States Consider Removing Civil Service Protections for Employees

In light of the current fiscal realities states are faced with, government employees from around the nation have found themselves the object of increasing scorn from both the public and their own employers.  Most notably, Wisconsin became a battleground for labor issues beginning in 2010, as Governor Scott Walker pushed legislation which included provisions which cut benefits for government employees, including reductions in civil service protections.

Originally, civil service laws were enacted to remove patronage from government employment. The job protection measures included in civil service laws were meant to ensure that government employment is based on merit rather than political affiliation.  Theoretically, by insulating government employees from political influence, they could perform their jobs more efficiently and effectively—ultimately benefiting the public, who would enjoy an efficient government run by effective public servants.

However, a few states are now revisiting the idea of stripping civil service protections from government employment. In Arizona, Governor Jan Brewer recently proposed legislation which would require most new government employees to be hired under “at-will” contracts—meaning that these employees can be terminated at any time, and for any reason, as long as it’s not illegal. (It’s important to note that all states except Montana presume that employment is at will).  More significantly, the proposed legislation would offer a 5% pay increase to any government employee who voluntarily elects to become at-will. The Governor estimates that if this bill passes, more than 80% of the government workforce would be at-will within the next four years. The bill’s sponsor, Representative Justin Olson, touts that the bill “will implement common sense reforms,” while “bring[ing] Arizona’s state personnel system in-line with the most effective practices of the private sector.”

Arizona is not the first state to switch to civil service protection. Georgia switched to a largely at-will system in 1996, as did Indiana  more recently.

Other states are beginning to consider removing civil service protections as well. In Tennessee, Governor Bill Haslam proposed legislation which would remove most civil service protections. In Colorado, Governor John Hickenloop called for bringing “the state’s antiquated personnel system into the 21^st century.”

Click here for a more in-depth overview of this issue.

Court Restructuring, Economic Development, and the State of New York Courts

Last night, New York’s Chief Judge Jonathan Lippman gave his annual address on the state of the judiciary.  In his introduction, the Chief Judge echoed a familiar sentiment to those who follow most of the recent developments out of Albany: “As Governor Cuomo has said, now is the time to reinvent government and to work smarter.  Now is the time, not just to find ways to reduce costs, but more importantly, to rethink and fundamentally transform the way we do business.” The address went on to highlight a number of social initiatives, including: raising the age at which defendants in nonviolent cases are considered adults from 16 to 18; preventing wrongful convictions through a mix of eyewitness identification safeguards, videotaped interrogations, expanding the DNA data bank and enlarging convicted defendant’s rights to access to the new DNA bank; and enhancing legal services to underserved populations, particularly to mortgage foreclosure cases and indigent legal defense.

The Chief Judge also noted that New York courts “must seek to create an even more hospitable environment for business.”  To this end, the Chief Judge called for expanded electronic filing (which is still not widely required in New York) and further announced the creation of a “Task Force on Commercial Litigation in the 21^st Century” to help reinvigorate the Commercial Division of the state’s Supreme Courts.

However, absent from the Chief Judge’s address was any call for court consolidation or restructuring.  The current structure of New York’s Courts has been described as:

The most archaic and bizarrely convoluted court structure in the country. Antiquated provisions in [New York's] state Constitution create a confusing amalgam of trial courts: an inefficient and wasteful system that causes harm and heartache to all manner of litigants, and costs businesses, municipalities and taxpayers in excess of half a billion dollars per year.

New York currently has a court system that features eleven trial courts, (California, who has twice the population, only has one), and a disproportionate appellate court system which divides the state into four appellate departments (one department contains half of the state’s population) which was set up in the 1890s. Compare the structure of New York’s court system to other major commercial states, such as California or Delaware (see charts for all the states at the Court Statistics Project):

                

The idea of court consolidation in is not new in New York State, and a number of appointed Task Forces have visited the problem time and again (the Tweed Commission issued reports between 1955-58, the Dominick Commission between 1970-73, the Vance Commission between 1974-76, and proposals in 1986 and 1997).

Continuing this trend, in 2006 former Chief Judge Kaye appointed a similar Task Force to assess the effective of the state’s current court structure and propose appropriate reforms.  The group, commonly referred to as the Dunne Commission, issued a report which proposed consolidation of the state’s trial courts, and the creation of a fifth appellate department. After the report was issued, the recommendations were endorsed by former Chief Judge Kaye and then Governor Elliot Spitzer. As the Commission found:

[I]n the millions of cases that are handled in [New York] state courts every year, people waste countless hours making redundant court appearances, filing unnecessary papers and briefs, and suffering through delays caused by courthouse backlogs and inefficiencies.  In addition to confusion and aguish, the practical effect of this is lost wages, lost productivity, and higher costs and attorney’s fees for individuals, businesses and government entities. Given the number of cases affected (3.7 million cases are resolved annually in the state courts) these hidden costs add up to $502 million per year.

Although the $502 million certainly seems extreme, the Dunne Commission was quick to point out that this estimate had “been vetted by economists, and the [] National Center for State Courts has not only endorsed [the] projections but referred to them as ‘conservative.’”  Through restructuring, the State would see a budget savings of approximately $60 million a year, while private individuals, businesses and municipalities would realize a cumulative savings of over $440 million.  The report further supplied an appendix which included an economic analysis to show the basis for these financial conclusions. Older reports by New York’s own Unified Court System have also projected significant savings for the state.

Notably, the Dunne Commission did not focus on New York’s vast (and oft criticized) network of Town and Village Justice Courts, and recommended that further research be done for their possible role in restructuring. The State Comptroller’s Office has a court consolidation pamphlet for municipalities, which, if done properly “could help increase the efficiency and effectiveness of justice courts without jeopardizing local court revenues or lessening access to justice.”  Local court consolidation could save municipalities budgets until greater reform is accomplished. For example, in New Orleans the Inspector General issued a report on the performance of the municipality’s City Courts and Traffic Courts. The report found that by consolidating courts, the City would see approximately $2.5 million in annual budget savings.  As states around the country reel from budget constraints, court restructuring initiatives may continue to get a harder look.

Courts around the country are increasingly finding themselves slowed by increased caseloads, yet smaller budgets. New York’s court system is no exception, and after a particularly harsh fiscal year which saw deep budget cuts that caused widespread court delays and personnel shortages, in 2012 it will operate a court system with a budget  that has been called “the bare minimum.”   An overburdened judiciary should be an area of deep concern for all citizens.

States Climbing Out of the Recession by Spending Less

The USA Today has reported that states and cities have drastically cut their spending  at the end of 2011.  It was noted that this decrease in spending coincidentally came at a time when federal stimulus aid was coming to an end and therefore states had to spend less on such things as health care, projects, employees, roads, and college buildings.  This decline in spending has allowed states to end their fiscal years with evidence of budget relief and in some cases a surplus.

As noted in a previous post on the financial surplus in Michigan states are starting to come back the financial decline.  The federal Bureau of Economic Analysis reports that state and local spending was cut by $26 billion in the last few months of 2011 (1.2%).  The National Conference of State Legislatures states that this has built up the states’ confidence, who know have a positive outlook on their financial situation.  With federal aid providing less and less to state and local governments sales tax revenue has once again been the number one source of funds.

In the article the Center on Budget and Policy Priorities suggests that the current successes in the fight against this recession is because the relief money to state and local governments got distributed quicker than in the past, which boosted the states’ economy when they needed it the most.

The article is available here.

For Michigan the Question Is: To Spend or Not to Spend?

As we near what many believe to be the end of the “great recession,” Michigan finds itself in a place that many states are envious of, a surplus.  The New York Times has reported that while Michigan has been in an economic downturn longer than most states they now find themselves with a $57 million surplus.  The National Conference of State Legislatures noted that state revenues are improving, however state’s are unsure as to what their next move should be.  Is the recession over and is it safe to start spending again? Or should states, like Michigan, save their surplus for rainy days to come?

In the case of Michigan, the state has made so many cuts that each government agency and department is fighting for a piece of the pie.  Furthermore, the states largest city, Detroit, is in dire financial straits.  Michigan is contemplating whether the state should take over the City’s finances, although their poor economic situation is expected because often cities recover slower from recessions than states.  On top of all this, Michigan’s employment rate has been lower than most states due to the influence of automobile manufacturers in the state, who are now hoping to receive surplus funds.

States are going to have to make tough decisions as the recession ends and states are realizing budget surpluses, a sight that has not been seen by many for years.  An official from the Michigan Chamber of Commerce was quoted by the Times as saying “While our members have a confidence and renewed optimism, we’ve also seen a decade of real turmoil in our state.”

State and Local Government Groups Push for Federal Education Reform

There has been a call by five municipal groups to reform the Elementary and Secondary Education Act (ESA) to reframe the federal, state, and local education partnership.  The groups include the National Governor’s Association, the National Conference of State Legislators, The Council of State Governments, the National Association of Counties, and the National School Board Association.  These groups are seeking to reform the ESA because currently it does not afford states and local governments with enough flexibility to prepare their students and provide them with a world-class public education, which is a service that state and local governments must provide.

The groups outlined their reform suggestions to congress in a letter, which included providing greater flexibility to state and local leaders, increasing flexibility in federal funding, recognizing state and local budget challenges, streamlining federal red tape and compliance requirements, and streamlining the waiver process.  They mention that with these reforms state and local governments will increase innovation in the way they educate and therefore prepare students for college and beyond.  The federal policies in place now limit innovation at the state level hindering education.

The impact of unprepared students, as they leave high school and enter college, can be enormous. For example recently the State University of New York has stated that they spend 70 million dollars in their budget for remedial work helping unprepared college students.  This tax payer money is spent helping students who are not prepared for college get up to speed.  This is a problem that needs to be fixed at the source and more collaboration must occur at the elementary and secondary levels of education.  Reforming the ESA is one step to solving this problem.  However, education reform is a subject that all state and local governments should examine when trying to improve governments services and increase government efficiency.

Reforming Collective Bargaining and Public Labor Laws

Collective bargaining for public sector workers represents a large part of state and local expenditures.  Some states are looking to reform their collective bargaining laws because most states and municipalities are finding it harder and harder to collectively bargain with their public sector workforce in the current economic climate.  Last year, Gov. Cuomo of New York was able to negotiate concessions with the state’s public workforce avoiding massive layoffs.  However, most states are looking to reform their collective bargaining laws as opposed to negotiating with the unions.

Wisconsin

The most prominent news story and collective bargaining reform bill was passed in Wisconsin.  Less than a year ago Gov. Walker signed the Budget Repair Bill that limited the public worker’s right to collectively bargain and would potentially save 30 million dollars in state and local budgets for this year.  As reported by the Wisconsin Bar Association the bill limits collective bargaining to the subject of base wages, limits base wage increases to a percentage, prohibits collective bargaining on matters not permitted by the Wisconsin Municipal Employment Relations Act, limits contracts to one year terms, allows unions to only collect their dues directly from the employee not through salary deductions by the employer, allows employees to stay in the union without the payment of dues, and denies employees of the University of Wisconsin System, UW Hospitals and Clinics Authority, and certain home/child care providers the right to collectively bargain.

Indiana

Indiana was one of the first states to ban collective bargaining through an executive order in 2005 which was codified into law by the budget bill passed in April 2011.  Indiana has recently taken it one step further singing into law a right-to-work bill.  This bill prohibits employers from mandating union membership for employment, which will weaken the strength of the unions.  Indiana is the twenty-second state to enact a right-to-work statute.

Ohio

Adding to the list of states who are seeking to reform collective bargaining laws is the State of Ohio which passed Senate Bill 5 eliminating the rights of union members to bargain collectively.  However, unions were able to gather enough support to trigger a referendum vote which defeated the collective bargaining reform legislation.

Arizona

Arizona is now attempting to join the club of public workforce reform.  The Arizona Senate Committee voted to introduce a bill that would ban collective bargaining with public employee unions.  This bill will be watched closely as it travels through the approval process and makes its way to the Governor. 

Collective bargaining is an area that state governments are focusing on when trying to reform.  Most of these initiatives were passed in the face of large public sector layoffs as a way to save money and avoid laying off the workers.

Government Reform Proposed by GOP, Dems, in Minnesota

Following the infamous government shutdown in Minnesota last summer (which the State is still feeling the effects of), Republican members of both the House and Senate began gathering a variety of proposals for the current legislative session. The list of proposals, commonly called “Reform 2.0” covers a variety of areas, including economic development, education, health care, and government reform.

As State Rep Keith Downey noted, “[o]ne of the biggest challenges we face in state government is we’re about 20 years behind in improving state operations.” To that end, the “Reform 2.0” includes a number of  government reform provisions that would: make government pay and benefits competitive with the private sector, reduce the number of departments in the Executive Branch, require local governments to present budget and spending information in an easier to understand format for the general public, work with local governments on mandate relief, require the state budget to include federal insolvency contingency planning, and fix the problems which were encountered during the government shutdown.

Not surprisingly, State Democrats remain skeptical of the Reform 2.0 proposals. House Minority Leader Paul Thissen was reportedly disappointed by the GOP plan, echoing the claim of other Democrats who believe that many of the ideas are recycled from previous, unsuccessful proposals. To counter, Democrats have announced their own reform package which would emphasize reforms in the Legislature. Highlights of the Democratic package include: a plan to prevent future state shutdowns, requiring politicians to disclose any outside income, preventing private meetings whenever the State Capitol is closed, prohibiting public meetings between 12 a.m. and 7 a.m., prohibiting officials of political parties from holding public jobs, and a provision on “unallotment.”

Recent Developments for Social Impact Bonds

Social Impact Bonds, also known as Pay for Success Bonds, are a funding model where private investors fund social programs through an outcome-based contract with the public sector; if the program achieves the desired results the private investors see financial returns, if it fails the investors lose their investment.

We’ve already posted about social impact bonds, and noted how governments at all levels had shown varying amounts of interest in the pilot projects. However new announcements at the federal and state level show a continued interest in the model.

First, the White House recently announced that the Department of Labor and the Department of Justice would each make millions of dollars available in grants for programs which incorporate social impact bonds. The Department of Labor will make up to $20 million available to grant applicants through its Workforce Innovation Fund, which focuses on employment and training outcomes. Likewise, the Department of Justice will give priority consideration to grant applicants for the Second Chance Act, which provides funding to organizations which help reduce recidivism among newly released inmates.

In Massachusetts, Governor Deval Patrick made a recent move towards implementing a social impact bond program, as the state’s Executive Office of Administration recently called for “social entrepreneurs to submit proposals for performance-based programs which would curtail chronic homelessness and to support youth who leave juvenile correction and probation systems in Massachusetts as they get older.”

Abroad, social impact bonds continue to be used. In the UK, the Department of Work and Pensions recently announced the use of the social impact bonds to help fund charities that would work with disadvantaged youth.

State Incentives for Local Government Efficiency

States are currently in the business of promoting local government efficiency as a way to cut local government expenditures.   However, funding is a barrier for local governments that are tryting to take steps towards efficiency.  State incentive programs offer the funding that is needed for local governments to become more efficient through shared services, consolidation, dissolution, mergers, or cooperative agreements. 

The Local Government Efficiency Program in New York is a state incentive program that will provide technical assistance and competitive grants for local governments that seek to save money through consolidation, merger, dissolution, shared services, and cooperative agreements while at the same time still provide core governmental services to the community.  The grants are awarded through the LGeGrant Program which requires the municipality to go through an application process to be awarded the funding.

The Local Government Innovation Fund (LGIF) is an Ohio incentive program (click here for program policies) that will provide financial assistance to municipalities that are trying to set in place innovative and more efficient ways to deliver government services to their community.  Local governments seeking this award should be expected to describe how the plan will also improve the business environment and attract members to the community. With 45 million dollars available, 9 million for grants and 36 million for loans, the LGIF is a resource that local governments should use to implement innovative ideas.

For more information, and technical assistance, on local government consolidation, dissolution, mergers, and shared services visit the Center for Government Research, as well as, the Technical Assistance Manuel for New York’s Share Municipal Services Incentive Grant Program  prepared by the Government Law Center of Albany Law School for the New York Department of State, Division of Local Government Services.

Virginia Continues to Take Big Steps Towards Government Reform

Virginia Governor Bob McDonnell set up the Governor’s Commission on Government Reform and Restructuring (commission) with Executive Order No. 2. The commission’s purpose is find a way to make the Virginia State Government more effective, more efficient by streamlining the process, identifying and trimming unneeded agencies.  Further, the commission is to make the state government more transparent, accountable, and accessible to the residents of Virginia.

On April 12, 2011, the Governor signed twenty pieces of government reform legislation based on the commission’s findings.  These pieces of legislation will eliminate the disability services council; consolidate water quality project reports; establishes a state inspector general; consolidates payroll services; and authorizes the consolidation of executive branch agency reports. 

 In addition, on November 29, 2011, Governor McDonnell announced that he had submitted his Government Reorganization Plan to the General Assembly. This plan was estimated by the Department of Planning and Budget to save at least $2 million a year by cutting two state agencies and nineteen boards and commissions, merging seven agencies and twenty-three boards and commissions, moving four offices and initiatives, and de-regulating three professions. The Governor’s Plan has passed the House and is currently before the State Senate.  

For the current version of Governor McDonnell’s Government Reorganization Plan click here. 

 For more information about The Government Reform & Restructuring Commission click here.

This blog post was created by Abby Brinkerhoff, Albany Law School Class of 2013.