Time to End Longevity Pay in Tennessee?

by | February 17, 2015

By Andy Sher

After running into one legislative buzz saw on his Medicaid expansion proposal, Republican Gov. Bill Haslam may be racing toward another on an idea that would affect pay for thousands of veteran state employees.

The governor in his State of the State address last week proposed eliminating "longevity" pay for state executive branch employees. It's part of a larger overhaul of state salaries that began in 2012 and included a new, five-tiered evaluation system and merit pay.

Early indications are the idea of ending longevity pay is not going over well in the GOP-dominated General Assembly. Republican Senate Speaker Ron Ramsey is already calling it a "tough sell."

The plan gives workers with three or more years of service $100 for each year, atop their base salaries. The benefit tops out at $3,000 per year for 30 years' service or more.

Haslam wants to end the payments, estimated to cost $31.5 million annually. His plan? Put half of the money into the affected employees' base salary. The rest would be poured into a roughly $30 million merit pay pool, with awards based on tougher, performance-based evaluations Haslam already has implemented. The administration acknowledges that ending longevity pay would mean some employees' checks would shrink.

Any leftover funds would be used on long-range plans to bring state worker pay up to private-sector "market levels."

Haslam's $33.3 billion budget proposal calls for $47.3 million in state employee raises, which includes longevity pay.

Under the old system, that money would be distributed as an across-the-board raise of about 3 percent. But Haslam's TEAM Act of 2012 gutted the state's traditional civil service, creating a new, five-tier evaluation system and implementing merit pay.

Workers in the two bottom evaluation categories -- those with "marginal" or "unacceptable" evaluations -- would get no raises. That's about 2 percent of workers, the administration says.

Most workers are in the middle category -- "valued" employees. They'd see a 2 percent raise. "Advanced" workers would see 3 percent and "outstanding" employees 4 percent.

But Ramsey and other Republicans are worried. And their chilly reception comes less than two weeks after they killed Haslam's proposed Insure Tennessee plan for 280,000 low-income Tennesseans in a special session. They're also ready to battle the governor over education, demanding the state abandon Common Core standards in K-12 English, language arts and math.

State employees are up in arms over the longevity pay proposal. Last week, top officials with the Tennessee State Employees Association trooped through legislative corridors. On the TSEA website, the group strongly encouraged members to weigh in on that and other personnel issues.

A legislative secretary for one lawmaker said her boss got more than a dozen phone calls and nearly two dozen emails from enraged state employees who work in the lawmaker's district.

Ramsey said he has heard concerns from colleagues and others.

"I think that's going to be a tough sell," Ramsey said, suggesting that Haslam consider eliminating longevity pay only for new hires.

Finance Commissioner Larry Martin and Human Resources Commissioner Rebecca Hunter, a former Hamilton County government personnel director, explained the proposal last week in the House Finance Committee.

Chairman Charles Sargent, R-Franklin, told them bluntly that he's worried about the impact on employees' retirement benefits, since longevity is factored into retirement calculations.

Hunter said her department has worked hard to ensure the evaluations are fair, with "audits" on what agencies are doing.

"Have we looked at phasing this in?" said Sargent, who suggested the plan start for workers with fewer years of state service. "I think this is going to be a big concern to the members of this committee and the members of the entire General Assembly."

Martin acknowledged that compensation changes are never easy and noted there is always "some risk" for someone on the "borderline," or near retirement. He promised, "We will look at that."

He and Hunter argued the general concept is to ensure state workers at a minimum are doing the jobs they were hired to do.

But a worried Rep. David Hawk, R-Greeneville, warned elimination of longevity pay "is going to be very difficult for us to take home. There's no way to sugar coat that."

(c)2015 the Chattanooga Times/Free Press