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					                                           Minutes of the meeting of the
                                       Commonwealth Competition Council
                                     held Wednesday, August 24, 2005, 10 a.m.
                                    General Assembly Building, Senate Room B
                                                    Richmond


Members present:                             Senator Emmett W. Hanger, Jr., Chairman
                                             Lana Ingram Digges
                                             Barry R. Green
                                             Delegate Allen L. Louderback
                                             Edgardo Marquez, Vice-Chairman
                                             Marian M. Pegram
                                             Delegate Thomas Davis Rust
                                             David A. Von Moll
                                             Sara Redding Wilson

Members absent:                              Senator J. Brandon Bell, II
                                             Sandra D. Bowen
                                             Beverly B. Davis
                                             Roger E. Ortega, Sr.
                                             Ronald V. Shickle
                                             David M. Zobel

Notice of the meeting appeared on the Commonwealth Calendar on the Internet.

Senator Hanger presided over the meeting and extended a welcome to all present. He welcomed Mr. David A. Von Moll,
State Comptroller, to the Council. Mr. Von Moll was appointed by Governor Warner to a three-year term ending June 30,
2008. He occupies the seat formerly held by Mr. Richard D. Brown, Director of the Department of Planning and Budget,
who had served the six-year maximum term of appointment to the Council.

Public Comment

None

Minutes

The minutes of the January 5, 2005, meeting of the Council were approved and will be filed with the permanent records of
the Council. As a reminder, draft minutes appear on the Internet as soon as possible but not later than ten working days
following the meeting in accordance with § 2.2-3707.1 of the Code of Virginia. Final approved minutes are posted within
three working days of final approval. Commonwealth Competition Council minutes are being posted in accordance with
the above to the Council web page at http://www.egovcompetition.com.

Commonwealth of Virginia Workforce Planning (State Government Demographics)

The chairman said that one of the reasons workforce planning is important to the Council is its impact on the services
performed by state government for the citizens of Virginia.

Mrs. Sara Redding Wilson, Director of the Department of Human Resource Management, spoke with the Council on what
is now being referred to as Workforce Planning. This is not a new concept, but is an effort to coordinate human resource
management programs so that they support the strategic goals of the organization. Programs such as job evaluation,
compensation management, performance management, training and development, and recruitment are all components of a
successful workforce planning effort. Its focus is on current staffing issues as well as anticipated future staffing needs.
Virginia is the one state that has built a statewide plan from the bottom up.




                                                             1
The challenges facing state agencies today include funding, available skill sets in the labor market, image of public service,
and perception of limited career and salary growth for state employees. Selected details are mentioned below:

        5 percent increase in classified FTE over the 13 year period from 1991 to 2004, from 106,926 in 1991 to 112,455
         in 2004 (lowest number occurred in 1995 when the level was 106,872)
        Trends reflected largest FTE reduction in transportation secretariat with 11.2 percent reduction
        June 2005 salaried and wage employees totaled 114,375.49

                                                          Salaried          Wage
                           Executive Branch              94,839.67         14,431.59
                           Legislative                      503.00            343.56
                           Judicial                       3,039.90            116.79
                           Independent                    1,358.30             51.68
                                                         99,740.87         14,634.62

        7.6 percent employees eligible for unreduced retirement today; 21 percent in five years; 36 percent in 10 years
                            Contributing factors for employees not retiring as soon as eligible are:
                            health care costs and these employees are the “sandwich” generation (employees
                            having dependent children and caring for aging parents). Virginia is in better
                            shape than other states.
        Average age (45.5) increased 10.4 percent in last 13 years;
         average years of service (11.3) increased 10.8 percent during same period
        Highest turnover occurs during first 9.9 years of state employment:
                                     Less than 1 year             3 percent
                                     1 to 4.9 years              43 percent
                                     5 to 9.9 years              23 percent
                                     Total                       69 percent
        29 agencies exceed the 11.1 percent average state turnover rate (contributing factors retirement systems and health
         care) – largest turnover in Department of Veterans Services
        45 of 141 Roles exceeded the 11.1 percent average state turnover rate, one of which was licensed practical nurses:

                           Licensed practical nurses:
                           average salary $31,468; 26.5percent turnover in 597.5 positions; 24/7
                           schedule
                           Contributing factors include lack of day care for second and third shifts, sick
                           children, etc.
                           Private hospitals give signing bonuses to nurses who are trained at the State
                           teaching hospital and accept positions with the private hospitals.
                           Nurses are in such demand they can go from hospital to hospital with the best
                           benefits, salaries, bonuses.
        Salary statistics:
                         Lowest salary              $13,398     ($5.15 minimum wage x 2080 hours = $10,712)
                         Median                     $32,892
                         Average                   $ 36,848
                         Highest                  $194,113      (director of mental health facility)
        Nine pay bands; State wages below all sectors; and State employee salary increases lag the market
        Workforce planning issues range from aging workforce, increasing workloads, to increasing security issues. The
         HR officials have indicated that knowledge transfer is the biggest issue facing state government today.
        Jobs at greatest risk involve high retirement rates, high skill/experience required, few employees with replacement
         skills, compensation levels not competitive

Mrs. Wilson said that the Department of Human Resource Management does not collect data on contract employees or
“body shop” employees. At the upcoming HR conference she indicated there would be tips on how to deal with working
culture, jobs at greatest risk, etc.



                                                              2
Delegate Louderback suggested that the success of the Employee Suggestion Program (ESP) be reported more frequently.
This could serve as a means to promote the state employee and bring out the good to counter any negative press. Mrs.
Wilson said that the ESP program has and is being reorganized and the web site is available to not only state employees,
but to the public as well. It was stated that if press reports where issued monthly or quarterly, it could motivate other
employees to offer suggestions and be awarded incentives.

Property and Casualty Insurance Proposal Leveraging with Other States

Mr. Brown updated the Council on the innovative proposal to generate savings by joining with other noncontiguous states
to use their combined leverage to reduce the costs of insuring state-owned property in a way that is mutually beneficial to
each state financially. He proposed property and casualty insurance as it was less complex than, for instance, medical
malpractice or workers’ compensation.

He reminded the Council that the total amount of reported insured property for Virginia in fiscal year 2005 was $15.6
billion. Virginia’s property insurance is structured to provide $500 million in coverage and is designed to protect from a
serious loss, not a catastrophic loss. He reported that for any claim the state must first pay a $1 million deductible before
private insurance pays. Further, the state pays a $4 million deductible for flood damage and $2.5 million deductible for
hurricane damage. The five tier coverage of the state insurance plan ranges from $1 million to $25 million, $25 million to
$50 million, $50 million to $100 million, $100 million to $250 million, and $250 million to $500 million. The most
expensive part of property insurance for Virginia is the cost of coverage for the first $25 million of a claim, cost estimated
at $2.4 million. The total property insurance premium is $5.3 million.

Mr. Brown indicated that through the National Association of State Budget Officers a few states have indicated interest in
this concept. He noted that the commercial P&C rates skyrocketed after September 11, and there was a corresponding rise
in property values. Due diligence will be done. Procurement laws and the timing cycle of procurement are different in
each state. One area to be resolved would be who has governance over the contract. So far a midwest state and one on the
east coast have expressed interest in this concept. No western state has opted in at this point.

Delegate Louderback asked about boiler and fine arts insurance. Mr. Brown indicated he would get more details on this.
He felt it was rider on the insurance policy. Delegate Rust said that some of the localities in Northern Virginia have pooled
their insurance needs together.

Certificate of Appreciation

The chairman expressed appreciation of the Council to Mr. Brown for his service on the Competition Council which ended
June 30, 2005. A certificate of appreciation was presented to him in recognition of his exemplary service. He told the
Council that he supports the work being done by this body, and he looks forward to continuing to provide whatever
assistance he can as the Council meets its goals and objectives.

Commercial Activities Inventory for State Government

Mrs. Peggy Robertson, Acting Executive Director of the Council, briefed the members on the process being followed to
comply with House Bill 1043 (2004) and House Bill 2844 (2005) relating to the commercial activities inventory. This
legislation calls for the inventory to be submitted no later than October 1, 2005, to the Governor, the chairs of the House
Committee on Appropriations and the Senate Committee on Finance, and such others as the Governor may designate.
Thereafter the inventory is to be submitted once in each biennium and no later than October 1 of the second year.

The legislation calls for the Secretary of Administration, in consultation with the Secretary of Finance and the Secretary of
Technology, to accomplish five objectives:

           (1) develop a methodology for updating the 1999 inventory of commercial activities previously developed by
               the Competition Council
           (2) provide guidance in determining functions that should be performed by state employees because they are
               inherently governmental in nature and those that may be suitable for cost comparison analyses




                                                               3
           (3) determine which commercial activities are suitable for consideration for outsourcing at the agency level
               and which should be the subject of enterprise-wide approaches
           (4) provide guidance to agencies and institutions in making realistic and fair cost comparisons for contracting
               with the private sector
           (5) recommend other actions as may be necessary and appropriate to procure the services and develop the
               required reports

The legislation defines state employees as all persons employed by the state to provide services, including both salaried
and wage employees, and all persons engaged to perform work for or to provide services to the state. It states that the
Governor shall cause to be conducted an examination of at least three commercial activities being performed to ensure they
are being accomplished in the most cost efficient and effective manner.

Secretary Bowen has asked Mrs. Robertson to work with her staff on this project. The Secretary has emphasized that the
processes followed in carrying out this legislation maximize the use of technology. Existing databases at the Department
of Human Resource Management and the Department of Planning and Budget are being utilized. Mr. Von Moll suggested
that the Department of Accounts’ Commonwealth Integrated Payroll/Personnel System (CIPPS), the state’s central payroll
system, might provide the needed data on wage employees.

The Council expressed interest in the inventory and asked for a full briefing at the next meeting. The chairman suggested
that the inventory might be a continuing agenda item. Some examples of the Council’s interest involved what the cost is
for a particular service, how to get a handle on the unit cost, what services the state is spending the most on and are the
values of these services benefiting the constituents, and could the data be misinterpreted by the public. The chairman
reminded the members that the Council’s COMPETE program is a nationally recognized PC-based cost comparison
program that permits state agencies and institutions to develop fully allocated costs (not only on the full cost of a particular
service but the unit cost as well), to compare alternative business proposals, and to set benchmarks to measure contract
performance.

Review of need for Competition Council legislation

The chairman reminded the Council that since July 1, 2004, it has been staffed by the Department of Planning and Budget,
and that the Council staff has been absorbed into that agency. This action was authorized through an amendment to the
Appropriation Act, which takes precedence over the Code of Virginia. In Paragraph F of Section 2.2-2621 the Code of
Virginia, it states that “[T]he Council shall employ such staff as necessary to enable it to perform its duties as directed in
the appropriation act.”

The Council agreed to direct staff to work with the Department of Planning and Budget to incorporate any needed changes
to the Council’s legislation into proposed legislation the department may be submitting.

Review and approval of proposed calendar

The Council unanimously approved the proposed 2005-2007 meeting calendar as presented by staff, with one change, on
motion by Mrs. Wilson, seconded by Mrs. Digges. The October 12, 2005, date shown on the proposed meeting schedule
dated August 16, 2005, was changed to October 11, 2005. The approved calendar is attached and made a part of the
minutes. Members were reminded to place the upcoming Council meeting dates on their individual calendars.

Election of Chairman and Vice-Chairman

Section 2.2-2621, paragraph D, of the Code of Virginia calls for the Council to annually elect its chairman and vice-
chairman from among its members and that a majority of the members of the Council constitute a quorum.

The chairman indicated for the record that a quorum was present. Mr. Marquez, current vice-chairman, was unanimously
reelected vice-chairman. Senator Hanger was unanimously reelected chairman. Both terms are for the 2005-2006 fiscal
year.




                                                               4
Establishing committees to work on individual projects

The chairman asked Mrs. Robertson to send the list of projects from the last strategic planning session to each member,
asking each to indicate their interest in serving on a committee to delve into the topic in more detail and report back at a
future meeting of the Council.

All presentation materials are attached and made a part of the minutes.

There being no further business, the meeting was adjourned. The next meeting is set for 10 a.m., Tuesday, October 11,
2005. Those members not present will be polled.


                                                                   Emmett W. Hanger, Jr.
                                                                   Chairman




                                                               5
                                   Commonwealth Competition Council
                                               2005-2007 Meeting Schedule
                                                      Approved August 24, 2005

    Date                     Suggested Topics                                    Informational Notes

                   Senate Room B, General Assembly Building,
                   10 – 12 noon
August 24, 2005             Organizational meeting
                            Adoption of Calendar                            Commercial activities inventory due
                            Election of Officers                             October 1, 2005
                            Review any CCC legislative initiatives
                            Sign up to study the following initiatives
                   Senate Room B , General Assembly Building,
                   10-12 noon                                                Annual Report due December 1,
October 11, 2005            Review commercial activities inventory           2005
                             report                                          Draft report to CCC by October 28,
                            Public vs. private prisons                       2005

                                                                             CCC savings report to Director of
                            Debt collection                                  Department of Planning and
January 4, 2006             Licensing functions in state                     Budget by February 26, 2006.
                             government                                      DPB certifies savings by March 31,
                            Local government participation                   2006.



 April 26, 2006             Strategic Planning meeting (longer              Draft of Planned Activities for
                             than normal two hours)                           2006-2007


                            Organizational meeting
 July 12, 2006              Adoption of calendar
                            Election of officers
                            Review of any CCC legislative
                             initiatives
                            Sign up to study the initiatives

                                                                             Annual Report due December 1,
October 11, 2006                                                              2006
                                                                             Draft report to CCC by October 31,
                                                                              2006

                                                                             CCC savings report to Director of
                                                                              Department of Planning and
January 3, 2007                                                               Budget by February 26, 2007.
                                                                             DPB certifies savings by March 31,
                                                                              2007.


                            Strategic Planning meeting (longer
 April 25, 2007              than normal two hours)


                            Organizational meeting
                            Adoption of calendar                            Commercial activities inventory due
                            Election of officers                             October 1, 2007
 July 11, 2007              Review of any CCC legislative initiative



October 10, 2007            Review commercial activities inventory          Annual Report due December 1
                             report                                          Draft to CCC by October 31




                                                        6
                             Potential Project List Identified at the
               Commonwealth Competition Council 2004 Strategic Planning (SP) Session
No. Votes
received at
S.P. session


5                License Operations
                         Department of Motor Vehicles' operations
                         Game Hunting and Fishing
                         Boating Registration
                         Professional Licensing

CCC Notes        Look at functions that could be done by an outside source, security issues, local Commissioners of the
                 Revenue becoming involved in titling aspects and photo identification because of familiarity with
                 citizens, customer service, faster service, standardizing processes involved, commonalities among the
                 licensing processes and with some private sector expertise might be able to standardize the process, one
                 of which would be localizing some of it and in standardizing the process can eliminate some time and
                 perhaps some human resources.


4                Prison Operations
                         Cost of public vs. private
                         Rehabilitation Services

CCC Notes        Private prison cost, efficiencies, compared to what the state is doing.


3                Property and Casualty Insurance Stop Loss
                          Develop a cooperative
                          Joint contract with other states
                          Not regional

CCC Notes        Discuss opportunities to form a cooperative with other states.


3                Payroll Processing
                          Department of Accounts does for small agencies
                          Make "taxable"
                          Non-governmental function

CCC Notes        No action taken on.


3                Debt Collection
                         "Match" pursuit
                         Large amounts

CCC Notes        Explanation of the roles of those involved. Look to see how local Treasurers could be used in this
                 function of state government.




                                                             7
3           Transportation
                    Long-term transportation needs
                    Project allocation
                    Roads (briefing)
                             Alternatives
                    Mass Transit Options
                             Cabs
                             Rail
                             How to leverage
                             Big picture

CCC Notes   Long-range plan and six year allocation plan.


2           Recognitions - Clearinghouse for Council
                    People
                    Organizations
                    Documentation - benchmarks

CCC Notes   No action taken on.




2           State vs. Non-State Museums
                      Allocation Plan
                      Efficient Delivery

CCC Notes   Presentation at a later date.


2           Understand eGov Procurement
                    On contract vs. exception
                    New vs. used
                    Up-to-date technology
                    Qualifying Minority Business Enterprises and status/statistics

CCC Notes   Presentation at a later date.
            Division of Purchases and Supply of the Department of General Services will provide an executive
            overview of the Virginia Public Procurement and Surplus Property Manual and the eVA procurement
            system. (eVA - Web-based electronic procurement system that supports Virginia’s decentralized
            purchasing environment)


1           ABC Privatization

CCC Notes   Sufficient time did not exist for the Council to discuss.



1           Mental Health and Mental Retardation Hospitals
                    More efficient/effective
                             Privatization as option

CCC Notes   Sufficient time did not exist for the Council to discuss.



                                                         8
1                Abolish Dillon Rule

CCC Notes        Sufficient time did not exist for the Council to discuss.



Projects initially identified but receiving no votes:

0                Training delivery


0                Prescription Drug Purchasing
                          Power of the State


0                Child Care


0                Recruitment


0                Support Services
                         Shared service/service bureau


0                Campus Police


0                Efficient/effective organization of state government
                 (threshold number of employees - 50?)
                          Combination
                          Competition between each
                          Duplication of effort/services


0                Abolish Independent Cities


0                K - Higher Education
                         More efficient/effective
                                 Privatization as option


0                School Construction
                         Allocation


0                Internal "Audit" for efficiency, best management practices




                                                              9
              Commonwealth of Virginia
              Workforce Planning

      Department of Human Resource Management


                      Commonwealth Competition Council
                     General Assembly Building, Richmond, VA
                                 August 24, 2005




                  Location of State Employees




                             Source: DHRM Data Warehouse as June 1, 2005
August 24, 2005                                                                 2




                                                                           10
                  Total Full-Time Equivalent
                  State Employees
                   FTEs increased 5% in the last 13 years
                                125000



                                120000



                                115000



                                110000



                                105000



                                100000
                                           1          2         3         4         5          6            7       8

                   Year                   1991       1993     1995       1997      1999       2001        2003     2004
                   Number of Employees   106,926   113,183   106,872    108,325   113,710    117,349   110,471    112,455




                                                 Source: DHRM Data Warehouse as June 30
August 24, 2005                                                                                                             3




                  State Employees
                  Full-Time Equivalent Trend
                                 Secretarial Area                      Dec-01               Jun-05              Change
                          Education                                     40,706.88            42,045.27             3.3%

                          Public Safety                                 19,588.00            18,319.50            -6.5%

                          Health & Human Resources                      15,732.69            15,550.79            -1.2%

                          Transportation                                12,488.50            11,086.15           -11.2%

                          Commerce and Trade                             2,658.37             2,516.90            -5.3%

                          Natural Resources                              1,864.50             1,816.81            -2.6%

                          Finance                                        1,088.18             1,103.20             1.4%

                          Administration**                                 853.78             1,029.95            20.6%

                          Technology                                       353.00             1,029.10           191.5%

                          Executive Offices*                               357.00              339.00             -5.0%

                          Agriculture & Forestry                                                     3.00

                          TOTAL                                        95,690.90            94,839.67             -0.9%



August 24, 2005                                        Source: DHRM Data Warehouse                                          4




                                                                                                     11
                  State Employees
                  Full-Time Equivalent Trend
                                 STATE EMPLOYEES                      Dec-01                Jun-05           Change
                           SALARIED EMPLOYEES
                                Executive                              95,690.90            94,839.67          -0.9%

                                Legislative                                 537.50              503.00         -6.4%

                                Judicial                                 2,841.40             3,039.90          7.0%

                                Independent                              1,253.21             1,358.30          8.4%

                                TOTAL SALARIED                      100,323.01            99,740.87            -0.6%
                           TEMPORARY EMPLOYEES
                                Executive                              14,813.50            14,431.59          -2.6%

                                Legislative                                  42.61               34.56        -18.9%

                                Judicial                                    126.30              116.79         -7.5%

                                Independent                                  55.71               51.68         -7.2%

                                TOTAL TEMPORARY                      15,038.12            14,634.62            -2.7%
                           TOTAL STATE EMPLOYEES                    115,361.13          114,375.49             -0.9%

August 24, 2005                                           Source: DHRM Data Warehouse                                  5




                  Classified Employees
                  Occupational Categories
                     Skill requirements increasing
                            33.3% more Professional jobs
                            42.9% fewer Office Support Staff
                            53.6% fewer Maintenance and Service Workers
                                                                    May           June
                            Occupational Category                                             Change
                                                                    1991          2005
                           Professionals                              21.3%        28.4%          +7.1%

                           Protective Service                         11.2%        14.2%          +3.0%
                           Paraprofessionals                          14.0%        16.8%          +2.8%

                           Skilled Craft Workers                       7.9%        10.0%          +2.1%
                           Officials and Administrators                5.6%          6.3%         +0.7%
                           Technicians                                 9.6%          8.2%          -1.4%
                           Maintenance & Service Workers              11.0%          5.1%          -5.9%

                           Office Support Staff                       19.6%        10.9%           -8.4%


August 24, 2005            Source: Virginia 2004-2005 State Workforce Planning Report, DHRM Data Warehouse             6




                                                                                                   12
                   Classified Employees
                   Average Years of Age & Service
            Average age increased 10.4% in last 13 years
            Average years of service increased 10.8% in last 13 years
                                                                          Age        Service

                  50                                                                                                        45.2            45.5
                                                                                            44.6             44.4
                                          41.9            42.4                  43
                           41.2

                  40



                  30



                  20

                                          10.5            10.7              11.0            11.4             11.2           11.7            11.3
                           10.2
                  10



                  0
                           1991           1993           1995               1997            1999            2001            2003            2004


August 24, 2005                                                             Source: PMIS                                                                    7




                   Classified Employees
                   Turnover Rates
               7.6% of classified employees eligible for unreduced retirement today
                                                     State Retirement Rate                  State Turnover Rate

                  16.00%
                                                            15.06%




                  12.00%                                                                                  10.79%                   11.90%
                                                                            10.84%      11.86%                                                     10.60%
                                            9.16%                                                              11.34%
                           10.13%
                  8.00%




                  4.00%                                          4.21%                                              2.95%
                                                                                                                                   3.17%
                                  1.42%                                                 1.59%
                                                                                                                                                   2.10%
                                                 0.90%                      1.16%
                                                                                                     1.86%
                  0.00%
                              1991         1993          1995            1997        1999          2001             2003      2004          2005




August 24, 2005                                                             Source: PMIS                                                                    8




                                                                                                                            13
              Classified Employees
              Turnover by Years of Service
                       Highest turnover is in the first 5 years of service
                                      Length of Service                        % Separation
                                    Less than 1 year                                     3%
                                    1 to 4.9 years                                      43%
                                    5 to 9.9 years                                      23%
                                   10 to 14.9 years                                      8%
                                   15 to 19.9 years                                      6%
                                   20 to 24.9 years                                      4%
                                   25 to 29.9 years                                      5%
                                   30 years and over                                     8%


August 24, 2005                               Source: PMIS data October 2000 – June 2004                               9




                  Top 10 Agencies
                  with Highest Turnover
                   29 agencies exceed the 11.1% average state turnover rate
                  Agency           Top 10 Agencies with 50+ classified employees                Position   Turnover
                   Code                     with Highest Turnover Rate                           Level       Rate

                      912   Department of Veterans Services                                      257.5      35.6%

                      777   Department of Juvenile Justice                                       2178.0     17.8%

                      247   George Mason University                                              1160.0     17.0%

                      720   Dept Mental Health, Mental Retardation & Substance Abuse Services    8945.0     16.7%

                      242   Christopher Newport University                                       271.0      15.7%

                      123   Department of Military Affairs                                       241.5      15.4%

                      122   Department of Planning and Budget                                     52.0      14.7%

                      146   Science Museum of Virginia                                            54.0      14.1%

                      215   Mary Washington College                                              272.5      13.6%

                      201   Department of Education                                              528.0      13.0%




August 24, 2005                                     Source: PMIS data July 2004 – May 2005                            10




                                                                                                14
                  Classified Employees
                  Roles with Highest Turnover Rate
                     45 of 141 Roles exceed the 11.1% average state turnover rate
                                                     Top 10 Roles with Highest Turnover Rate
                                                          with 50+ classified employees
                                                                                            Pay          Avg.         #       Turn-
                                Role                                 Function
                                                                                            Band        Salary     in Role    over
                  Education Support Specialist I   Historic site interpreters                2      $     19,387     102.5    31.9%
                  Emergency Coordinator I          Police, fire and ambulance dispatchers    3      $     26,070       94.5   30.0%
                  Lab & Research Tech              Lab technicians                           2      $     23,499       97.0   28.1%
                  PR & Mktg Spec II                Welcome Center workers                    3      $     32,261       79.0   27.6%
                  Licensed Practical Nurse         Practical nurse                           3      $     31,468     597.5    26.5%
                  Therapy Assistant/Therapist I    Recreation, OT and PT assistants          3      $     32,196     127.0    22.3%
                  Direct Service Associate II      Pyschiatric/behavioral technicans         2      $     21,642    3655.5    21.2%
                  Law Enforcement Officer I        Campus police officers                    3      $     34,127     206.5    21.1%
                  Transportation Operator I        Road maintenance workers                  1      $     21,060       86.0   20.3%
                  Counselor I                      Nonclinical social workers                3      $     33,470       86.5   20.2%




August 24, 2005                                    Source: PMIS data July 2004 – May 2005                                             11




                  Classified Employees
                  Salary

                   Average salary                                                 $36,848
                   Median Salary                                                  $32,892
                   Lowest Salary                                                  $13,398
                   Highest Salary                                              $194,113



August 24, 2005                                    Source: PMIS data as of June 30, 2005                                              12




                                                                                                   15
                   Classified Employees
                   by Pay Band
                                                                RANGE                               EMPLOYEES
                                 BANDS
                                                        Minimum         Maximum             Number               Percent
                                         1          $        13,798    $       28,318                2,902               4.0%

                                         2          $        18,026    $       36,995               11,444              15.8%

                                         3          $        21,543    $       44,213               24,930              34.5%

                                         4          $        28,143    $       57,759               17,711              24.5%

                                         5          $        36,766    $       75,456               11,302              15.6%

                                         6          $        48,032    $       98,576                3,368               4.7%

                                         7          $        62,750    $      128,783                  411               0.6%

                                         8          $        81,976    $      168,242                  213               0.3%

                                         9          $       107,094        MARKET                        17              0.0%



August 24, 2005                                            Source : PMIS data as of June 30, 2005                                                       13




                   Classified Employees
                   Pay Actions Taken
                                  Total pay actions taken                                                     29,700
                                  Total pay adjustments                                                       26,400
                                  Average pay adjustment                                                       5.2%
                                                #       # Pay      Ave. %                                                    #       # Pay      Ave. %
              Pay Action                                                                        Pay Action                Actions Adjustments Adjustment
                                             Actions Adjustments Adjustment
  Promotions                                     1847        1826      14.7%        IBA – New KSAs/Competencies               1517        1517       7.6%
  Demotion - Voluntary                            256         119     -12.2%        IBA – Retention                           2040        2040       4.7%
  Demotion – Disciplinary                          25          25      -9.2%        IBA – Internal Alignment Increase         5129        5129       6.4%
  Role Change – Upward                            927         734       9.8%        IBA – State Police                        3084        3084       3.9%
  Role Change – Lateral                           571         139       7.1%        Bonus – Change in Duties                   180         180       3.4%
  Role Change – Downward                          114          17      -9.5%        Bonus – Internal Alignment                  19          19       5.7%
  Voluntary Transfer – Competitive               2800        1940       9.3%        Bonus – New KSAs/Comp.                     132         132       3.8%
  Voluntary Transfer - Non-Competitive            809         141       2.4%        Bonus – Retention                         1128        1128       1.7%
  Temporary Pay – All Reasons                    1096        1096       7.9%        Bonus – Recognition, Monetary             2660        2660       0.9%
  End Temporary Pay                               692         692      -8.6%        Bonus – Sign-On                             58          58       2.8%
  Competitive Salary Offer                        275         275      13.7%        Bonus – Non-Monetary                       334         334       0.1%
  Reassignment within Band                        207           0       0.0%        Bonus – Recognition Leave                 1325           0       0.0%
  Disciplinary/Performance Decrease                 2           2      -7.5%        Bonus – Project                            216         216       1.6%
  Apply/Adjust Special Rate                       697         697       1.2%        Bonus – Referral                             9           9       0.8%
  IBA – Change in Duties Increase                1564        1564       7.5%




August 24, 2005                                         Source: PMIS January 1, 2004 to December 31, 2004                                                    14




                                                                                                                    16
                  Average Weekly Wage Trend
                  by Employer
                   Indexed to 1997 weekly wage
                   State wages below all sectors
                                                   Trend of Average Weekly Wage by
                                                             Employer Type

                                               Federal        State           Local      Private

                   140



                   130
                                                                                                        122.4
                                                                                                                122.5
                                                                                         119.7

                   120                                                115.5




                                                      108.5
                   110
                                      104.4


                         100.0


                   100



                    90
                         1997         1998           1999             2000               2001           2002    2003




August 24, 2005                                     Source: Bureau of Labor Statistics                                    15




                  State Employee Salary History
                   State employee salary increases lag the market
                         7
                         6
                         5
       Percent                                                                                          State
       Increase          4                                                                              Market
                         3                                                                              Linear (State)
                                                                                                        Linear (Market)
                         2
                         1

                         0
                                 96 97 98 99 00 01 02 03 04 05

                                              Fiscal Year
August 24, 2005                                   Source: Appropriation Acts                                              16




                                                                                                   17
                  State Employee
                  Retirement Eligibility
                     Classified employees eligibility for
                      unreduced retirement
                         8% today                                      5,438 employees
                         21% in 5 years                               14,985 employees
                         36% in 10 years                              25,659 employees




August 24, 2005                         Source: PMIS data as of June 31, 2004                   17




                  Workforce Planning Issues
                     Aging workforce
                     Increasing workloads
                     Increasingly complex programs
                     Doing more with less
                     Increasing salary gap
                     Hiring replacements
                     Training and development
                     Developing needed skills
                     Increasing security issues
August 24, 2005               Source: Virginia 2004-2005 State Workforce Planning Report        18




                                                                                           18
                  Jobs at Greatest Risk
                 High retirement rates
                 High skill or experience required
                 Few employees with replacement skills
                 Compensation levels are not competitive




August 24, 2005                                                                                                19




                  Top 10
                  Agency Staffing Issues
                     Agency plans identified 52 staffing issues
                                 Agency Staffing Issue                                              % Agency

                   Decreased or inadequate number of employees                                        43%
                   Increased demand for agency services                                               42%
                   New policies or programs                                                           32%
                   Salaries too low compared to job requirements                                      32%
                   New positions need to be filled                                                    25%
                   Increased knowledge or certification requirements                                  25%
                   Additional program funding needed                                                  23%
                   Staff stretched too far                                                            22%
                   Information technology training needed                                             20%
                   Need to keep pace with evolving technology                                         18%
August 24, 2005                   Source: Virginia 2004-2005 State Workforce Planning Report                   20




                                                                                               19
                  Top 10
                  Agency Staffing Strategies
                   Agency plans identified 116 staffing strategies
                              Agency Staffing Strategy                                           Agency Use

                  Recognition Program                                                                58%
                  Cross-training                                                                     42%
                  Compensation tools                                                                 38%
                  Information technology solutions                                                   35%
                  Mentoring                                                                          35%
                  Inventory of competencies or KSAs needed                                           32%
                  Identification of key positions                                                    32%
                  Educational assistance                                                             32%
                  Web-based recruitment                                                              30%
                  Paid or unpaid internships                                                         30%
August 24, 2005                    Source: Virginia 2004-2005 State Workforce Planning Report                 21




                  Challenges
                     Funding
                     Available skill sets in the labor market
                     Image of public service
                     Perception of limited career and salary
                      growth for state employees



August 24, 2005                                                                                               22




                                                                                                20
                  Resources
                 www.dhrm.virginia.gov
                 Virginia 2004-2005 State Workforce Plan




August 24, 2005                                             23




                                            21
                  Property and Casualty Insurance Proposal
                        Leveraging with Other States

Objective

           To generate savings by joining with other states to use their combined
            leverage to reduce the costs of insuring state-owned property in a way that
            is mutually beneficial to each state financially.


Current Property and Casualty Insurance Program

           The total amount of reported insured property in FY 2005 is $15.6 billion.

           Virginia’s property insurance is structured to provide $500 million in
            coverage.

           For any claim the state must pay a $1.0 million deductible before private
            insurance pays. (The state must pay a $4.0 million deductible for flood
            damage and $2.5 million deductible for hurricane damage.)

           Property insurance coverage for the state is designed to protect from a
            serious loss and not a catastrophic loss (only $500 million in coverage per
            claim).

           The state insurance plan has five tiers of coverage (i.e. $1 million to $25
            million, $25 million to $50 million, etc. – see attached chart). [Not attached
            to this document; but for copy of the chart, please call (804) 786-3812.]

           The most expensive part of property insurance for Virginia is the cost of
            coverage for the first $25 million of a claim (cost is $2.4 million).

           The total property insurance premium is $ 5.3 million.




                                            22
Proposal

          Virginia would join with three to five other non-contiguous states to issue a
           Request for Proposal (RFP) to get bids from insurance companies to provide
           property insurance coverage for those states. The bid would be for all or a
           portion of the coverage (i.e. for the first $1 million to $25 million of
           coverage, which is the most expensive part of the policy).

          Leveraging the insurance coverage of several states may result in lower
           costs for property insurance for the states. Such savings would be divided
           between the states proportionally.

          The details of the RFP would be determined with input and negotiation of
           all the states such that it is mutually beneficial to each one.

          If further reform is desired, participating states could also consider other
           alternatives such as a standard insurance policy or joint self-insurance pool.


Steps to Proceed

          Contacting other states through their budget directors and the National
           Association of State Budget Officers to determine the interest of other states
           and the best potential matches to proceed.

          Each state that is interested would need to ensure that its procurement rules
           or regulations and any other applicable law permit joining with other states
           to purchase insurance.

          The states wishing to proceed would need to develop a joint RFP that
           specifies the insurance coverage and any other relevant details.




                                           23
                                          CHAPTER 994
An Act to amend the Code of Virginia by adding in Title 2.2 a chapter numbered 55.2, consisting of
sections numbered 2.2-5512 and 2.2-5513, relating to the creation of the Competitive Government
Act.
                                             [H 1043]
                                     Approved April 21, 2004

Be it enacted by the General Assembly of Virginia:

1. That the Code of Virginia is amended by adding in Title 2.2 a chapter numbered 55.2,
consisting of sections numbered 2.2-5512 and 2.2-5513, as follows:

                                      CHAPTER 55.2.
                               COMPETITIVE GOVERNMENT ACT.

§ 2.2-5512. Definitions.

As used in this chapter:

"Commercial activity" means an activity performed by or for state government that is not an
inherently governmental activity and that may feasibly be obtained from a commercial source
at lower cost than the activity being performed by state employees.

"Commercial source" means any business or other private concern that is eligible for contract
awarded in accordance with the Public-Private Education and Infrastructure Act of 2002 (§
56-575.1 et seq.) or the Virginia Public Procurement Act (§ 2.2-4300 et seq.).

"State employee" means all persons employed by the Commonwealth to provide services,
including both salaried and wage employees, and all persons engaged to perform work for or
to provide services to the Commonwealth.

§ 2.2-5513. Responsibilities of Governor to ensure efficiency in government.

A. The Governor shall cause to be conducted an examination of the commercial activities
that are being performed by state employees at state agencies and institutions to ensure
such activities are being accomplished in the most cost-efficient and effective manner.


                                                 24
B. The examination required by subsection A shall be completed at least once in every two-
year period and may be conducted entirely by a commercial source through a solicitation
process as provided in the Virginia Public Procurement Act (§ 2.2-4300 et seq.) or the Public-
Private Education Facilities and Infrastructure Act of 2002 (§ 56-575.1 et seq.).

C. The examination required by subsection A shall consider at least three commercial
activities as the Governor or the commercial source may identify.

D. Upon determination that outsourcing a commercial activity may result in reduced costs or
otherwise provide a measurable benefit to the Commonwealth and to assure such activities
are being accomplished in the most cost efficient and effective manner, the Governor shall
cause that commercial activity to be competed in accordance with the Virginia Public
Procurement Act or by using the processes described in the Public-Private Education
Facilities and Infrastructure Act of 2002 (§ 56-575.1 et seq.).

2. That to implement the provisions of this act, no later than July 1, 2004, the Governor shall
direct the Secretaries of Administration, Finance, and Technology to (i) develop a
methodology for updating the inventory of commercial activities previously developed by the
Commonwealth Competition Council; (ii) provide guidance in determining functions that
should be performed by state employees because they are inherently governmental in
nature, and those that may be suitable for cost comparison analyses; (iii) determine which
commercial activities are suitable for consideration for outsourcing at the agency level and
which should be the subject of enterprise-wide approaches; (iv) provide guidance to
agencies and institutions in making realistic and fair cost comparisons for contracting with the
private sector; and (v) recommend such other actions as may be necessary and appropriate
to procure the services, and develop the reports provided for in the third enactment of this
act.

3. That the initial examination required by this act shall result in a report being completed by
the Secretary of Administration, in consultation with the Secretary of Finance and the
Secretary of Technology, and presented to the Governor, the chairs of the House Committee
on Appropriations and the Senate Committee on Finance, and such other entities as the


                                                25
Governor may designate no later than January 1, 2006. Thereafter, once in each biennium,
the examination of commercial activities not already examined by a commercial source in a
preceding report, shall be conducted and reported to the Governor, the chairs of the House
Committee on Appropriations and the Senate Committee on Finance, and such other entities
as the Governor may designate no later than January 1 of the second year of each biennium.




                                             26
                                          CHAPTER 566
An Act to amend and reenact the third enactment of Chapter 994 of the Acts of Assembly of 2004,
relating to the Competitive Government Act; reporting dates.
                                              [H 2844]
                                     Approved March 22, 2005


Be it enacted by the General Assembly of Virginia:

1. That the third enactment of Chapter 994 of the Acts of Assembly of 2004 is amended and
reenacted as follows:

3. That the initial examination required by this act shall result in a report being completed by
the Secretary of Administration, in consultation with the Secretary of Finance and the
Secretary of Technology, and presented to the Governor, the chairs of the House Committee
on Appropriations and the Senate Committee on Finance, and such other entities as the
Governor may designate no later than January 1, 2006 October 1, 2005. Thereafter, once in
each biennium, the examination of commercial activities not already examined by a
commercial source in a preceding report, shall be conducted and reported to the Governor,
the chairs of the House Committee on Appropriations and the Senate Committee on Finance,
and such other entities as the Governor may designate no later than January 1 October 1 of
the second year of each biennium.




                                                 27

				
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