State worker pay proposal outlined
BOISE – State lawmakers got their first look Friday at Idaho Gov. Butch Otter’s plan to raise state employee pay but cut benefits, and some had concerns.
Otter says he wants to match up with the private sector, and state employees are paid less than private-sector workers, but their benefits are better. So Otter wants to raise pay and cut benefits.
“It has to be a package deal,” Otter’s chief of administration, Mike Gwartney, told the joint legislative committee on state employee compensation.
Chairman of the panel Rep. Bob Schaefer, R-Nampa, said, “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 better benefits cost the state more in the long run than paying better salaries.
Otter is recommending merit-based raises of at least 5 percent for state workers each year for at least the next five years, while trimming 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’ 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. As part of that plan, Otter would eliminate retiree health benefits for all workers hired after July 1, 2008, and increase the portion of health care costs paid by retirees who receive the benefit.
“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.
Committee member Sen. Kate Kelly, D-Boise, said, “I don’t think that the private sector should necessarily be the default model for how we conduct state business.”
She noted that the state is the largest consumer of health care in Idaho, between state employee plans and programs such as Medicaid. “We are in a position to affect policy in this state, not just blindly follow the mistakes of the private sector,” she said.
Sen. Jim Hammond, R-Post Falls, said, “I understand the need – I understand how much benefits are skyrocketing in terms of liability for the state. I’m hoping that before we get done, we can develop a solution … that softens the blow for the employees.”
The panel already has received 250 letters expressing concern about the proposal. It’s continuing to accept written comment through Jan. 14.
This year’s annual report on state employee compensation shows that state worker salaries are lagging 15 percent behind the market.
Younger workers value pay more than benefits, the administration said, so the state should revise its system to attract that future work force. The average state employee is now 47 years old; the average age range of hires last year was 36 to 40.
Otter isn’t recommending any changes in the state retirement system, which covers thousands of local government workers along with state employees, although his administration concluded in the annual compensation report that the Public Employee Retirement System of Idaho is “significantly richer than the retirement plans in the private sector.”