LITTLE HOOVER COMMISSION
| May 4, 1995 | |
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The Honorable Pete Wilson
Governor of California |
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| The Honorable Bill
Lockyer President Pro Tempore of the Senate and Members of the Senate
The Honorable Willie L. Brown Jr. |
The Honorable Kenneth L.
Maddy Senate Republican Floor Leader The Honorable James Brulte Assembly Republican Floor Leader |
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Dear Governor and Members of the Legislature: Thousands of applicants take exams for civil service jobs and ultimately the lucky candidates are picked by lotteries. Changing the form that state workers fill out when they are sick requires reams of paperwork and months of paper shuffling. Scores of state employees each year appeal written reprimands through a months-long and court-like process that involves sworn testimony and formal rulings. Large departments have "bone yards," where workers who are too much trouble to fire are assigned meaningless tasks. Those are among the problems the Little Hoover Commission found when it examined the state's personnel management system. Those are among the problems supporting the Commission's conclusion that significant reforms are needed if California government is going to respond effectively and efficiently to the changing needs of a growing population. The civil service is largely comprised of hard-working individuals who care about their performance and the State's future. But the system for managing that work force discourages innovation and ambition. It is burdened by a labyrinth of authorities and procedures that are costly to operate, reduce management discretion, and ultimately limit the potential for both rank-and-file workers and managers. The Commission's report, which is being transmitted to the State's top policy makers with this letter, contains eight findings and recommendations crafted to eliminate redundancies, clarify authorities and deregulate a system that has evolved over nearly a century. Of equal importance, the report identifies ways to better equip state government to deal with challenges beyond the horizon. The reports findings and recommendations are grouped into three areas: Organizational Issues. The management system has been amended over the years in response to the urgency of the times and, as a result, authority and responsibility is divided among different agencies. Management of this bifurcated structure is further hamstrung by procedures that intentionally discourage change.
Personnel Management Issues. Individual departments lack the flexibility to test, hire and assign tasks to the most qualified people. Many managers lack the skills needed to change departments for the better. The employee discipline process is costly and dysfunctional. And compensation and job status are independent of performance.
Labor-Management Issues. The State is restricted from tapping the talents and efficiencies of the marketplace to accomplish the public's work. And fundamentally reforming civil service will require more cooperation and communication between managers and rank-and-file workers.
The public's concern about the effectiveness of government does not begin and end with civil service reform. But the delivery of government services can only be improved so much without retooling the government itself. Effectiveness and efficiency cannot be provided by statute. But neither can it be expected in a system that masks accountability and limits discretion, discourages punishments and mutes rewards. We believe the speedy enactment of the Commission's recommendations will both encourage and shape the kind of public workplace that California needs and Californians deserve. The Commission stands ready to work with the Governor and the Legislature to make these policy changes a reality.
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Table of ContentsExecutive Summary Introduction Background Findings and Recommendations Chapter I: Organizational Issues
Finding 2: Administrative Procedure Act hamstrings managers
Finding 4: Managers lack authority, leadership skills, incentives Finding 5: Minor, major discipline appeals are treated the same Finding 6: Tenure and automatic pay raises are obsolete Chapter III: Labor-Management Relations
Finding 8: Reforms will require cooperation Conclusion Appendices Endnotes
Table of IllustrationsTable Table 1 - The Personnel Bureaucracy Table 2 - Appeals Presented to the State Personnel Board Table 3 - Delineation of Minor and Major Discipline Actions Table 4 - Appeals by Type of Discipline Action Table 5 - Contracts Reviewed by Department of General Services Table 6 - Bargaining Units
Chart Chart 1 - State and Private Income Trends Chart 2 - State Employment Trends Chart 3 - State Payroll Trends
Chart 4 - Appeals to the State Personnel Board
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Introduction
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Public confidence in government is waning. Election tallies and pollsters have documented the dissatisfaction. And commentators and politicians have prescribed a cure of smaller and more efficient bureaucracy. The painful therapy recommended for government is not unlike the wrenching restructuring and work force reductions that private corporations have endured in pursuit of competitiveness. But government has been slow to respond. And in that part of the state government built to manage the bureaucracy, small doses of reform have spurred large controversies.
The institutional resistance to change is predictable. California's stalwart civil service system was designed to ensure stability and insulate it from political influence. It is made even more rigid by the imposition of collective bargaining, an arrangement that can stymie even minor improvements. Critics of the system can be easily found, inside and outside of government. They describe books of rules that are antiquated and duplicative. They describe oversight overkill, turf cold wars and regulations crafted to circumvent over-regulation. In the landmark 1992 work "Reinventing Government," David Osborne and Ted Gaebler wrote: |
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The bureaucracy is basically staffed by well meaning officials and employees who find themselves hamstrung by illogical procedures and pulled in unproductive directions by perverse incentives. |
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| Similarly, the Winter Commission, a privately funded group of business and government leaders that studied civil service systems across the nation, concluded in 1993 that the values that inspired civil service protections had long since been undermined by regulations: | ||
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America's civil service was invented 100 years ago to guarantee merit in the hiring process. Sadly, many state and local governments have created such rule-bound and complicated systems that merit is often the last value served. How can merit be served, for example, when supervisors are only allowed three choices from among hundreds of possible candidates for a job? How can merit be served when pay is determined mainly on the basis of time on the job? How is merit served when top performers can be "bumped" from their jobs by poor performers during downsizings? |
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In each of those examples, what is true in Washington, D.C., is true in Sacramento. But any fortune California derives by not being alone with these problems is limited to the opportunity to learn from others who also are reconstructing government.
When California's civil service system is independently reviewed, three problem areas become clear: Structural problems create inefficiency and reduce accountability. Statutory restrictions make it hard to find the right person for the job, to discipline and reward, to promote and dismiss. And tensions between labor and management undermine efforts to collaboratively strive for improvement. It is difficult to gauge the resources consumed by this entropy. Even more important -- and harder still to measure -- are the losses to all Californians resulting from an obese and hand-cuffed bureaucracy. Nevertheless, it has become an expensive irony that government has greatly benefited this nation by deregulating private industry, yet has only recently looked to deregulate itself. The last time the Commission reviewed California's personnel management system was in 1979 at the request of Governor Edmund G. Brown Jr. While some of the Commission's recommendations were followed, those recommendations crafted to reduce redundancies in the bureaucracy, to streamline discipline procedures, and to increase the skills and flexibility of management were not. Sixteen years have passed since the original study was conducted. In terms of demands on government and the science of personnel management, much has changed. In terms of the government itself, not enough has changed. In conducting its new study, the Commission convened an advisory group of more than 90 people, including representatives of management, labor, academia, the public and the Legislature (please see Appendix A for a list of participants). More than three dozen of those took part in meetings to identify key issues. The study involved an extensive literature review of federal and state reforms. Interviews were conducted with experts in public policy, labor relations and personnel management. The list included former state executives, state personnel specialists, private sector managers and others involved in civil service reform nationwide. The Commission conducted two public hearings, one in Sacramento in August 1994 and one in Los Angeles in November 1994 (please see Appendix B for a list of witnesses at each hearing). These hearings explored overlapping responsibilities and regulatory burdens, barriers to change and steps taken elsewhere to reform civil service. In addition to specific problems and potential solutions, two overriding realities emerged. First, the State's civil service system is the product of a process and any reforms will be the product of that process, as well. Participation is mandatory on the part of all concerned: unions and professional organizations, public managers and personnel professionals, elected representatives and the general public. The second reality is that most of those players have a vested interest in the status quo that must be overcome if they are to benefit from a more efficient public workplace. The Commission's report begins with a Transmittal Letter, an Executive Summary, this Introduction, and a Background section. Eight findings and eight recommendations are presented in three chapters: Organizational Issues, Personnel Management Issues, and Labor-Management Issues. The report ends with a Conclusion, Appendices and Endnotes. |
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| Background | ||
| The State personnel management system is a labyrinth of 11 different agencies. Some have broad duties. Most have minor and narrow roles. In addition to laws and regulations, a series of negotiated settlements and interagency agreements guide procedures and decisions in over 100 different departments, from the Department of Aging to the California Youth Authority.
Of the 274,000 employees who receive state paychecks, about 185,000 are part of the civil service system. The rest are exempted executives and employees of the judiciary, Legislature and higher education systems. Those 185,000 employees fall into 4,462 classifications. Most of them -- nearly 140,000 -- are represented by 21 different bargaining units; the balance are not represented by unions. Collectively, they represent an annual payroll of $8 billion. This section provides a history of the civil service evolution and a description of the agencies responsible for the personnel system in California. It also describes the personnel management revolution that has swept through the private sector and is pounding on government's door. | ||
| When Civil Service Was a Reform |
By the late 1800s, the "spoils system" -- which rewarded political supporters with cushy government jobs that were then abused to further solidify political support -- had so corrupted America that it cost the nation a promising president. Just four months after taking office in 1881, President James Garfield was assassinated by a disappointed office seeker. The shocking tragedy galvanized public support for civil service reforms.
The Pendleton Act of 1883, was based on the belief that the public was entitled to efficient service by a stable and professional work force. Those who sought careers in the public sector were entitled to a fair opportunity, based on their competence and not their campaign contributions. The system built to institutionalize these values was buttressed by the best academic thinking of the day -- that centralized programs would create consistency and efficiency. Jobs would be distributed through competitive hiring, and advancement would be based on qualification. The initial hallmarks of the civil service "merit" system included a reliance on written examinations, the rule of three, which restricted selection to three top test takers, and other protections for status and tenure. The four consistent themes of the merit system were:
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| California's civil service rules were established as part of progressive reforms |
California sought to reform its public employment system in 1913 with passage of the Civil Service Act, which created the Civil Service Commission to eliminate political abuses and guarantee fairness in hiring, promotion and termination. The Act was passed in an era of progressive reforms, including the establishment of the initiative, referendum and recall processes and non-partisan local elections.
The State's reforms, however, got off to a rocky start. Nearly two decades later, half of the positions remained exempt from the Civil Service Commission's provisions. Temporary appointments lasted for as many as 15 years because the commission could not schedule examinations. Moreover, the commission was resisted by the employees it intended to protect, who were concerned about abuses in the young system and feared their traditional job security was in jeopardy. Their fears were aggravated by a worsening economic depression. State revenues fell and workers faced pay cuts and layoffs. The newly formed California State Employees Association (CSEA) proposed a plan calling for employees to voluntarily return a portion of their pay to the general fund. But the scheme failed and by 1933 more than 1,500 workers were threatened with layoffs. To try and solidify the unsure footing of its members, the CSEA sponsored an initiative in 1934, which voters approved by a 3-to-1 margin, that placed the Civil Service Act within the state Constitution. The measure (Article XXIV, recodified as Article VII) replaced the Civil Service Commission with the State Personnel Board (SPB). The board was charged with setting policy and administering the personnel system -- prescribing probationary periods, creating classifications, conducting selection and promotion examinations. It also was charged with policing the system it managed -- investigating and hearing appeals from employees concerning dismissals, demotions and suspensions. World War II and the decade that followed were stable times for government and its staff of civil servants. The stresses of the economic times and the demands of war had encouraged new management techniques that questioned the centralized control of most organizational structures, including the civil service system. "Enlightened" personnel policies began to move away from control and toward service and results. | |
| Political winds of the 1960s buffeted the Civil Service System |
By the 1960s, social and political changes directly challenged the status quo. Dramatic growth required the bureaucracy to satisfy new demands. The Personnel Board struggled to supply the highly skilled workers needed for public works programs such as the State Water Project and interstate highway system, as well as expanding social programs, such as mental health and welfare. The concept of political neutrality in civil service also was challenged by a rise in employee activism and the push for expanded equal opportunity policies. All of these forces contributed to fundamental changes in the system: Civil rights authorities were granted to the State Personnel Board. The Career Executive Assignment was introduced to make managers more accountable. Collective bargaining was established. The Civil Rights Act of 1964 required additional assurances that testing and evaluation methods did not discriminate against people because of sex, race, religion, color, national origin, ancestry, marital status or physical disability. Legislation in 1977 made the Personnel Board responsible for statewide coordination and enforcement of the departmental affirmative action programs. The Career Executive Assignment (CEA) program was created in response to concerns that top level bureaucrats, who were protected by civil service rules, were indifferent to the policies of political administrations. At this level, loyalty and accountability to program changes are indispensable to democratic government. The CEA was a compromise solution that exempted one half of 1 percent of the work force -- at the highest employment levels -- from civil service procedures, giving administrations more flexibility in selection, compensation and termination. | |
| As unions organized public employees, the manager-worker relationship changed | Almost simultaneously, unions started to organize public employees. Since the mid-1930s, employees -- through the relationship between the Personnel Board and the California State Employees Association -- received the pay and benefits they wanted. But the unions sought a formal and exclusive process for negotiating the terms and conditions of employment. The George Brown Act of 1961 required the State to "meet and confer" with representatives of the state work force over salaries. CSEA later lobbied for collective bargaining with the Governor's office. Then-Governor Ronald Reagan declined, but in 1971 he issued an executive order instructing the Secretary of the Agriculture and Services Agency to meet and confer with representatives of employee organizations on salary and benefit proposals. In 1972, state government experienced its first large strike. Five hundred hydroelectric and civil maintenance employees working for the State Water Project struck over a salary dispute. That strike sent shock waves through the system and led to the formation of the Assembly Advisory Council on Public Employee Relations. The council recommended that employees be given full collective bargaining privileges. Administratively, the duties of setting salaries and benefits began to shift from the Personnel Board to the Governor's office. By executive order, the Governor's Office of Employee Relations was established in 1975. The agency was charged with representing the governor on salary and benefit issues, meeting and conferring with representatives of employee organizations, and developing policies to improve employer-employee relations. CSEA continued to fight in the Legislature for collective bargaining and in 1977, the State Employer-Employee Relations Act (SEERA), also known as the Dills Act after its author Senator Ralph Dills, was passed and signed into law. Under the act, most terms and conditions of employment became negotiable for the majority of the State's civil servants. SEERA went beyond "meet and confer" to requiring the Governor's representatives to meet "in good faith" with exclusive representatives of employee groups. The Public Employment Relations Board, created the year before to settle collective bargaining disputes involving teacher unions, was expanded to cover the state work force. | |
| The bureaucracy evolved to provide for a dual personnel management system |
SEERA represented a fundamental shift away from a civil service system that unilaterally managed the work force, to a dual system that gave the Governor and exclusive bargaining units the authority to negotiate working conditions. The question was how collective bargaining would be meshed with the Personnel Board's constitutional obligation to manage by merit.
In 1979, Governor Edmund G. Brown Jr. established the Department of Personnel Administration (DPA), which replaced the Office of Employer-Employee Relations and assumed responsibility for overseeing the State Employer-Employee Relations Act.
The DPA has functioned as expected. But the State Personnel Board (SPB) has seen its role challenged and its resources diminish. In the last decade, SPB staffing has fallen from roughly 600 to 150. But a lack of resources also has hindered the board's ability to carry out those duties still within its purview. For instance, the board once had "advocate managers" working on behalf of specific under-represented minorities to encourage departments to meet affirmative action goals. Those positions have been eliminated. The Board's once-exclusive appellate responsibilities also have been diluted. In 1985, several applicants for the California Highway Patrol complained to the Department of Fair Employment and Housing (DFEH) that they had been denied jobs because of physical disabilities. The Personnel Board challenged DFEH, asserting it had prime jurisdiction over complaints involving the civil service system. Ultimately, the state Supreme Court ruled that both DFEH and the Personnel Board had authority to hear disciplinary and examination appeals based on charges of discrimination. Nevertheless, the board's appeals-related caseload has risen. Since the early 1980s, the number of appeals has grown by more than 250 percent. The staff level, however, remained constant and a months-long backlog was created. The board in 1994 was authorized more positions, but the appeals process still takes six months. The board continues to oversee merit-related aspects of the personnel management program. But its role has shifted from that of performing duties to providing guidance to DPA and individual departments. Table 1 shows the 11 different state agencies that have some responsibility over the State's personnel management system. |
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The Personnel Management Bureaucracy (State departments with some personnel responsibilities) | |
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| State Personnel Board | The five-member board, gubernatorially appointed, revises classification plans, develops exam techniques and hears employee appeals of discipline actions. |
| Department of Personnel Administration | Negotiates salaries, benefits and other employment terms with unions. Administers compensation, evaluation and training programs, and layoff and grievance procedures. |
| Public Employment Relations Board | Protects the rights of workers to unionize and hears appeals of unfair labor practices. |
| Department of Fair Employment and Housing | Investigates complaints of discrimination in housing, employment and public accommodations. |
| Office of Administrative Law | Reviews and approves regulations proposed by state agencies, including most personnel management rules. |
| Department of General Services | Reviews contracts for personnel services from private firms for legal adequacy. |
| Department of Finance | Analyzes department budget proposals, including the expansion and reduction of staffs |
| State Compensation Insurance Fund | Offers insurance protection to employers against on-the-job injury claims, and administers benefit claims. |
| Public Employees' Retirement System | Contracts and approves health benefit plans for state workers; hears employee appeals on coverage disputes. |
| State Board of Control | Settles employee claims over "out-of-class" work assignments and unpaid benefits. |
| State Controller | Administers the state payroll and oversees the Personnel Management Information System. |
| As the table shows, the State Personnel Board and the Department of Personnel Administration play the largest roles in personnel management. Others, such as the Office of Administrative Law and the Department of General Services, play secondary roles. The other seven have administrative duties involving the State's work force.
Over time, the civil service has grown, both in terms of the numbers of workers and in payroll. While the numbers of state workers continue to increase, state employees as a percentage of the population have declined over the last decade, from 8.9 per 1,000 Californians to 8.3 per 1,000 Californians. According to the U.S. Census Bureau, California ranks second in the nation for having the smallest state work force per capita. The following series of charts displays trends in the size and compensation of California's civil service work force. Numerical tables displaying the data in more detail are contained in Appendices D and E. Chart 1 shows trends in civil service income, the income for all Californians, and inflation as measured by the cost-of-living index. |
| Source: Department of Personnel Administration, California Statistical Abstract |
| As the chart shows, after a period of gains in the early 1980s, the earnings of both civil service workers and Californians as a whole have paralleled inflation. During the fiscal crisis of the early 1990s, civil service workers took a 5-percent reduction in pay for 18 months (in exchange for one vacation day a month). Chart 2 shows trends in the number of state employees. |
| Governor's Budgets, various years |
| As the chart shows, the number of state employees has gradually increased over time. Civil service, as a subset of the state's work force, has accounted for most of the increase. Chart 3 shows the effects of a growing work force and cost-of-living increases on state payroll. |
| Governor's Budgets, various years |
| The Management Revolution | For decades, the private sector in America was the world's model for efficiency and productivity. After World War II, strong demands for U.S. goods and services fueled enormous business growth, largely free from external competition.
As European and Asian countries recovered from the war, American companies experienced increased competition, particularly concerning quality and service. Japanese manufacturing productivity grew at 8.5 percent a year from the late 1950s through the mid-1980s, and German and Italian productivity was not far behind. But U.S. productivity gains slowed -- averaging a modest 2.5 percent a year. The increased competition, greater emphasis on quality and technological advances exposed anachronistic management practices. Practices that encouraged efficient manufacturing -- a division of labor into specific tasks, elaborate management control and a clear hierarchy -- discouraged flexibility and responsiveness. Businesses reassessed management practices and experimented with new approaches to regain competitiveness and profitability: management by objectives, organizational diversification, zero-based budgeting, quality circles, Deming's Principles of Quality Management. Tom Peters and Robert Waterman studied the management practices of businesses that were successful in the new economic climate and identified eight traits in their book "In Search of Excellence: Lessons from America's Best-Run Companies." On the whole, the characteristics enabled organizations to better adapt and profit in markets constantly being redefined by global competition, advancing technology, new work patterns and increasing customer expectations. |
| Emerging Trends of Private Sector Organizations | The private sector has "re-engineered" how work is assigned and accomplished. Other changes are intended to develop a new "work culture."
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| Implications for the Public Sector | The public sector has been aware of the changes occurring in the private sector. Government agencies encounter many of the same demands. Budget constraints have led public organizations to change the way they provide services.
A recent survey by the National Association of State Personnel Executives showed that more than 30 states are involved in some form of personnel system reform. But like private companies, public agencies have unique political, historical and legal contexts. What might work to revitalize one office may not be easily transferable. Public agencies must also adapt private sector reforms to work in the framework of an elected executive, within the limitations of numerous laws, and for "customers" comprised of a diverse citizenry. On some issues, California already has instituted reforms that other states have only proposed. Much of the State's selection program, for example was decentralized to departments in the mid-1980s. The limited tenure and flexible hiring characteristics of the Career Executive Assignment Program has been used as a model by the federal government and several states. The goal of these strategies is to change an agency's culture: To get public managers to be self-critical and challenge the status quo; to become cost-conscious and in touch with taxpayer concerns. And to inspire workers to be concerned with "customer" satisfaction. Among the common strategies being pursued by government agencies:
Some of these strategies can be implemented through individual initiative and leadership. Others require an overhaul of the present system and the elimination of constraints that have outlived their usefulness. Needed reforms are explored in the following three chapters. > |
Organizational
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Organizational Issues |
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The organizational structure of the State's personnel system resembles the architecture of a European cathedral built over centuries. Departments and programs have been added as needs have changed, their design reflecting the vogue thinking of the day.
Legal authorities are laid out in the Constitution, in the Government Code, in agency-established rules, and as a result of negotiated agreements. The Governor appoints the members of the State Personnel Board (SPB), who then appoint an executive officer. The Department of Personnel Administration (DPA) is led by a director, who serves on the Governor's cabinet. The prominence and responsibilities of the personnel management organizations have waxed and waned -- with the urgencies of the day, the nature of their leadership, the availability of funds, and their effectiveness in the Legislature. At best, there has been an enormous amount of bureaucratic diplomacy invested in making sure that agencies do not violate other's turf. But despite the effort, the inevitable has occurred. The executive officer of the State Personnel Board told the Commission: "We have spent a lot of time working together to reduce overlap. Still, there are overlaps." Sometimes redundancy in government is a necessary evil. Other times it is an unwanted byproduct of history. The evidence shows the civil service system in California is burdened by history. |
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| Finding 1: There is overlap and conflict between the State Personnel Board, steward of the traditional civil service system, and the Department of Personnel Administration, which is charged with the expanding role of union contract negotiator for the Executive Branch. | |
| The principal redundancy in the civil service system -- between the quasi-judicial Personnel Board and the Department of Personnel Administration -- covers the important public employment issues of classifying, selecting and disciplining employees.
But that is not the only redundancy. The Personnel Board overlaps the Department of Fair Employment and Housing on discrimination complaints. The Personnel Board adjudicates discipline matters that might also end up before the Public Employment Relations Board. This redundancy has even tarnished the effectiveness of one of California's civil service successes, the Career Executive Assignment program. Designed to make top managers accountable to the Governor, the potential is limited by bureaucratic rules. |
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| Overlap Between the Personnel Board and DPA | The advent of collective bargaining redefined the employer-employee relationship by requiring personnel rules and policies to be bilaterally developed. Collective bargaining also required splitting personnel management duties between the Personnel Board and the Department of Personnel Administration, and framers of the new strategy believed they did so in a way to minimize conflict. DPA would represent the executive branch on matters such as salaries and benefits and in negotiations with employee organizations. The State Personnel Board would administer classification proposals, selection programs, probationary periods and disciplinary appeals.
California's dual system was similar to personnel systems that had been developed nationwide. But in the intervening years, most state civil service commissions have been abolished or their responsibilities greatly diminished. A survey by the National Association of State Personnel Executives in 1993 found only eight states have retained an independent commission, and many of the surviving ones have been curtailed. Shafritz, Hyde and Rosenbloom concluded in "Personnel Management in Government" that in addition to their obsolescence in an era of collective bargaining, independent civil service commissions dilute democracy: |
| Put simply, independent, structurally and politically isolated personnel agencies have a great difficulty in serving the needs of elected executives and public managers. They ultimately become viewed as obstacles to efficiency and effectiveness and are sometimes unduly influenced by pressure groups. | |
| In California, too, the civil service system has developed a reputation for inefficiency, largely because of the dual jurisdictions of the Personnel Board and DPA. The problems, according to personnel specialists and DPA officials, manifest themselves more as a low-grade fever than paralysis:
Marty Morgenstern, chair emeritus of the Center for Labor Research and Education Institute of Industrial Relations at the University of California, Berkeley, and the State's first Director of the Department of Personnel Administration, said that through compromise and court action the State ended up with a civil service system of interlocking authorities: |
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| There are too many departments, boards and commissions with overlapping duties and responsibilities, resulting in a cumbersome and wasteful process for adjudicating adverse actions and other disputes. The work force remains divided into hundreds of minutely defined job classifications that interfere with the ability of workers at every level to perform better and produce more efficiently. |
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| Overlap and Disputes Over Classification | Classification is a classic element of civil service. It lays out the qualifications for a job, the range of duties and compensation. These same issues also are important from a management perspective. The result, according to DPA officials and personnel officers, is a litany of conflict and confusion:
These seemingly minor conflicts aggravate and delay state agencies trying to do increasingly complicated jobs with fewer resources, personnel specialists and DPA officials said. Individual departments -- along with DPA and the unions -- complain that class changes require approval from both DPA and the Personnel Board. The frustration is particularly high after lengthy negotiations between DPA and the unions yield an agreement but the Personnel Board is reluctant to approve it. DPA has urged that the Constitution be amended to eliminate the Personnel Board's role in the classification system. |
| Overlap in the Discipline Process | Effective discipline of errant employees is essential to effective management. During the Commission's investigation, it heard frequent criticisms of the current discipline process. One example stems from the overlap between the Personnel Board and the Department of Personnel Administration.
In the early days of collective bargaining, the Personnel Board asserted exclusive responsibility over the discipline process. One union disagreed and filed an unfair labor practice charge. The Public Employment Relations Board (PERB) ruled that DPA could conceivably negotiate discipline procedures to the extent that they did not conflict with the Board's constitutional authority to review discipline. This structural stalemate is particularly important because of the overall failure of the discipline process. Management believes it is too difficult to take discipline actions. And unions complain that it takes too long to resolve disputes over the actions that management does take. But the structural overlap divorces accountability from responsibility, and as a result reform proposals have languished. Another example is the handling of affirmative action complaints. The Personnel Board asserts that affirmative action programs fall within its responsibility to ensure fairness. Consequently, DPA has rejected union offers to arbitrate alleged discrimination or sexual harassment disputes. In a resulting appeal, PERB ruled that the Personnel Board does not hold a monopoly on the process, and that discrimination complaints could be arbitrated. Still, DPA has decided not to arbitrate, arguing that it is a specialized area of employment law and is better adjudicated in specialized forums. |
| Overlap Between Personnel Board, Other Agencies | In its roles as arbiter of the civil service, the State Personnel Board's duties also overlap those of the Department of Fair Employment and Housing (DFEH) and the Public Employment Relations Board (PERB).
By law, both the Personnel Board and the DFEH can investigate complaints of discrimination filed by state employees. Most of these complaints are made to the Personnel Board. And in most cases where the Board has completed its investigation, held an evidentiary hearing and rendered a decision, DFEH defers to the Board. But nothing precludes employees from filing complaints with both agencies, and there have been cases in which both agencies investigated the same complaint. On occasion, employees or their representatives filed complaints with the SPB, and if they didn't like the result, refiled it with DFEH. And if they are still unhappy, they file it with the federal Equal Employment Opportunity Commission. In testimony before the Commission, the director of the Department of Fair Employment and Housing said: "State employees now enjoy more protection than private sector employees as both the Civil Service Act and the Fair Employment and Housing Act provide protection from, and remedies for, unlawful discrimination in their employment." For state employees, discrimination complaints are initially investigated by the department charged with discrimination. For that reason, DFEH officials said, state workers frequently consider an appeal to the Personnel Board to be part of the in-house review that should not preclude them from appealing to DFEH, just as any worker could after failing to resolve the issue with an employer. The Personnel Board, however, is supposed to be a neutral party, and has an investigative and hearing process similar to DFEH. Similarly, discipline issues related to union activity can end up before the Personnel Board or the Public Employment Relations Board. PERB has a policy of not holding hearings on issues covered by a collective bargaining agreement. But the exception to the rules are those cases where employees are job stewards and the union claims that the alleged reprisal interferes with their ability to carry out their representative duties. |
| Overlap and the CEA Program | The California Executive Assignment Program has been one of the state's civil service success stories. But even that program has stirred controversy between the State's two personnel agencies. And it exemplifies how management discretion can be challenged by employee representatives before the Legislature.
The Legislature created the CEA in 1963 to give administrations more flexibility in selection and tenure -- in exchange for more accountability from -- top level civil servants. |
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Career Executive Assignment means an appointment to a high administrative and policy influencing position within the state civil service in which the incumbent's primary responsibility is the managing of a major function or the rendering of management advice to top level administrative authority. Such a position can be established only in the top managerial levels of state service and is typified by broad responsibility for policy implementation and extensive participation in policy evolvement... |
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| The act directed the Personnel Board to develop classification, selection and pay features that would not be bound by civil service rules. Incumbents would not gain tenure in their positions and could be removed by the administration with a 20-day notice, provided the removal was not based on racial, religious or political grounds. Competition for these positions was to be restricted to civil service employees. The board established one broad CEA category, divided it into five levels of salary and responsibility. Selection procedures were simplified to focus on the position rather than the category. Over the years, the program has remained relatively small, encompassing roughly 900 positions (less than 1/2 of 1 percent of the state work force). Meanwhile, the DPA has designated nearly 3,150 employees as managerial, based on a definition in the 1977 State Employer-Employee Relations Act: |
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Managerial employee means any employee having significant responsibilities for formulating or administering agency or departmental policies and programs or administering an agency or department. |
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| Those employees have no representation rights, and fall under a different compensation and classification program than other state employees.
In 1988, DPA proposed to the Personnel Board that the management classes and the CEA positions be "harmonized" by consolidating the classification, selection, pay and tenure provisions of the entire managerial rank. DPA argued that the Personnel Board had too narrowly interpreted the CEA definition. And in an era of collective bargaining, a broader interpretation was needed to give management more flexibility. The proposal drew criticism from the unions. The Association of Deputy Attorneys General argued that DPA was trying to "subvert the essence of the civil service system and return to the spoils system." As it stands, however, not even the CEA program is free from the dual jurisdiction of the Personnel Board and DPA. Departmental personnel officers who testified before the Commission complained that to create a CEA position requires detailed justifications that are reviewed by both agencies and can consume several months. The personnel officers argued that, given the detailed guidelines, no central review -- let alone two reviews -- is necessary. |
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| Bifurcated Authority | The overlapping responsibilities between the Department of Personnel Administration and the State Personnel Board does more than waste money and increase frustration. The overlap diminishes authority and accountability. The Department of Personnel Administration, under the direct oversight of the state chief executive, has had limited authority to speak as management. The State Personnel Board's role as independent arbiter of nearly all civil service disputes is tarnished by its day-to-day administrative duties. In effect, the board at times is in the awkward position of sitting in judgment of itself, and has lost the confidence of workers as an impartial venue for resolving disputes. In 1979, when the Commission last reviewed the State's civil service system, it concluded: |
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The time has passed for patching. Only a new overall structure will assure critically needed coordination by, and accountability of, the Governor for the State's personnel management, and adequate and coordinated attention to employee equity and citizen apprehension that merit administration is being avoided. Because the overhaul must be fundamental, it should be completed in two coordinated phases: first, a Governor's initiated reorganization; and second, Constitutional and statutory changes. |
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| The first step was accomplished. The second step was never taken. | |
| Protecting Against Patronage and Favoritism | The Winter Commission, a privately funded panel that studied civil service reforms nationwide, believes the days of flagrant patronage are history. The panel's confidence rests in a series of U.S. Supreme Court decisions that have made the practice illegal and because of the prevalent attitude among elected officials that "good government" is good politics. In 1976, the Supreme Court in the case of Elrod vs. Burns found that patronage dismissals violated the First and 14th Amendments. In 1980, the court found in Branti vs. Finkel that partisanship can only be a factor in hiring when the government can prove it is essential to performance. And in 1990, the court found in Rutan vs. Republican Party of Illinois that the First Amendment protections from patronage practices extend beyond dismissal to hiring and promotion. Experts acknowledge that "most of the abuses which merit procedures were established to prevent are now either impossible due to the advent of collective bargaining or illegal due to court decisions; yet the control mentality persists." |
| Many states and the federal government already have eliminated civil service boards | That belief also is reflected in the nationwide trend to eliminate state civil service commissions. Likewise, when the federal government reformed its civil service in 1978, it eliminated its commission and replaced it with a more narrowly defined Merit Systems Protection Board. The bipartisan board acts as an appellate body and monitors the federal bureaucracy for violations of the fairness issues. The board staff believes that the agency has provided an expeditious alternative to the court system, and its presence has encouraged managers to make more defensible decisions.
In California, even with the Personnel Board, there is concern about fairness. The California State Employees Association, which represents six out of 10 unionized workers, testified that delegating selection and other duties to individual departments has already eroded the core values of the civil service: "The merit system no longer reflects merit and is perceived by employees as a joke." And union officials maintain that those concerns will only grow if departments truly begin to reform, streamline and tailor classification and other procedures as a way of increasing efficiency and improving service delivery. Reformists, however, must begin by examining the overlap between personnel agencies because it is debilitating to the fundamental civil service elements of classification and discipline. The overlap also has encumbered attempts to reform the system, as has been the case in the CEA program, the delegation of some classification duties to departments, and DPA's interest in crafting an alternative discipline process. |
| Recommendation 1: The Personnel Board should be eliminated. Oversight of personnel management and central leadership should be assigned to the Department of Personnel Administration. A new forum, either arbitration or a combination of arbitration and an appeal board for issues of favoritism, patronage and discrimination, should be established as the sole and final venue for resolving worker appeals of management actions. | |
| The Personnel Board and the Department of Personnel Administration are not compatible in their present forms. The first and largest step that the State could take to improve the management of its civil service ranks would be to terminate one of the system's two masters.
Article VII of the Constitution should be amended to eliminate the State Personnel Board. The Governor and Legislature should enact legislation to transfer the board's administrative duties to the Department of Personnel Administration. One of two procedures should be followed to establish a new method for resolving worker appeals and to guard against patronage, favoritism and discrimination. The Governor and the Legislature should enact legislation establishing binding arbitration as the sole venue for settling such disputes. Alternatively, management and labor should decide through collective bargaining whether disputes will be resolved through arbitration or with a combination of arbitration and a new independent board established to hear equity-based termination appeals. |
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| Eliminating the Personnel Board | Employees cannot one moment be given all the protections of civil service and the next moment be afforded all of the protections of union membership. Management cannot be innovative and responsive when its must negotiate with one hand tied behind its back, then plead its case before the Personnel Board -- and then be subject to the enactment of new laws by the Legislature and interpretation of existing laws by the courts. In this environment, the State would be better served if it were free to negotiate single venues and procedures for dealing with such important issues as classification and discipline. |
| Consolidating Management Authority | The Commission believes DPA should gain full control -- and be held accountable -- for personnel management operations. Given the authority, DPA could work with employee representatives to simplify classification plans and delegate both responsibility and authority to departments. DPA should also be free to negotiate improvements to the selection and discipline process. DPA could continue to negotiate with labor organizations over the broad issues that cross department lines, while helping individual departments negotiate subagreements relating to particular program needs. |
| Ensuring Fairness | A lingering concern is how the principle of fairness, open competition for public jobs and equitable treatment of civil servants would fare in an environment defined by a political administration sitting across the table from labor unions. At the end of the day -- unions or no -- civil servants are working for all Californians. It is in the best interest of the State that professionals are free from political abuse, and that all citizens have a fair opportunity to secure public jobs. A process should be in place to ensure fairness in selection, promotion and termination of civil service workers, and to guard against partisanship, political favoritism or retribution, and racial, sexual or religious discrimination.
The Commission believes there are two options that the Governor and the Legislature should consider as a way of simultaneously enforcing these values and quickly resolving employee appeals currently handled by the Personnel Board:
Under both options, employees should have a single forum for resolving these issues. As a condition of employment, workers should no longer have the option of pursuing disciplinary appeals before the Public Employment Relations Board and the Fair Employment and Housing Commission, or the courts. |
| Finding 2: State departments are hamstrung by the requirement that internal personnel management rules and negotiated agreements be submitted to the Office of Administrative Law, resulting in significant delays of personnel changes. | |
| In California, even regulations are regulated. The Administrative Procedure Act was created to make sure that state agencies do not create rules that the public does not know about or cannot understand. The act also required that proposed rules be reviewed to make sure they were legal and did not duplicate or conflict with laws that were already on the books.
Most discussions about this issue begin with a disclaimer that it is in the public's interest to be told about rules that government wants to impose on the public. Citizens should be able to review and comment on proposals, and understand rules eventually put on the books. It is difficult to envision a government "of the people" that made up rules in anything less than public fashion. However, California's rule-making process is the most rigorous in the nation. It is particularly onerous -- and can take months to negotiate -- when it is applied to the rules that state government creates to manage itself. |
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| Pushing Back the Line on Paperwork | The task of regulating the regulators is assigned to the Office of Administrative Law (OAL), which annually reviews more than a thousand proposed rules covering tens of thousands of pages. Among those rules reviewed by the OAL are those used by state departments, including the State Personnel Board and the Department of Personnel Administration, to manage state workers.
The original Administrative Procedure Act was adopted in 1945. It was substantially amended in 1979, creating the Office of Administrative Law (OAL) and the regulatory process that it was to oversee. The specific intent of the amendment was to reduce the number of regulations by making it difficult to create regulations. It also was designed to improve the quality of regulations that did make it through OAL's gantlet. However, state managers testified to the Commission that in attempting to limit government, the Administrative Procedure Act also limited their ability to improve government. |
| The process for creating personnel rules is the same as creating public regulations | Consider the process: First a rule is drafted and a public notice is issued. The notice must contain a description of the problem, and an "informative digest" analyzing existing state and federal laws and regulations. It must identify each technical, theoretical and empirical study used to craft the rule. It must contain information about potential costs and benefits of the proposed regulation, as well as any less restrictive alternatives. The public has 45 days to respond.
If the agency changes the original proposal, it must send out a new notice and allow another 15 days for public comment. The information contained in the initial "statement of reasons" must be updated before the final regulation is submitted to the OAL. The final documents must summarize every objection or recommendation received by the agency, explain how the proposed action was changed to accommodate the comment, or defend the decision to not change the proposal. If anyone requests a public hearing, one must be held within 45 days of the original notice. After this process is completed, the proposed regulations are sent to OAL for its review and approval. OAL has 30 days to review the rules for authority, clarity, consistency, reference, non-duplication and necessity, as well as for compliance with the notice, comment and response requirements. Unions and individual employees can petition OAL to conduct even more review if they believe a proposed rule imposes an undue burden or is illegal. If approved, proposed regulations are filed with the Secretary of State and printed in the California Code of Regulations. They are effective 30 days later. If the regulations are not approved, the rules are returned to the agency. The problem may be resolved through discussions between OAL and the department. The rules may be refined, or additional public hearings may be required. Professor Michael Asimow, an administrative law expert at the University of California, Los Angeles, told the Commission that "California's rule-making procedures probably surpass that of any other State, and by far surpass the federal government's procedures, in the number of steps required, the rigor with which the law is enforced, and the breadth of application." Some rules are exempted from this procedure. Government Code Section 11351 exempts the Public Utilities Commission. Government Code Section 3539.5 exempts DPA rules implementing benefits for state officers and employees who are not covered by collective bargaining. And the Legislature included a broad exemption for "internal management" rules: |
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Regulation means every rule, regulation, order, or standard of general application or the amendment, supplement or revision of any such rule, regulation, order, or standard adopted by any state agency to implement, interpret, or make specific the law enforced or administered by it or to govern its procedures, except one which relates only to the internal management of the state agency (emphasis added). |
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| But the courts have narrowly interpreted "internal management." In 1973, for instance, the 3rd District Court of Appeal decided in the case of Poschman vs. Dumke that college tenure rules were of public interest, and as a result not internal to management. But the real complications came at the end of that decade, when a state Supreme Court decision and a legislative amendment to APA combined to significantly increase the procedural burden on managers. In the 1978 case Armistead vs. State Personnel Board, the state Supreme Court virtually eliminated the internal management exemption. The lawsuit was brought by an employee of the Department of Water Resources who had resigned, and then asked for his resignation back. The department denied the request, citing the Personnel Board's manual, which gave managers the discretion to accept and keep written resignations. The employee challenged the validity of the personnel manual. The court ruled that the manual was not "internal" to the Personnel Board, because it concerned workers in other departments. And because that resignation provision had not been reviewed under the APA process, it was invalid. The following year the Legislature amended the Administrative Procedure Act, making the rule adoption procedures more involved. The consequence of the two actions, according to Asimow, is that internal rules must go through the rule-making process, and that process is much more difficult to complete. |
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The rule-making procedures in effect at the time Armistead was decided were similar to the bare-bones notice and comment model in the federal APA. Thus the Supreme Court probably thought that compliance with its decision would not prove burdensome. The 1979 revision called for an awesomely complex pre-adoption procedure and it has been frequently amended since 1979 to add still more bells and whistles. |
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| The costs of complying with the law have not been calculated. But officials say ushering a routine set of regulations through the process can require hundreds of hours of staff time and tens of thousands of dollars in direct costs. The absolute minimum time required for a rule to be approved is four months, and a more typical approval time is six months. However, it is not uncommon for the process to take several years if the rule is controversial, time needed for agencies to document the necessity of the regulation and respond to every criticism. The resulting paper maze does more than consume time and resources:
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| Personnel management agencies say process weakens authority without improving rules | Many believe that the process offers little value. The Personnel Board said that it publicized and held hearings on proposed rules for years before the APA required it to do so. DPA maintains that the State Employer-Employee Relations Act requires personnel rules and policies for rank-and-file employees to be decided through collective bargaining. To go through a public review process afterward, it believes, is useless. In one instance, a worker challenged the state rule that employees must declare on absence forms the reason they missed work. OAL concluded that the requirement was invalid because the State had not provided public notice and held a hearing when the requirement was added to the forms. The OAL went even further to opine that any revision to the forms might be considered "underground regulations" requiring review. In the case of drug testing, the Administrative Procedure Act greatly complicated management's effort to respond to the changing stresses of the workplace. The Department of Personnel Administration -- as many large employers did in the 1980s -- wanted to inform departments of rules regarding "substance abuse" testing. It took eight months for DPA to get a drug testing policy through the APA procedures. The Personnel Board was equally frustrated when it set out to establish pre-employment drug testing rules. It started the project in early 1988 and was unable to get rules on the books until April 1990. Five public hearings were required to satisfy OAL. The disagreements often resulted from an OAL determination that the board did not adequately answer questions raised during the hearings, rather than whether the rules were legal or understandable. And among the reforms stymied by the process are "demonstration projects," the State's primary vehicle for testing new ideas that can be applied throughout the government. While the law allows demonstration projects, the legal complexities of setting them up discourages agencies from trying out the very ideas that could streamline the process. Departments or central personnel agencies interested in starting a demonstration project have to hold public hearings, obtain the approval of both the Legislature and the employee unions, and then complete the Administrative Procedure Act process before a project can begin. Some experts believe reforming the process for issuing new rules is essential to reforming all other rules that shape the civil service system. Marty Morgenstern, the first director of the Department of Personnel Administration, said: "If every proposed change in classification, adverse actions and other rules that will be needed to streamline the process is required to go through current procedures, it will never get done. Never happen." |
| Requirements Elsewhere | Federal law and statutes in other states either require less review or exempt internal management rules from independent review. Many states, however, do require that regulations exempted from review be published in a public forum, and in some cases subject to formal public comment periods.
North Carolina's law exempts internal management rules that do not "directly or substantially affect" the rights of people not employed by the agency. Washington's administrative procedure law -- rewritten in 1988 in a reform effort watched nationwide -- expressly exempts internal management rules from review. The Model State Administrative Procedure Act, crafted by the National Conference of Commissioners on Uniform State Laws, encourages informal review processes for rules that are not subjected to rigorous analysis. |
| Recommendation 2: The Governor and the Legislature should enact legislation to eliminate review by the Office of Administrative Law of rules, regulations and negotiated agreements relating to the internal personnel administration of the State. | |
| Two pressures define civil service. The need to balance public interest in how the government functions with the need for the government to function with business-like efficiency. While the Office of Administrative Law offers a valuable service in reviewing rules applicable to the general public, the review requirement creates a costly burden on state managers, reducing discretion and discouraging change.
The Governor and the Legislature should enact legislation to remove the Office of Administrative Law from the review and approval of rules, regulations or negotiated agreements relating to the internal personnel administration of State government. Departments, however, would still be required to provide public notice and allow for public comment on proposed rules. |
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Eliminating OAL Oversight
| The public has a stake in the outcomes of the State's personnel management system. But the Legislature, the courts and the public forum in which the State's chief executive can be held accountable are adequate venues for resolving concerns about those outcomes.
The real stakeholders in internal management are the employees, managers and supervisors. The terms and conditions of employment are already the product of participative processes. The internal stakeholders also have access to the other forums, as well, to resolve disputes about fairness and legality. And they have not been reluctant to use them. Personnel issues exempted from OAL review, however, would still have to comply with the public notice provisions of that act -- that proposals be announced in the California Regulatory Notice Register, that the public have the opportunity to comment and that approved rules be published in the California Code of Regulations. |
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Personnel Management Issues |
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| Civil service jobs have a reputation for stability. Workers may have to put up with the bureaucracy. But for those fond of security, it is a lifetime job shielded from the blustery management winds and harsh competitive pressures of private enterprise.
This perception has become even more ingrained as the largest of America's corporations -- even those that once enjoyed luxurious monopolies -- have felt the heat of competition on their back and responded with layoffs and pay cuts. But the same demands for reducing costs and increasing service are now being pressed upon state government, and the response must include a re-examination of the civil service assumptions. Many of those assumptions shape the entire civil service system from the front end: the classification and selection systems that determine who the State will hire and the duties they will perform. The evidence shows the current selection system consumes resources while actually hindering the State's efforts to find the most qualified and ambitious, those who would be up to the task of satisfying the public's rising expectations of government. The issues of compensation, training, discipline and tenure are issues effecting both managers and rank-and-file workers. While any changes will undoubtedly be seen as an erosion of longstanding comforts, they also could be liberating and rewarding for many in public service. |
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| Finding 3: The concept that all state employees belong to one civil service is fiction. Different departments have different missions, clientele and needs. The centralized system hinders cost-efficient management, complicates procedures, discourages experimentation and masks accountability. | |
| It may have been appropriate half a century ago to consider all state employees to be part of the same civil service corps -- managed by a central office, subjected to identical forms. But today the concept is obsolete, and the system created to manage that system makes it difficult to attract the best employees and match their talents to the needs of an organization.
The obsolescence rests in the civil service mainstays of classification, selection and protection against random layoffs. Central oversight also has discouraged individual departments from launching demonstration projects intended to improve the delivery of public services. |
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| The Fiction of One Civil Service | There are more than 100 different state agencies, departments, boards and commissions covered by the civil service system. They range from the small Board of Prison Terms and State Board of Control to mammoth organizations with facilities throughout the state -- the Department of Corrections, the Employment Development Department and Caltrans. The nature of these agencies is in some ways more diverse than the private sector: law enforcement, administration, medicine, engineering, finance, social work. Some agencies perform research, some provide services, some regulate business.
Some departments have elected executive officers -- the Superintendent of Public Instruction, the Treasurer, the Controller, the Secretary of State. Some have directors who report to politically appointed commissions. Some directors are appointed by the Governor. Some departments have narrowly defined missions, such as the California Highway Patrol. Others have broad mandates, such as the Public Utilities Commission. Departments such as the Air Resources Board or the Attorney General's Office require highly educated specialists to perform analytical work. The Department of Motor Vehicles and the Franchise Tax Board need employees who can perform standardized tasks yet can quickly adapt to new technology. |
| Improving government requires flexibility that civil service rules discourage | With declining revenues, increasing public demands and new technology, many departments have begun to review their organizational structure, the skills and abilities of their staff, and the manner in which they provide services. And they have begun to seek more flexibility in personnel and procurement. But the current civil service system eschews flexibility.
The California Code of Regulations contains 48 pages defining State Personnel Board regulations for advertising job openings, creating eligibility lists, defining probation, resolving discrimination complaints, investigating appeals and conducting hearings. Another 60 pages lay out Department of Personnel Administration rules: compensation and employee benefits, the accrual of vacation, sick leave and holiday credit, layoff and demotion provisions, the merit award program and training policies. The problem is not just centralized control. Personnel officials at all levels believe the procedures themselves are antiquated and ineffective. The requirement for competitive examinations has become in many cases a costly and useless step. For example, the rule of three, which requires departments to hire from candidates in the top three examination ranks, has prevented agencies from matching the right person to the job. The entire convoluted process discourages many of the best candidates from even applying. Department personnel specialists said the problem is not a lack of creative and innovative ideas. They believe the problem is the miles-long obstacle course that prevents personnel specialists from experimenting with line managers to fulfill program responsibilities. The three best examples of the problems created by centralized control are the classification, selection and layoff processes. California has been applauded nationally by the Winter Commission, a privately funded panel of government and business leaders, for starting to delegate these duties to the individual departments. But many believe that process has not gone nearly far enough. Not only is there still central review of many department decisions, but the basic procedural requirements are still in place. |
| Classification | In 1934, the Personnel Board was given the authority to create classifications. When classifications were first created in 1916, there were 355 classes for the 12,500 employees. The system groups workers into general occupations, such as clerical, legal, engineering, professional and law enforcement that are the basis for the 21 bargaining units that negotiate with management over salaries and terms and conditions of employment. |
| Classification system hamstrings managers ability to respond to changing needs | The system, however, results in the inflexible stratification of duties and responsibilities for the various positions. Performing duties outside the formal description is considered working "out-of-class," which unions view as circumventing the promotion process. But strictly adhering to the system, one expert concluded, creates a system that "keeps the bright performers from moving up and rewards the seat warmers." Another consequence is the energy consumed by managers trying to comply with the system. Even the State Personnel Board considers the classification plan "so complex that it inhibits rather than helps managers get their jobs done." If a department wants to establish or revise a class, it must submit a "concept paper" to the Department of Personnel Administration. DPA reviews the idea, and if it concurs, the department develops a more detailed plan. The department typically shares the proposal with the appropriate unions. After DPA approves the proposal, it is forwarded to the Personnel Board, where the staff reviews the job qualifications, proposed exam plans, probationary periods and affirmative action implications. If there is no opposition to the proposal, it is placed on the Personnel Board's "consent calendar" for consideration. With so many departments and civil service classes, and with program needs changing so rapidly, there is a staggering volume of paper flowing between departments, DPA and the Personnel Board to approve new classes, revise existing classes or change the grade and pay level of a class.
Many civil service systems have experimented with "broadbanding" -- consolidating classifications with similar occupational skills into single classes. The concept is to give managers more flexibility in assigning tasks, responding to changing and temporary demands, and reducing the paperwork needed to comply with a narrowly crafted classification plan. The federal government also has experimented with broadbanding, and found that it helped organizations attempting to instill more innovative work cultures, that it facilitated the delegation of classification duties to managers, and made it easier for managers to evaluate the performance of workers. |
| Selection | The classification plan defines positions. Selection is the process for filling positions with employees. Selection rules are as rigid as the classification rules and have their genesis in Article VII of the State Constitution: |
| In the civil service permanent appointment and promotion shall be under a general system based on merit ascertained by competitive examination. | |
| The problems result from the last four words: "ascertained by competitive examination." From those words, an elaborate system has evolved in laws and regulations that control employee selection. The process creates large lists of potential applicants and large pools of technically qualified candidates, while complicating efforts to fill unique positions and doing little to help managers find the right person for the job.
When a department has vacancy -- and it is satisfied with the classification -- it publishes a job announcement. If a list of eligible candidates does not exist, it must develop and conduct a competitive examination. From the examination results, the agency prepares a list of "certified" candidates. And an appointment can be made from that list. Much of that process has been decentralized to individual departments. Departments have substantial flexibility in the nature and scope of the examination. The Personnel Board regulations allow examinations to be "assembled or unassembled, written or oral, or in the form of a demonstration of skill, or any combination of these." Certification rules are more restrictive. For instance, depending on the examination, some competitors -- such as veterans -- are given supplemental points that raise their test scores. But delegating duties has not resulted in significant innovation. |
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| Personnel officers say rules intended to find best candidates often rely on chance | For some departments, the list of potential candidates is so large they have contracted those duties back to the Personnel Board, which on occasion must rent out Cal Expo to accommodate all of the test takers. Typically, 90 percent of those who take the tests pass. The State has turned to lotteries to further narrow down the field. The Ad Hoc Personnel Officers Committee, a group of departmental personnel officers, testified that some exams involve 15,000 applicants for positions that may result in 300 hires. Hours of staff time are consumed reviewing stacks of applications. And those departments that use written tests to winnow down the list do so knowing such tests are not the best predictor of success. And even then, the test results will leave them with a pool much larger than the vacancies. The application list doesn't have to reach into the thousands before competition based on qualification is diluted by chance. It is equally common to have 10 or 20 candidates who have tied for the highest score. But the rules require each candidate to have an individual rank on the eligible list, and so computers randomly assign ranks. As a result, a person with the highest score -- and maybe the best qualified -- may not even be granted an interview. At the state level, the competitive examination requirement prevents the State from being competitive. The process, DPA Director David Tirapelle said, is not only costly to the State, but discourages applicants. When America's top corporations visit university campuses they frequently offer jobs on the spot. The State, Tirapelle said, can offer top graduates the opportunity to take a test in several weeks, and then perhaps be lucky enough to get an interview several weeks later. The combined problems of the classification and selection process is particularly burdensome to state government as it tries to adapt to rapidly changing technology. Departments need flexibility in job assignment and in hiring. They need to find people who have the right skills and know how to learn. And they must be able to move that learner into constantly challenging positions to solve the State's problems. |
| Layoffs | The State's fiscal crisis has illuminated another failing of the centralized bureaucracy, the inability to swiftly, yet fairly, lay off unnecessary workers.
From June 30, 1991 through November 30, 1994, more than 7,000 employees moved from general-funded to special-funded positions as the number of general funded positions declined. During this period, only 310 employees were actually laid off. For layoff purposes, each department is considered a separate employer and determines need for staff reductions, and the classes and geographic areas where the layoffs will occur. The layoffs are initiated when voluntary methods -- including voluntary transfers, reduced work time, retirement and hiring freezes -- fall short of reduction goals. But centralized oversight by both the Personnel Board and DPA greatly complicates and diminishes that authority. |
| Cumbersome layoff rules make it hard to eliminate unneeded workers | Layoffs are made according to seniority. But determining the seniority list is "a complicated and lengthy process." One credit is awarded for each month of state service, although the law permits performance considerations to be included for selected scientific, professional and administrative positions. Employees can obtain seniority credit for short-term military leave or temporary disability leave. Some bargaining units have negotiated special layoff provisions. For example, the Correctional Officers consider only the time served in classes in that specific unit for calculating seniority. After DPA has crafted a list, the Personnel Board reviews scores to determine if the layoff will adversely impact ethnic, sexual and disabled composition of the class. If that is a likely outcome, the Board can modify the seniority score rating. This process has rarely resulted in changing layoffs from the seniority base; the more common effect has been to add complexity and to slow down the process. Once the seniority list is developed, affected employees must be notified in writing at least 30 days prior to the layoff date. Employees can appeal the layoffs if they believe the process is unreasonable or inappropriate. As workers voluntarily leave a department or transfer to new positions, the seniority list may have to be updated. The process can take several months. During the past three years, DPA staff has calculated more than 49,000 seniority scores for the 310 employees who were actually laid off. |
| Layoff plans in one agency complicate hiring plans in other agencies | The process also has ramifications for those departments not facing layoffs. The "State Restriction of Appointments" (SROA) rules require departments with vacancies to consider individuals from other departments who are in the same or comparable classes and face layoff. These individuals can turn down offers, but each time they have to be considered. From June 1991 to November 1994, 13,715 employees were placed on the SROA list.
Even if a department has advertised to fill a position, or is seeking to promote an employee already performing the duties, it may have to interview and consider SROA candidates. Departments can seek an exemption from the SROA process. If DPA denies the exemption, it is common for departments to not fill the position rather than hire someone who may not be equally qualified. |
| Demonstration Projects -- Innovation Stalled | In 1980, the Legislature gave state agencies a license to experiment. The new law, modeled after a similar federal statute, authorizes the Personnel Board to initiate demonstration projects designed to find ways to improve personnel management practices. The law allows civil service rules to be set aside to give innovators the latitude they need.
But the law also attached a lot of strings: To set up a demonstration project, concept papers have to be written, hearings held, and notice must be given to unions and the Legislature six months in advance. Unions with members affected by the projects must give written permission. The law only allows five projects at a time, and limits the projects to five-year lifespans. And the Office of Administrative Law maintains it must review the proposals for compliance with the Administrative Procedure Act. In 15 years, only three demonstration projects have been initiated and all have expired. All three dealt with increasing the members of under-represented groups in the state work force: severely disabled job applicants; women in blue-color jobs; and Hispanics. |
| Lack of resources, regulations discourage departments from experimenting | In 1994, the Personnel Board urged departments to seize the opportunity to improve selection procedures for managerial classes, establish broadbanding of classes to reduce repetitive testing, ease the transition of student and seasonal employees into the regular work force, and reduce the number of persons tested in open examinations for limited vacancies. But still no proposals have been submitted. A serious problem is the amount of staff time required to develop a proposal -- particularly when central personnel agencies are shrinking and department personnel offices are trying to assume more responsibilities. The Personnel Board has considered proposing legislation to increase the potential number of projects that can be active at any given time and to extend the time for a project beyond the five-year period. The Department of Transportation, during testimony to the Commission, expressed a strong interest in becoming a "pilot" department for new personnel systems. It may be desirable to select several diverse departments to test the concept: A regulatory department such as the Department of Insurance; a public-service-oriented department such as the Department of Fish and Game or the Department of Parks and Recreation; and one of the more autonomous departments managed by an appointed board, such as the Public Employees' or the State Teachers' Retirement System. Given the wide variation between departments and the needs of each, it has become nearly impossible to impose a single, uniform and effective personnel management system. The problem is particularly evident in the classification, selection and layoff provisions. The tight rules that often result from centralized authorities also have discouraged efforts to find solutions through demonstration projects. |
| Board of Control | Among the bureaucratic fixtures that complicate the personnel system and ultimately diffuse management prerogative is the State Board of Control's review of special "equity claims" from state employees. The Department of Personnel Administration has the authority to approve claims from employees seeking additional compensation for performing duties outside of their class. The Board of Control, however, also has that authority, and over the years has reviewed claims that were not submitted to DPA, or that DPA did not approve. The Board of Control also has authority over employee claims for travel and relocation expenses and personal property damage. When those claims are received, the Board of Control refers the matter back to the employee's department for review and its recommendation. Normally, the department concurs with the claim and the Board of Control follows the department's recommendation. The Board of Control then includes the claim in one of its two annual legislative claim bills, which allocates payment from the departmental budgets. Department personnel officers described this as an unnecessary and bureaucratic exercise in paperwork. |
| Recommendation 3: The Governor and the Legislature should enact legislation allowing the Department of Personnel Administration to delegate to individual departments more authority over classification, selection, discipline, compensation and layoff procedures. The legislation should also encourage more demonstration projects to foster reforms. | |
| While it is the State's interest for DPA to negotiate common salary and benefit issues, individual departments should be enabled and encouraged to develop supplemental agreements with unions on unique concerns.
The Governor and Legislature should enact legislation to give greater discretion to individual departments over classification, examination, selection and layoff procedures. DPA should develop guidelines to assist departments in tailoring those procedures to their needs. The Governor and Legislature should enact legislation to ease and encourage more demonstration projects, and to enable successful experiments to become permanent management practices. In some cases, entire departments should be granted substantial freedom to gauge the potential benefits of a deregulated personnel management system. |
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| Delegate Personnel Decision-Making to Departments | Departments should be given greater management discretion. This would require an extensive revision of the laws that now dictate these procedures, and in some cases negotiating changes to collective bargaining agreements. The statutory and negotiated changes should enable departments to undertake such reforms as:
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| Enable Innovation | The Governor and the Legislature should amend Government Code Section 19600 to simplify the process for initiating "demonstration" projects. Experimentation is essential to crafting cost-effective reforms and the potential for demonstration projects to encourage change has never been realized. The legislation should remove the limitation that only five projects can be active at any one time and allow projects to extend beyond five years if more time is needed to assess the practicality of an experiment. The legislation also should make it easier for projects to become permanent features of government and enable the transition of successful projects from individual departments to the entire state system. |
| Finding 4: Many state managers lack the authority, leadership skills and incentives needed to create a positive work environment and deal effectively with employees. | |
| Many managers are promoted because of their strong technical skills, but lack the necessary skills to be effective managers. For organizational cultures to change, managers must be enthusiastic partners. In addition to authority, managers must have the skills necessary to do the job and be held accountable for their actions.
As demonstrated in previous findings, the authority of local managers is usurped by the complex and centralized structure of the civil service system. For departments to turn managers into leaders, they must be granted still more authority, be trained to accomplish the task and given incentives for taking on the challenge. While these are common traits in successful organizations, they are particularly lacking in the State's civil service. |
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| Authority | The Commission was told by numerous personnel officers and managers that their ability to get the job done, let alone make major changes in how work gets done, is hindered by the complexity of civil service regulations: The classification and selection process can take weeks of effort and months of time to find the right worker to complete a difficult task. The discipline procedures make it difficult to resolve the kind of personnel issues that distract other employees.
While some of these issues are structural, they must also be viewed in terms of their effects on managers trying to manage. In "Reinventing Government," Osborne and Gaebler wrote: |
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Managers in civil service systems cannot hire like normal managers: advertise a position, take resumes, interview people, and talk to references. They have to hire from lists of those who have taken written civil service exams. Often they have to take the top scorer, or one of the top three scorers -- regardless of whether that person is motivated or otherwise qualified... |
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| And Marty Morgenstern, who after directing the Department of Personnel Administration researched public sector management at the University of California, Berkeley, said the State must be willing to give more authority to managers, supervisors and even rank-and-file workers. | |
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"I strongly believe that the single most important step in improving the quality and responsiveness of state government would be to put the power to work smart in the hands of the state work force." |
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| Morgenstern said his greatest concern is the classification system, and how it limits managers' ability to manage workers. He said it creates turf wars within departments, making it hard to get people to work together, or change work techniques.
The same latitude is lacking in selecting and coordinating the management corps. The dispute between the Department of Personnel Administration and the State Personnel Board over the definitions of "management" has given the State two different kinds of managers -- those who fall into the Career Executive Assignment and those who are considered management by the State Employer-Employee Relations Act. As a result, different selection, compensation and tenure provisions apply to different managers. The CEA is limited, with a few exceptions, to those who already have permanent status in the civil service, and so is effectively a closed system. The State can not tap the expertise of private sector managers to fill these positions. And for the rest of the management corps, the same restrictions that make it difficult to hire the right person for a rank and file job make it hard to find the right manager. Selection is sometimes limited to established promotional lists -- again precluding recruitment of private sector managers. Other times open tests draw so many applicants that the pool is unmanageable -- discouraging top private sector managers from even applying. |
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| Leadership Skills | One criticism of public service is that front-line workers are not performing their jobs. The criticism is often misdirected. Personnel experts assert that supervisors and managers should be the ones held accountable for the performance of their staff and the quality of the service provided. And union officials argue that existing civil service procedures would work better if managers were properly trained to lead willing workers and discipline poor performers. Either way, experts agree that better leadership skills will become more important as the State streamlines its process and delegates authority. The characteristics of contemporary organizations are rapidly changing. Managers and supervisors are being asked to improve communication, use participative management styles, take advantage of new technology and focus on results. The Winter Commission, a privately funded panel of business and public leaders, found that in government these traits were especially needed and particularly lacking: |
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In its call for merit system reform, the Winter Commission urges a one-two punch: one, freeing managers from any rule that thwarts their abilities to manage personnel and, two, greater investment in education and training to ensure that managers possess the insight and skills to use their expanded direction wisely. |
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| But it is clear that the current system is not providing the training needed for the State to improve efficiency or effectiveness.
Managers often are promoted on the basis of strong technical or professional skills, and don't have formal management training or experience. Those managers who are trained must be retrained to learn modern management styles that stress coaching, listening, mentoring and championing the ideas of their staff. Today's managers need to understand new philosophies for effective selection, performance expectations and evaluations, positive and timely recognition or corrective action, and assuring that their staff receive needed training.
Employees cannot modify work habits and perform new tasks without the strong support of managers. To encourage change, researchers have concluded, managers will have to view employees in different ways and commit to the trust-and-lead approach. The work culture must encourage employees to view their careers as an endeavor of continuous learning.
There are substantial gaps in the State's training programs. Some departments recognize the need to strengthen management. Others have taken a "laissez-faire" approach that does not focus training on the organization's long-term strategy. It is not that the State lacks rules, regulations and programs on training. The issues are whether those rules are being followed, whether the programs are effective and whether training is a priority among senior managers. For this study, the Department of Personnel Administration surveyed departments with more than 100 employees to determine the nature and extent of manager and executive training. Of 73 departments that responded, 22 make an effort to provide training. Of the 22, only a handful have what could be considered a significant program. A primary concern expressed by managers was not insufficient funding but an unwillingness of managers to take time away from their jobs. The reaction is indicative of the commitment made to training, and suggests that the benefits of training some executives will be undermined if other executives do not receive the same training. Winter Commission Director Frank Thompson said training is a program that managers often -- and wrongly -- think of as discretionary: |
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The management and executive education ethos that permeates much of the business world is almost completely absent in government. Training and education budgets in government agencies usually get chopped at the first hint of fiscal turbulence. Most state governments slight training ... While recognizing the barriers to adequate investment in education and training, it is essential that we attempt to surmount them. Better prepared managers, committed to drawing on the insights of front-line employees in problem solving, hold the key to the success of more deregulated civil service systems. |
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| Responsibility for Training | The Department of Personnel Administration has the lead role for training in state service. It provides guidelines to help departments comply with training policies. It evaluates department training programs and develops performance standards for state training instructors.
DPA offers consultant services to departments and it operates the State Training Center. The center offers courses on analytical skills, problem solving, technical report writing, basic supervision, labor relations, the State's discipline process, sexual harassment and managing a multi-cultural work force. |
| Training has been delegated, but resources and commitment have not followed | Following a fruitful trend, training has been decentralized and many of the larger departments have developed their own training programs. Smaller departments, however, typically offer a limited range of opportunities for employees. Departments are responsible for allocating financial resources to training, developing training policies consistent with DPA rules, submitting an annual training plan to DPA and conducting the training. They employ their own training staff and hire some outside consultants. Many department employees also perform formal "on-the-job" training in their specialized areas. The State has done little to evaluate department training programs or provide stronger statewide leadership. There is no effort underway to conceptualize ways to provide managers with a strong, coordinated and on-going training and development program. There is no plan to outline for departments what might constitute an effective managerial training program. |
| Training Supervisors | State law requires that all new supervisors receive at least 80 hours of training within the term of their probations or one year of appointment. The training covers: "the role of the supervisor, techniques of supervision, planning, organizing, staffing and controlling, performance standards, performance appraisal, affirmative action, discipline, labor relations, and grievances." The law demonstrates the problems created by overly detailed legislation. Supervisory practices and managerial theory are changing as rapidly as technology and the work itself. Modern managers must be familiar with quality management concepts, team building and "crisis intervention." Although DPA could begin including these topics in their training programs, technically it requires a change of law. There is no requirement in the law that supervisors receive refresher or additional training. While some managers and supervisors take additional classes, DPA training officials said there is no requirement and little monitoring to ensure that managers maintain the skills needed to be effective. |
| State Manager/Executive Training and Development | |