Legislative Finance Committee Report Confirms State Employee Classification and Compensation System is Broken

May 16, 2024 – Originally Reported in The Candle

“The classification and compensation structures are out of sync with the current labor market, negatively impacting talent acquisition and retention.” – Key Finding of Deloitte Study

The Legislative Finance Committee (LFC), meeting this week in Gallup, released a draft copy of the first serious in-depth study done in almost 25 years on the state personnel system – with a particular emphasis on employee compensation and the classification system used by the State Personnel Office.

Preliminary findings confirm what has been known for years – the system is broken.

Governor Michelle Lujan Grisham came to office more than five years ago promising to fix state government.

Previous administrations of both political parties have tinkered with the system with no significant positive impact.

And despite increased appropriations over the past five years for better staffing at many agencies, the current administration has been unable to fill many needed positions.

State employees tried to get the administration to conduct a serious study and develop a plan to replace employment practices which have resulted in serious vacancy rates across almost every state agency under the control of the Governor.

They complained agencies were losing employees because of a broken classification system and insufficient pay scales.

Likewise, recruitment was compromised due to a system out of date with market employment practices, leaving state agencies at a severe competitive disadvantage.

Legislators Decided to Get a Study Done –

With vacancy rates averaging 23%, and as high as 48% in some key agencies providing protective services, the Legislative Finance Committee Chairman, Senator George Muñoz, and others, felt the State Personnel Office was not getting the job done.

In 2023, the Legislature appropriated $1.2 million to conduct the first comprehensive study of the personnel system in almost 25 years.

The LFC staff, in one of the related handouts used for the presentation of the draft study to legislators, noted they have been working (alongside staff from the Department of Finance Administration and the State Personnel Office) with Deloitte Consulting, a professional group with expertise in employee compensation, recruitment and retention practices.

The draft report from the preliminary work notes:

“There is a disconnect in strategic alignment between the Personnel Act’s guidelines and the goals of State HR initiatives, hindering overall HR service effectiveness.”

Also included in the report are the following key findings”

• Current HR technologies lack modern automation and analytics, which results in over-reliance on manual processes.
• Recruitment methods are outdated, and do not leverage modern technologies and platforms, which restricts the State’s ability to attract diverse talent in a timely manner.
• The classification and compensation structures are out of sync with the current labor market, negatively impacting talent acquisition and retention.
• Many job descriptions are outdated, leading to a mismatch between actual job demands and documented responsibilities.

The Candle will have more reporting on the study draft this weekend.

(Copies of the draft report and related documents provided by the LFC, can be found below.)

Five Page LFC Key Hearing Issues Summary

EXECUTIVE SUMMARY: PERSONNEL ACT REVIEW SCOPE AND PURPOSE

Link To Power Point Presentation – Deloitte Project Summary

Final-Report_LFC-Meeting_DRAFT_for-client-review.-Draft.-Power-Point.-May-2024