State Contract Negotiations: Nothing Transformational Here

In early April, Governor Walz attended the season opener, a rarity by the state’s chief executive.  This one, however was filled with suits rather than uniforms and one where disputes are settled by arbitrators rather than umpires.   It was the Minnesota Association of Professional Employees (MAPE) kickoff to the 2023-2025 contract negotiations in which the union presented its initial proposals directly to the Governor.   Contract negotiation season is now in full swing, and MAPE is just one of several unions now negotiating with the Labor Relations Division of MMB to establish the workforce rules and terms and conditions of employment for the upcoming biennium.

Collective bargaining contracts can have a major influence on the effectiveness, efficiency, and accountability in the delivery of government services.   Although the mission of both parties is to serve the public good, it is a mistake not to recognize collective bargaining is at its core a competitive exercise pitting the private interests of labor against the broader public interest of taxpayers as represented by management.   As the 1995 Brandl/Weber report to Governor Carlson, An Agenda for Reform, observed,

"Government employees are interested in their jobs, their incomes, their raises, their advancement, their pensions, their security in the workplace. These interests are represented at the Legislature, effectively, by wealthy and powerful organizations, which are themselves private. These interests are legitimate. But they are not public interests. It makes no difference that they do not take the form of a business corporation. They are private interests.” 

For this reason, transparency in public sector collective bargaining is essential to understand how well that balance between public and private interests is struck.   Absent insights into how the negotiations evolved, taxpayers have little ability to evaluate what provisions/changes government representatives believed were needed to better advance the public interest or to what degree those provisions were secured or sacrificed in the outcome.   The fact that, unique to government, management’s existence at the bargaining table can be a function of the financial support from the other side of the table adds to the need for transparency. 

To MAPE’s tremendous credit, the union has continued its commitment to what it has called in the past “radical transparency” by making its initial proposals publicly available along with initial proposals put forward by MMB. 

MMB: Rocking the Boat…Ever So Gently

Weighing in at 31 pages with 105 change items, MMB’s “comprehensive package” might suggest state interest in putting some new ideas regarding government workforce organization, design and management on the table, perhaps along the lines of the National Academy of Public Administration's guidance and recommendations on meeting the human capital needs of government in the 21st century.   On inspection those expectations immediately evaporate. 

A large number of changes are technical in nature like the type of language changes in author’s amendments needed to get a legislative bill in order.  An equally large number are minor administrative process related adjustments and actions (e.g., requiring a written notice here, establishing a time limit there).  Another category might be described as office operating rule tweaks like no longer having to provide space on office bulletin boards for exclusive use of the union and putting a 5-minute time limit on distributing union newsletters during work hours.   Much of the package strikes a reader as large amounts of disposable fodder for negotiations or conversely potential management “success counts” on minor, uncontroversial items.

There are a few more impactful proposals addressing greater management discretion, flexibility, and control in various areas of workforce management.   Many are modest, but some others tread on issues likely to be the subject of more animated discussion.  Unsurprisingly, these are around filling position vacancies and dealing with layoffs and recall.   As it did in the last contract cycle, MMB again is looking to adjust bumping rights and exercise some greater control over how positions are filled and how layoffs are managed.  Interestingly, MMB is proposing some new language in a couple of circumstances dealing with personnel moves that states, “the employer must determine the employee to be qualified.”  The apparent absence of that in past contract language is rather disconcerting.

MAPE: “Time to Catch Up”

Unlike MMB’s administrative and process-focused proposal content, MAPE’s nine proposals cut directly to the chase and center primarily on private worker interests.  The exception is new workforce management policy regarding telecommuting which has proven to be quite popular.  MAPE is proposing a default approval of an employee’s telecommuting request unless management can demonstrate its unsuitability.  

Benefit-related provisions include expanded granting of sick and bereavement leave use to extended family or individuals employees recognize as family; bump in vacation accrual rates; a doubling of the maximum employer match to the states deferred compensation plan ($250 to $500); and formalization of the pilot student loan payment reimbursement as a talent attractor/retainer.  State health care is coalition bargained across state employee bases and negotiated separately.

The eye-catching proposal is wage adjustments.  MAPE is seeking an 11% increase the first year of the new biennial contract and 10% increase in the second year.   The 11% first year increase matches the difference between MAPE wage growth over its last two contract periods and private sector wage growth over that same period as reported by the Federal Reserve’s Employment Cost Index.  (That may be a coincidence but we doubt it.)  Compounded, that is a 22% wage increase for the FY24-25 biennium.

However, that does not include “step” increases which are granted each year (largely by default)¹ on an employee’s work anniversary.  Step increases are provided annually for achieving a satisfactory level of performance; exceeding performance standards is not considered.  Historically steps run at around 3.6% per year.   Because of compounding effects, MAPE employees that were step eligible over all four years of the last two contracts saw their wages grow 5.2% more than the private sector during this four-year period.  

On the other hand, employees at the top of their job class’s pay scale with no step increases – which presumably would include some of the most experienced and productive professionals in the state workforce – experienced wage growth less than half of the private sector wage gains and a little over a third of their colleagues.  For a compensation system singularly and slavishly devoted to establishing equity across 1500 state job classes, the compensation inequities that can result are remarkable.

Addressing the situation of those already at the top of pay scales is undoubtedly a factor behind the proposed 10% increase in the second year of the contract.  But under the state’s classified system, a rising tide must lift all boats.  Going forward, if the opening MAPE position is ratified, the compounding effect of steps with the annual wage adjustments would result in a 31% two-year wage increase for step-eligible members.  Unless the cohort makeup of the union has significantly changed recently, that increase would – indiscriminately -- accrue to well over half of the 16,000 employees represented by the union.  

Human resource experts have identified certain employment conditions and circumstances in which step-based compensation design is best used.  The first is strict management and administration of compensation expense, which likely appeals to the state.   Others are:

• Majority of jobs are routine and task-oriented doing the same thing every day.
• Performance/skill variation levels of most jobs are minimal—in other words, it’s difficult to tell the difference between someone doing extremely well and average.
• Management cannot make appropriate distinctions among employee performance/skill levels for most jobs

 It would be interesting to survey Minnesota’s government professionals to see if they believe these bullets accurately describe their activities and responsibilities.

“Let’s Keep it Just Between Us”

At the same time negotiation sessions are taking place, both the House and Senate have included provisions in their respective omnibus state government bills to essentially remove the Legislature from any review and oversight of collective bargaining agreements.   Under the proposed language:

•  the MMB commissioner would no longer have to regularly advise the Legislative Coordinating Commission (LCC) on the progress of collective bargaining activities
•  the LCC would no longer make recommendations to MMB as it deems appropriate on negotiations
•  the MMB commissioner would no longer have to submit to the LCC negotiated collective bargaining agreements, arbitration awards, compensation plans, or salaries for legislative approval or disapproval.

This is about simplifying contract ratification.  But aside from concerns about reduced oversight, it also makes the state contract development and review processes that much more immune to addressing potential reform needs.

The state is about to embark on one of the greatest expansions of government programming in its history resulting in literally thousands of new hires (if budget change requests are accurate).  As the demand for both the quantity and quality of government public services increases, the more relentless and aggressive government must be in pursuing innovation and implementing efficiency and productivity improvements.  Otherwise, costs explode, taxes increase, and the state business climate deteriorates.  Human capital management is a foundation of this pursuit.  We need state government to recognize this and we need unions to recognize their true power lies in the talent, commitment and professionalism of individual members.

Footnote

¹ Providing steps does not require an affirmative notification or action by management.  Instead, refusing a step increase requires a manager to give the employee a written notice that the step increase is to be withheld because of less than satisfactory performance.   If that notification is not given to the employee prior to the employee’s anniversary date, the step increase is automatically granted.  Any withholding of a step increase is grievable/arbitrable.  Historically, well over 90% of step-eligible employees receive their step increase.