BILL ANALYSIS Ó SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 216 Jim Beall, Chair HEARING DATE: April 8, 2013 SB 216 (Beall) as amended 4/03/13 FISCAL: YES STATE MANAGERS & SUPERVISORS: SALARY COMPACTION HISTORY : Sponsor: Association of California State Supervisors (ACSS), Sponsor Other legislation: SB 1113 (Evans) 2012 Died in Assembly Appropriations SUMMARY : SB 216 requires the Department of Human Resources (CalHR) to address salary compaction for managerial and supervisorial employees and provide data to the Legislature when insufficient revenue is available to implement a salary determination to increase managerial and supervisorial salaries by 10 percent over the salaries of their subordinate rank and file employees. BACKGROUND AND ANALYSIS : 1) Existing law : a) effective July 1, 2012, merged the Department of Personnel Administration (DPA) and the administrative functions of the State Personnel Board (SPB) to form CalHR, which among other duties serves as the representative for the Governor in all state collective bargaining activities. b) requires that CalHR and each of the state's 21 collective bargaining units meet and confer and enter into contracts over wages and working conditions for represented employees. c) requires that CalHR set salaries for excluded and Glenn A. Miles Date: 4/03/13 Page 1 exempt employees, and allows excluded employee representatives to meet and confer with CalHR, but does not otherwise make the state employer or excluded employees subject to collective bargaining requirements. 2) This bill : a) makes findings and declarations regarding the roll of CalHR in setting salaries for excluded employees and managing the nonmerit aspects of the state's personnel system, and declares that CalHR is unable or reluctant to recommend appropriate salary increases for excluded employees when there is no legislative appropriation to pay for the increases, and in such cases defers to the Department of Finance even though the Department of Finance has no direct role in establishing or recommending salaries for excluded employees. b) requires CalHR to address salary compaction and parity concerns consistent with the principle that it is appropriate to provide managerial/supervisory employees a salary at least 10 percent higher than the salary of rank and file employees they supervise. c) requires CalHR to provide the Legislature with data on salary compaction as specified whenever the department determines there is insufficient revenue to fund a salary determination to increase managerial/supervisorial salaries pursuant to the State's compaction differential policy. COMMENTS : 1) What is salary compaction ? Salary compaction refers to the condition where managerial/supervisorial (excluded) employees do not earn enough in relation to their subordinate employees. This is problematic because excluded employee candidates may be dis-incentivized from seeking promotions, or after promoting, may later decide to demote to non-managerial/supervisorial positions. Glenn A. Miles Date: 4/03/13 Page 2 CalHR sets excluded employees' compensation. There is no statutory requirement to extend a pay package that was bargained for represented employees to related excluded employees. CalHR is not currently required to study the impact of the rank and file MOU on related excluded classes and provide data to the Legislature. Excluded employees do not generally receive overtime pay and other protections provided to represented employees through collective bargaining. Moreover, excluded employees may have higher levels of stress and responsibility due to their managerial/supervisorial role. 2) Arguments in Support : The Association of California Supervisors states that "after years of?cuts to state employees, supervisors, managers, and confidential employees now often make less than the employees who work for them. In fact, according to a recent survey, 43 percent of state supervisors and managers earn the same or less than the employees who report to them." According to the California Correctional Supervisor Organization, "Compaction issues, left unaddressed, create a disincentive for qualified line officers to seek promotion. This in turn, weakens the structure of the entire organization." 3) SUPPORT : Association of California State Supervisors (ACSS), Sponsor California Association of Professional Scientists (CAPS), Co-sponsor California Correctional Supervisor Organization, Co-sponsor Professional Engineers in California Government (PECG), Co-sponsor 4) OPPOSITION : None to date Glenn A. Miles Date: 4/03/13 Page 3 ##### Glenn A. Miles Date: 4/03/13 Page 4