Mesa State College attempts to opt-out of state personnel system, but bill is unlikely to succeed

The Colorado Statesman

A plan by Mesa State College to get its classified employees out of the state personnel system is awaiting approval from the House this week, but it faces an almost certain demise in the Senate.

House Bill 11-1007 is sponsored by Rep. Laura Bradford and Sen. Steve King, both Republicans from Grand Junction. Classified employees in the state personnel system who work at Mesa State would be given an opportunity to vote on whether they want to stay in the personnel system, with its civil service protections, or become at-will employees.

Under the proposed bill, classified employees who vote to opt out of the personnel system would be governed by Mesa’s current personnel system for its faculty and exempt employees. Once an employee leaves the state system, and the position becomes vacant, the position remains exempt. Under HB 1007, employees who choose to stay in the system retain all of the rights and protections of the state personnel system. If the vote to become exempt does not receive majority support from the estimated 120 classified employees, the college’s president must wait a year before asking them to vote again on the issue.

The bill was heard last week in the Economic and Business Development Committee, an unusual committee choice, given that bills on state employee issues in the past decade have gone to the State, Veterans and Military Affairs Committee, or to the Education Committee when it involved state employees in higher education.

Bradford told the committee that the issue is one of “local control.” She cited an Internet poll of the classified employees, authorized by the Mesa State administration, which showed that 74 percent wanted the choice on whether or not to stay in the state system. Jeanne Herring, a classified employee in Mesa’s facilities department, pointed out that classified employees have not gotten cost of living raises in three years and that the state’s merit pay system also has not been funded. “Our paychecks are going backwards,” she said. The implication, that they would be paid better if they became exempt, led Rep. John Soper, D-Thornton, to question whether that was the case. “There’s no guarantee, but I know what I see,” replied Herring. Rick Fox, president of the college’s staff council and a classified employee, agreed, saying that better pay for exempt employees “is the perception” by classified employees.

Scott Wasserman, political director for Colorado WINS, one of the state’s employee unions, testified against HB 1007. The state personnel system, established through the Colorado Constitution, was set up to promote merit and avoid nepotism, Wasserman said. And although Mesa has only 120 classified employees, there are 8,000 through higher education, he said, and efforts like HB 1007 will spread to the rest of the higher ed system. “Universities have already taken liberties” with exempting classified employees out of the state system, Wasserman pointed out.

Mesa State classified employee Tom Orrell said that the choice to become exempt is a “false” one: “become exempt or kiss a raise goodbye.” Despite the poll result, the opt-out decision has caused “intense disagreement” among the classified staff, Orrell said.

He also raised concerns about intimidation by the administration, stating that “it can be immensely intimidating for staff to voice dissent” at the college, and that some employees believed there would have been retribution for voting “the wrong way” on the poll.

Mesa State President Tim Foster told the committee that the opt-out effort must be “employee-driven,” and said his relations with his staff are good. “This is their issue,” he said.

The committee approved the bill on a 7-6 party-line vote. It awaits a second reading on the House floor, where it is expected to pass. After that, HB 1007 would move on to the Senate, but its reception there may not be so rosy.

What may doom the bill to failure: opposition from the union, and concern that HB 1007 will hurt efforts to shore up the unfunded liability status of the Public Employees’ Retirement Association (PERA) pension.

Classified employees in higher education are members of PERA’s state division; according to PERA about 23,000 are active members. That also includes exempt employees from other colleges and universities who elect to use PERA for their pension plans. Mesa, however, does not; their faculty and exempt employees are enrolled in a Defined Contribution (DC) plan.

If an election to get Mesa out of the state personnel system succeeds, current classified employees would still have the option of staying in PERA, or they could join the college’s DC plan. However, new employees hired after the election would not have that option; they’d automatically be enrolled in the DC plan. And over time, that would reduce the number of active classified employees paying into the PERA plan — and helping pay down PERA’s unfunded liability, a top Senate priority in last year’s session, which was addressed with Senate Bill 10-001.

Sen. Bob Bacon, D-Fort Collins, said that while he hadn’t seen HB 1007, anything that negatively affected the SB 1 effort would not be viewed favorably by Senate Democrats.

Mesa’s effort to get out of the state personnel system is viewed even by supporters of HB 1007 as a “slippery slope” that if approved, will lead to the state’s other public colleges requesting the same permission.

And it isn’t the first time they’ve asked.

History replete with examples

In 1989, the General Assembly passed House Bill 89-1143, making the University of Colorado Hospital a private non-profit corporation and taking its classified employees out of the state personnel system. The law was challenged in court, and the Colorado Supreme Court ruled in 1990 that the law “violated rights of state workers at the hospital by requiring them to join the corporation’s personnel system or face losing their jobs.” In 1991, the General Assembly passed new legislation, Senate Bill 91-255, which made UCH a quasi-government entity and allowed its classified employees the option of the state system or the UCH personnel system. By the mid-2000s, only a handful of UCH classified employees remained in the state personnel system.

In 2004, two Republican votes in the Senate were all that stopped the wholesale “opt out” of higher education from the state personnel system.

House Bill 04-1011 got unanimous support from the House Education Committee, passed the House with bipartisan support, and easily passed the Senate State, Veterans and Military Affairs Committee. With a Republican-dominated Senate the bill appeared certain to head to Gov. Bill Owens’ desk. But during its time in the Senate, classified employees flooded the General Assembly with 20,000 e-mails and phone calls against HB 1011, and two Republicans joined with the 17 Democrats to vote it down.

But what higher ed institutions couldn’t get through the front door, they may have gotten through the back door.

In that same year, legislators approved, and Gov. Bill Owens signed, Senate Bill 04-007. The bill attempted to clarify who should be exempted from the state personnel system, changing an exemption statute regarding officers and their “professional staff” to a laundry list of staff positions. But the bill also included the phrase “employees in professional positions,” and that opened the floodgate to exemptions of hundreds of classified positions in higher ed.

In June 2006, the state auditor took a look at the results of SB 7 but found no justification or evidence that an exempt system was more cost effective or efficient.

The audit said that while higher ed officials had maintained for years that exemptions are more cost effective, they hadn’t been able to prove it. And higher ed institutions had taken advantage of the lack of definition of “professional” from SB 7 and exempted positions inappropriately, the audit said. They cited as examples exemptions of an administrative aide, a cashier and custodians, whose positions were reclassified as “professional” and then exempted, when the intent of the statute was to apply exemptions to deans, directors, officers or other higher-level employees. “Due to the multiple, broad definitions of ‘professional’ that can be used by institutions when making exemption decisions, it appears that most positions within the higher education system may meet at least one of the definitions and can therefore be exempted,” the audit said.

In a 2007 report in the Silver & Gold Record, Rich Gonzales, executive director of DPA, said the intent of the 2004 law was to “overlay” the statute on positions being considered for exemption to see if they fit the criteria for exemption. Instead, he said, the positions were modified to fit the statute criteria and then exempted, and he promised more scrutiny of the exemption process.

Just how many classified employees remain in higher ed isn’t clear. Colorado WINS estimates that number at 8,000, but a Dec. 2010 workforce report from the Department of Personnel and Administration places that number much higher, at around 9,300.

DPA was unable to say just how many exemptions have taken place since 2004. The 2006 audit said the number of overall classified employees in higher ed had dropped by about 800 and the number of exempt, non-faculty employees had grown by 600, both over a four-year period beginning in 2001. And among SB 7’s provisions was one that removed DPA from the oversight process, instead allowing exemption approval decisions made by the institutions to be turned over for final approval to the institutions themselves.

Rep. Lois Court, D-Denver, said that few, if any, legislators are aware of the history of higher ed and its efforts to get out of the state personnel system. She told The Colorado Statesman Wednesday that she is concerned about the “ripple effect” HB 7 would have, if it makes it to the governor’s desk. “If enough people aren’t covered” by the civil service system, she said, “the system will no longer be viable.”

But she said the bigger problem entailed in the bill is that with the amount of turnover in the General Assembly, due to term limits or other factors, the knowledge of the history of the classified system in higher ed doesn’t exist. She noted that the claim that a privatized personnel system is less expensive is a myth, but added that legislators “vote on [these] laws with a significant lack of historical knowledge” of the issues. Court also blamed the dwindling general fund support for higher education, stating that the lack of funding will lead to the state creating a “non-public higher education system. We do not pay enough taxes to sustain a robust [public] higher education system.”