SENATE BILL REPORT

HB 91

BYRepresentatives H. Sommers,  Hankins, Walk, Sayan, B. Williams, Holm, O'Brien and Winsley; by request of Secretary of State

Changing provisions relating to state employee incentives.

House Committe on State Government

Senate Committee on Governmental Operations

Senate Hearing Date(s):March 24, 1987; April 1, 1987

Majority Report:  Do pass as amended.

      Signed by Senators Halsan, Chairman; Garrett, Vice Chairman; DeJarnatt, McCaslin, Pullen, Talmadge, Zimmerman.

Senate Staff:Barbara Howard (786-7410); Eugene Green (786-7405)

                  April 2, 1987

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, APRIL 1, 1987

BACKGROUND:

Overview of Programs and Eligibility for Awards.  In 1982 the Legislature created the State Productivity Board to administer a revived Employee Suggestion Awards Program (ESP) and a newly created state employee Incentive Pay Program (IPP).  The two programs are intended to achieve, and to reward eligible state employees for achieving, cost savings and productivity gains in state agencies.  "State employees" are defined as employees in agencies of the state civil service system and the state higher education personnel system.

Under ESP, the Board pays state employees whose money-saving suggestions it accepts 10 percent of the net savings to the benefitting agency, up to $10,000.  Awards for approved employee suggestions under this program must be paid from the appropriated funds of the benefitting agency.

IPP allows employees in state agency work units to receive 25 percent of any savings to the state that their units may have realized.  The total net benefit of both programs combined was approximately $860,000 in 1986.

Funding of Productivity Board Administration.  The Legislature initially intended the Board to be self-supporting from agency savings.  However, time lags between agency payments of awards and the realization of savings have created a cash flow problem, hampering the achievement of this goal.  In 1985 the Legislature approved an appropriation to supplement agency savings for Board administration.

Productivity Board Membership.  The Productivity Board is chaired by the Secretary of State, three appointed members with experience in administering employee incentives, and the directors of the Department of Personnel, the Higher Education Personnel Board, and the Office of Financial Management.

Scheduled Termination of Productivity Board.  The Productivity Board and its two programs are scheduled for termination on June 30, 1987.  In the sunset review, both the Legislative Budget Committee and the Office of Financial Management recommended that the Board be continued with modifications.

SUMMARY:

Continuation of Productivity Board.  The Board and its programs are continued indefinitely by being removed from the sunset schedule.  LBC must perform a cost-benefit analysis of both Board programs in 1990, with findings reported to appropriate legislative committees in January, 1991.  The Incentive Pay Program is renamed the Teamwork Incentive Pay Program.

Eligibility for Awards.  The definition of "state employees" eligible for awards under both Board programs is changed to specifically exclude the following:  elected officials; directors of state agencies and institutions and their confidential secretaries and administrative assistants; and others specifically ruled ineligible by Board rules.

Award Payment Procedures.  Agencies may pay ESP awards from nonappropriated funds that benefit from approved employee suggestions.  After joint approval by the Board and the Director of the Office of Financial Management, payments of ESP awards and fees may also be drawn from the general fund for suggestions that generate new or additional revenue for that fund.

Funding of Productivity Board Administration.  Existing statutory provisions are amended as follows:

            oThe Legislature must appropriate revenue from the DOP Service Fund to pay for the Board's administrative costs;

            oRevenue deposited in the DOP Service Fund may offset amounts appropriated to the Board from other sources for administrative costs; and

            oThe Board must review revenue transfers annually and may reduce or suspend such transfers if they are not needed to meet administrative costs.

Productivity Board Membership.  Three new members are added to the Board:  The Director of the Department of General Administration and two members appointed by the Governor -- one representing the state civil service system, and one representing the higher education personnel system.  The Governor and the chairperson of the Board are allowed jointly to make ad hoc appointments to the Board.

Fiscal Note:      none requested

Effective Date:The bill declares an emergency.  The section repealing the sunset termination date takes effect immediately.  The rest of the bill takes effect on July 1, 1987.

SUMMARY OF PROPOSED SENATE AMENDMENT:

In the suggestion awards program, the Board must establish guidelines to allow for employee leave in lieu of cash where cost avoidances are identified, after consulting with the two state personnel boards.  Ad hoc members of the Board serve in an advisory capacity without vote.

Senate Committee - Testified: Ralph Munro, Chair, and Carolyn Smith, Administrator, Productivity Board; Matt Coyle, Department of Revenue