Budget & Tax

Officials say state’s ‘merit protection’ system harms workforce quality

November 18, 2019

Ray Carter

Under the “merit protection” system used in Oklahoma government, it’s too hard to fire bad employees or give raises and promotions to good employees, according to several officials who spoke at a recent legislative study.

That has some officials calling for a major overhaul, or even repeal, of the system.

“Agency heads have to be able to make personnel decisions without unnecessary, arbitrary, and antiquated constraints that do little but stifle effective management,” said Rep. Mike Osburn, an Edmond Republican who requested the study. “On the other hand, not only should they be able to discipline or eliminate bad employees for bad behavior or subpar work, they should also have the freedom—and be encouraged—to promote and reward without having to climb a mountain of red tape.”

Oklahoma’s merit protection system, created in the 1950s and last significantly updated in 1982, provides numerous safeguards for “classified” state employees, including an appeals process for disciplinary actions. Workers not covered by the system are “at will” employees who can be fired or disciplined without dealing with the red tape of the merit system.

The share of classified employees in each agency varies wildly, ranging from 0 percent at 69 state agencies to 97 percent of employees working at the Employment Security Commission. The agencies with the largest and smallest shares of classified workers defy expectations. The Oklahoma Health Care Authority, which employs 525 and oversees the state’s Medicaid program, is an at-will agency with no classified employees. In contrast, 85 percent of employees at the Oklahoma State Board of Cosmetology and Barbering are classified workers.

“There is no consistency among agencies,” said Mike Jackson, executive vice president of the State Chamber of Oklahoma.

Jackson said about 65 percent of Oklahoma government employees are in classified positions today, which is in the top one-third of states nationally.

He said the appeals process is “extremely lengthy and costly” to state government, and that process can be used more extensively in Oklahoma than in most states.

“Oklahoma is the only state that allows for state employees to appeal performance reviews,” Jackson said.

Ellen Buettner, chief of staff at the Oklahoma Health Care Authority, previously served as human resources director at the Oklahoma Department of Mental Health and Substance Abuse Services and has overseen both classified and unclassified government workers.

She noted that defenders of the merit-protection system say employees can be fired “for things they do that are really bad.”

“My question is why do we have to wait for something really bad to happen?” Buettner said. “There should be flexibility for managers to take action when they see it to resolve those issues.”

As an example, Buettner added, “A nurse at a state-operated facility shouldn’t have four chances to kill someone by a med error” and noted there “have been individuals who have engaged in sexual harassment that we were required to keep.”

“If someone has really poor performance, just because they don’t do something that is so egregious it warrants immediate termination doesn’t mean that they can’t cause damage while they’re still there,” Buettner said.

The State Chamber contracted with the National Academy of Public Administration to conduct an analysis of Oklahoma's civil service system and that of six other states, and found Oklahoma’s system is both more rigid and can impede job promotion.

“The current system is extremely bureaucratic and inflexible,” Jackson said. “If you look at pay bands, you look at the ability for employees to progress, it’s extremely difficult for those managers and heads of agencies to actually reward high-performing employees.”

Sterling Zearley, executive director of the Oklahoma Public Employees Association (OPEA), said the merit protection system does need to be modernized, but said workers’ due-process rights should be preserved, and pointed to 2012 reforms adopted in Tennessee as an example of the proper approach. Tennessee was also highlighted as a reform state by The State Chamber.

Prior to heading the OPEA, Zearley worked for 23 years for the state tourism department and was a supervisor of both classified and unclassified employees and had to discipline and discharge some of those workers.

“You have this misconception that you can’t terminate classified employees,” Zearley said. “If you can’t, it’s because you’re lazy. Period.”

Zearley said he had to fire employees at the tourism department for offenses that included theft, alcohol use, failing to show up on time, and more. He noted that 669 state workers lost their jobs in 2017 either because they were fired or were part of a reduction in force. In 2018, that number was 643.

Buettner noted defenders of the merit system say without it, people would have to have the backing of state lawmakers to get state jobs, or that legislators would be able to get workers fired over political differences.

“Now, is that something that has ever happened in the history of the state?” Buettner said. “Possibly. But those are going to be the exceptions to the rule, and the state of Oklahoma is one of the largest employers in the state, and I just don’t think it’s a great idea to build an entire employment system around exceptions.”

But Zearley said such situations are not as rare as some officials suggest.

“I will tell you that, during the course of my tenure at tourism, it was very substantial,” Zearley said. “When I first started, you could not even hire a seasonal employee without a legislative letter.”

He also argued that whistleblowers would face greater pressure without the merit protection system.

“OPEA has heard from state employees who’ve been threatened by supervisors for informing legislators about concerns in their workplace and ways services could be improved,” Zearley said.

He said that problem arose at the state health department, where massive financial mismanagement was uncovered in recent years. That same agency also experienced a “ghost employee” scandal roughly 20 years ago in which friends and relatives of legislators were given jobs with few responsibilities.

But other states have shifted away from merit-protection systems without major scandal.

Nearly all state government workers in Texas have been at-will employees since 1985, Jacksons said. In 1996, Georgia lawmakers voted to gradually phase out classified employees. Every time a classified worker retired or left for another job, that position was made an at-will job. Today, 98 percent of Georgia state employees are at-will employees.

Earlier this year, Gov. Kevin Stitt issued an executive order that granted agency leaders the ability to hire additional unclassified workers, but maintained a freeze on classified positions, saying “we’ve got to make sure that we don’t grow those classified positions” if agencies are going to be customer-focused and deliver services.

But at least one lawmaker suggested allowing agency directors greater flexibility when overseeing personnel management, including assigning salaries within existing agency budgets, would create financial problems.

“The government really is a service organization. Our employees are really a lot of our greatest cost,” said Rep. Judd Strom, R-Copan. “And giving every agency the right to allow those salaries to fluctuate, really I feel like we would lose control of that and we would have to actually force, from our level, cutbacks that we don’t want to do every year.”

Osburn said Gov. Kevin Stitt has indicated reform of the merit-protection system will be a priority in the 2020 session, and that legislators need to be prepared to tackle the issue.

“We have to update our human resource and personnel management laws,” Osburn said, “or we are not being accountable to the people of Oklahoma, and we are not being good stewards of the money they have entrusted to us.”