Gov. Butch Otter’s chief of administration, Mike Gwartney, told legislators this morning that the administration believes Idaho is underpaying for state employee salaries by about $110 million, but overpaying for benefits by $35 million to $40 million, and has too much liability for state retirees’ medical costs. This year’s annual report on state employee compensation shows that state worker salaries still are lagging 15 percent behind the market. But Gwartney said an administration task force concluded that benefits are above market levels. So Otter wants to raise pay and cut benefits. “It has to be a package deal,” Gwartney told the Change in Employee Compensation Committee.
Rep. Bob Schaefer, R-Nampa, responded, “In the past we’ve made up for what we were not giving in salaries with benefits.” But representatives from Otter’s Division of Human Resources said studies show that costs the state more in the long run than just paying better salaries. You can read my full story here.
Otter’s recommending at least 5 percent merit-based increases for state workers each year for at least the next five years, while trimming back state-paid health benefits for employees over a four- to five-year period. Currently, the state pays 78 percent of the total cost of employees’ and dependents’ health benefits and employees pay 22 percent. Otter wants to move that to a 70-30 split to align with comparable private-sector employee health plans. He also wants to make cuts in retiree medical benefits – 36 percent of state employees are now 52 or older – to cut the state’s liability from $442 million to $190 million. “Mainly, the governor asked us to do this: I don’t want a state employee to leave here because they could get a better deal on the benefit side anywhere else,” Gwartney told the committee.
Younger workers value pay more than benefits, the administration said, so the state should revise its system to attract that future workforce. The average state employee is now 47 years old; the average age range of hires in the past year is 36 to 40. Among Otter’s recommendations is to eliminate retiree health benefits for any employee hired after July 1, 2008. So far, the joint CEC Committee has received 250 letters from state employees expressing concerns about the plan; written comments still are being accepted through Jan. 14 at CEC@lso.idaho.gov, by fax at 334-2668, or by mail at: Legislative Services Office, Attn: CEC Committee, 514 W. Jefferson, Boise, ID 83720.