DHRM Director Recommends More Personal Choice for State Employees

State officials face a challenge if they want to offer higher salaries to hire and retain great employees while also maintaining attractive benefit packages for all state workers, Paul Garver, executive director of the Utah Department of Human Resource Management (DHRM), told the Legislature’s Government Operations Interim Committee.

“In today’s tight market, many state agencies are facing difficulties in attracting and retaining talent.  One way to change this is higher pay,” he said at the Committee’s Oct. 17 meeting. “In order to do this, the value would be taken out of the benefit package. [However,] the benefit package helps retain employees once they are here.”

Garver’s comments came as he presented DHRM’s “Options for Rebalancing Benefit and Pay Values” report.

DHRM spent two months meeting with key stakeholders, including representatives from the Public Employees Health Plan (PEHP), Utah Retirement System (URS), and the Utah Public Employees’ Association (UPEA).  The report reflects input from all three groups..

The department also surveyed employees with five years or less of service who are in the Tier II retirement system.  It asked these employees why they came to work for the state and why they continue to work for the state.  More than 90 percent of the respondents (the survey had a 40 percent response rate) said primary motivators include job stability and strong benefit offerings (retirement and health care). The study found that employees remain with the state because of health insurance, improved work/life balance, and retirement benefits.

“We don’t necessarily want to upset the key motivators, but we also don’t want to detract individuals from working for the state because of low pay,” Garver said. While these motivators remain strong for many employees, some desire higher wages even if there is less value in their benefits. “Personal choice is key,” he said.

DHRM’s current pay adjustment initiatives include:

  • Cost-of-living increases
  • Targeted funding initiatives
  • Administrative salary increases
  • Reinvest agency operational improvement savings into employee compensation

These initiatives should continue and run parallel to benefit/pay rebalancing recommendations.

The key parameters of the current proposal are to:

  • Allow employee choice to appeal to individual motivators
  • Have little, if any, budget impact
  • Be perceived as fair, transparent, and favorable by employees

Medical Insurance Rebalancing Option

Under the proposal, employees have the option of converting their health care spending accounts (HSAs) to cash they can use for any reason.  Currently, state employees have three options (offered annually) to choose from for medical care.  They elect their insurance options during the annual open enrollment period, selecting an HSA if it appeals to them.  PEHP will administer the program and provide the cash conversion payments, allowing for complete transparency to the employee.  This option will have no impact on income or retirement calculations.  However, the employee will lose the tax-shelter benefit of the cash-converted amount, which will be subject to payroll (both employee and employer) taxes.  Also, should an adverse health event occur, the employee would potentially be open to a larger personal financial burden.

Sen. Dan Hemmert, R-Orem, chairman of the Retirement and Independent Entities Committee, said he “is impressed that Mr. Garver returned to the committee with actionable items that require no legislation to implement.”

Sen. Wayne Harper, R-Taylorsville, indicated there will be no bill on this issue.

Todd Losser, UPEA executive director, testified before the committee.  He thanked PEHP, URS, and the Governor’s Office for their time and work on this issue.  Losser also said he “is looking forward to a continuing dialogue and working with stakeholders in a fair and transparent way.”