Coordinated Compensation Proposal for Fiscal Year 2019 · FY 2019 Coordinated Compensation Proposal Page 2 Introduction Rule 1-15.4(c) states that the Employment Relations Board shall

STATE OF MICHIGAN

CIVIL SERVICE COMMISSION

COORDINATED COMPENSATION PANEL

Coordinated Compensation Proposal

for

Fiscal Year 2019

Recommendations for Nonexclusively Represented Employees in the State Classified

Service for the Fiscal Year Beginning October 1, 2018

FY 2019 Coordinated Compensation Proposal Page 1

Table of Contents

Introduction ........................................................................................................................................ 2

Economic Overview ........................................................................................................................... 3

Proposals and Positions .................................................................................................................... 6

I. Wages and Benefits ................................................................................................................. 6

A. Wages ..................................................................................................................................... 6

B. Special Pay Increases .............................................................................................................. 7

C. Health, Dental, and Vision Insurances .................................................................................. 9

II. Miscellaneous ....................................................................................................................... 9

A. Professional Development Fund Contribution ...................................................................... 9

B. Increased Employer Retirement Contribution Match .......................................................... 10

C. Membership Information ...................................................................................................... 10


Introduction

Rule 1-15.4(c) states that the Employment Relations Board shall serve as the coordinated

compensation panel. Rule 5-1.3 charges the panel as follows:

The coordinated compensation panel shall send a recommended coordinated

compensation plan for all nonexclusively represented classified employees to

the civil service commission. The panel shall consider negotiated collective

bargaining agreements, any impasse panel recommendations, and any

recommendations of the employer or employees.

Regulation 6.06 establishes a process for employee participation and guidelines for the panel

in making its recommendations. Under the regulation, participants in the Coordinated

Compensation Plan process include the Office of the State Employer (OSE) and organizations

granted limited-recognition rights under Rule 6-8.3. The following limited-recognition

organizations participated in this year’s process:

Association of State Employees in Management (ASEM)

Michigan Association of Governmental Employees (MAGE)

Michigan State Police Command Officers Association (MSPCOA)

Nonexclusively represented employees (NEREs) who are not members of limited-recognition

organizations may also participate upon leave granted by the panel. No employees requested

to participate this year.

The panel held a hearing on November 7, 2017. All parties were allowed to make

presentations and respond to proposals of other parties. Having reviewed the parties’

arguments and submissions, the panel offers the following summary and recommendations

to the Commission.


Economic Overview

Consistent with Regulation 6.06, which calls for the panel to consider “the current and

forecasted financial condition of the State” in making its recommendations, the panel

received evidence on fiscal year (FY) 2019 revenue forecasts and budget projections as part

of the OSE’s presentation. The following is a summary of information provided by staff of

the Department of Treasury and State Budget Office:

Jobs in Michigan have increased for six consecutive years, but the number of total jobs

in the state in 2020 is still forecasted to be 205,900 less than in 2000.


Michigan’s labor force has shrunk by 57,000 since February 2017.

Michigan expects continued modest personal income growth through 2019.


General Fund revenue is expected to increase slightly in FY 2017 and FY 2018.

Adjusted for inflation, General Fund revenue is forecast to be below FY 2000 levels.


The Transportation Package is expected to reduce overall available revenue by $350

million in FY 2019, $525 million in FY 2020, and $800 million each year thereafter.

The state’s share of Medicaid, Healthy Michigan, pharmaceutical, Indigent Defense

Commission, Education, and other obligations is likely to increase.

MAGE argued that economic trends are largely positive with 28 straight quarters of payroll

growth. MAGE also highlighted continuing improvement in unemployment.

Proposals and Positions

I. Wages and Benefits

A. Wages

1. The OSE Proposal

The OSE recommends a general-wage increase of 2% for NEREs in October 2018. This

increase is consistent with agreements reached with exclusively represented employees. The

OSE estimates the proposed 2% increase would cost $36.4 million.

2. ASEM Proposal

ASEM agrees with the OSE’s proposed 2% increase for FY 2019.

3. MAGE Proposal

MAGE seeks a general-wage raise of 3% for all NEREs to recognize dedicated state employees

who worked hard to get promoted. It argues that the OSE’s proposed 2% raise barely keeps

up with the anticipated 2.5% rate of inflation.

4. The OSE Response

The OSE opposes MAGE’s proposed increase. The OSE asserts that:

The proposed 3% general wage increase would cost $54 million in FY 2019.

The proposal fails to recognize that total pay and benefits—and not just base

wages—must be considered. Other NERE benefits reflect an additional 80% of

total wage costs that the panel should view as part of NERE compensation.

NEREs also enjoy leave benefits that are more generous than most employers.

Many applicants, both from within and outside state government, apply for

NERE positions. Applicants are motivated by a competitive pay package and the

opportunity to work on complex programs.


The 2017 employee survey showed high employee engagement.

5. Recommendation

During the most recent round of bargaining, the OSE reached voluntary agreements

including 2% general-wage increases for FY 2019. The panel has previously recognized the

need for equitable treatment of NEREs. The panel further finds that, given the combination

of improving economic conditions and remaining budgetary uncertainties, the OSE’s

proposal represents a reasonable wage adjustment. MAGE did not provide compelling

evidence of a need for pay increases greater than that suggested by the OSE. Accordingly,

the panel recommends adopting the OSE’s proposal.

B. Special Pay Increases

1. MAGE Registered Nurse Manager Proposal

MAGE1 requests a special 5% base-wage increase as a retention bonus for all RN Managers:

The Department of Health and Human Services has persistent problems recruiting

and retaining RN Managers, who must work overtime three days each week.

Many nurses do not want to work in the dangerous environments of state mental

hospitals and prisons.

MAGE is concerned that departments will continue to not use the $5,000 recruitment

and retention bonus pilot program approved by the commission.

The median pay for RN Managers in the classified service is approximately $77,600,

while the median salary for nurse managers nationwide is approximately $85,900.

2. The OSE Response

The OSE does not support the proposed RN Manager wage increase. There is no basis for

MAGE’s belief that departments will continue to refuse to take advantage of the pilot

program, which just took effect on October 1, 2017. Departments have indicated that they

will take advantage of the pilot program to the degree their budgets allow. The OSE also

notes that departments are precluded by rule from paying retention bonuses until September

30, 2018. DHHS indicates it is exploring various scheduling options to be more competitive

with the private sector, reduce absences, and reduce mandatory overtime. The proposal

would cost over $2.2 million in total for FY 2019.

1 MAGE withdrew a separate proposed promotion incentive for supervisors in the Department of

Corrections to consider newly available information.


3. OSE Lieutenant 14 Proposal

The OSE states that the Department of State Police is experiencing difficulty attracting an

adequate pool of candidates interested in promoting to Lieutenant 14. Under a third of

eligible sergeants appear on the promotional roster for consideration for promotions. The

OSE proposes adjusting the Lieutenant 14 pay scale to make the current end-of-year-one

wage the new base rate, and increasing the current last step by $2.00 to make the new last

step. The OSE also proposes making the State Police Lab Manager 14 the same as Lieutenant

14. Those pay schedules are currently separate even though the lab manager classification

consists of both enlisted Lieutenant 14 employees and civilian employees performing the

same duties. Combining the two classifications into one pay schedule would avoid creating

a split classification and possible pay inequity. The OSE’s proposal would cost $939,565. The

MSPCOA concurs with the OSE’s proposal.2

4. Recommendation

In addition to comparisons with other workforces, the Coordinated Compensation Plan

standards in Regulation 6.06 include consideration of “the continuity and stability of

employment.” When seeking special pay adjustments, evidence of a strong program need,

such as difficulty recruiting and retaining qualified candidates, should accompany a request.

The panel acknowledges that the issues facing Registered Nurse Managers outlined by

MAGE could be affecting recruitment and retention of Registered Nurse Managers and

supervisors. After last year’s CCP recommendation, in which the panel rejected MAGE’s

request for a 3% base wage increase for Resident Nurse Managers for lack of quantitative

support, the OSE and departments employing nurse managers met and agreed on a pilot

program designed to increase recruitment and retention by allowing departments to pay a

one-time bonus of up to $5,000 to eligible employees. The commission approved the pilot,

which took effect October 1, 2017. The pilot program was the first CCP recommendation since

2005 attempting to improve recruitment and retention of Registered Nurse Managers. The

panel believes it is premature for MAGE to argue that the pilot program has not been used

when the recruitment program had been operating for just a few weeks and departments

cannot pay retention bonuses until next year. It also believes judging the pilot program’s

effect is best done after it ends. The panel also notes that a recent Office of the Auditor General

audit of Walter Reuther Psychiatric Hospital, while not necessarily indicative of overtime by

nurse managers, illustrates one facility’s need to use overtime to maintain adequate nurse

2 The MSPCOA initially sought a greater wage increase for Lieutenant 14s and provided evidence in

support that such an increase may lessen ongoing recruitment difficulties, but later concurred with the

proposal in the OSE’s response.


staffing. The panel strongly encourages agencies to participate in the program so that it can

meaningfully review the program’s results next year. Accordingly, the panel recommends

rejecting MAGE’s proposal.

The MSPCOA has demonstrated, and the OSE has acknowledged, that the Department of

State Police currently has difficulty recruiting Lieutenants. It has also shown that Sergeants

are reluctant to seek promotion in large part because of the perceived lack of a pay increase

commensurate with Lieutenants’ greater responsibilities. The MSPCOA has agreed with the

OSE’s proposal to increase the Lieutenant 14 and State Police Lab Manager base pay and

place both classifications into one pay schedule. Accordingly, the panel recommends

adopting the OSE’s proposal.

C. Health, Dental, and Vision Insurances

1. The OSE Proposal

The OSE proposes no plan design changes. The OSE notes that overall insurance costs to the

employer would increase due to any premium rate increases. However, the OSE proposes

that the panel approve language addressing the Federal Excise Tax scheduled to take effect

in 2020. The language would require that flexible-spending-account limits be reduced or

eliminated if the aggregate cost of any state-sponsored health plans exceeded the 2020 tax

thresholds. Identical language was negotiated for exclusively represented employees. ASEM

agrees that no changes should be made to plan design.

2. Recommendation

The panel recommends adopting the OSE’s proposal.

II. Miscellaneous

A. Professional Development Fund Contribution

1. The OSE Proposal

The OSE recommends continuing the NERE Professional Development Fund and adding

$200,000 of funding in FY 2019. NEREs requested almost $200,000 in reimbursements during

the past fiscal year. ASEM agrees with the OSE’s proposed increase to the fund.

2. Recommendation

The panel recommends adopting the OSE’s proposal.


B. Increased Employer Retirement Contribution Match

1. MAGE Proposal

MAGE requests that the state increase its matching contribution from up to 3% of an

employee’s compensation to up to 5% of an employee’s compensation. MAGE argues that

under the current matching rate, state employees who are ineligible for a pension do not have

adequate retirement savings.

2. The OSE Response

Under Rule 5-13, classified employees are eligible for retirement benefits as provided by law.

The OSE asserts this is not a CCP issue.

3. Recommendation

The Michigan Supreme Court has ruled that the statutory retirement system is a creation of

the legislature and thus not subject to modification or oversight by the commission. Whatever

the merits of MAGE’s proposal, it is one that should be addressed to the legislature and not

this panel. Accordingly, the panel recommends rejecting MAGE’s proposal.

C. Membership Information

1. ASEM Proposal

ASEM requests to continue developing a plan with the OSE to provide information to all

NEREs about ASEM membership. ASEM requests changes to the OSE website to provide

additional contact information for limited-recognition organizations. This would allow more

input to help the OSE find solutions to problems and provide better representation to all

eligible employees. ASEM acknowledges that membership communications is not a

compensation issue, but wants the panel to be aware of its goals.

2. The OSE Response

The OSE informed ASEM that it could reach out to NEREs through a third-party mailer to

distribute membership enrollment material. Also, after last year’s panel hearing, the OSE

created a direct link to each limited-recognition organization’s websites on its intranet page

so employees could access information about them. The OSE argues that ASEM’s request is

not a CCP issue, but is willing to provide further clarification on the OSE intranet.

3. Recommendation

Parties must offer position statements “proposing a change to the compensation or benefits

plan.” Issues related to the rights of limited-recognition organizations are labor-relations


issues under Chapter 6 of the rules and regulations and not compensation or benefits issues

under Chapter 5. Accordingly, the panel recommends rejecting ASEM’s proposal.

Documents

Coordinated Compensation Proposal for Fiscal Year 2019 · FY 2019 Coordinated Compensation Proposal Page 2 Introduction Rule 1-15.4(c) states that the Employment Relations Board shall