Study urges a new ap­proach to Va. em­ployee com­pen­sa­tion

Anal­y­sis rec­om­mends fo­cus­ing raises care­fully, re­view­ing salaries yearly

Richmond Times-Dispatch - - FRONT PAGE - BY MICHAEL MARTZ

“What’s the use of do­ing a pay-for-per­for­mance sys­tem if you’re not go­ing to pay for per­for­mance?” Col. M. Wayne Hug­gins, ex­ec­u­tive di­rec­tor, Vir­ginia State Po­lice As­so­ci­a­tion

Vir­ginia should con­sider a dif­fer­ent ap­proach to com­pen­sat­ing state em­ploy­ees, ac­cord­ing to a new leg­isla­tive study that says work­force pay needs to be an an­nual pri­or­ity to en­sure that agen­cies can re­cruit and re­tain tal­ent, es­pe­cially in jobs with high turnover and non-com­pet­i­tive salaries.

The Joint Leg­isla­tive Au­dit and Re­view Com­mis­sion re­ceived a com­pre­hen­sive look at to­tal em­ployee com­pen­sa­tion on Mon­day that found the Vir­ginia gov­ern­ment to be com­pa­ra­ble to other em­ploy­ers, but pri­mar­ily be­cause of gen­er­ous health in­sur­ance ben­e­fits and re­tire­ment ben­e­fits that have di­min­ished for newly hired state work­ers un­der pen­sion re­forms im­ple­mented in 2014.

The study rec­om­mended that the Gen­eral As­sem­bly look at re­quir­ing the state to con­sider the com­pet­i­tive­ness of salaries and other com­pen­sa­tion ev­ery year be­fore de­vel­op­ing the pro­posed bud­get, rather than leav­ing the is­sue to po­lit­i­cal chance, which has made pay raises ir­reg­u­lar and un­pre­dictable.

The JLARC staff also sug­gested that Vir­ginia pro­vide pay raises ac­cord­ing to spe­cific needs rather than across-the-board in­creases that may not help the state re­cruit and re­tain tal­ented em­ploy­ees for cer­tain jobs.

“Pro­vid­ing uni­form salary in­creases for all em­ploy­ees does not use fund­ing most ef­fec­tively be­cause funds are not tar­geted to where they are most needed,” Jeff Lu­nardi, the project leader, told the com­mis­sion. “Vir­ginia’s bud­get process could bet­ter pri­or­i­tize needed salary in­creases.”

Em­ployee rep­re­sen­ta­tives ap­plauded the rec­om­men­da­tion of mak­ing em­ployee com­pen­sa­tion an an­nual bud­get pri­or­ity in­stead of an af­ter­thought, but said some study sug­ges­tions al­ready are pos­si­ble if the state would put money

on the ta­ble to fund them.

For ex­am­ple, the study rec­om­mends that the leg­is­la­ture con­sider chang­ing state code to al­low agen­cies to give a dif­fer­ent per­cent­age raise based on per­for­mance, but em­ployee ad­vo­cates say the state al­ready has a pay-for-per­for­mance plan the state rarely has funded.

“What’s the use of do­ing a pay-for-per­for­mance sys­tem if you’re not go­ing to pay for per­for­mance?” asked Col. M. Wayne Hug­gins, ex­ec­u­tive di­rec­tor of the Vir­ginia State Po­lice As­so­ci­a­tion and a for­mer state po­lice su­per­in­ten­dent.

Hug­gins said he also was sur­prised that the study spent lit­tle time on the is­sue of salary com­pres­sion — in which pay for vet­eran em­ploy­ees does not keep up with mar­ket pay for newly hired work­ers — even though it is a con­se­quence of ir­reg­u­lar raises over a pe­riod of years.

“In the pre­sen­ta­tion today, there wasn’t a men­tion of pay com­pres­sion,” he said.

Hug­gins and R. Ron­ald Jor­dan, ex­ec­u­tive di­rec­tor of the Vir­ginia Gov­ern­men­tal Em­ploy­ees As­so­ci­a­tion, gen­er­ally agreed with the study’s find­ings, which show the state strug­gling to at­tract and re­tain em­ploy­ees for cer­tain jobs that are es­pe­cially vul­ner­a­ble to high turnover rates in large part be­cause the salaries aren’t com­pet­i­tive.

“The in­for­ma­tion they pro­vided con­firmed many of the things we al­ready knew and the Gen­eral As­sem­bly had al­ready be­gun ad­dress­ing,” Jor­dan said.

For ex­am­ple, the Gen­eral As­sem­bly this year re­stored a 3 per­cent raise for all state em­ploy­ees that had been ap­proved and then can­celed the pre­vi­ous year be­cause of an un­ex­pected rev­enue short­fall. The bud­get also in­cluded a 2 per­cent raise for high-turnover, high­stress jobs, such as nurses and aides at state be­hav­ioral health fa­cil­i­ties that have strug­gled to main­tain staffing ra­tios that the U.S. Depart­ment of Jus­tice has scru­ti­nized in the past.

But those jobs con­tinue to rep­re­sent a case study of state agen­cies that of­ten can­not hire and keep work­ers for crit­i­cal jobs.

“State men­tal health fa­cil­i­ties are sig­nif­i­cantly un­der­staffed in core po­si­tions be­cause of re­cruit­ment and re­ten­tion chal­lenges,” Lu­nardi said in his pre­sen­ta­tion.

An­other case study came from the Vir­ginia Depart­ment of Agri­cul­ture and Con­sumer Ser­vices, which em­ploys about 200 peo­ple to in­spect restau­rants, food pro­duc­ers and farms. Those in­spec­tors cur­rently carry caseloads that are twice the fed­er­ally rec­om­mended av­er­age, which Lu­nardi said de­lays the open­ing of new restau­rants and the abil­ity of farm­ers to set higher prices for prod­ucts based on state grad­ing.

JLARC rec­om­mends that the leg­is­la­ture estab­lish a work group to “de­velop a method­ol­ogy that can be used rou­tinely for pri­or­i­tiz­ing salary in­creases for job roles with the most sig­nif­i­cant work­force chal­lenges.”

While state pay in­creases the past 12 years have kept ahead of the rate of in­fla­tion, those raises have come ir­reg­u­larly in large chunks “to make up for years with­out salary in­creases,” the study said.

“Smaller salary in­creases at reg­u­lar in­ter­vals are more ef­fec­tive,” Lu­nardi said.

Part of the prob­lem is the process now used for de­vel­op­ing the state bud­get, which “does not com­pel” the gov­er­nor or other bud­get of­fi­cials to eval­u­ate the com­pet­i­tive­ness of em­ployee salaries an­nu­ally, the project leader said. “In­stead, they com­pete with ev­ery other dis­cre­tionary pri­or­ity in the state bud­get.”

The re­port said the as­sem­bly could re­quire the Depart­ment of Hu­man Re­source Man­age­ment to re­port to the gov­er­nor and bud­get com­mit­tees each year on the state jobs “most in need of salary in­creases,” as well as pro­posed in­creases and the cost of pay­ing for them.

Hug­gins said he likes that idea.

“It would bring the is­sue to the front burner,” he said.

Part of the chal­lenge for the state is ad­dress­ing what Jor­dan called “the stark dif­fer­ence” in com­pen­sa­tion of em­ploy­ees in agen­cies that de­pend on the state gen­eral fund or through non-gen­eral funds, such as trans­porta­tion rev­enues and tu­ition for higher ed­u­ca­tion in­sti­tu­tions.

How­ever, the study said 75 per­cent of state agen­cies “re­port some re­cruit­ment chal­lenges” and most “strug­gle to find min­i­mally qual­i­fied can­di­dates for cer­tain po­si­tions.”

“Low start­ing salaries are the num­ber one rea­son cited for re­cruit­ment chal­lenges,” Lu­nardi said in his pre­sen­ta­tion.

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