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Senator Doug Whitsett e-newsletter, District 28, 4/21/11

Public employee compensation

Public employee compensation represents about three fourths of the state General Fund and Lottery budgets. Moreover, a large percentage of state revenue derived from fees, charges and licenses as well as revenue from federal grants are also spent on employee compensation. The amount and form of employee compensation is established largely through the collective bargaining process. The major bargaining issues include salary, cost of living increases, annual merit or step increases, retirement benefits (PERS), medical insurance, and paid leave. Each of those issues has a measurable dollar cost. However, the cost of paid leave is not calculated as a line item cost in determining state employee compensation budgets. In fact, with current state accounting methods we appear to be unable to even accurately estimate those costs.

 We do know that public employees now enjoy more than forty forms of paid leave. They include vacation, sick leave, three forms of holiday leave, three days of personal leave, no less than seven forms of paid leave for union activities and even paid leave when inclement weather forces work closure.

 Several factors make the cost of paid leave difficult to calculate. First it depends upon the hourly compensation of the employee. Then we must consider the lost value from the employee not being at their post while on paid leave. Further we must consider the cost incurred if someone else must be hired to fill the post during their absence such as a prison guard or a substitute teacher. For instance, in a 2009 briefing paper the Oregon Department of Corrections states that their correction officers are only available to work at their posts 187.52 days per year. Therefore, it requires more than eight officers to be employed in order to fill a single twenty four hour seven day a week job. It appears that none of these cost factors are addressed in our current budget process.

 We have attempted to approximate the direct state payroll costs of paid employee leave. First, we estimate that more than 125,000 employees are paid with state funds when school districts, education service districts, community colleges, universities and all health care workers are included. The average state employee receives more than $70,000 in annual compensation according to the figures from the Department of Administrative Services. Total employee compensation could then be estimated to be about $17.5 billion for the current two year budget cycle.

 The aggregate cost for each day of paid leave for Oregon employees compensated from state funds can be approximated by dividing the total $17.5 billion cost by the number of work days in the biennium. That cost is about $34 million per each day of the budget cycle. The total cost of paid leave almost certainly exceeds a $1.5 billion dollars in direct payroll costs per budget cycle. That astonishing figure does not include any costs incurred because the employee is not at their post. The estimate also does not include further costs incurred to employ another person to fill the post while the primary employee is on paid leave.

 We must update our state accounting systems to recognize and account for all of the direct and indirect costs of employee paid leave. These enormous costs are real and they will never be accurately measured and accounted while our budget process continues to ignore their existence.

Please remember, if we do not stand up for rural Oregon, no one will.

Best,

Doug

 
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