state politics: Idaho

Idaho State Employees May Lose Money Under Otter Plan

By Sharon Fisher, 1-11-08

Despite Governor Butch Otter’s recommendation in Monday’s State of the State address for a 5% employee salary increase, some state employees may actually end up making less starting in July, the Joint Finance-Appropriations Committee learned Wednesday.

That’s for two reasons. First, such increases are doled out by merit – while the overall effect is a 5% increase, some employees may receive more – or less – than that number. Second, state employees may have to pay on the order of $400 more annually for their medical insurance.

“There are going to be people who net out less than they did before,” conceded Mike Gwartney, director of the Department of Administration.

The state surveyed a number of Idaho companies – Albertsons, Blue Cross, Boise Company, Idaho Power, Micron, Regence Blue Shield, Simplot, and WGI – to find out what their policies were on health insurance. The survey found that it boiled down to the private employer paying 70% of premiums and 30% of covered charges. In comparison, the state of Idaho is paying 92% of premiums and 78% of covered charges, Gwartney said.

Gwartney also noted that the survey had chosen only Idaho’s big employers because the state wanted to be in the top quartile or so of benefits. For example, a Department of Labor survey found that only 63% of 1100 Idaho employers offered medical benefits at all.

If the Legislature approves the Governor’s recommendations to change the medical benefit structure, the result is that, of the pay increase – assuming it is applied evenly – 42% of it for lowest-paid employees and 11% of it for higher-paid employees will go to paying for the increase in plan contributions, Gwartney said.

That’s assuming, of course, that they also fund the pay increase. It could happen that the increase in medical benefits will pass and the salary increase won’t.

At the same time, changing demographics means that Idaho state government has to consider salary increases as well to continue to attract new employees, said Neville Kenning of the Hay Group, who consulted with the state on salary and how it compared to the private sector.

“When unemployment is high, people move [jobs] for benefits,” Kenning said. “When unemployment is low, people move for salary.” Idaho’s current unemployment level is less than the national average, and state government salaries are, on average, 15% behind the market, while at the same time “competitive salary” has moved to the top of the list of what makes people feel satisfied with their jobs, he said.

This becomes a problem when the mass of baby boomers in Idaho’s state government start retiring, Kenning said. The average age of state employees is 47, and the average age of new hires is 36. Moreover, younger people these days are not afraid to change jobs, with people now having nine jobs before they’re 40, he said.

“We are not attracting the young,” Kenning said, adding that it is critical to have the compensation to replace state employees who are retiring.

JFAC co-chair Representative Maxine Bell (R-Jerome) pointed out that state employees enjoyed more job security, and Kenning reminded her that state government had also had layoffs in recent years.

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