrooming unfunded accrued liability in its retirement accounts (now over $18 billion, which will soon cost the state over $1 billion to fund in order to wipe it out by the constitutionally-mandated year of 2029) by making employees pay their fair share of funding for their retirement benefits. Two years previously, legislation would have switched new employees into defined contributions plans away from the current over-generous defined benefit regime. Politics as usual focused on state employees rather than the citizenry derailed both reforms. Even the Jindal Administration is running into resistance as it tries to bring the administrative costs of health benefits under control with increased efficiency.

Hopefully, the State Civil Service Commission and Jindal can work together to continue pay plan reforms that slow the rate of increase in pay from its artificially-high levels of the past, by tying performance more closely to pay, without inducing pay raise freezes. The CSC also can move to make for more realistic evaluation of employees (currently, almost none are involuntarily separated for subpar work). Also, the revival and this time passage of the legislation to create a prudent retirement plan needs to occur, and Jindal needs to stay the course in making the administration of health benefits more efficient. Only in carrying through with these actions can the imbalance favoring bureaucracy over Louisiana’s citizens be rectified.

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