Whether it be state unions fighting the legislature's furlough savings plan or digging lines in the sand over ways to reduce state health care costs, it is becoming clear that the budget isn't the only thing that needs transformation in Washington State. It is also time to re-evaluate the so-called 2002 Civil Service Reform that put state unions in the driver's seat and policy makers in the back seat when it comes to certain budget decisions.

The 2002 "reform" first took full effect during the 2005-07 biennium. Under the new rules state unions no longer had to have their priorities weighed equally with every other special interest during the legislative budget process. Instead they now negotiate directly with the Governor, while lawmakers only have the opportunity to say yes or no to the entire contract agreed to with the Governor. Lawmakers can't make any changes.

Perhaps not coincidentally, state spending during the 2005-07 budget cycle increased 18% over the 2003-05 budget.

For true budget transformation to occur the Governor and legislature need to make their number one priority in January repeal of SHB 1268 from 2002 (civil service reform) and replace it with a law that simplifies an agency's ability to use performance-based contracts while also restoring the legislature's flexibility over compensation issues for state employees.

Otherwise any compensation reforms or competitive contracting/flexibility for agency directors to innovate on service delivery will run against the brick wall of that 2002 law.

An example of this is some of the agency responses to the Governor's eight budget questions.

Note these answers from the State Parks Commission concerning park operations (page 112):

Question 6: Are there more cost-effective, efficient ways for the state to perform - Yes
Explore more efficient staffing models and contracting. Reduced appropriations may result in service reductions i.e. hours of operations, staff presence or maintenance levels. Union contract must be renegotiated.

Question 7: Can the activity be the subject of a performance contract - Yes
If we contract out aspects of operations and if union contracts are modified.

Question 8: Can the activity be the subject of a performance incentive - Yes.
If we contract out aspects of operations and if union contracts are modified.

As evident from the answers to questions 6-8, the Governor and legislature are going to need more flexibility dealing with state unions to truly transform the state budget. 

At a minimum state union rules should be changed to reflect the process prior to 2002 allowing state employees the authority to negotiate for non-economic issues (while not providing a veto over agency contracting authority) but leaving compensation decisions up to the legislature as part of the normal budget process.

Another approach would be to follow the lead of Governor Mitch Daniels of Indiana. One of the first things he did when he took office in 2005 was to issue this Executive Order which in effect ended any state negotiations with unions. 

In response to my email asking about this action, Anita Samuel, Assistant General Counsel/Policy Director for Gov. Daniels, wrote:

"Employees are still able to pay union dues through payroll deductions. It is completely their choice. Union reps are allowed to represent employees in the grievance procedure. We expanded who was eligible to take a grievance through our State Employees Appeals Commission under this EO. Every employee, merit and non-merit below an executive level could file a complaint. The prior process only applied to merit employees.

The state does not negotiate with the unions on any issues. At times, the State Personnel Department will meet with the unions when requested. The state sets the compensation, pay for performance increases and benefits without negotiating with the unions. Governor Daniels put in place a robust pay for performance system starting in 2006. The first year the structure was 0% for does not meet expectation, 4% for meets and 10% exceeds.  The second year it was 0,3,8.5%. Employees were also given a 1.5% general salary increase that the legislature called for. I think that most employees were pleased with this system." 

Filed Under : Union Issues & Employee Benefits

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