August 3, 2004

California's state workforce won't be shrinking

By John Hill

If a proposal to overhaul state government to be released Tuesday amounts to "blowing up the boxes," state workers won't catch much shrapnel.

The California Performance Review doesn't envisage a radical shrinking of the state workforce in favor of privatization or curtailing government services.

Instead, it calls for a relatively modest reduction of 12,000 in the projected growth of the payroll in the next five years.

The state's workforce would keep growing - just not as fast as anticipated.

By comparison, the state payroll - in real numbers - has shrunk by almost 10,000 in the past two years.

"It's not going to result in massive layoffs, unless there's something we don't know," said Laura Aguilera, a spokesman for the State Personnel Board.

The task force was assembled five months ago by Gov. Arnold Schwarzenegger, who famously promised to "blow up the boxes" of the bureaucracy, rather than just shuffling them around.

But the panel's final report rejects a radical approach to the state workforce, focusing instead on developing a strategic plan for replacing workers expected to depart as the Baby Boom generation reaches retirement age.

"If you slash and burn now, you won't have an adequate workforce for when you start seeing the oncoming wave of retirements that everyone is expecting," said Carl DeMaio, president the Performance Institute, a private think tank that promotes budgeting techniques that measure the effectiveness of programs. DeMaio and some of his colleagues have been advising the panel.

Once the bureaucracy has been streamlined, he said, the state can consider ways to introduce competition to reduce costs further.

But even that is not grounds for panic among state workers, DeMaio said. In many cases, government workers compete successfully against private sector contractors and retain their old jobs.

Bob Martinez, a member of the performance review panel, said that early media accounts of the report have misleadingly focused on the downsizing of the workforce.

Even with the slower growth in payroll, the state would still add more than 6,000 positions in the next five years, instead of the 18,000 that's currently projected. The report estimates that the workforce proposal would save $4.3 billion over five fiscal years.

"What we're talking about is the challenge of being more efficient and maximizing the taxpayer dollar," Martinez said.

J.J. Jelincic, president of the California State Employees Association, did not immediately reject the idea, saying the goal of slowing growth by 12,000 jobs "is not outside the realm of possibility."

But he said it depends on the details.

"If all those cuts are coming out of DMV lines, it's probably not reasonable," he said, referring to the state offices that issue driver licenses and car registrations.

On the other hand, Jelincic said, if the state can figure out a way to automate certain functions, such as determining inmate sentences, it might work.

"We are concerned with quality public service," he said. "We are not opposed to doing it efficiently."

The review makes several other proposals for the state's personnel system, such as consolidating the Department of Personnel Administration and the State Personnel Board, establishing a formal process for grooming leaders, and creating a centralized plan for a more efficient workforce. More than two-thirds of states already have such plans, either formally or informally, the report says.

It also takes aim at the state's system of "merit" pay increases.

"The existing merit salary adjustment concept is broken," it says. "Merit salary adjustments are automatic and reward mediocrity exactly the same as excellence."

In fact, the report says, 99.2 percent of all employees get annual merit raises, which workers can receive until they reach the top of the salary range for a job title.

To deny a pay increase, it says, supervisors must assemble almost as much documentation as they would if they were suspending or demoting a worker. Even denying the merit pay raise to just 4 percent more workers would save the state $10 million a year, according to the report.

"We want people to stop talking about 'the' pay increase and start talking about 'my' pay increase," DeMaio said.

Such a move would reward workers who truly deserved it, he said, helping the state recruit and retain the best possible candidates. "It is not an anti-employee initiative," he said.

Jelincic of the state workers association was not so sure.

The raise is based on the idea that workers get better with experience, which he said is almost always the case. And a supervisor who believes a worker is not performing should take action long before it comes to denying that worker a raise, Jelincic said.

At that point, "it sounds like you've got a supervisor problem, not an employee problem," he said.