Executive Summary

Workforce Reforms

Public employment systems developed a century ago are ill suited to the realities of today’s 21st century economy. The current fiscal crisis demands a comprehensive overhaul of how the Commonwealth manages its workforce. Implementation of the reforms described here will save $115 million during the coming year.

Elimination of Civil Service

Civil Service is an outdated and costly system. Collective bargaining and general employment law now provide employees with extensive protections against arbitrary dismissal. Following successful examples in Georgia, Florida, and Texas as well as the Federal Department of Homeland Security, the Romney budget eliminates Civil Service for most state employees. The Commonwealth continues merit testing for public safety employees, but state and municipal managers will be freed from the unnecessary bureaucracy of civil service.

Reform of anti-outsourcing law

Massachusetts is the only state that virtually prohibits outsourcing of any functions currently performed by state employees. State law mandates that private bids be compared to a fictional cost if public employees were to work “in the most cost-efficient manner.” The Romney budget reforms the law, freeing managers to seek lower cost or higher quality alternatives and restoring competition to the delivery of state services. This reform alone will save $50 million in 2004.

Redefining managers and supervisors

Public managers face strict limitations that far exceed private sector management-labor rules. The Romney budget recognizes that these inherent management rights, many of which have been taken away over the past 30 years, must be reinstated. For example, under Massachusetts law, supervisors are union members, compromising their ability to supervise effectively. The Romney budget reforms state law to remove supervisors from union membership and bring Massachusetts in line with the National Labor Relations Act.

Collective bargaining rights should not determine which employees are hired, fired, or promoted. They certainly should not determine how state services are delivered. Fair and reasonable limitations to the scope of collective bargaining will permit the Commonwealth to deliver core services more efficiently.

Pensions

The state’s pension system is antiquated and underfunded. A lack of portability unfairly punishes younger workers. Benefits should become proportional to contributions, ending unfair subsidies of some employees by others. In the coming months, the Romney administration will file more comprehensive pension reform legislation.

Health benefits

Health care costs are skyrocketing for all Massachusetts residents. Spending on state employee and retiree health care increased from $598 million in 1998 to $797 million in 2002 -- a 33 percent cost increase with only a 3.8 percent growth in enrollment.

Total Healthcare Cost Per Subscriber

Fiscal Year

Because state employees currently pay only a fixed 15 percent of premiums, they have little incentive to choose economical plans and providers have little incentive to control costs. The Romney budget calls for level funding of the newly named Division of Group Benefits and gives it greater flexibility to set rates and provide incentives for choosing less costly plans.