Where Labor is Weak, State Workers Face Huge Cutbacks


Mike Shields, Kansas Health Institute

Kansas state Representative Mario Goico argued to reduce state employees' pay by 1.2 percent, as opposed to a previous plan that cut salaries by as much as 7.5 percent. "Coming in and cutting salaries by 7.5 percent just isn't the right way to do things," the Republican says. "It isn't fair to the employees who have made commitments based on the expectation of receiving a certain salary."

    While the nation's attention has been focused on state worker battles in union strongholds such as Ohio and Wisconsin, quiet but consequential labor battles are breaking out in Kansas, Texas and other states where collective bargaining rights for public workers were weak or non-existent to begin with.

The outcome of these confrontations will have a big impact on how many state employees get to keep their jobs and how much they'll be paid to do them. It also will impact less-visible aspects of these states' relationship with their workers, such as how much employees must pay for their out-of-pocket health costs and whether civil service protections meant to shield rank-and-file positions from patronage hiring will continue.

One of the biggest flash points is Alabama, where legislators are considering a raft of bills that would lean heavily on state employees to help close a big budget deficit. The most contentious proposal is to begin furloughing state workers for as many as 24 days out of the year. The Alabama State Employees Association is willing to embrace furloughs as an alternative to layoffs but objects to the high degree of discretion agency managers would have to use them, even if the state's fiscal condition were to improve. "They'd be able to use the income of state employees like a checking account," says association director Mac McArthur. 

McArthur estimates that the furloughs — combined with bills that would eliminate longevity pay bonuses for longtime employees and require workers to contribute more toward their health care and pension plans — would decrease the take-home pay of the average state employee by 20 to 30 percent. Even an employee travel allowance of $11.25 for work-related day trips may be discarded. Associations of public-sector workers do not have collective bargaining rights in Alabama. They may be further weakened by a state law passed in December that prohibits employees from taking voluntary payroll deductions to support the political activities of organizations such as the Alabama State Employees Association. Implementation of the law has been blocked while a legal challenge works its way through the courts.

Legislative leverage

    Public employees Southern and Great Plains states do not enjoy the same bargaining rights as their counterparts in the Rust Belt and Northeast. That doesn't mean they don't have leverage to oppose measure they don't like in the legislature, however. Even in Mississippi, where the rate of unionization among state workers is the lowest in the country (see chart), employees last month killed a proposal that would have exempted agency managers from state Personnel Board rules. Those rules govern everything from the ways employees are hired and promoted to the process by which they can be terminated. Governor Haley Barbour argues that doing away with these rules would allow agencies to restructure operations in a more efficient way. But the Democratic-controlled legislature sided with state workers who said it would give agency leaders too much control. In Kansas, state workers recently beat back a proposal to suspend civil service requirements at the state Department of Labor and make all employees of the agency "at will." Jane Carter, executive director of the Kansas Organization of State Employees, says ditching the merit system for hiring at a time when the rights of state workers has become such a contentious national issue would open the door to politicized hiring at the department. "It takes away the protections of employees and puts politics back into it," Carter says. "There would have been nothing to stop the whole Department of Labor from becoming a political appointee." Employee pay is another battle line in Kansas, where state workers have some collective bargaining rights but the legislature ultimately controls the purse strings. The pay issue actually goes back a few years. In 2006, high staff turnover rates and lost investments in training new employees prompted Kansas to hire a consulting firm to study how state salaries compare to market rates. The study found that state salaries were lagging 8 to 10 percent below average. The next year, an oversight commission created by the legislature responded with a plan to restructure the state workforce to raise salaries and reward strong performers. The budget passed last week by the state House, however, de-funds the plan in the years to come. Initial versions of the House budget also included a big pay cut for Kansas state workers who make more than $40,000. The cuts were to fall on a sliding scale of up to 7.5 percent. State Representative Mario Goico offered a successful amendment to reduce the pay cut to 1.2 percent across-the-board. "Coming in and cutting salaries by 7.5 percent just isn't the right way to do things," says Goico, a Republican. "It isn't fair to the employees who have made commitments based on the expectation of receiving a certain salary to things like house payments and college tuition."

Big cuts in Texas House budget

    Texas is another state where severe budget cuts are likely to make a big impact on the state workforce. As many as 8,000 state positions may be eliminated if the proposed budget passed by the Texas House last week becomes law. The cuts proposed in the Senate budget wouldn't be nearly as deep, and the process of reconciling the two plans is expected to be heated. Other topics of discussion in the legislature include furloughs for workers and repealing longevity pay. But the most contentious proposal is a possible overhaul of the state's health care plan, which would result in higher payments and deductibles for state employees and their dependents. If the proposal passes, employees would have to pay 10 percent of their health care premiums — currently they don't contribute a dime. That proposal still leaves a $591 million gap for the Employees Retirement System of Texas, which administers the health care plan, to figure out how to fill. As a briefing paper from the retirement system makes clear, any solution to that problem likely would mean more financial pain for employees and retirees. If the House plan becomes law, there would be increases in premiums and deductibles, as well as steeper out-of-pocket costs for health care services. Under one scenario, the deductible would be $3,400 per participant. A family would have a total out-of-pocket annual liability of $11,900. As Andy Homer, director of government relations for the Texas State Employees Association, puts it, "That would make it almost a catastrophic plan."


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