House Budget Committee weighs proposed pay hike for state employees

      The Parson Administration has made its case to the House Budget Committee for a proposed 5.5-percent pay increase for state employees. 

Missouri Budget Director Dan Haug testifies before the House Budget Committee (Photo: Ben Peters, Missouri House Communications)

      The committee heard from the administration’s budget director, Dan Haug, who outlined the motivation for the plan that would cost about $72-million including $41-million in general revenue.  It would set state employee pay at a minimum of $15 an hour and kick in February 1, if it can get through the legislature by then.

      Haug said Missouri must do something to respond to recent and rapid changes in the labor market. 

      “We’re getting to the point where if we have more vacancies and more turnovers we’re not going to be able to operate our state facilities,” said Haug.  He said some facilities with minimum staffing requirements, such as prisons and mental health facilities, have resorted to forced overtime to fill shifts. 

      “That’s not the way we want to run the state,” said Haug. 

      Haug said one reason for proposing a February 1 start date is that a stipend being paid out of federal money to state employees in some institutions came to an end at the end of December.   

“We feel like if we wait until July 1, which is typically when we would do a pay increase, when the new fiscal year starts, then we’re just going to keep bleeding employees and we’re going to get to those critical numbers where we don’t have enough employees to safely operate our correctional institutions and our mental health institutions and provide the quality of services that the citizens of this state deserve,” Haug said. 

“We’re just responding to the wage market that is out there.  We are trying to figure out what a market wage is that’s going to let us be competitive.  We’re not trying to set the market.  Honestly we’re not even trying to get to the middle of the market.  We’re just trying to get somewhere where we can be competitive and get people in and keep our good people,” said Haug. 

Most lawmakers seemed to agree with the desire to increase state employee pay.

“Let’s face it:  we’re in competition with McDonald’s right now, so obviously something has to break there, without a doubt,” said Representative Don Mayhew (R-Crocker).   

      Excelsior Springs Republican Doug Richey agrees, but he has an issue with setting a new minimum baseline of $15 per hour for state employees’ pay.  He said given existing pay structures that could set the income of some new state hires too close to the level of pay of long-term employees.

      “Creating an arbitrary baseline prevents us from being able to be responsive to the market, as well as sends an unintended message that would be somewhat negative to those … who have been working for two decades,” said Richey.  “You can work for 20 years in your job, have tremendous institutional memory and ability, but you’re really no different than a part-time custodial worker at 17 years of age with no experience.”     

      “I wanna get away from the $15 an hour because to me that’s just a number.  That’s not what it’s going to take to get people in.  I’m an employer … in unskilled jobs and I can’t get people for $17 an hour, so that $15 an hour is just a number we’re throwing out there and I believe that is for political reasons,” said Representative Richard West (R-Wentzville)“Let’s do realistic and what’s it going to take to hire?  For one department it may require 15, for another department it may require 18, for another department it may require 22.”

The Missouri House Budget Committee takes testimony from Missouri Budget Director Dan Haug (Photo: Mike Lear, Missouri House Communications)

      Many legislative budget makers resist using federal funds to support ongoing expenses, like state employee pay.  They refer to it as, “one time money.”  Haug said this proposed pay hike relies only on state funds.

      “Missouri’s revenues are doing very well.  Right now the state’s economy is doing well.  We have more people coming back to work.  Our revenues are coming in very strongly.  They came in very strongly last fiscal year.  The consensus revenue estimate shows strong growth through fiscal year 23,” said Haug.  “Even at a very conservative growth rate of 1.5-percent growth in general revenue we can easily afford this ongoing pay increase.”

      Haug, who has worked with the state’s budget for more than 25 years, said, “I feel very confident that we can afford what we’re doing now and what we’re going to need to do in the future.”

      Other legislators asked whether studies should be done to make sure the state needs the employees it has, or that pay increases would be going to the employees who are most needed or deserving.  Haug said the state has reduced its workforce significantly in the past ten years, and said such an employee pay review could take months, and changes to the labor market necessitate a quick response.  He said state employee turnover in some positions and pay levels has been as high as 55-percent. 

      The committee has not voted on the bill which includes the proposed pay plan, House Bill 3014

Legislature’s budget proposal would boost employee pay and benefits, study pay by job class

State employees would receive a pay raise beginning January 1 under the budget the legislature proposed last week, and their health care benefits would also be bolstered.

The ranking Democrat on the House Budget Committee, Kip Kendrick (left) and House Budget Committee Chairman Scott Fitzpatrick (photo; Tim Bommel, Missouri House Communications – click for larger version)

The legislature approved a budget that would increase by $700 the pay of employees making less than $70,000 a year.  Those making more than $70,000 would receive a 1-percent increase.

It would also pump $61-million into the Missouri Consolidated Health Care Plan – the insurance program for most state workers.  Budget makers say MCHCP was close to depleting its reserve funds, and they hope that the infusion of money in this budget will stave off premium increases for state employees.

“I don’t think there’s enough discussion in the state right now on the condition of Missouri Consolidated Health Care Plan,” said Columbia representative Kip Kendrick, the leading Democrat on the House Budget Committee.  “Any new funding that we could do for them this year – I’m glad we could get to $61-million in new decision item funding for Missouri Consolidated – it’ll help offset that.  I suspect there will be plan changes and premium increases, but it will help us at least keep those costs somewhat contained.”

The budget also includes an additional $350-per year increase in pay for prison guards.  House Budget Committee Chairman Scott Fitzpatrick (R-Shell Knob) said lawmakers have heard that the Department of Corrections has had increasing difficulty in hiring and retaining guards, and that is in part due to the offered salary not being great enough.

Fitzpatrick and Kendrick agreed that while there are employees throughout the state to whom they would like to give greater pay increases, corrections officers’ pay needed immediate attention.

“The raise we agreed to specifically for corrections officers combined with the raise for all state employees amounts to over a $1000 increase, which for some of these corrections officers who are making in the high 20s, low 30s per year I think is significant,” said Fitzpatrick.  “That, by itself, probably isn’t going to be a game-changer but hopefully it’ll help reduce turnover and help us with the issue we have with the vacancies in that area.”

$3.2-million would go to increase pay for public defenders.  Kendrick said the average public defender starting out is making $39,000 a year.

“Typically having a new law degree and an average debt of over $100,000, $39,000 does not go nearly far enough.  We needed to do what we could make sure we increased pay for public defenders to somewhat balance the justice system again,” said Kendrick.  “Nothing against prosecutors – prosecutors are great.  They tend to be paid much better than public defenders and when you have that it kind of tilts the balance even more so in the direction of the prosecutors.”

Kendrick said bolstering the state’s public defenders could save the state money by slowing the growth of its prison population.

The budget also includes a $6.3-million boost in pay for the state’s Highway Patrol troopers.

Fitzpatrick said perhaps more significant for state employees than the pay and benefits increases in this budget could be funding for a reward for performance study requested by the Office of Administration.

“We’re going to give them the opportunity to go out and really study all the job classes in the state – what we’re asking people to do and trying to compare and find out what the market rate is on that, so that we can get a real good sense of what job classes we really need to focus on,” said Fitzpatrick.  “I think we have some job classes in the state that are probably overpaid, I think we probably have some that are severely underpaid, and some that are probably right about where they need to be.”

Fitzpatrick said with the information from that study the legislature could begin, even next year, working to get Missouri out of last place among all states in employee pay.

The legislature’s budget lays out more than $28.3-billion in proposed spending of state-controlled money.  It was approved on Wednesday, two days ahead of the constitutional deadline, and will next be sent to the governor.

Legislator exploring ways to improve state employee benefits even if pay hike not possible for FY ’18

The Missouri legislature could have a difficult time building a pay increase for state employees into the Fiscal Year 2018 budget, but there are other things it could consider to improve those employees’ benefits.

Representative Mike Bernskoetter chairs the Joint Interim Committee on State Employee Wages (photo; Tim Bommel)
Representative Mike Bernskoetter chairs the Joint Interim Committee on State Employee Wages (photo; Tim Bommel)

The Joint Interim Committee on State Employee Wages has heard a follow-up report from St. Louis-based CBIZ Human capital Services.  CBIZ studied nearly 38,000 of Missouri’s 50,000 employees.  It’s already reported to the legislature that those employees are the least paid in the nation, with compensation more than 10-percent below what is recommended to compete in the job market.

The study said it would cost the state $13.69-million to bring more than 5,000 of those state workers’ pay up to the minimum CBIZ recommended to be competitive in the market.  That would be a one-percent increase in the state’s payroll.

Committee Chairman Mike Bernskoetter (R-Jefferson City) said building that into the budget that legislators will propose over the next couple of months could be difficult based on what he’s heard from the House’s Budget Committee Chairman, Scott Fitzpatrick (R-Shell Knob).

“I’ve heard reports where he thinks we’ll have to cut $500-million out of the budget,” said Bernskoetter.  “Hopefully it won’t be that bad but I guess we’ll see as they go through the process.”

Bernskoetter said he does believe that if there is enough money to increase state employee pay, it is among Fitzpatrick’s priorities.

“If the budget is the way he thinks it is it’s going to be tough this year, but he’s led me to believe he’s interested in improving state employee pay,” said Bernskoetter.

He said even if the state can’t begin increasing state employees’ pay this year, the study makes clear a path toward improving that pay.

“We have a blueprint for the future, so there is something in that,” said Bernskoetter.  “We have a plan that hopefully we can implement in the future.  If not this year, next year.”

Some of CBIZ’s other recommendations could be worked on this year, however.  One is that Missouri replace its step-based system for awarding salary increases.  A CBIZ representative called it “archaic,” and expensive to administer.  Bernskoetter said he is reviewing proposed legislation to make that change.

Another recommendation is that Missouri return to requiring that an employee work five years to be vested rather than ten years.  Bernskoetter liked that idea as well.

“Say we have Governor Greitens and he wants to bring in the best and the brightest … even if he was here for two terms – eight years – they would not get anything out of it other than their salary.  They wouldn’t be vested,” said Bernskoetter.  “That’s one way of compensating the best and the brightest.  If we can’t at least give them a great salary, we’ve got a good benefit package.”

Bernskoetter would also like to see state employees given more flexibility, where possible.

“Obviously you have some places – the Department of Corrections – where you have to be staffed 24-hours a day and you can’t really be flexible.  But if we can be flexible in certain departments – if people want to work 6 to 2, or if they can work from home, I think I need to sit down and talk to different departments and be more flexible with employees,” said Bernskoetter.  “If we can’t give them a pay raise, then be more flexible with their schedule.”

CBIZ won a bid of up to $300,000 to conduct the pay study.

Our earlier stories:

House Members optimistic about taking first step in improving state employee pay

Legislators to learn more about state employee pay study at meeting next week