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Haslam Plan to Scrap ‘Longevity’ Pay Regarded Skeptically by Lawmakers

Governor wants state workforce compensation to more closely resemble private sector, but legislators worry about disruptive changes

Gov. Bill Haslam’s budget for the coming fiscal year includes further changes in the way state employees are paid, but he’s already facing bipartisan opposition to the plan from members of the Legislature.

In his state-of-the-state address Feb. 9, Haslam proposed directing a little more than $47 million toward state employee pay raises and market adjustments. “That amounts to a three percent pool, but unlike in years past, those won’t be across the board,” the governor said.

Instead, he wants to tie the raises to performance. “We have worked hard to bring employee salaries up to be competitive with the private sector,” Haslam said. “After nearly two years of implementing performance evaluations, it makes sense to take the next step to move toward rewarding employees like the private sector does — on their performance and results, not just on seniority.”

The administration is proposing to roll back a bonus system that’s currently in place that awards state workers yearly bonuses of $100 a year for every year they’ve worked for the state. Instead, half of the $31.5 million that’d otherwise go to longevity payouts would fund base salaries. The other half will help fund merit-pay bonuses.

Finance Commissioner Larry Martin told lawmakers last week that the longevity bonuses are “not necessarily consistent” with the goals laid out in 2012’s Tennessee Excellence, Accountability and Management Act, which overhauled the state employee hiring and retention system.

“Moving away from across-the-board salary adjustments for our employees” and instead putting more emphasis on performance-based pay is “consistent with best practices and consistent with the private sector,” Martin said.

Lt. Gov. Ron Ramsey, a Republican from Blountville, said Haslam’s shift away from longevity pay is going to be “a tough sell” in the General Assembly, at least with respect to applying it to veteran state employees, to whom it’ll look a lot like “a pay cut.”

“It’s hard to change the rules in the middle of the stream,” Ramsey, the speaker of the Senate, told reporters at a press conference Thursday.

Similar concerns were expressed in House Finance Committee hearing last week after Commissioner Martin laid out the plan. Martin said the governor’s overarching strategy is “to reward and retain employees” who’re doing exemplary work.

Committee Chairman Charles Sargent, R-Franklin, is amenable to the vision. “I don’t probably overall disagree with what you are trying to do,” he said. But like Ramsey, Sargent is uneasy about how longevity-pay reductions would affect long-tenured employees, especially those approaching retirement.

“Have we looked at phasing this in, and is there a way to phase this in?” ask Sargent. He predicted that a new system viewed as financially injurious to the aging populations of the state government’s workforce will be “a big concern to the members of this committee and the members of the entire General Assembly.”

Human Resources Commissioner Rebecca Hunter told Sargent the administration is open to considering different ways of implementing the new pay structure.

David Hawk, a Republican from Greenville said ending longevity pay “is going to be very difficult for us to take home.”

“There’s no way to sugar coat that,” Hawk said.

He also worried that of the new “pools” of funding for compensation that the Haslam administration is proposing to spread around, some state employees will get left high and dry.

“My fear is not everybody is going to get wet in these pools, so I have got some concerns there,” Hawk said.

Craig Fitzhugh, the Democratic minority leader in the Tennessee House of Representatives, fretted that Haslam’s longevity-bonus reductions will fall especially hard on subpar workers, who would in fact see pay reductions.

Martin, however, said the administration isn’t too concerned about offending employees whose performance reviews tend to show them as “marginal” and “unacceptable.” He suggested they in fact need a wake-up call. “I hope that they would then take seriously their performance level and do their best to do a better job and move up and they would not experience (pay cuts),” he said.

Fitzhugh said telling a worker that “if you don’t do a better job then we are just going to cut your pay” doesn’t sound like a very progressive approach to labor relations.

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