•Take Action Now to Support Pay Raises and Maintain Our Health Insurance!
•State Auditor’s Report Reveals Huge Pay Disparity
•EMPACT, TPEA’s Affiliated Political Action Committee, Releases Endorsements
•Austin American-Statesman Supports State Employee Pay Raise
•ERS Budget Submission Shows Continued Rise in Health Care Costs

Texas Public Employees Association wants state employees to be aware of legislative activities and developments affecting your job and career.

TPEA is sending this message to our members and to state employees who have participated at TPEA events and given us their e-mail addresses. TPEA also requested and received e-mail addresses as public information from a number of state agencies.

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REMEMBER: STATE EMPLOYEES SHOULD NOT USE STATE EQUIPMENT OR STATE TIME TO ENGAGE IN ANY TYPE OF LEGISLATIVE ADVOCACY EFFORTS. This message should not be printed, replied to, or forwarded using state equipment, unless allowed by your agency's policies and procedures.

Take Action Now to Support Pay Raises and Maintain Our Health Insurance!

It is vital that state employees and retirees actively work to support pay raises and funding to maintain our health insurance benefits. Click Here to get information to help you communicate with legislators and state leaders.

State Auditor’s Report Reveals Huge Pay Disparity
A new report by the State Auditor’s Office (SAO) concludes that the State’s overall compensation system is not competitive, and that employees’ actual pay is substantially lower than what other public and private employers pay for comparable work.

The primary finding of the report is “The average state employee’s pay is 17 percent less than the pay of employees performing similar jobs in government or private industry. In addition, the State’s compensation system no longer provides competitive salary ranges.” In the comparable report issued two years ago, the SAO found that actual employee pay was 14 percent below that paid for comparable work by other employers. The report confirms what many had speculated, that the State’s salary disparity is continuing to worsen.

The Biennial Report on the State’s Compensation System for Fiscal Years 2006 and 2007 (Click Here to View Report) is a statutorily required report issued biennially. Because of changes made in the law, the report no longer includes specific prospective recommendations for employee pay raises, as it has in past years. However, the report clearly identifies the scope of the problem, that the problem has been growing worse, and the consequences for not addressing the issue.

The report also correctly notes the consequences for failing to act, “Without changes to the compensation system, state agencies will face an increased risk of turnover and the inability to compete for and retain qualified employees.” State agencies have experienced excessive turnover for a number of years, largely as the result of noncompetitive salaries. Turnover for FY 2003, the most recent year currently available, was 17.4 percent, a rate significantly higher than that experienced by other public and private employers in Texas and nationally. This turnover rate is particularly disturbing because it occurred during an economic downturn when employees were less likely to change jobs.

The report found that the pay ranges for Schedules A and B lagged the market by 10 percent, and law enforcement positions on Schedule C lagged by 8 to 17 percent. Although raising state employee Salary Schedules closer to market-competitive rates will help in recruiting new employees, it will not adequately address the actual salary disparity for most current employees. This is because the analysis of Schedules is based on a comparison of mid-points in salary ranges. And, as the report found, a sizeable majority of employees are paid below the midpoint of their pay range. Because of a lack of appropriated funds, agencies have only been able to reward a relatively small percentage of deserving employees with any type of merit pay awards, only 18 percent of eligible employees received a merit increase (13 percent) or a one-time merit award (5 percent ) in FY 2003, far below the norm for employers generally. Although the report does not make recommendations for across-the-board raises, as it used to, it states that the cost to move all employees to the midpoints of their pay ranges would be $596 million per year in the next biennium. Adequate pay raises in both years of the 2006-2007 biennium are TPEA’s top legislative priority for the 79th legislative session.

The report also includes some information on total compensation for state employees, this includes salary plus indirect compensation such as insurance, retirement, vacation and sick leave. These figures are striking in two respects. First, as the report notes, “The cost to provide health insurance benefits to state employees increased 45 percent from fiscal year 2000 to fiscal year 2003.” Secondly, while health care costs spiraled up rapidly, more of the overall share of these costs was shifted to employees. Whereas in FY 2000 state-paid contributions constituted roughly two thirds of the total dollars spent on health care, the SAO report projects that in FY 2005, which just began, the state-paid share of total costs will drop to less than half the total. ERS has estimated that the average state employee saw a $900 annual increase in out-of-pocket health care costs based on the changes that occurred in 2003. The erosion in the value of state health insurance benefits makes it more difficult for agencies to attract and retain and employees, and it makes it even more important to convince the Legislature to increase employee salaries to help employees absorb these shifted costs.

Viewed in the context of previous State Auditor’s reports on employee turnover, as well as the significant erosion in the value of state employee health benefits, failure to address state employee compensation issues will result in a further weakening of the state’s ability to attract and retain a stable and qualified workforce resulting in hollowing out of the state workforce, the loss of vital institutional memory, and a deterioration in the quality of state services. TPEA is working to make sure legislators and other state leaders are aware of this report and the absolute necessity of providing meaningful pay raises for state employees.

EMPACT, TPEA’s Affiliated Political Action Committee, Releases Endorsements
TPEA has an affiliated political action committee, or PAC, that endorses candidates and provides campaign contributions to candidates in state elections. EMPACT is essentially the affiliated political arm of TPEA, governed by a separate Board comprised of active and retired state employees. Click Here to see the list of candidates EMPACT is endorsing in Texas House and Texas Senate races this November 2.

Austin American-Statesman Supports State Employee Pay Raises
An editorial (Click Here to View) in the Sunday, September 19 Austin American-Statesman provided well-reasoned support for a state employee pay raise. Citing the State Auditor’s report on the State’s Compensation System, rising out-of-pocket health care costs, and spiraling employee turnover, the editorial concludes “When the Legislature convenes in January, it should consider a state employee pay raise a must.” The piece also quotes TPEA’s Director of Government Relations.

ERS Budget Submission Shows Continued Rise in Health Care Costs
In its Legislative Appropriations Request (LAR) submission to the Governor and the Legislative Budget Board (LBB), the Employees Retirement System (ERS) estimated the cost in new funds to maintain current health benefits for state employees during the 2006-07 biennium at $595.9 million for general state government and $691.4 million when including higher education institutions under ERS.

Under the instructions provided to develop LAR submissions for the 2006-2007 biennium, agencies are required to submit a base line budget request at 95 percent of general revenue appropriations for the current 2004-2005 budget. Funding at the 95 percent level, or even level funding, “would require significant changes to current contribution and eligibility policy, including changes to the currently provided premium subsidies, co-payments and other benefit changes that would increase out-of-pocket expenses for employees.”

More simply stated, ERS continues to project growth in health care costs of 13 percent per year during the next biennium. ERS has requested Exceptional Item funding to maintain current benefits, which would require $691.4 million in new funds. Failure to receive sufficient new funds could require employees to contribute more for health insurance premiums, result in increased co-pays, deductibles or other out-of-pocket costs as occurred during the last legislative session. TPEA is seeking to maintain the current premium contribution policy and prevent any increases in out-of-pocket costs.

Sign Up with An Email Address Outside of the Office
TPEA has been building a new list of email addresses – ones that don’t go to State computers or workplaces and instead to home and web-based email accounts. Because you are receiving this email, we invite you to join the new list. Signing up will ensure that TPEA can keep you up-to-date on all issues concerning Texas State Employees. Click here to add your email address.

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If you do not wish to remain on this list, you can unsubscribe by
following the instructions at the end of this email.