While a conservative think tank was releasing figures last week that its leaders said show the cost of Maine’s public employees has risen faster than similar jobs in the private sector over the last 13 years, a major state study getting some traction after gathering dust for nearly two years shows that most state workers do worse than their private-sector counterparts even when benefits are considered.

The version of the study released through an FOAA request last fall from the Maine State Employees Association shows that for most of the employee categories represented by the MSEA, state workers earn wages lower than their private-sector counterparts. When generally higher employee benefits are added in, state workers in general still lag behind the private sector. (See chart.)

The study, conducted by Crescendo Consulting of Portland for the Department of Administrative and Financial Services (DAFS) at a cost of $52,394, is little known to the public, and even key legislators on the Appropriations Committee — who make the major decisions about the state budget — said recently they haven’t read it.

Nor has much been made of it by the LePage administration. Sawin Millett, DAFS commissioner, who played a role in commissioning the report in his earlier service as a legislator, said it was not likely to have a major effect on current budget negotiations. “From the view from 30,000 feet, there are not a lot of conclusions we can apply,” he said.

The LePage administration and its allies in the Maine Heritage Policy Center, a conservative think tank based in Portland, have depicted public employees as the recipients of high salaries and Cadillac benefits versus their counterparts in the private sector.

Tarren Bragdon, the outgoing head of the organization and former LePage advisor, has described public employee benefits as “lavish.”

Last year the MHPC created a website listing the name and salary of every state public employee. This week the group updated the site with new salary information that, the group said, showed an increase in high-pay employees, overtime and benefits since 1997.

The group called for a reduction in those benefits and support for LePage’s budget. The governor’s budget calls for a decrease in public employee pension benefits, a plan that opponents say is being used to fund LePage’s proposed tax cuts for the wealthy.

The 2009 study, however, initiated by the Legislature’s watchdog agency, the Office of Program Evaluation and Governmental Accountability (OPEGA), contradicts those views of lavish state compensation compared to public compensation.

Study: Private salaries best public salaries overall

The Crescendo report is complex. There is very little narrative, and a lot of complicated tables, graphs and data on employee classifications.

It does state, though, that the employee groups comprising engineering, finance and accounting positions, skilled trades, and legal and human resources “are at the greatest disadvantage relative to comparable private sector jobs,” making anywhere from 7 to 21 percent less.

Concerning benefits, it says that the state’s insurance packages are “generally better than average private sector packages” and that the value of state pensions “is somewhat larger than that offered by some private sector survey participants.”

The study’s numbers flesh this out, using an extensive survey of more than 100 private employers and more than 100 municipal governments, ranging from major employers such as Maine Medical Center, IDEXX, Hussey Seating, UNUM and Dead River through smaller companies, including Pine Ridge Carpentry, True Textiles and Dielectric.

Towns and cities responding directly to requests for information included Augusta, Portland, Scarborough and South Portland, while Cumberland and Aroostook counties and several county jails were also included. Through an annual salary survey, the Maine Municipal Association also provided data on more than 100 of its member towns and cities.

Where private sector comparisons were not possible – as with law enforcement and State Police categories – Crescendo looked at pay rates for those sectors in New Hampshire and Vermont.

One of the biggest wage gaps occurred in the professional and technical category, where state workers were paid 21.7 percent less than their private-sector counterparts, while operations and maintenance workers, including the skilled trades, plow drivers and equipment operators, were paid 21.6 percent less.

A smaller gap exists for administrative services and institutional workers, about 7 percent less and about 12 percent less, respectively. In sum, the four categories are where the MSEA has almost all of its members, some 10,000 employees.

According to the Crescendo study, overall, state supervisory employees earn 9.6 percent less than in the private sector, while rank-and-file confidential workers earn 24.3 percent less.

“In each of these categories, state workers are paid far less that their private sector counterparts,” said Chuck Hillier, an MSEA negotiator. “The public seems to believe that all state workers are well paid, and that’s not at all true.”

Hillier contends that the information would have been useful to have during the 2009 legislative session, when the Baldacci administration was enforcing pay cuts, including shutdown days, that amounted to $34.6 million. “We didn’t even know the study existed at the time,” he said. (See related story.)

One category where Maine state workers are paid substantially more is confidential policy-making positions – employees hired under the civil services system, but not eligible for collective bargaining.

OPEGA leaders were originally interested in tracking just these employees, prior to the Crescendo study, and Millett said there were some interesting comparisons here. “With some job titles, we look to be very competitive. In other categories, we’re in the middle of the pack,” he said.

The other category where state workers are paid more is law enforcement. Maine law enforcement agents, including game and marine wardens and liquor inspectors, have a much greater advantage, about 21 percent higher, while State Police earn salaries 1 to 2 percent higher than their northern New England counterparts, according to the study.

Overall, the results of the Crescendo report were not conclusive enough for OPEGA to see any important savings that would justify reclassifying any positions, said Beth Ashcroft, who has served as OPEGA’s executive director since it began operations in 2005.

Even with benefits, private picture generally rosier

When benefits are included, the picture changes, though private compensation is still essentially the same or higher than public compensation in three of the four categories that contain the majority of state union workers, according to the study.

With benefits figured in, the operations/maintenance difference shrinks to 15.4 percent and the professional/technical difference to 17.1 percent, with administrative services actually showing a 1 percent gap in favor of state workers.

According to the study, the one significant exception appears to be institutional workers. While state wages are 11.8 percent lower than the private sector, when benefits are added such employees come out ahead by 6.2 percent. Employees at state institutions are offered the standard benefit packages, while few comparable private-sector employers — such as nursing homes — offer comprehensive insurance or retirement benefits.

After benefits, the positive compensation gap for state workers in law enforcement, State Police and confidential/policymaking positions grows larger. (See chart for details and more categories.)

Jim Kugel is managing partner at Crescendo Consulting, which was spun off from the well-known professional service firm Baker Newman Noyes in 2003. He said that the study was valid at the time it was conducted – the fall of 2008 – but that “market conditions, particularly in the private sector, have changed a lot since then,” referring to job losses and benefit reductions that may have narrowed the gap between private and public sector compensation.

There are other factors the study describes that also affect the overall picture. State workers generally have more paid vacation and holidays than the private sector, an average of  six to eight per year, and family health benefits are more generous. On the other hand, Hillier points out, private employers do not have to bear the cost of the unfunded liability in the state pension system, which increases the amount the state, as an employer, has to pay into the system.

Scott Good, who wrote the report for Crescendo, said he is confident that the report’s benefit comparisons are reasonably accurate because they look at employer costs, rather than the way benefits were paid to employees.

Millett noted a complication: the fact that job titles tend to differ significantly between the public and private sector. “It’s not clear whether they’re really comparable,” he said. “It’s a real limitation of the data.”

Good acknowledged the difficulty, and said that the titles were most similar in the law enforcement categories. Elsewhere, the study did have to make some judgment calls, he said.

Slow getting the word out

State workers are having difficulty gaining the attention of the people who are in a position to make adjustments to Gov. Paul LePage’s proposal to sharply cut pension benefits and increase state employee retirement payments. These amount to more than $410 million in net concessions, according to the Legislature’s fiscal office.

One lawmaker who is familiar with the study is Rep. Peggy Rotundo, D-Lewiston, a current Appropriations Committee member and former co-chair. She remains puzzled that the study didn’t get more attention when it was finished, or why legislators weren’t provided copies. “With a major study like this, we normally include it in public hearings, yet the committee didn’t know about it,” she said. (See related story.)

She said the findings of a 7 to 21 percent pay gap in the categories that represent the bulk of the state workforce are important, particularly in the wake of claims that state employees are better off than the private sector. It’s clear, she said, “that many people don’t understand what state workers are really making.”

Educating the public about these issues can change this, she said. In the current pension debate, she said that many Mainers she’s talked to don’t realize that state retirees are not eligible for Social Security benefits. “When they find that out, it changes their minds.”

She intends to use the information “to help educate the rest of the Legislature as we continue to have these conversations” about pay and benefits.

Rep. Patrick Flood, R-Winthrop, has served on the Appropriations Committee for two terms and is now House chair. He said he became aware of the Crescendo study during this legislative session, but as of a few weeks ago had not yet reviewed it. He said a pay study might have less relevance to the current debate, which focuses on pension benefits and contributions. “We have so much information to consider in a puzzle that is enormously complex,” he said. “But we’ll try to absorb most of it.”

Beth Ashcroft said OPEGA did provide copies of the report to legislative staff in the Office of Fiscal and Program Review, and said she believes it was also distributed to the Appropriations Committee. But since the narrow issue OPEGA was most interested in at the start – the compensation and benefits of certain confidential employees – was not directly addressed, it was of limited value from OPEGA’s point of view.

“I assume that if the administration had wanted to act on any of the findings, they would have found a way to do that,” Ashcroft said.

What is certain is that the Baldacci administration, which had commissioned, designed and received the report, didn’t take any further action on it.

Ryan Low, Baldacci’s last finance commissioner, said that the Crescendo study was commissioned under his predecessor, Becky Wyke. In an email, he said, “I remember being briefed but it was so long ago I don’t recall any of the details.”

Pay study to nowhere

The state has conducted pay studies in the past that have produced results, which may have been why the Crescendo study took in the whole range of state employment and not just the confidential employees OPEGA was interested in. Both Joyce Oreskovich, director of the Bureau of Human Resources at the Department of Health and Human Services, and Chuck Hillier at MSEA referred to a joint labor-management study late in the Angus King administration that produced pay adjustments for some state worker categories.

That study, however, was conducted at a time when state revenues were growing and the biggest problem was retaining employees, who were leaving for more attractive private-sector jobs.

“That was during the IT boom, and computer programmers and tech support people were leaving in droves,” said Hillier. “In some offices, they were hiring someone new every six months.”

When MSEA discussed these issues with King, Hillier said the governor’s response was “We can’t provide a 15 percent pay increase, but we can take a look at certain categories.” One of the surprise results of that study was that clerical workers for the state were paid much less than those in the private sector.

Alicia Kellogg, Oreskovich’s predecessor at the state’s Human Resources, said that pay disparities weren’t actually addressed during the King years, and it wasn’t until Baldacci took office that some pay categories were upgraded.

MSEA argues that even if the study is now 2 years old, it should give pause to continuing efforts to trim the state workforce, since there may be no significant cost advantage in shifting jobs to the private sector. In a recent news release, responding to administration pledges to contract out work now done by the Department of Transportation, it claimed that “Gov. LePage appears to be pursuing a strategy that will absolutely increase the state’s costs.”

Oreskovich said the earlier study was the product of a labor-management agreement, with both sides involved in designing the study and assessing the results. This time, labor wasn’t involved as a partner, which she said may have limited its usefulness.

Kellogg said she had higher expectations that someone would address the study’s results, because it directly affects the state’s ability to hire and retain skilled workers.

“There was so much energy behind this, for getting it done, she said. “Then it was like it just fell off a cliff.”

Languishing in obscurity

The Crescendo report’s obscurity appears to have a lot to do with its origins.

In May 2008, the state’s Office of Program Evaluation and Governmental Accountability (OPEGA) produced “State Administrative Staffing,” a report that included three recommendations, including the one that led to the Crescendo report. It directed the state Department of Accounting and Financial Services (DAFS) to “conduct a market study of total compensation packages (salary and benefits)” for specified employee categories, with the idea that “the results would be beneficial in identifying whether adjustments to current compensation package are warranted to increase success in recruitment and retention or reduce personnel-related costs.”

The recommendation seemed to put OPEGA and DAFS on different tracks from the beginning. OPEGA, emphasizing the pay categories for top-ranking confidential employees, was looking to test those in the market. But the Baldacci administration, considering the language about “recruitment and retention,” ended up conducting a much broader study that considered pay levels throughout state government – but did not answer the most pressing questions about confidential employees, in the view of critics.

DAFS requested proposals for a study, and accepted Crescendo’s bid. Work began that fall and a substantial draft was completed by January 2009, at the beginning of that year’s legislative session. According to Joyce Oreskovich, director of the Bureau of Human Resources at the Department of Health and Human Services, work continued for several months afterward, with final documents filed late that summer. In the copy of the study released to the MSEA after leaders filed a Freedom of Access Act request, almost every page is stamped “confidential,” even though the final product is clearly a public document.

The results were presented to OPEGA, and that was the last anyone seems to have heard about them for more than a year. Alicia Kellogg, Oreskovich’s predecessor at Human Resources, thinks she knows why. “The study didn’t say what they wanted it to. People believe that state workers are overpaid, and the study doesn’t show that.”

Beth Ashcroft, who has served as OPEGA’s executive director since it began operations in 2005, said the initial May 2008 report on administrative staffing was focused on a narrower target than the one the Crescendo report ultimately took in, and, therefore, was not a priority to the agency.

While broadly worded in its formal recommendation, “Our main issue concerned the confidential employees who were paying a very small percentage into the retirement system,” she said.

While rank and file state employees pay 7.65 percent of salary into the retirement system, the same as the Social Security tax for the majority of public and private employees who participate in the federal system, some confidential employees pay far less, a distinction that OPEGA was told involves past deferrals of pay increases.

“Even if that was true then, we wanted to see if it was still justified,” Ashcroft said. The Crescendo study does not specifically address that issue, nor is it part of the pension changes proposed by the LePage administration in the current biennial budget.


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