DEPARTMENT OF JUSTICE OFFICE OF THE ATTORNEY GENERAL. February 9, 2018
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1 ELLEN F. ROSENBLUM Attorney General FREDERICK M. BOSS Deputy Attorney General DEPARTMENT OF JUSTICE OFFICE OF THE ATTORNEY GENERAL The Honorable Senator Peter Courtney, Co-Chair The Honorable Representative Nancy Nathanson, Co-Chair Joint Interim Committee on Ways and Means 900 Court St NE H-178 State Capitol Salem, OR Dear Co-Chairpersons: Nature of the Request This report responds to a budget note in the budget report for House Bill 5015 (2017), the Oregon Department of Justice s (DOJ s) appropriation bill. The budget note reads as follows: Budget Note DOJ is to submit a report to the Legislature or Emergency Board if compensation adjustments for DOJ s attorneys exceeds the standard compensation adjustment for management service employees in the Executive Branch of state government. The report is to include the cost differential and proposed funding mechanism of any such increase. This report summarizes the compensation adjustments for DOJ s attorneys and for state government s Executive Branch management services employees. It compares these two adjustments, assesses the cost differential, and proposes mechanisms to fund the cost differential. Agency Action The American Federation of State, County and Municipal Employees (AFSCME), on behalf of the Oregon Association of Justice Attorneys (OAJA), reached a collective bargaining agreement with the State of Oregon for the period from ratification to June 30, OAJA members ratified the agreement near the end of January Two provisions in the OAJA agreement exceed the compensation adjustment for state Executive Branch management service employees. To compare adjustments in the OAJA agreement to those for management service employees, we first present the adjustments for management service employees and then present the adjustments in the AFSCME and OAJA agreements Court Street NE, Salem OR Telephone: (503) Fax: (503) TTY: (800)
2 Page 2 Standard Compensation Adjustment for Management Service Employees Governor s Order According to an from Madilyn Zike, DAS Chief Human Resources Officer, to all agency directors on October 3, 2017, employees in management, executive, and classified unrepresented service will receive the following compensation plan adjustments during the biennium: Effective June 15, 2018, a 1.00 percent cost of living increase; Effective February 1, 2019, a PERS swap, in which employees salaries will increase by 6.95 percent and employees will be required to contribute 6.00 percent of their salaries to PERS as the employee contribution for their retirement packages; Minimum monthly wage of $2,600 per month for full-time employees following the February 1, 2019 PERS swap adjustment; and Annual step increases on employee s salary eligibility date if otherwise eligible. DOJ Attorneys Compensation Adjustment AFSCME and OAJA Bargaining Agreements AFSCME The state and AFSCME central table union negotiators reached an agreement of the following compensation adjustments for AFSCME-represented employees in state government: Effective June 15, 2018, a 1.00 percent cost of living increase; and Effective February 1, 2019, a PERS swap, in which employees salaries will increase by 6.95 percent and employees will be required to contribute 6.00 percent of their salaries to PERS in lieu of the state contributing an amount equal to 6.00 percent of the employees salaries to PERS as the employees portion of the PERS contribution for the employees retirement packages. OAJA In addition to the AFSCME compensation adjustments identified above, the OAJA agreement contains the following compensation adjustments: Effective January 1, 2018, increase all pay rates for AAGs by 1.60 percent; and Effective January 1, 2018 and paid February 1, 2018, DOJ will pay Senior Assistant Attorneys General (Senior AAGs) a one-time lump-sum payment of $2, less applicable taxes and withholdings. Cost Differentials 1.6% pay increase for AAGs DOJ has 106 budgeted AAG positions affected by the 1.6% increase in pay effective January 1, In aggregate, the salary increase for the 18 months from January 1, 2018 to June 30, 2019 would be $240,764. Adding Social Security, Medicare, PERS, and Mass Transit Tax brings the total cost of the 1.6% pay increase to $306,589 in the biennium.
3 Page 3 Senior AAGs receive $2, lump-sum payment DOJ has 166 budgeted Senior AAG positions affected by the $2, one-time lump-sum payment effective January 1, In aggregate, the one-time lump-sum payment would be $352,035. Adding Social Security, Medicare, PERS, and Mass Transit Tax brings the total cost of the lump-sum payment to $432,815 in the biennium. The collective bargaining agreement provides that DOJ will pay the lump-sum payment on a prorated basis to employees moving into a Senior AAG classification either from an AAG classification or as a new hire during the 18 months from January 1, 2018 to June 30, In calendar year 2017, four Senior AAGs retired from DOJ. At this pace, DOJ would have about six retirements and new Senior AAGs during the effective period of this provision. Assuming one retirement and replacement every three months, DOJ would pay out about $6,400 in additional pro-rated lump-sum payments. This amount has not been added to the total summarized below due to the difficulty of assigning it to specific divisions. Summary of Cost Differentials As noted above, the 1.6% pay increase for AAGs adds $306,589. The lump-sum payment for Senior AAGs adds $432,815. In sum, these two components total $739,404 in the biennium. By division within DOJ, the projected costs of the OAJA agreement, over and above the management compensation adjustment, are as follows: DOJ Division Cost Administration $24,841 Appellate 95,373 Civil Enforcement 245,176 Criminal Justice 28,522 Crime Victims Services 2,569 General Counsel 230,928 Trial 111,994 Total $739,404 Proposed Funding Mechanisms for Cost Differential Due to the lack of substantial discretionary spending, the primary mechanism to fund the cost differential will have to be vacancy savings. The number of positions DOJ needs to hold vacant to pay for the OAJA agreement cost differential depends on the number of months the positions can be held vacant and the Personal Services budgets (salary and benefits) of the positions held vacant. The following table shows the potential budget savings of holding attorney positions vacant by classification and step and by number of months of vacancy.
4 Page 4 Potential Vacancy Savings* per Position by Classification and Step Class. & Step Monthly 16 Months 12 Months 6 Months AAG Step 2 $10,210 $163,360 $122,520 $61,260 AAG Step 4 11, , ,648 66,324 AAG Step 6 11, , ,592 71,796 AAG Step 8 12, , ,904 76,452 Sr. AAG Step 2 13, , ,184 80,592 Sr. AAG Step 4 14, , ,392 87,696 Sr. AAG Step 6 15, , ,824 95,412 Sr. AAG Step 8 17, , , ,950 * Includes salary and other payroll expenses (e.g., flex, PERS, Social Security, and Medicare) The potential vacancy savings figures identified in the above table are for a single position. In order to offset the full $739,404 projected cost of the OAJA collective bargaining agreement (CBA) that exceeds management compensation adjustments, DOJ will have to hold vacant more than one position. The following table shows the number of positions (rounded to the nearest 10 th of a full-time position) that DOJ will have to hold vacant for a selected number of months in order to offset the projected cost of the CBA. Vacant Positions, by Duration, Needed to Offset OAJA CBA Costs Class. & Step 16 Months 12 Months 6 Months AAG Step AAG Step AAG Step AAG Step Sr. AAG Step Sr. AAG Step Sr. AAG Step Sr. AAG Step Assumptions Used in This Analysis This analysis uses the following percentages of salary for the calculation of benefits on the additional payments: Social Security: 6.2% on the first $130,500 of wages. Medicare: 1.45% on the first $200,000 of wages. PERS: 19.09% (the budgeted amount). Mass Transit: 0.6%. Action Requested DOJ requests the Joint Interim Committee on Ways and Means acknowledge receipt of this report.
5 Page 5 Legislation Affected None. Sincerely, Frederick M. Boss Deputy Attorney General cc: Ellen Rosenblum Art Ayre Robert Schiewe
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