Senator Mike Parry
Representative Steve Drazkowski
August 29, 2012
During the contract years 2006 — 2009, before the state's finances plummeted, Governor
Pawlenty's administration agreed to annual, across-the-board wage increases of 2% in 2006, an
additional 2% for 2007, 3.5% for 2008, and an additional 3.5% in 2009. The legislature approved
all four increases by overwhelming bi-partisan margins.Furthermore, as with previous contracts, this one would not cost Minnesota taxpayers one
additional dollar. In July 2011, the legislature set state agencies' budgets for the two years of thiscontract, and those budgets would not change, if this agreement were approved. The agencies
would be required to pay for the six months of salary increases from within their existing budgets.In this new contract, we negotiated the first increase in state employees' payments for
their health care since 2008. They would pay almost $8 million more this year and every year
thereafter. If, however, your Subcommittee rejects the contracts, those savings to the state will be
Your criticism of us for not revising the state's system of step increases again begs the
question: where were you during the previous eight years? I am told by MMB that steps wereenacted into state law by the legislature in the 1960s. When collective bargaining began in 1973,that system was incorporated into state contracts. In the following 39 years of collectivebargaining, steps have been withheld only once, in FY 2009. However, they were restored by the
previous administration with the concurrence of the legislature for FY 2010, the year leading into
this contract. Again, where were the legislative proposals for "reform" (your word) during that
I am told that the rationale for steps, which have now been in existence for nearly 50years under Republican, Independent, and Democratic governors and legislatures, was that everyyear new employees work, they gain knowledge and experience which make them more valuableto the organization. Step increases are meant to reflect this increase in employee value.However, when employees reach the top of the salary range for their jobs, their step increases
stop. Thus, contrary to some accusations, the step system does not reward long-term seniority. It
actually applies to new employees in their first few years of employment.Regarding "pay for performance," my Chief of Staff, Ms. Tina Smith, is responsible forre-establishing such a system within state government, something that was largely ignored by theprevious administration (again without any evidence of legislative criticism).
We have begun with a performance award system. The awards are:
Tied to the performance of employees — not a broad payout to most or allemployees.
•Linked to our efforts to improve management for outcomes and results, andencouraging managers to provide better, more immediate feedback to employees.•
Paid for out of agencies' existing budgets.
•For all employees except AFSCME, whose previously negotiated contractexpressly precludes performance awards for their members.