Last September, my office and the Senate Republican
Caucus asked the Oregon Department of Administrative Services (DAS) and
Legislative Fiscal Office (LFO) to determine both the average and median
compensation for Oregon state employees. Completing the task appeared to be a
great deal more labor intensive than we had anticipated.
The agencies were able to provide the requested
information in early February. Last week, the Legislative Fiscal Office
published their findings in its Budget
Information Brief/2016-4.
Their Brief states that in 2015, the average
compensation for state employees was just over $89,000. About $56,000 was paid
in salary, and another $33,000 was paid in employee benefits such as
retirement, medical insurance and other payroll expenses (OPE). The cost of the
benefit package and OPE computes to nearly 60 percent of the average salary.
Hourly compensation averaged just under $43.
Public employees often protest that average
compensation computations may be skewed by a few employees earning very high
salaries. While in certain instances this argument may have merit, the LFO
Brief reports 2015 median state employee costs at about $7,100 per month, or
$85,152 per year. Median hourly compensation was just under $41.
Even these hard to believe figures do not accurately
encompass all of the public employee payroll costs. For instance, the costs of
paid vacation, other paid leave and paid sick leave were not included in the
report. Incredibly, state accounting methods apparently do not keep track of
those very real, and significant, payroll expenses with enough accuracy to
report the costs.
We understand that the average state employee receives
about five weeks of combined sick leave, vacation and other paid leave each
year. We assume that their absence from the workplace means their assigned work
would either not be completed or performed by another state employee. We
further assume the average employee will use or accrue all authorized leave.
Using LFO figures and those assumptions, the
additional payroll expenses due to paid leave compute to about $8,600.
Including these very real costs, the average state employee may have actually
made about $97,000 last year, or about $46.50 per hour.
Public employees who are represented by unions also
enjoy significant job security. Separation of an established employee for cause
is very difficult, and often expensive, for the public employer to accomplish.
Even in the event that the job itself is discontinued, an employee with
seniority is often able to replace another employee with less seniority in the
workforce. While such job security certainly has significant value, it is
difficult to accurately assess its payroll cost.
In comparison, according
to figures provided by the Oregon Employment Department to the Statesman
Journal newspaper, the average private sector employee
earned $22.60 per hour in 2015, or about $47,000. The Department has no way of
accurately estimating benefits paid to private sector employees, because those
costs are not reported to the agency. However, I believe we can safely assume
that private sector benefits and OPE rarely, if ever, approach 60 percent of
average salary.
The discrepancy between public and private employee
compensation is evident. It is also unsustainable.
A very high percentage of the revenue needed to pay
public employees is derived from taxes, charges and fees paid by employers,
their employees and other individuals within the private sector. Annual private
sector labor cost inflation appears to be running less than four percent.
Annual public sector labor cost inflation is running nearer to seven percent.
The structural budget deficit is obvious.
Nevertheless, the current public employee labor
contracts, negotiated by the Governor and unions representing the state’s
government workers, appear to call for at least 30 percent in compensation
increases over the next four years. That enormous increase likely does not
fully encompass either the soaring cost of the Public Employee Retirement
System (PERS) or the medical insurance provided to state employees through the
Public Employment Benefit Board (PEBB). Neither does it include the impending
compression costs of Oregon's
new minimum wage law.
On its current trajectory, I believe by the year 2020,
Oregon state employee compensation could easily be averaging more than $130,000
per year, or nearly $11,000 a month!
The growing structural budget deficit is already
enormous. The only way to pay the costs appears to be through significant tax
increases. That is the apparent goal of Initiative Petition 28
(IP 28).
According
to the Legislative Revenue Office, IP 28’s new two and one
half percent tax on certain corporate gross sales will raise at least $5
billion per budget cycle. That amount of new revenue would increase Oregon’s
General Fund by nearly 30 percent.
Although the new revenue would flow to the General
Fund, the IP’s sponsors claim that they will be dedicating the new money for
public early childhood and kindergarten through 12th grade
education, healthcare and services for senior citizens. In my opinion, their
rhetoric is simply disingenuous.
The sponsors know, or certainly should know, that
General Fund revenue is completely fungible. The Legislative Assembly can and
will spend that revenue for any purpose it deems necessary. Because Oregon must
have a balanced budget, General Fund revenue must be used wherever budget
shortfalls exist. Further, it is not legally possible to bind the actions of future
Legislatures, short of a constitutional amendment.
Not surprisingly, the primary sponsor of IP 28 is Our Oregon, a
501 (c) (4) corporation formed primarily by the public employee unions of
Oregon. By my calculations, the preponderance of the new revenue that would be
raised through the passage of IP 28 will be needed to pay for the combined
costs of already negotiated public employee labor contracts, the previously
identified enormous increases in PERS employer contributions, the
rapidly escalating PEBB premiums, and minimum wage compression costs.
The public employee unions appear to be feathering
their own nests. The great majority of the enormous cost will ultimately be borne
by private sector businesses and their employees.
Please remember--If we do not stand up for rural Oregon, no one will.
Best Regards, Doug
Senate District 28
Email: Sen.DougWhitsett@state.or.us I Phone: 503-986-1728 Address: 900 Court St NE, S-311, Salem, OR 97301 Website: http://www.oregonlegislature.gov/whitsett
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