Turnover of state workers climbing as their salaries fall further behind

We expect a lot from the Oklahomans who work for state government. These are the men and women we entrust to care for victims of abuse and neglect, supervise the most dangerous criminal offenders, stop the spread of infectious diseases, and ensure that our laws are applied fairly.  We expect them to be well-trained, to work hard, and to maintain the highest ethical standards. Unfortunately, a decade of budget shortfalls have made it increasingly difficult to pay state workers competitive wages. The result is that state compensation is lagging further behind the private sector, leading to increasingly expensive employee turnover.

A newly-released study  finds that average salaries for state employees fell to 24 percent below the competitive labor market in 2016, “a continued deterioration of the state’s salary position to the market.” As compensation fell further behind, the state employee turnover rate rose to 20.5 percent in 2016, which is a nearly 40 percent increase from a decade earlier. Employee turnover cost the state over $135 million in 2016, the report found.

These findings are part of the annual compensation report that is required by law to be done each year by the Office and Management and Enterprise Services. The report uses a market pricing approach that compares state employee compensation with that offered by public and private sector organizations in Oklahoma and surrounding states. It analyzes survey data for 274 benchmark jobs for classified state employees,  representing 70 percent of all state employees. The report was prepared in the fall of 2016 and the report is dated January 2017, although it was only released to the public this month.

Key Findings

• Oklahoma state employees are underpaid. The average salary for Oklahoma state employees, $43,979, is 24.13 percent below the average market salary for comparable jobs, $57,965, in 2016. When total compensation, including benefits, is considered, Oklahoma is 21.12 percent below the external labor market.
• The salary gap is growing. The state average salary has increased by 39 percent since 2005, while the market has increased close to 70 percent.
• Most employees have gone a decade without a pay increase. The last across-the-board pay raise for state employees was in 2007. In 2014, several occupation groups, including correctional officers, nurses, and law enforcement, received 6-8 percent raises.
• Turnover rates are high and rising. In 2016, the voluntary turnover rate of state employees, which includes resignations, retirements, and voluntary buyouts, was 16.44 percent, while the total turnover rate, which includes discharges, deaths and involuntary reductions in force, hit 20.52 percent. As the chart shows, the turnover rate is at its highest level since at least 2000 and is about 40 percent higher than its peak from the years 2000-2011.
• Heavy staff turnover imposes heavy costs. The turnover cost for the state’s classified workforce was $135.8 million in 2016, based on a conservative costing model.

The state workforce is shrinking

In addition to lagging pay, Oklahoma’s state employee workforce is substantially smaller than it was a decade ago. Budget cuts have forced most agencies to leave positions unfilled and implement voluntary buyouts and involuntary staff reductions. In FY 2016, the state employed 36,376 workers, which is 4.8 percent fewer than in FY 2006 and fewer than in FY 2001. Meanwhile, over the past 15 years, the state’s overall population has increased by almost 500,000 people, or 14 percent. This overall population growth has meant growing responsibilities and workloads for state workers, whether it’s in the number of licensing permits to issue, childhood immunizations to provide, court cases to administer, or prisoners to oversee.  The combination of stagnant and noncompetitive pay and increasing workloads helps account for the high turnover rate of state employees.

The state employee compensation study does not include public school employees or employees of the higher education system. Oklahoma public school teachers have experienced similar salary challenges as state employees: Oklahoma’s average teacher salary (including benefits) was $45,276 in 2016, ranking us 49th and ahead of only West Virginia and Arizona, according to NEA data. The last time Oklahoma lawmakers raised the teacher salary schedule was 2008.

Time for action

The new compensation report concludes with a brief recommendations section that states:

Although current revenue shortfalls and the likelihood of the continuation of these shortfalls in the foreseeable future have severely restricted the state from taking any meaningful steps this year to improve its competitive position in the market, the state should be prepared to address pay concerns when funds are available.

Low pay takes a toll on state employees struggling to provide for their families and pay their bills, and high turnover adds substantial cost and disruption for state government.  It’s encouraging that the Republican budget plan introduced in late October included a $1,000 raise for state employees, but that’s just a fraction of what’s needed to make up for years of stagnation. It’s past time for lawmakers to adopt a comprehensive budget plan that allows us to meet our core responsibilities, including to the state employees who work hard serving the people of Oklahoma.