Analysis Item 2: Department of Human Services Interim Reporting Budget Note Position Management

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1 Analysis Item 2: Department of Human Services Interim Reporting Budget Note Position Management Analyst: Laurie Byerly Request: Acknowledge receipt of a report on agency efforts to improve position management practices. Recommendation: Acknowledge receipt of the report. Analysis: The budget report for SB 5526, the primary budget bill for the Department of Human Services (DHS), included a budget note directing DHS to report, at each interim meeting, on its work to improve position management practices. This effort includes reducing the number of both double filled and vacant positions; it will likely take several months to make substantial progress. The agency s report includes double fill and vacant position counts by program for June, July, and August Since June, counts for both data sets have increased. For double fills, this is primarily driven by pending activity in the Position Inventory Control System (PICS); the system is being updated and audited to capture position changes approved in the budget. After the update is completed and reflected in the personnel system, DHS will be able to alleviate some double fills by moving employees to positions that are being modified or established. In addition, some vacant positions will be abolished which will affect that data set. The number of vacant positions the agency is carrying has also been inflated by recent hiring freezes but is expected to decrease as the state freeze was recently lifted. However, the budget includes a hiring slowdown budget adjustment that will also affect positions vacancy status as DHS moves to fill open positions. Along with addressing double fills and vacant positions, DHS will also work to clean up position classifications to make sure they marry up with work performed. The associated changes will likely require both administrative and legislative action. For the November report, DHS is expecting the PICS update to be completed along with at least some employee movement. This should provide a more accurate baseline for evaluating future progress and continuing to refine next steps. The Legislative Fiscal Office recommends acknowledging receipt of the report. Legislative Fiscal Office Interim Joint Committee on Ways and Means September 2017

2 2 Department of Human Services Brickman Request: Acknowledge receipt of a report on the progress of position management. Recommendation: Acknowledge receipt of the report. Discussion: During the 2017 Legislative Session, the budget report for Senate Bill 5526 included the following Budget Note directed to the Department of Human Services (DHS): DHS is directed to accelerate the agency s current effort to improve position management practices; these have typically relied heavily on double filling positions and using funding from holding positions vacant to cover the double fill costs. While perhaps expedient from a program perspective, this approach makes it difficult to externally assess or validate how many positions should be approved in the budget, to calculate any gap between a position s funding versus actual cost and to determine if a vacant position is no longer needed. It is also not consistent with truth in budgeting and makes it challenging to set baselines for cost containment strategies, budget growth metrics or program capacity analyses. At a minimum, at each interim meeting, the Department will report on progress, by program, in reducing the number of double filled and vacant positions, along with providing an update on its plan for resolving double fills and cleaning up vacant positions over the next two years. It is anticipated the agency will need to work through both the administrative position change (permanent finance plan) and legislative position change (rebalance or policy package action) processes to complete the project. As of June 1, 2017, DHS had 494 double filled positions, 814 vacant positions and 7,767 employees. This is the agency s first interim report on this issue since Sine Die on July 7, In March 2017, the department began a project to reduce double-filled positions. Double filling positions within DHS has been a long standing practice and should be reviewed, analyzed and rectified in order to properly reflect the types of positions needed by the agency to complete its work. The department provided information on the number of double-fills in existence as of August 1, 2017, which increased from June and July The department reports a number of the doublefills are related to actions pending the update of the Position Inventory Control System (PICS) for the Legislatively Adopted Budget. After the PICS update, the Department anticipates some of the double-fills will be eliminated. The department also reported on vacancies. The department reports the vacancies will start to decline since the hiring freeze from has been lifted and they are currently recruiting for some positions. DHS will continue to work on cleaning up double filled positions through administrative and legislative action. Once PICS is updated with the budgeted position data, the department anticipates more accurate information to present as it moves forward in addressing position management issues. Department of Administrative Services 2-i September 20, 2017

3 Oregon August 21, 2017 Kate Brown, Governor Department of Human Services Office of the Director 500 Summer St. NE, E-15 Salem, OR Voice: Fax: The Honorable Senator Richard Devlin, Co-Chair The Honorable Representative Nancy Nathanson, Co-Chair Interim Joint Ways and Means Committee 900 Court Street NE H-178 State Capitol Salem, OR Re: Budget Note Report regarding DHS position management Dear Co-Chairs: Nature of the Request The Department of Human Services requests acknowledgement of receipt of this report on the progress of Position Management Activities related to a Budget Note in SB 5526 (2017). Specifically, this is in response to concerns about the agency s use of double fills of positions and the high number of vacant positions within the agency. Agency Action In the 2017 Legislative Session, the Department of Human Services had the following budget note related to position management in SB 5526(2017): Position Management - DHS is directed to accelerate the agency s current effort to improve position management practices; these have typically relied heavily on double filling positions and using funding from holding positions vacant to cover the double-fill costs. While perhaps expedient from a program perspective, this approach makes it difficult to externally assess or validate how many positions should be approved in the budget, to calculate any gap between a position s funding versus actual cost, and to determine if a vacant position is no longer needed. It is also not consistent with truth in budgeting and makes it challenging to set baselines for cost containment strategies, budget growth metrics, or program capacity analyses. Assisting People to Become Independent, Healthy and Safe

4 Page 2 At a minimum, at each interim meeting, the Department will report on progress, by program, in reducing the number of double filled and vacant positions, along with providing an update on its plan for resolving double fills and cleaning up vacant positions over the next two years. It is anticipated the agency will need to work through both the administrative position change (permanent finance plan) and legislative position change (rebalance or policy package action) processes to complete the project. As of June 1, 2017, the agency had 494 double filled positions, 814 vacant positions and 7,767 total employees. Double Fills: In March 2017, the Department of Human Services launched an effort to reduce, the number of double-filled positions within the agency. The table below reflects the status of double fills as of August 1, Complicating progress in resolving double fills is the fact that positions granted to the agency in the 2017 legislative session are not yet available for use. To the extent possible, a column in the table is reflective of the anticipated double-fill count after the new positions are established in the position management system (PICS). Additionally, a number of the vacant positions will be abolished in the budget, in part to establish some of the new positions. These abolishment actions have also not yet occurred in PICS. Since March 2017, the agency has submitted a number of financing packages to reclassify and/or abolish/establish position in order to have positions at the appropriate classification for the work to be performed. This has alleviated a small number of double fills. Ongoing efforts to make these sorts of adjustments, utilizing vacant positions, will be occurring until the agency is able to eliminate all of the long-term double fills on record. As a long-term strategy moving forward, the agency will not allow the use of double fills except in short term situations that may be necessary. These necessary double fills will be for issues such as; an impending retirement where training from the current incumbent is necessary, backfilling behind an employee out on leave, or awaiting establishment of positions in the PICS system. A process has been put in place to require documentation of the need for any new double fill, as well as the plan for near-term resolution, authorized by either the program area director, or the agency Director or Deputy Director. Utilizing this process will allow the agency to better track double fills and to monitor their timely resolution.

5 Page 3 Change 6/17 to 8/17 New or Changed Positions tied to DF Resolution Remaining DF after New Positions Program Area Jun-17 Jul-17 Aug-17 APD CW CW_SS I/DD SSP VR Shared Central Total Note: the final column is a best estimate of what PICS will do when it rolls into the biennium. Actual numbers may vary. Vacant Positions: The following table reflects the number of vacancies, by program area. It also includes a column reflecting positions to be abolished that have not yet been deleted from the PICS system. Many of the vacancies have remained vacant due to the statewide hiring freeze that was in effect until the agency s budget bill was signed by the Governor. In addition, there is a federal hiring freeze that has impacted the ability for the agency to hire positions in the Disability Determination Services office (a part of the Aging and People with Disabilities program). Hiring in this program will not occur until that freeze is lifted. As of August 1, 2017, there were 26 positions impacted by the freeze which has been in effect for over three years. No anticipated end date is known for this freeze. Although the table below does not reflect much reduction in vacancies due to the statewide hiring freeze, it is anticipated that once positions are released for hire, the number will be reduced significantly. Additionally, some of the vacancies noted below will be abolished to fund establishments and/or reclassifications of positions to relieve double fills.

6 Page 4 Change 6/17 to 8/17 Positions to be abolished in PICS Net Vacancies after PICS Updates Program Area Jun-17 Jul-17 Aug-17 APD CW CW_SS I/DD SSP VR Shared Central Total Next Steps: DHS has the following plan to clear double fills and true up positions. First DHS plans to place as many double fills on vacant positions as possible. This may mean over or under filling positions in the short term. The goal of this process is to first clear as many double fills on like positions as possible. The reason to clear double fills even on mismatched position types is to allow DHS to see where DHS needs to true up position types and to identify positions that may need to be requested permanently by DHS. Secondly, ideally this will lead to a series of both reclassification packages done through the normal reclassification process and rebalance proposals if a large package is required that makes more sense going through a legislative process. Once this is completed DHS may need to request new position authority if sufficient funding cannot be identified through the reclassification process. DHS is particularly sensitive to making changes to workload model related positions. Most of DHS staff are in field offices providing direct services that are earned through DHS workload models. However, there is a great need for infrastructure and policy positions that support these direct service positions that are not included in the types of positions earned under the models. In other words the workload models do not include the earning of needed infrastructure positions. Over the next few months DHS will be looking at its positions from an enterprise standpoint to identify positions that need to be trued up from both a classification and funding standpoint. Part of the complexity of DHS positions is having

7 Page 5 multiple funding sources for multiple programs that are not always identical in fund mixes. Not only does DHS need to review the actual classifications, but it also needs to ensure the proper funding types are used for the position. This becomes even more complicated with Shared Services positions that are Other Funded but then paid for by DHS and OHA through cost allocation. DHS is hopeful that PICS will roll prior to the letters being due for the next interim legislative days as that will help DHS identify what positions exist vs. what positions are needed to operate the business. Part of the reason DHS is in its current state is that the business need for certain classifications of positions has changed over time and DHS has not trued up positions as the business has changed. Action Requested Acknowledge receipt of report. Legislation Affected None at this time. For further information or additional questions please contact Eric Moore. Sincerely, Eric Luther Moore DHS Chief Financial Officer cc: Laurie Byerly, Legislative Fiscal Office Ken Rocco, Legislative Fiscal Office George Naughton, Department of Administrative Services Tamara Brickman, Department of Administrative Services