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State worker pay falls behind, drives turnover

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Pay for state government workers has become significantly less competitive in recent years, making it more difficult to retain employees and helping to drive up turnover in the workforce, according to a report by the State Personnel Office.

State workers do well when it comes to average pay, but employees in many job classifications are paid less – some far less – than they could earn in surrounding states.

With an average annual pay of $41,912 for state workers in fiscal 2013, New Mexico ranked No. 5 from the top when compared with eight neighboring and other nearby states. New Mexico, at $72,156, ranked No. 4 in average total compensation, including pension and health care benefits.

“However, a detailed analysis and comparison of specific (job) classification levels shows New Mexico to be well below actual market averages,” says the State Personnel Office report.

The State Personnel Office estimates turnover in the government’s merit-based classified service cost $126.2 million in the 2013 fiscal year, which ended June 30.

The biggest cost of turnover is overtime pay for employees to do extra work while jobs are vacant. The state paid $36.7 million in overtime in fiscal 2013. That was a $12.3 million, or 50 percent, jump in overtime pay in just three years. There are also significant costs in separation pay and in hiring and training new workers.

The state’s failure to keep wages competitive with those paid by other public sector employers and private entities is also hampering the state’s ability to fill vacancies, according to the State Personnel Office’s annual report on the classified service.

“As the economy continues to recover, pressure is being experienced as other private and public sector organizations are competing for the same workers that the state is also trying to attract and retain,” the report says.

“Absent ongoing maintenance and adjustments to the state’s compensation structure, New Mexico will continue to fall further behind each year … especially in critical occupations.”

The success of government, like that of a private sector employer, hinges in large part on its ability to attract, reward and retain qualified and dedicated workers.

Those kinds of employees make better MVD clerks, highway maintenance workers, auditors, scientists and more.

In the 2013 fiscal year, 2,962 of the more than 17,000 workers in classified service left government, up from 2,332 in the previous fiscal year, according to the report by the State Personnel Office.

There are more than 1,000 job classifications in the classified service, and the State Personnel Office compared average pay for 151 so-called benchmark classifications with average pay for the same classifications in eight nearby states.

The report shows New Mexico’s average pay for 115 of the 151 classifications trailed the average pay of the nearby states.

The workers whose average pay trailed the average pay in the other states by more than 20 percent included plumbers, biologists, engine mechanics, chemists and many more.

The State Personnel Office report says the pay disparity with the other states is the greatest among the lowest-paid government workers. About half of classified workers earn between $20,000 and $40,000 a year.

“The state’s lack of attention and maintenance of the pay plan coupled with challenging economic conditions during the past decade have caused the state’s classified service compensation program to fall significantly behind the market,” the report says.

Last year, government workers received a minimum salary increase of 1 percent, the first across-the-board pay hike since 2008.

The State Personnel Office says the current cost to adjust government’s salary structure to reflect market conditions and to make other changes to the pay system is estimated to be as much as $80 million. Cutting turnover in half could potentially free up $63 million, it says.

Republican Gov. Susana Martinez and the Democratic majority in the Legislature recognize there is a problem, but they differ on how they want to approach it.

Martinez opposes an across-the-board increase for state workers but has proposed spending $14.2 million in targeted compensation increases for employees in positions that have traditionally been the hardest to fill and to keep filled.

The pay hikes would go to State Police, correctional officers, Child Protective Services employees, information technology workers and health and engineering professionals.

About one-third of the state’s classified workforce would be affected, and Martinez hopes to enact similar compensation reforms for the remainder of the workforce over the next one or two years, according to the Governor’s Office.

“It’s about reforming a broken classification system,” says Martinez spokesman Enrique Knell.

The Legislative Finance Committee has proposed targeted compensation increases for State Police, Child Protective Services employees and others, but it wants to spend less than the governor on the effort.

The LFC has also proposed that all state employees receive a minimum of a 1.5 percent pay increase, at a cost of about $11 million. Its plan calls for an additional $11 million to be distributed to agencies so they could come up with their own plans for additional compensation. Those plans could bring individual salary increases up to 3 percent or higher.

“This budget contains not only an effort to improve pay for neglected state employees but also the beginnings of a better pay system to attract and retain the best employees, especially in certain agencies, and reward strong performance,” says LFC Chairman Luciano “Lucky” Varela, D-Santa Fe.

The Legislature went into session last month with the chief order of business being the adoption of a state budget for the fiscal year beginning July 1, including money to fund any compensation increases for government workers. The session ends Thursday.

UpFront is a daily front-page news and opinion column. Comment directly to Thom Cole at tcole@abqjournal.com or 505-992-6280 in Santa Fe. Go to www.abqjournal.com/letters/new to submit a letter to the editor.

 

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