Sunday, March 30, 2003

State keeps hiring amid fiscal crisis

3,859 workers got jobs or promotions within past year

By Spencer Hunt
Enquirer Columbus Bureau

COLUMBUS - Ohio may be facing its worst budget crisis since World War II, but that hasn't stopped the hiring of thousands of state workers.

More than 3,800 people have been put on the state's payroll or promoted to higher-paying jobs in the past eight months - even as Gov. Bob Taft has cut funding to schools and colleges and proposed wide-ranging tax increases, an Enquirer analysis has found.

Agency officials say most of the new employees replaced workers who had left essential positions. And overall, the number of government jobs has dropped 5.7 percent since 1999, when Taft took office.

But state payroll records show that nearly 1,000 people were hired since July 1 for work not directly linked to health care, public safety or highway maintenance - all primary functions of state government.

Here's what Gov. Bob Taft has said about state spending, hiring and the ongoing budget crisis:
April 4, 2002: "I have imposed a stringent hiring freeze on all state agencies. With the exception of people critical to health, safety and those involved in revenue-generating activity, we will put all hiring on hold effective immediately. I will make a determination in early July about whether to lift the hiring freeze."
Jan. 22: "We've reduced the state work force by nearly 3,000 just in the last 22 months, and cuts in this and the next budget will cause our work force to shrink further." - State of the State address.
March 5: "We are managing as conservatively as possible while still providing essential public services. And yet, because of the national economic slowdown, we still have a significant budget gap. I have no choice but to impose additional spending reductions to balance the budget." - explaining his order to cut $140 million from universities and other schools.
Those workers alone cost taxpayers up to $39 million a year.

Some state lawmakers - who are being pushed by Taft to raise more than $3 billion in new taxes - were surprised to learn of the hirings.

"Oh my God, you've got to be kidding," State Rep. Timothy Grendell, R-Chesterland, said.

Grendell is an outspoken critic of Taft's budget plans. Even more moderate lawmakers question the propriety of the hiring, which began when Taft quietly lifted a three-month hiring freeze July 1.

"This tells me that the governor hasn't been able to get the attention of his department heads as to how serious the shortfall in the economy is," says Sen. Bill Harris, R-Ashland, chairman of the Senate Finance Committee.

Harris says his committee will examine state hiring as part of its budget balancing process. He says the governor should consider re-imposing the hiring freeze to keep current state spending in the black through June 30.

"I think we need to ask these questions: Are these people actually needed? Or is this a case of reducing the workload of other (state employees) at a time when we can't afford to do it?"

Taft's spokesman, Orest Holubec, says the governor won't impose another freeze. He says Taft trusts his agency leaders to hold the line on costs.

"It would be very difficult to maintain a multiyear hiring freeze without crippling essential state services," Holubec says.

Hiring freeze lifts

Taft cracked down on hiring last April to help plug an estimated $1.2 billion deficit in the current budget. The freeze and other agency cutbacks helped save $100 million. At the time, Taft said he'd consider lifting the freeze in July.

That's just what happened. On July 1, agencies no longer had to show the governor's budget office how each new hire was essential. Some 3,859 new workers came on board.

There is no rule or policy that clearly defines what an essential employee is. But it is commonly agreed that a major state function is to ensure the health and safety of citizens.

For its analysis, the Enquirer subtracted from the list of state hires all employees involved in health care or food service at state institutions, prison guards, Highway Patrol cadets and dispatchers, parole officers, social workers, road maintenance workers, and teachers hired to help educate adult prisoners and juvenile offenders.

Temporary and seasonal employees - including 382 college interns, 73 of whom were paid more than $11 an hour - likewise were subtracted. Employees paid solely with federal funds were excluded, too.

That left 989 people who are paid through state taxes and fees for a range of jobs. They include everything from 16 custodial workers paid an average $11.85 an hour to a top department of education administrator who earns $120,000 a year.

Hundreds of people were hired as secretaries, office assistants, computer programmers, administrative staff and tax auditors. Thirteen deputy state agency directors, each of whom will cost taxpayers an average $76,500 a year, also were hired.

The Enquirer's findings are estimates. Records don't show which employees are part-time and full-time.

While more part-time workers would lower the total bill to taxpayers, the data also does not include benefits, such as health insurance, that typically cost government another 30 percent on top of each employee's salary.

Rick Yocum, director of the Ohio Public Expenditure Council, a bipartisan group that monitors government spending, says state officials are missing out on a great opportunity to review their operations and determine how many people they truly need.

"You can fall into a trap where you feel like, well, we've done it this way forever and we need to keep doing it this way," Yocum says of agency leaders. "The fact is, you don't."

Some help is high-priced

State records show that some of the most highly paid employees were hired on or soon after July 1, the day the state's hiring freeze was lifted.

The Board of Regents, which oversees Ohio's public universities and colleges, hired Guy Thibodeau, a computer expert, to run the agency network for more than $90,000 a year.

The Office of Budget and Management, which oversaw all hirings during Taft's freeze, hired its own computer analyst, Nola Haug, for more than $97,000 on July 1.

Officials at both agencies say the new hires were not delayed by the freeze and their July 1 starting dates were coincidental. Budget Director Tom Johnson says Haug's addition to his staff actually saved thousands, because she already had been working for the agency as an outside consultant.

That meant the state was paying a private company a fee for Haug's services on top of her private salary - a common practice among state agencies.

"It was costing the state a couple hundred thousand dollars or so," Johnson says. "So we saved money there."

Haug and Thibodeau were not the most expensive additions to the payroll. The Department of Education hired two men for jobs that each pay well more than $100,000 a year.

Daniel Wilson was hired in January to oversee the department that distributes more than $7 billion in taxes each year to local schools. He will make $115,000 a year.

Joseph Johnson was hired away from the U.S. Department of Education on July 8 for $120,000 a year. He is now the leader of a special committee looking for ways to reduce the gap in state achievement test scores among children of different races and ethnicities.

He's also looking for ways to match state standards for quality education with President George W. Bush's "no child left behind" initiative. Like all agency officials, Johnson defends his job as essential.

"If we're really going to close achievement gaps, this isn't just creating a little program to fix it," he says. "We're looking at all the things we do because there are so many things that have influence."

Some of the state's most expensive hires were psychiatrists and other doctors who provide health-care services to Ohioans in state institutions.

The Department of Mental Health hired eight psychiatrists, none of whom will make less than $107,000 a year. Sam Hibbs, a spokesman for the agency, says the state can't pay any less.

"We're paying the market rate and nothing higher," Hibbs says. "We provide care to the most seriously mentally ill people. Our hospitals are basically the intensive care units for the public mental health system in Ohio."

Mental Health is still looking to hire six more psychiatrists, Hibbs says.

So who's really essential?

The term "essential employee" has a broad definition among department heads.

The Department of Natural Resources, which hired 76 people, says it did so only after it offered incentives that convinced 271 employees to retire early and the agency laid off another 98 workers.

"We've been scrutinizing every single position over here," agency spokesman Jim Lynch says. "If it's an essential position, then we move forward on it."

The Department of Education hired 28 education consultants and consultant administrators, employees who act as links between the state and local school districts. Each consultant is paid an average $53,500 a year.

"Any employee that works directly with the school districts is an essential employee," agency spokesman J.C. Benton says.

Benton says the agency has cut back on its spending, noting that more than half of its employees received no cost-of -living raises this year - a move that he says saved $1 million. He also says the agency's payroll spending amounts to 1.2 percent of its more than $7 billion annual budget.

The Department of Job and Family Services, the state's biggest agency, hired 140 people since July 1. That number includes 30 computer-tech employees with salaries ranging from $20 to $40 an hour.

Job and Family Services says many of these hires were cost-savers for the state. Spokesman Dennis Evans says the agency has saved $50 million by hiring its own computer technicians instead of paying an outside company to do that work.

"The average hourly rate for one of our state computer staff is $42.29 per hour," Evans says. "The average we're paying for a contract (employee) is $105 an hour."

Some Democratic lawmakers say that argument only underscores their point that the GOP administration overpays private contractors.

"So it is true that we can hire our own people to do the same things for less," says Sen. Mark Mallory, D-Cincinnati. "Where's the common sense here?"

Perhaps the best reason for hiring comes from the Department of Taxation, which hired 55 auditors in December and January.

Agency spokesman Gary Gudmundson compares the average $34,500 salary each auditor makes to an estimated $457,000 in unpaid taxes he or she collects.

"They are more than carrying their weight," he says.

Government is smaller

It is important to note that the overall size of government, under Taft's watch, is down.

State agencies under direct control of the governor employ 2,829 fewer people now than the 50,006 working when Taft first took office in 1999.

Instead of a hiring freeze, Taft now sets limits on the maximum number of people most agencies can hire. Most officials say they are operating well under those "hiring caps" and could actually hire more workers.

The Department of Health, for example, has a 1,309-employee cap and currently employs 1,305. Job and Family Services can employ 3,777 workers but currently has 3,579.

Tom Johnson, the state budget director, says the budget office is considering lowering Job and Family Services' cap, maybe within the next month. He also says agencies can ask to raise their caps if they think the extra manpower is really needed.

Some lawmakers question why the hiring freeze was lifted even though the state's fiscal situation continued to decline. They say the governor may have had an ideal opportunity to save taxpayer dollars and stave off cuts to education funding if he'd continued the freeze.

Taft ordered $140 million cut from state funds to local schools and universities on March 5, after lawmakers refused to raise cigarette and alcohol taxes to fill a $720 million short-term budget deficit.

He also wants lawmakers to raise $3.1 billion in new taxes to pay for the $49.2 billion, two-year budget that he proposes to take effect July 1. The new taxes and deep cuts to Ohio's Medicaid program are intended to fill a $4 billion deficit over the next two years.

"The point is government needs to decrease," Grendell says. "You can't make government more efficient when you continue to replace expensive bureaucrats."

Holubec and agency officials challenged the notion that cutting back on employees would save millions in taxes for other programs. For example, he said several employees working for the Department of Natural Resources are paid entirely through fees for hunting and fishing permits.

"That makes it hard to quantify the (tax dollars) that would have been saved if the hiring freeze had still been on," Holubec said.

Sen. Jeff Jacobson, a suburban Dayton Republican and a member of the Senate Finance Committee, says lawmakers cannot understand why proposed agency budgets show a 4 percent increase for salaries when state employee unions have been told there will be no pay raises next year and only 2 percent increases the year after that.

"We saw that and thought we'd identified a great place for cost savings, but the administration insisted all the hires were essential," Jacobson says. He says the sheer number of new hires "demonstrates that we needed a lot more explanation than we got."

Jacobson says lawmakers greatly underestimated the number of hires that would be made.

"We had no idea," he says.


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