P EVALUATION REPORT State Employee Compensation

OL A

REPORT # 00-05

OFFICE OF THE LEGISLATIVE AUDITOR

STATE OF MINNESOTA

PROGRAM EVALUATION REPORT

State Employee Compensation

Photos courtesy of City of Minnetonka and Legislative Auditor staff

FEBRUARY 2000

Photo Credits:

The cover photographs were provided by the Minnesota Zoo, Minnesota Department of Health, and the Office of the Legislative Auditor. The photograph on page 10 was provided by the Minnesota Department of Health. The photographs on pages 25 and 30 were taken by the Office of the Legislative Auditor.

2 / $ Office of the Legislative Auditor State of Minnesota ? James Nobles, Legislative Auditor

February 3, 2000

Members Legislative Audit Commission

In April 1999, the Legislative Audit Commission directed us to conduct a study of state employee compensation. Legislators expressed interest in learning how state government salaries and benefits compared to compensation offered by other employers in the private and public sectors. Some legislators also wanted to know which jobs were causing the greatest recruitment and retention problems for state agencies.

Not including the University of Minnesota, the state employs about 50,000 workers in a wide variety of jobs. We found the state to be generally competitive in the salaries and benefits it offers, but like public employers in general, state pay is relatively high for lower-skilled jobs and relatively low for upper-level professional and managerial jobs.

Almost all state agencies reported some problems recruiting and retaining various types of employees. State agency human resource directors attribute many recruitment problems to the current tight labor market, but also identified compensation as a factor of secondary importance in certain situations.

This report was researched and written by Elliot Long (project manager), Jennifer Moenck Feige, and Craig Helmstetter, with assistance from Beth Haney. We thank staff of the Department of Employee Relations and the Minnesota State Colleges and Universities for their assistance.

Sincerely,

/s/ James Nobles

James Nobles Legislative Auditor

/s/ Roger Brooks

Roger Brooks Deputy Legislative Auditor

Room 140, 658 Cedar Street, St. Paul, Minnesota 55155-1603 ? Tel: 651/296-4708 ? Fax: 651/296-4712 E-mail: auditor@state.mn.us ? TDD Relay: 651/297-5353 ? Website: auditor.leg.state.mn.us

Table of Contents

SUMMARY

INTRODUCTION

1. BACKGROUND Characteristics of State Employment Organization of Human Resources in State Government Compensation Policy Summary

2. COMPENSATION Salary Comparisons Employee Benefits Summary

3. RECRUITMENT AND RETENTION Current Recruitment and Retention Problems Suggestions for Change Summary

APPENDICES A. State of Minnesota Career Families B. Central States Salary Comparisons

FURTHER READING

AGENCY RESPONSE

RECENT PROGRAM EVALUATIONS

Page ix 1 3

19

49

63 81 85 87 Back Cover

List of Tables and Figures

Tables

Page

1.1 Employees by Executive Branch Agency, 1999

7

1.2 Largest Career Families, 1999

8

1.3 Job Family Growth, 1985-98

9

1.4 Hay Job Evaluation Factors

12

1.5 State Employees by Bargaining Unit, 1999

14

2.1 National Rankings of Minnesota State and Local Government

Employment, 1998

20

2.2 Minnesota Positions with Top-Ranking Salaries in Central

States Survey, 1998

21

2.3 Public Sector Monthly Pay in Minnesota, 1999

23

2.4 Average Hourly Wages, State of Minnesota and Private Sector

Employees, 1999

28

2.5 Regional Variation in Pay in Minnesota, 1996-97

32

2.6 Variation in Average State Employee Wages, Twin Cities and

Outstate Minnesota, 1999

34

2.7 Regional Variation in Average State Employee Wages,

Minnesota Metro Areas, 1999

35

2.8 Average Salaries, Faculty at MnSCU Four Year Institutions,

FY 1999

37

2.9 Average Salaries, Faculty at MnSCU Two Year Institutions,

FY 1999

38

2.10 Full-Time Employees Receiving Selected Benefits

41

2.11 Average Days of Paid Annual Leave After Specified Years

of Employment

43

2.12 Employer Costs per Employee Hour, National Averages, 1999

45

2.13 Employer Costs per Employee Hour, Private Industry by Size

of Establishment, 1999

46

2.14 Employer Costs per Employee Hour, State and Local

Governments Nationally and Minnesota State Government, 1999 47

3.1 State Agency Recruitment and Retention Problems

51

3.2 Information Technology Recruitment/Retention Problems

52

3.3 Reasons for Information Technology Recruitment/Retention

Problems

53

3.4 Office Administration Recruitment/Retention Problems

54

3.5 Reasons for Office Administration Recruitment/Retention Problems 54

3.6 Accounting Recruitment/Retention Problems

55

3.7 Reasons for Accounting Recruitment/Retention Problems

56

3.8 Suggestions for the Department of Employee Relations

57

3.9 Suggestions for the Legislature

57

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