Gaining Ground

State Employee Issues

The most important ingredient of state government is the work force that carries on the public's business every day. Like most Texans, they take pride in their jobs and try their best to give taxpayers a fair measure of performance for every dollar they earn, usually going above and beyond the call of public duty. Despite the bureaucratic atmosphere that frequently stifles creativity and initiative, state govern-ment's front-line workers often find ways to improve their pro-ductivity.

A packet of proposals in this report would improve working conditions and benefits for state employees. They deserve our best. And by giving it to them, all Texans will win out in the end with a state structure that attracts the highest quality work force possible.

Enhancing state employee training. State government has been slow to respond to the needs of the changing work force outlined throughout Gaining Ground. Laptops have replaced typewriters, meetings are held by conference call, and many publications are available on-line. Flatter management structures, new job responsibilities and more cultural diversity have created work settings that bear little resemblance to those of even the recent past.

One reason for the lack of public employee training progress is that those programs that do exist, though essentially identical across state government, are conducted separately, agency by agency. The Human Resource Development Network, a group of state agency training representatives, has begun to let em-ployees know which classes are available where and when by means of an electronic bulletin board system.

But there's a more fundamental challenge: reaching out beyond the public sector for the latest training techniques and information.

In Lubbock, state agency field office employees, realizing how much time and money they were spending to travel to distant training sites, have formed the Lubbock State Agencies Computer Task Force Shared Training Facility, an unwieldy name for a concept that has much to teach state government in other parts of the state. In the past three years, the Lubbock group has saved more than $200,000 by forming partnerships with area businesses that offer their own experts to conduct computer and other training courses.

TPR recommends the creation of an Agency Human Resource Center in the Governor's office to coordinate consistent state agency training efforts and establish links with local universities, colleges or businesses to devise customized training courses for public employees. The new center should also explore the feasibility of implementing computer-based training, allowing agencies to save travel time, avoid transportation and hotel costs and improve the effectiveness of their employees.

Cutting workers' comp costs. The cost of state government's variety of benefit programs for employees who are injured or permanently disabled on the job have gone up by 68 percent in the past five years. And while medical expenses have been somewhat reduced since 1991 through medical bill audits, little has been done to encourage safety, case management or return-to-work programs.

A comprehensive package of 16 detailed recommendations in Gaining Ground would help the state substantially cut future workers' comp costs. We propose that the Legislature add current funding for workers' comp claims to each agency's budget, accompanied by cost-containment incentives and clearly-stated guidelines to increase their accountability. We call for the establishment of consistent reporting procedures to allow meaningful evaluations over time and a plan to reduce the potential disability costs across state government. We suggest merging the risk management function of the Texas Workers' Compensation Commission with the Attorney General's Workers' Compensation Division to streamline services.

These and other recommendations would reduce workers' comp appropriations by 20 percent in fiscal 1997 and beyond, and save taxpayers more than $68 million over the next five years.

Giving state employees early retirement incentives. In 1986, the Legislature provided a temporary "window" through which state employees could retire from their jobs early. According to the State Pension Review Board, 43 percent of those eligible -- 2,918 employees -- took advantage of the plan. Their total salaries amount-ed to $75.6 million. Then, in 1993, responding to a recommendation in Against the Grain, lawmakers opened another "window" for state employees. This time, 52 percent of those eligible -- 4,704 employees with total salaries of nearly $153 million -- retired early, and more are expected to follow before the temporary plan expires in August 1995.

The purpose of the early retirement incentive programs is threefold: to reduce the state bureaucracy's size and total payroll costs, afford agencies the opportunity to cut the number of their middle managers, who earn higher average salaries, and to give employees better benefit packages and credit for a few more years of service so they can quit work sooner than planned. It can also help shake up the bureaucracy, injecting fresh faces into the system.

Unfortunately, both earlier state efforts were diluted just before final passage with provisions allowing the retired workers to return to full- or part-time state employment. No one counted how many came back in 1986. But as of July 1994, 265 people who retired under the 1993 plan had returned to work for the state -- all but eight of them in the same agency.

TPR suggests that the Legislature expand upon normal retirement eligibility requirements by letting state employees take an additional five years of age credit. Each state agency's appropriation should then be reduced by an amount equal to the annual salary of every retiring worker. Those employees who choose the new incentive plan and then return to state jobs shouldn't receive retirement annuities at the same time. Employees and agencies should comply with both the spirit and the letter of the law, which restricts retirees from contracting with the state for a full 12 months after their effective retirement dates.

We estimate that between 1,600 and 1,900 employees would retire early during the next two years for a total savings of more than $245.4 million.

Offering state retirees Medicare supplements. There are more than 38,000 retired state workers whose health coverage is paid by the Employees Retirement System (ERS), costing some $90 million a year. Eighty-six percent of them are part of HealthSelect, a preferred provider plan administered by Blue Cross/Blue Shield of Texas, while the others rely on one of several available HMO plans.

So what's the problem? Nothing -- unless you happen to be a taxpayer.

That's why we propose that ERS save money by providing state retirees over age 65 with a Medicare supplemental policy, rather than paying full health coverage at higher rates. This would broaden Medicare, ensuring retirees coverage comparable to more expensive plans, for $75 per month instead of the current cost of nearly $200 per month. The reduc-tion in premiums should be used to cut the state's contribution to Medicare and to raise retirement benefits for state employees. If only 20 percent of all eligible retirees transferred from their current HMO providers to comparable Medicare plans, taxpayers would save almost $1 million each year between now and the turn of the century.