New Democrat Update - October 2007
NEW DEAL FOR STATE WORKERS
Colorado Governor Bill Ritter is seriously considering advocating legislation that would give state employees collective bargaining rights. At the same time, his Government Efficiency Management initiative demonstrates a strong commitment to making state government work better and cost less.
Predictably, Republican legislators immediately jumped up and said that collective bargaining could only lead to lower-quality services and a fatter bill for taxpayers. According to that narrow view of the world, government’s customers and taxpayers can only be served if managers “crack the whip” and pay public employees at the lowest possible level.
Those on the right, who often say “government should be run like a business,” fail to realize the lessons of the private sector - no company has successfully reinvented itself without the active involvement and cooperation of its front-line workers. Besides, collective bargaining, properly structured, can lead to a less expensive government. In any case, all pay raises for state employees would still have to be approved by the legislature.
Unfortunately, some in our party also believe that better government and collective bargaining are incompatible, but for the opposite reasons. Their view is that any increase in service quality and cost-effectiveness benefitting taxpayers must automatically be at the expense of workers.
Ritter, however, does get it. “Employees will be our partners,” he said. “Front-line employees understand better than anyone how government works, and how it can work better. We need their good ideas, and then we need to make sure those ideas see the light of day and get put into action.”
Ritter, the legislature and organized labor should make a simple compact between state employees and taxpayers. “Gainshairing,” defined as pay bonuses determined by a percentage of the savings workers produce - similar to profit-sharing in the private sector, should be offered to employees. In exchange for that and collective bargaining rights, competition should be embraced as an important tool to improve the cost-effectiveness of state services.
Due to constitutional fiscal straitjackets, the state has woefully neglected needed investments in the ingredients key to future economic growth - higher education, transportation and health care. If Democrats are going to succeed at asking voters for more money, our party must first convince Coloradans that they are already getting a good bang for their tax buck.
Democrats can persuasively make that case by heeding the experience of those governments, where private sector firms, public agencies and employee unions get opportunities to bid on work. For example, in Indianapolis, competition yielded a 25 percent reduction in the cost of city government without hurting service quality. Savings are expected to exceed $200 million over a seven-year period.
It worked, in part, because the mayor and union leadership negotiated a fair deal with employees. In return, workers came forward with a ton of new, innovative and cost-saving ideas.
Employees - public or private - are not innovative if their livelihood is on the line. In Indianapolis, when union members lose their jobs through competition, they are either hired by the winning private contractor, placed in another city job or retrained and placed in a private sector job. The mayor also requires the bid-winning companies to recognize the union as the bargaining unit for the city employees it hires, and has adopted an unwritten no-layoff policy for union members.
Those workers, who want to stay in government, are transferred to other positions. Although it may not be the position they currently hold, employees can be guaranteed a public sector job, given attrition rates.
Once required to compete, the Indianapolis union began negotiating for gainsharing. Typically, workers collect 10 to 25 percent of savings when they drive costs below their bid price.
Gainsharing is a team sport; since everyone shares in the gains, it promotes employee collaboration. It also uses an objective measurement of performance - dollars and cents saved - so it is much less controversial with employees than incentives based on subjective performance appraisals made by managers.
This combination of competition, a no-layoff policy, collective bargaining and gainsharing has transformed worker behavior. A new, more cost-effective culture has replaced the old, top-down bureaucratic thinking. In addition to rewarding innovation, competition has boosted the pride and morale of employees. It also ensures that the savings come from new innovations, not simply from cutting jobs or skimping on compensation.
Workers, now free to be more innovative and work more effectively, feel a much stronger sense of ownership in their jobs. Incredibly, union members in Indianapolis now suggest outsourcing when it will save money.
The local public employee union president, Steve Fantauzzo, is enthusiastically on board. "Those employees and their managers are determining what they do best, their core activities." In fleet services, for example, "we don't do body work best, so let's get out of the body work business.
"Look what happens in the 11th month of a budget in traditional government," he adds. "Everyone is looking to spend the last dime to justify that plus more next year. Here, people are looking to save every dime because they figure a piece of the pie is going into their pocket."
Michigan has used gainsharing to reduce the cost of employee health care. It calculated the average cost of medical benefits in the preceding seven years, then offered to give employees half of the savings if they drove costs below that average.
In the last fiscal year the state saved about $40 million. Half of it went to 36,000 employees, whose checks averaged $555. "By working with employee groups, we cut costs and increased wages," says Mark Murray, the state budget director.
If competition, a no-layoff policy, collective bargaining and gainsharing are implemented in Colorado, another outcome could be a long overdue overhaul of the state’s antiquated and overly restrictive - and unnecessarily costly - personnel, procurement and budgeting systems. Top-down, heavy-handed changes mandated by elected officials and management would not be necessary - employees will be demanding the dramatic reforms.
It is one of the enduring paradoxes of American ideology that we attack private monopolies so vigorously but embrace public monopolies so warmly. The fact that government cannot be run like a business does not mean it cannot become more entrepreneurial. Well-structured and fair competition ensures better results, more cost-consciousness and much improved service.
Any institution, public or private, can be innovative, just as any organization, public or private, can be bureaucratic. In fact, the important distinction is not public versus private or union versus no union, but monopoly versus competition.
The bottom line - embracing that kind of thinking would do Colorado state employees and taxpayers a lot of good.
NEW DIGS
The Colorado DLC has moved! Its new address is 1535 Grant Street, Suite 310, 80203 in the Capitol Hill area of downtown Denver. Phone numbers are the same.
The organization sincerely thanks Barbara Bridges and Rutt Bridges for their generous donation of office space for the past eight years! Without them, the significant success of the Colorado DLC in changing our party would not have been possible.