Governor’s study group recommends agency mergers, improved state employee benefits

A study group convened by the governor Wednesday recommended increased pay, expanded benefits and changes to retirement plans to better recruit and retain state employees.

The Governor’s Study Group on Efficiency in State Government also recommended the mergers of some state agencies, including the Department of Senior Services with the Department of Human Resources (DHR).

The committee, formed by executive order by Gov. Kay Ivey in January, was tasked with making recommendations to improve the efficiency of government.

“During this time, we have gathered facts and figures,” said Young Boozer, Alabama Treasurer, who chaired the committee. “We have developed reports, received reports, and have sought opinions. We have taken all that into consideration in the work that we have done and in the reports that we are presenting here today.”

Shortly after the committee convened, members formed subcommittees that independently reviewed the two mandates that Ivey presented before the study group, with each group presenting options for the governor to consider.

“This was a lot of brainstorming,” said Kathleen Baxter, the state’s comptroller, who chaired the state employment subcommittee. “There were no prepared ways we were going to do this. We sat down and thought about how we were to recruit, retain, and hire employees in a different way.”

According to the report, the state employed about 29,400 people at the end of 2021, down from about 30,200 at the end of 2020. Some of which deal with pandemic, but employees for the state have also been getting older, with almost a third of those working for the state eligible for retirement within 5 years. Age becomes a more important factor in the future, and could explain the decrease in the workforce.

Turnover in state positions has risen from 11.4% in 2019 to 15.2% in 2021, the highest since 2004.

In 2013 the average salary was about $42,750. By the end of 2021 it had grown almost $52,300, but in real terms the level was largely unchanged. According to the Bureau of Labor Statistics’ inflation calculator, $42,750 in Dec. 2013 equaled was worth about $51,000 at the end of 2021.

The subcommittee suggested an independent, comprehensive review of the state’s employment policies. This includes recruitment and retention efforts as well as the application, onboarding and hiring process.

The subcommittee also recommended that the state offer paid parental leave, sick leave accrual, tuition reimbursement and front loading annual leave.

They also suggested a three or four step pay increase, with each step amounting to a 2.5% bump.

The subcommittee recommended paying employees overtime and subsidizing active and dependent insurance.

“State agencies could be allowed the flexibility to pay all FLSA non-exempt employees time-and-a-half,” the report states. “This change would allow agencies to pay other FLSA non-exempt employees overtime rather than requiring them to accept compensatory time.”

The group also recommended changes to retirement. Currently state employees are divided into retirement tiers: Tier I employees, who started work before Jan. 1, 2013, are eligible for retirement at any age after 25 years of service, or after 10 years of service after age 60. Tier II employees, hired after Jan. 1, 2013, can retire at age 62 with at least 10 years of state service, or age 56 if they are firefighters or law enforcement.

The report recommended returning employees to Tier I retirement, saying that “making Tier I retirement available for all employees could make state employment more attractive and may reduce the number of state employees leaving state service for entities that offer Tier I retirement.”

The group also suggested establishing a five-year vesting period timeline for Tier II employees instead of 10 years, and providing an employer match for deferred compensation for Tier II employees.

Proposed mergers

A subcommittee focused on consolidation and elimination subcommittee called for eliminating departments or functions whose missions are obsolete.

“The public may be better served with the deregulation of certain industries, in which case those boards should be eliminated,” the report states. “When determining which executive-branch entities should be eliminated, factors that should be considered include whether the benefit to the public, rather than licensees, outweighs the costs to the public and the State and whether another entity is already performing a similar task and could efficiently take on the roles of the eliminated entity.”

The recommendations included consolidating the Department of Child Abuse and Neglect Prevention to the Department of Human Resources, and merging the Department of Senior Services with the Department of Human Resources.

The group also suggested combining the Historic Blakeley Authority, the Alabama Historic Ironworks Commission, and the St. Stephens Historical Park into the Department of Conservation and Natural Resources (DCNR).

The subcommittee also called for consolidating the state’s workforce boards in keeping with the suggestion that was made earlier in the year. Members recommended combining the State Workforce Development Board and the Alabama Workforce Council.

This would coincide with reducing administrative costs by closing several state career centers, but the exact number is not given in the report.

The federal government provides states with funding for Title I  for the Workforce Innovation and Opportunity Act, which provides workforce training for people for those who are unemployed or underemployed.

“Since 2018, Alabama’s Title I WIOA programs have suffered a budget decrease of approximately 38%. Career center staff in each region have only been reduced between 5% and15%,” the report states.

The report doesn’t provide estimates for how much the state will save if the recommendations are followed.

“That is going to have to be figured out once people start to look at the recommendations,” Boozer said.