Total Compensation Survey

Key Findings

This preliminary report provides the results of an actual survey of public sector classifications conducted by Cooperative Personnel Services under contract to DPA.

For the private sector data, DPA purchased several licensed reports from reputable professional survey organizations that gather private sector compensation data under conditions of strict confidentiality. However, these private sector sources are limited when it comes to making job-by-job comparisons of total compensation. Despite the limitations, we opted to report this private sector data rather than limit our comparisons to other public sector employers.

Additional study is needed to fill in data gaps and provide a more accurate picture of “total compensation,” as well as vacancy and turnover rates for benchmark classes. In the meantime, we can report the following preliminary findings:

State salaries and total compensation lead the private sector for clerical jobs, accountants, custodians, and trade classes such as electricians, stationary engineers, but lag behind similar jobs in the public sector.
The State leads the private sector in its general analyst classifications (such as personnel and budget analyst) and lags other similar jobs in the public sector.
The State lags in all medical and related occupations. The greatest private sector lag is for occupational therapists, where the lag is 39 percent.
In the auditor and registered nurse classifications, the State salaries lag behind other employers – public and private. For auditors, the lag is 7 – 8 percent; for RNs, it’s 3 – 5 percent. (These lags do not reflect recent pay increases for RNs resulting from a federal court order.)
State compensation generally lags the public sector employers surveyed in all benchmark classifications. In most cases, the lag was between 15 and 30 percent.
The State offers similar health benefits to those of other large private sector employers (1000 or more employees), but exceeds 33 percent of the labor market which offers no health benefits.
A State retiree eligible for the full employer health contribution in retirement secures an additional $494,000 in compensation over 20 years.
In information technology, State salaries lag the other public employers in the survey. Comparisons with the private sector are limited given that only one State benchmark class could be matched to a comparable private sector job; in that case, the State salary lag is less than the public sector lag.

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Introduction

Prior to implementation of collective bargaining in 1978, the State Personnel Board’s Pay and Benefits Center annually collected extensive labor market salary data for occupations used in State civil service. The information they compiled provided the basis for the State Personnel Board’s annual recommendation to the Legislature on employee compensation.

Since the advent of collective bargaining for State employees and the demise of the Pay and Benefits Center, virtually no labor market compensation data has been collected by the State. Consequently, our knowledge of where the State employer stands in the competitive labor market is anecdotal at best.

In the FY 2005-06 State Budget, DPA received resources in the form of additional staff and operating expenses to conduct an extensive review of where the State of California, as an employer, stands in the labor market.

DPA did not embark on this project simply to review salaries. We needed a more complete picture of the State’s competitiveness in recruiting and retaining employees, which meant looking at other employers’ benefit packages as well as salaries.

To ensure the data we compared was indeed “comparable,” it was necessary to focus on elements of compensation that can be quantified, generally as an employer cost. However, using this approach has a downside: the value of any given benefit to the employee may not be captured in the comparison. That value may in fact have as much influence on employee decisions about their employment as the quantifiable factors. Likewise, some employees may choose a public service job over one in the private sector, and vice versa, for reasons that go beyond the “total compensation” packages we’ve measured.

As we planned the State’s first comprehensive survey of compensation in over 20 years, DPA set out to address two primary objectives:

Determine generally where specific benchmark job classifications stand relative to other public and private employers to guide allocation of the State’s employee compensation dollars; and
Begin building the data “infrastructure” that will allow the State to take a more business-oriented approach to managing the State’s human resources.

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Limitations of this Survey

It was not feasible to gather data on all the State’s civil service classifications – there are more than 4,100 of them. Consequently, DPA relied on “benchmark” classifications to form the basis of this survey. Comparing compensation for these classes provides a general picture of where we stand with respect to general occupational groups.

This survey does not cover public safety employees. Our consultant for the public sector portion of this survey advised us to survey these occupations separately because they tend to have different pay structures and retirement programs, so data collection instruments must be tailored to these particular occupations. The State is in the process of contracting for a separate study of public safety employee compensation.

We were not able to weight the data we gathered due to the difficulty of getting information from survey participants on the number of incumbents in each benchmark class. With more time, it would be possible to gather such information; in the future we will build that time into the survey.

Obtaining private sector information that would allow us to compare total compensation for the benchmark classifications is more difficult than obtaining such information from public employers. Salaries paid by employers in the private sector are usually highly confidential and typically obtained only through legal mandate or disclosed to professional survey organizations under conditions of strict confidentiality. Gathering this information would require an expensive customized survey of individual employers and more time than we had for this first survey.

Since it was not possible given the time and cost constraints of this survey to obtain reliable “total compensation” from private employers on a benchmark-by-benchmark basis, funds were provided for DPA to purchase a variety of subscription services used by human resources professionals to evaluate private sector compensation practices. From that data, which did not include the level of detail available from the public employers, we were able to draw generalized conclusions about elements of private sector compensation packages to complement the public sector data we gathered.

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Different Methods Used to Survey Public and Private Sectors

Methodology

Public Agencies Surveyed

Occupations Surveyed (“Benchmark Classes”)

Total Compensation Data Collected

Salary Data

Leading or Lagging Other Employers

Time Period Covered by Survey

TABLE 1

TABLE 2

Different Methods Used to Survey Public and Private Sectors

For the public sector component of this survey, DPA contracted with Cooperative Personnel Services (CPS), a joint powers human resources consulting organization, to collect data from other public sector employers in California using “benchmark classes” identified by DPA for this survey. The response rate to CPS was a remarkably high 98 percent. A copy of the survey instrument is included with this report as Exhibit A.

For the private sector, DPA extracted data from reports compiled by five professional survey organizations. We aggregated the data to preserve the confidentiality of responding employers. Such published surveys are widely used by human resources professionals in developing employee compensation programs. They are considered reliable indicators of salaries paid for specific occupations in the private sector, although they have limited value for measuring benefits for specific job classifications.

Public Agencies Surveyed

Sixty-five public employers in California were surveyed. Collectively, they employ a substantial majority of public employees in California and represent the public sector labor market in which the State of California operates and competes.

The participants were selected to ensure an adequate number of survey respondents, to include the major public employers in California, and to cover the geographic areas where most State employees are located. Surveyed employers were assigned to one of five regions. Table 1 lists the employers by region.

The cities of Elk Grove, Santa Barbara, and Yuba City, and the County of San Luis Obispo did not respond to the request to participate in the survey.

TABLE 1 - Public Sector Agencies by Geographic Region

Sacramento / Northern California
City of Chico	County of Butte
City of Davis	County of El Dorado
City of Eureka	County of Placer
City of Folsom	County of Sacramento
City of Redding	County of Yolo
City of Roseville	CSU Sacramento
City of Sacramento	Federal Government-Sacramento
City of West Sacramento	Sacramento Municipal Utility District

Bay Area
City of Hayward	County of Monterey
City of Oakland	County of San Mateo
City and County of San Francisco	County of Santa Clara
City of San Jose	County of Solano
City of Vacaville	Bay Area Rapid Transit
County of Alameda	CSU San Francisco
County of Contra Costa	East Bay Municipal Utility District
County of Marin	Federal Government-Bay Area

Central Valley
City of Bakersfield	County of Kern
City of Fresno	County of Merced
City of Modesto	County of San Joaquin
City of Stockton	CSU Fresno
County of Fresno	Federal Government-Central California

Los Angeles
City of Anaheim	County of San Bernardino
City of Long Beach	County of Ventura
City of Los Angeles	CSU Long Beach
City of Pasadena	Federal Government- Los Angeles
County of Los Angeles	Los Angeles Department of Water and Power
County of Orange	Los Angeles Department of Water and Power

San Diego / Southern California
City of San Diego	County of San Diego
County of Imperial	CSU San Diego
County of Riverside	Federal Government-San Diego

Of the 65 public employers, six agencies requested their data be coded in order to remain anonymous.

Occupations Surveyed (“Benchmark Classes”)

Before the survey began, DPA identified 34 journey-level classes and 7 executive- and managerial-level positions used by the State of California, for a total of 41 benchmark classes. These classes are representative of the broad array of occupations used by the State.

The classes we chose have typical benchmark qualities: they’re easily described, tied to other classifications in the job “family” and, in general, are readily found in the labor market. We loosely grouped them into six general occupational areas:

Administrative and Office
Medical and Related
Engineering and Scientific
Trades and Support Services
Safety
Executive and Managerial

Table 2 lists the 41 benchmark classes in the survey and the number of public sector matches found for each benchmark.

Although CPS was able to match several of the benchmark classes used by the public sector employers it surveyed, DPA was less successful matching these benchmarks to the private sector data. For our comparisons to be useful, we elected to use the published private sector data only when we had a reasonable degree of confidence the responsibilities of the private sector job were comparable to the State’s benchmark. We deemed a job comparable when 48 or more employers reported data for it. If fewer than 48 employers reported data, DPA was not confident of the job match and did not consider the data sufficiently valid.1

Of the 41 benchmark classes, we found valid private sector matches for 20.

Supervisory classifications and peace officer/firefighter classes were not included in this survey for several reasons: It’s often difficult to match supervisory classes due to differences in employer size, organizational structure, and supervisory responsibilities. Compensation for supervisors is often determined by internal salary relationships within an organization’s structure, rather than by outside comparisons. Pay structures of employers also vary significantly, particularly in the private sector. In addition, the timeframe and budget for this project limited the number of benchmark classes we could include. We also were concerned that additional benchmarks may have discouraged public employers from participating in the survey, reducing our response rate.

TABLE 2 - Count of Public Sector Comparisons by Benchmark

Benchmark	Number of Comparisons
Accountant	63
Associate Civil Engineer	56
Associate Industrial Hygienist	28
Attorney	54
Auditor	48
Budget Analyst	44
Chemist	22
Chief Financial Officer	61
Chief Information Officer	57
Clinical Laboratory Technologist	35
Cook	42
Custodian	58
Dentist	23
Director, Human Resources	64
Director, Parks and Recreation	27
Director, Public Works	38
Director, Social Services	26
Electrician	52
Engineering Geologist	11
Heavy Equipment Mechanic	57
Heavy Equipment Operator	58
Hydroelectric Plant Operator	5
Information Systems Technician	56
Laboratory Technician (Chemical Analysis)	36
Licensed Vocational Nurse	37
Mid-Manager	27
Occupational Therapist	33
Office Assistant	65
Personnel Analyst	65
Pharmacist	32
Physician	35
Programmer Analyst	57
Psychiatrist	27
Psychologist	33
Public Safety Dispatcher	57
Registered Nurse	43
Research Scientist	22
Respiratory Care Practitioner	21
Social Worker - Master's Level	42
Stationary Engineer	41
Systems Software Specialist	55

Peace officer and firefighter classes were not included because they tend to have different pay structures and retirement programs, so data collection instruments must be tailored to these occupations. (It should be noted that Government Code section 19827 requires DPA to survey selected police officer jurisdictions annually. DPA prepares a separate police officer compensation survey each year to comply with this mandate.)

Total Compensation Data Collected

Deciding what data to collect for this survey to measure “total compensation” revolved around the following considerations:

What are the employer’s significant costs for employee compensation?
What are the significant factors influencing employees’ employment decisions?

Based on these considerations, we included the following elements in our “total compensation” comparisons:

Base monthly salary
Employer contributions to employee health, dental, and vision benefits2
Employer pickup of employee retirement contribution3
Employer deferred compensation contributions
Longevity pay, education pay, incentive/bonus pay, recruitment and retention pay4
Employer Social Security contributions

In addition to the data elements listed above, we also collected information on paid leave practices and cost-of-living adjustments (COLAs).

The employer data for this survey is not weighted by the number of incumbents in the benchmark in each jurisdiction. Incumbent data is not readily available and requires a significant amount of work and staff resources to develop. In addition, requesting the information necessary to weight the data would have imposed too much work on the employers asked to participate, potentially reducing the response rate.

Salary Data

For each benchmark class, we compared the maximum base salary and total compensation data for the State to the median of the maximum base salary and total compensation data reported by the public sector respondents.5

Private sector salary information used in this project comes with limitations. Salaries in the private sector may not have salary ranges comparable to the State’s, nor any established maximum, which is typical for the State. In addition, bonuses and incentive pay programs are typically not reported by private firms in a manner that makes the information useful for comparisons.

Therefore, the private sector salaries we report represent the median of the salaries from the various surveys (when 48 or more employers reported data, as described above).

Leading or Lagging Other Employers

Where the State of California leads other employers, we show the percentage as a positive (+) number. Where the State lags, we show the percentage as a negative (-) number. In the case of a lag, the percentage shown represents the percentage by which the State compensation would have to be increased to equal the survey median data level.

Time Period Covered by Survey

Respondents in the public sector were asked to provide compensation data for January 2006. Data was collected from mid-January through mid-March. The private sector data comes from published survey reports that used 2005 data.

Total Compensation

In general, our survey found that the State lags other public employers in California in total compensation. However, the lag is due to the State’s lower base salaries, not the benefits package, where the State is generally competitive with other public employers.

The State leads other public employers in total compensation in just one benchmark class (Engineering Geologist), although by less than 2 percent. For all other benchmark classes, the State lags other public employers. In most cases, the lag is 15 - 30 percent. The greatest lag, nearly 56 percent, is for Respiratory Care Practitioner.

The average statewide lag is higher for executive and managerial classes (23 percent) than it is for the journey-level classes (20 percent).

Regionally, the State’s public sector lag is the greatest in the Bay area. The average public sector lag by region is show below.

Region	% State's total compensation lags
Bay Area	32.82
Los Angeles	20.41
Sacramento	16.29
San Diego	13.82
Central Valley	13.76

Table 3 compares the State’s total compensation and salaries with other public sector employers.

As described earlier in this report, the data we collected from the private sector does not lend itself to comparisons between the State’s total compensation for each of the benchmark classes and what is provided in the private sector. However, in the following sections of this report we compare salaries and benefit programs separately, using aggregate data from the private sector.

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TABLE 3 - Public Sector Statewide Comparison of Salaries and Total Compensation, All Benchmark Classes

Classification	State's Maximum Base Salary	Public Sector Median	% State is above or below median	State's Maximum Total Compensation	Public Sector Median	% State is above or below median
Accountant	$4,997	$5,298	-6.02%	$6,266	$6,989	-11.54%
Associate Civil Engineer	$6,250	$7,026	-12.42%	$7,634	$8,706	-14.04%
Associate Industrial Hygienist	$5,587	$6,523	-16.75%	$6,920	$8,277	-19.60%
Attorney	$7,386	$9,695	-31.26%	$8,758	$11,944	-36.38%
Auditor	$5,247	$5,647	-7.61%	$6,536	$7,031	-7.58%
Budget Analyst	$4,997	$6,304	-26.16%	$6,266	$7,786	-24.25%
Chemist	$5,110	$5,854	-14.56%	$6,407	$7,031	-9.74%
Chief Financial Officer	$10,951	$12,761	-16.53%	$12,514	$15,322	-22.43%
Chief Information Officer	$10,271	$13,013	-26.70%	$11,825	$15,147	-28.09%
Clinical Laboratory Technologist	$4,344	$5,251	-20.88%	$5,563	$6,878	-23.64%
Cook	$3,021	$2,998	0.78%	$4,139	$4,296	-3.80%
Custodian	$2,382	$2,688	-12.85%	$3,451	$4,011	-16.21%
Dentist	$9,913	$13,494	-36.12%	$11,449	$15,554	-35.85%
Director, Human Resources	$10,271	$11,549	-12.44%	$11,825	$14,037	-18.71%
Director, Parks and Recreation	$10,271	$12,641	-23.08%	$11,825	$14,973	-26.63%
Director, Public Works	$10,271	$12,839	-25.00%	$11,825	$15,348	-29.80%
Director, Social Services	$10,271	$12,907	-25.66%	$11,825	$15,350	-29.82%
Electrician	$3,926	$5,086	-29.55%	$5,053	$6,435	-27.34%
Engineering Geologist	$5,932	$5,964	-0.54%	$7,292	$7,182	1.51%
Heavy Equipment Mechanic	$3,837	$4,375	-14.02%	$4,958	$5,715	-15.28%
Heavy Equipment Operator	$3,497	$3,953	-13.04%	$4,592	$5,216	-13.61%
Hydroelectric Plant Operator	$4,971	$5,906	-18.81%	$6,178	$7,632	-23.52%
Information Services Technician	$3,326	$4,548	-36.73%	$4,468	$6,049	-35.39%
Laboratory Technician (Chemical Analysis)	$3,463	$3,959	-14.31%	$4,615	$5,170	-12.03%
Licensed Vocational Nurse	$2,967	$3,744	-26.19%	$4,281	$5,070	-18.43%
Mid-Manager	$6,984	$7,370	-5.53%	$8,436	$8,983	-6.48%
Occupational Therapist	$3,960	$5,964	-50.61%	$5,169	$7,504	-45.18%
Office Assistant	$2,641	$2,902	-9.88%	$3,730	$4,214	-12.97%
Personnel Analyst	$4,997	$6,120	-22.47%	$6,266	$7,630	-21.76%
Pharmacist	$5,748	$8,224	-43.07%	$7,819	$10,090	-29.05%
Physician	$10,866	$13,467	-23.94%	$12,416	$15,554	-25.27%
Programmer Analyst	$5,247	$6,301	-20.09%	$6,536	$7,645	-16.97%
Psychiatrist	$10,866	$13,180	-21.30%	$12,416	$15,985	-28.74%
Psychologist	$5,904	$6,656	-12.74%	$7,262	$8,594	-18.35%
Public Safety Dispatcher	$3,762	$4,246	-12.87%	$4,723	$5,673	-20.11%
Registered Nurse	$5,423	$5,565	-2.62%	$6,725	$7,282	-8.29%
Research Scientist	$5,984	$6,125	-2.35%	$7,348	$7,742	-5.36%
Respiratory Care Practitioner	$3,616	$5,695	-57.49%	$4,780	$7,444	-55.74%
Social Worker - Masters level	$4,139	$5,229	-26.33%	$5,762	$6,826	-18.47%
Stationary Engineer	$4,601	$4,809	-4.52%	$5,641	$6,343	-12.44%
Systems Software Specialist	$5,753	$6,897	-19.89%	$7,080	$8,454	-19.41%

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Salaries

Public Sector Salaries

Private Sector Salaries

TABLE 4

Public Sector Salaries

State salaries lag other public sector employers in all but one of the 41 benchmark classes surveyed. These salary lags account for the total compensation lags reported in the previous chapter.

State salaries for Cook lead other public employers by less than one percent.
The highest lag occurs in the Respiratory Care Practitioner class, where the State salary lags other public employers by 57 percent.
Looking only at salaries, the State’s journey-level classes and executive-managerial classes both lag the rest of the public sector by roughly the same percentage (an average of 19 percent).
Of the 65 public sector respondents, 50 granted COLAs to their managers last year ranging from 1.5 - 5.7 percent; 45 granted COLAs of 1 - 5 percent to non-managerial employees. As for future COLAs, 34 employers plan to give COLAs of 2 - 5 percent to managerial employees; 38 have scheduled COLAs of 2 - 5.7 percent for non-managers. State employees received a 5 percent general salary increase in July 2003.6

The State’s average salary lag behind other public sector employers is lowest in the Central Valley, as shown below:

Region	% State salaries lag
Bay Area	31.61
Los Angeles	21.23
San Diego	16.39
Sacramento	12.63
Central Valley	8.62

Exhibits B, C, and D compare the base salaries and total compensation of the State to the rest of California’s public sector, by geographic region. Exhibit E presents public sector cost-of-living adjustments.

Private Sector Salaries

Private sector salary data helps provide a more complete picture of the State’s relative position in the labor market. While “total compensation” comparisons would be more useful, even this limited data has value.

First, a note about the data. The comparisons reported in this section use the State’s maximum salary for a benchmark class and the private sector median. Ordinarily, one would assume that maximum salaries should be compared to maximum salaries, and median salaries be compared to median salaries. However, in State service employees move to the top of their class salary range almost automatically as long as their performance is satisfactory. Therefore, the maximum salary represents the State’s “market rate.” In the private sector, there often is no maximum rate for a particular job and employees ordinarily move to the market rate, typically the median salary for the job.

Accordingly, this survey compares the State’s market rate (maximum salary) to the private sector market rate (median salary) to establish whether the State leads or lags the private sector.

Of the 41 benchmark classes, 20 were considered to have “valid” (i.e., comparable) private sector salary data, which can be summarized as follows:

Administrative and Office: Compared to the private sector, State salaries lead in each of the four general administrative occupations (accounting, budgets, personnel, and clerical); the State leads the most for the Personnel Analyst class (10 percent). The State lags in the three technical areas (auditing, legal, and information technology); the greatest lag is for Auditor (8.5 percent).
Trades and Support Services: The State leads private sector employers in all four of the comparable occupations, ranging from a lead of 4 percent for Electrician to 24 percent for Cook.
Medical and Related: In all six of the benchmark classes where there was a comparable private sector occupation, the State lags the private sector. In four of the six, the lag exceeds 23 percent. The greatest lag is for Occupational Therapist (39 percent); the lag is smallest for Registered Nurse (5 percent).
Executive and Managerial: In the three executive-level positions for which there was a valid match between the State and private sector occupations, the State also lags, from 6 percent for Chief Information Officer to 21 percent for Chief Financial Officer.

Table 4 displays this data.

TABLE 4 - Private Sector Statewide Comparison of Salaries, All Benchmark Classes

Classification	State's Maximum Base Salary	Private Sector Median	% State is above or below median	# of orgs with class match
Accountant	$4,997	$4,707	5.8%	481
Associate Civil Engineer **	$6,250
Associate Industrial Hygienist*	$5,587
Attorney	$7,386	$7,845	-6.2%	111
Auditor	$5,247	$5,692	-8.5%	88
Budget Analyst	$4,997	$4,763	4.7%	116
Chemist **	$5,110
Chief Financial Officer	$10,951	$13,290	-21.4%	91
Chief Information Officer	$10,271	$10,908	-6.2%	48
Clinical Laboratory Technologist*	$4,344
Cook	$3,021	$2,292	24.1%	167
Custodian	$2,382	$1,851	22.3%	342
Dentist*	$9,913
Director, Human Resources	$10,271	$11,384	-10.8%	48
Director, Parks and Recreation*	$10,271
Director, Public Works*	$10,271
Director, Social Services*	$10,271
Electrician	$3,926	$3,778	3.8%	53
Engineering Geologist*	$5,932
Heavy Equipment Mechanic **	$3,837
Heavy Equipment Operator **	$3,497
Hydroelectric Plant Operator **	$4,971
Information Systems Technician*	$3,326
Laboratory Tech (Chem Analysis) **	$3,463
Licensed Vocational Nurse	$2,967	$3,296	-11.1%	223
Mid-Manager*	$6,984
Occupational Therapist	$3,960	$5,515	-39.3%	166
Office Assistant	$2,641	$2,555	3.3%	295
Personnel Analyst	$4,997	$4,507	9.8%	418
Pharmacist	$5,748	$7,970	-38.7%	164
Physician*	$10,866
Programmer Analyst	$5,247	$5,550	-5.8%	219
Psychiatrist*	$10,866
Psychologist **	$5,904
Public Safety Dispatcher*	$3,762
Registered Nurse	$5,423	$5,691	-4.9%	233
Research Scientist*	$5,984
Respiratory Care Practitioner	$3,616	$4,454	-23.2%	206
Social Worker - Masters Level	$4,139	$5,116	-23.6%	131
Stationary Engineer	$4,601	$3,839	16.6%	77
Systems Software Specialist*	$5,753

* No private sector matches.

** Insufficient private sector data.

Administrative and Office

Occupational Differences

Medical and Related

Engineering and Scientific

Trades and Support Services

Safety

Executive and Managerial

Administrative and Office

State salaries lead the private sector by 3 - 10 percent in benchmark classes that are generally administrative (e.g., accounting, budgets, personnel, clerical), but lag the private sector by 6 - 9 percent in the technical classes that require special knowledge and skill sets (e.g., auditing, legal, information technology).

The State lags the other public sector employers in total compensation in all benchmarks in this category by 8 - 36 percent.

The data for this occupational category is consistent with State experience. The State easily recruits and retains employees in the general administrative classes but has more difficulty recruiting and retaining staff with the requisite skills in the technical administrative area.

The State has begun addressing these issues in a variety of ways. For example, the recent bargaining agreement for State attorneys includes compensation increases that will significantly reduce the lag for those classes. In the information technology area, the State is in the process of totally revamping its IT classification structure.

Medical and Related

With one exception, salaries for all the State’s medical and related benchmark classes lag the public and private sectors by more than 10 percent.7 The exception is the Registered Nurse classification, where the State lags by less than 3 percent. Over the past three years, the State has increased compensation for its RNs by 10 percent. For RNs working in correctional facilities, salaries have been raised an additional 18 percent as a result of court order involving inmate health care.

The State faces its greatest recruitment and retention difficulties in this category. Recruitment and retention of qualified personnel in the medical and related area is so serious that civil rights organizations and the courts have become involved in the State’s compensation-setting process.

Engineering and Scientific

The State lags other public employers in all the engineering and scientific benchmark classes, both in total compensation and salary, except for one class: Engineering Geologist. For that class, the State slightly leads other public sector employers in total compensation (by less than 2 percent). There were no valid comparisons for the engineering and scientific benchmark classes in the private sector data we used.

The State has already begun to address this lag. The collective bargaining agreement for State engineers includes a “parity” provision that has significantly increased State engineer salaries. However, this improvement has a downside: the State now has severe retention problems in the scientist classes where the duties, responsibilities, and knowledge overlap the engineer classes. State scientists have been moving into equivalent but higher-paying engineer positions.

Trades and Support Services

State salaries in this category lead the private sector in each of the four benchmark classes where there was a comparable private sector job. However, the State lags the public sector in practically all of benchmarks in this category, both in total compensation and salary. The exception is the Cook classification, where the State salary leads other public employers by less than one percent.

Safety

The Public Safety Dispatcher is the only benchmark class included in this category. There were no comparable occupations in the private sector data we used.

Compared to emergency dispatchers in other public jurisdictions, the State’s total compensation lags 20 percent.

The State has begun to address its significant retention problems in this area by negotiating salary increases targeted specifically to this classification.

Executive and Managerial

The State lags the public sector in all seven of the benchmark classes in this category, both in total compensation and salary. Total compensation for Directors of Social Services and Directors of Public Works lags by almost 30 percent. Salaries for Mid-Managers lag by about six percent, the lowest lag in this category.

State salaries also lag the private sector for each of the three executive-level positions for which there was valid private sector data: Chief Information Officer by roughly 6 percent; Director of Human Resources by 11 percent; and Chief Financial Officer by 21 percent.

The State has long been aware that its executives’ and managers’ compensation falls below what many other employers provide. However, recruitment for these positions has generally not been a problem. Executives in the State’s “at will” positions know they will receive a lower salary when they accept the job. Mid-managers are often State civil servants who have invested years with the State and generally choose not to change employers late in their careers.

Graph: HMO – Health Contributions

Benefits

Health

Graph: PPO – Health Contributions

Dental

Graph: PPO – Dental Contributions

Vision

Retirement

Retiree Health Benefits

Retiree Dental Benefits

Paid Leave

Health

The State contributes $788 per month toward employee health premiums (for family coverage), which equals 80 percent of the total premium for most State employees. This level is on par with other public employers, but higher than the private sector.

All 65 of the surveyed public sector employers provide either a health benefit plan or a cafeteria8 plan. Monthly contributions toward health benefit plans range from $501 to $1,769. Public employers’ monthly contributions toward cafeteria plans range from $465 to $893.
According to the 2005 California Employers Health Benefit survey, 67 percent of all private sector employers in California provide some sort of health benefit coverage. Ninety-eight percent of all large private firms9 in California provide health benefit coverage.

The graphs HMO – Health Contributions and PPO – Health Contributions compare employer and employee health premium contributions in the State and private sector.

Graph of HMO Health

Graph of PPO Health

Dental

The State contributes $89.55 per month toward employee dental premiums, which is 75 percent of the total premium for most State employees. This level is on par with other public employers but higher than other large private employers.

Of the 65 public sector employers in the survey, 39 provide dental benefits in addition to their health benefits. The employers’ monthly contribution for these dental benefits ranges from $34 to $153. Eleven of the 65 include dental coverage in their health benefits or cafeteria plan.
The vast majority (95 percent) of private sector employers in this study provide some form of dental benefits, covering an estimated 62 – 65 percent of the premium for family coverage ($65 - $77 per month).

The graph PPO – Dental Contributions compares State and private sector employer and employee contributions to dental premiums.

Graph of PPO Dental

Vision

The State contributes $9.19 per month for employee vision benefits, which is 100 percent of the total premium. The State’s practice is consistent with vision benefits provided by the other public sector employers surveyed.

Thirty-two of the 65 public sector respondents provide vision coverage in addition to their health benefits plan, with monthly contributions ranging from $4 to $22. Thirteen of the public respondents include vision coverage as part of their health benefits or cafeteria plan.
The average private sector contribution toward vision benefits was not available, but the data we used indicate 56 percent of private employers provide some form of vision plan; two-thirds of them pay 96 - 100 percent of the total vision care premium.

Retirement

The State provides a defined benefit plan that guarantees a lifetime retirement benefit, a benefit similar to what most of the surveyed public sector employers provide. The private sector generally offers defined contribution plans rather than defined benefit plans. Defined contribution plans are more portable than defined benefit plans, a value difference this survey did not attempt to measure.

Most State employees in the benchmark classes fall under the 2%-at-55 formula.10 Of the 65 public respondents11, 21 use the same 2%-at-55 formula. Thirty-four offer a more generous formula.12 Ten provide a less generous retirement formula than the State.13
Like the State, 29 of the public respondents base the retirement benefit on the employee’s single-highest year of compensation. Sixty have a vesting eligibility period14 of five years, as does the State.
The vast majority of private sector employers covered by this study (92 percent) offer defined contribution retirement programs. Most of them match the employee contribution, none more than 5.5 percent of salary.

Exhibit F presents retirement information such as benefit, formula, plan, and vesting periods for the public respondents.

Exhibit G shows that a private sector employee would have to contribute a higher percentage of salary to a defined contribution plan to get the same benefit a State employee would receive from the defined benefit plan. In addition, a private sector employee would pay all the contribution toward retirement (unless the employer provides some portion of the contribution in matching funds, which typically don’t exceed 5.5 percent). The State employer pays all but about five percent of the retirement contribution for its employees in the Miscellaneous retirement category.

Retiree Health Benefits

State employees receive generous retiree health benefits, the costs of which are often overlooked as a portion of their compensation. In this area, the State’s coverage exceeds that provided by most of the surveyed public sector employers, and is far more generous than retiree health benefits provided by the majority of private employers.

For a vested retiree,15 the State contributes $394 per month for retiree-only coverage, $738 for retiree plus spouse, and $933 for retiree plus family. That’s 100 percent of the premium for the retiree and 90 percent for the retiree’s dependents.
Of the 65 public employers surveyed, only 35 contribute to two-party health benefits; contributions range from $65 - $2,307 per month. Seventeen of them have the same rate for two-party coverage as the “retiree only” rate.
The majority of public respondents that contribute to retiree health premiums have an eligibility period of 5 years (20 agencies) or 10 years (10 agencies).
In the private sector, only 2 percent of small firms and 32 percent of large firms offer retiree health benefits. Recent trends indicate that employers are shifting a greater portion of rising health care costs to employees and retirees and/or capping the amount the employer contributes to retiree health benefits.
Among private employers, the data used for this project indicates that 7 percent of private employers provide retiree health benefits for the retiree only (not spouse or other family). That data also indicates that an unspecified number of private employers provide coverage for dependents.

Exhibit H compares retiree health coverage for each public employer in the survey, including the amount paid by the employer for retiree, retiree plus spouse, retiree plus family, and the vesting policy for management and other employees.

Estimating the “worth” of retiree health benefits

As the following example demonstrates, a career State employee, eligible for the full employer contribution for retiree health benefits, secures an additional $493,851 worth of compensation during the first 20 years of retirement, absent any future changes.

This example assumes the employee retires at age 60 and based on life expectancy tables will live to 80. Employer contributions in this example are based on the State’s 2006 two-party rate ($738 per month). Premium projections are based on a 9 percent historical average of annual premium increases.

It should be noted that by the time the next survey of total compensation is conducted, public employers will have implemented new standards from the Government Accounting Standards Board (GASB) that require future health costs to be included as outstanding liabilities. This change will allow the survey to more fully compare the “worth” of retiree health benefits.

Retiree Health Cost Projection

Year after retirement	State employer annual contribution
1	$9,653
2	$10,522
3	$11,469
4	$12,501
5	$13,626
6	$14,852
7	$16,189
8	$17,646
9	$19,234
10	$20,965
11	$22,852
12	$24,909
13	$27,151
14	$29,594
15	$32,258
16	$35,161
17	$38,326
18	$41,775
19	$45,535
20	$49,633
Total over 20 years:	$493,851

Retiree Dental Benefits

The State provides a more generous retiree dental benefit than most of the public employers surveyed. Most of the private sector employers don’t offer retiree dental benefits.

The State contributes $89.55 to dental premiums to provide “retiree plus family” coverage; $61.73 per month for retiree plus spouse; and $35.04 per month for retiree-only coverage.
Only 15 of the 65 public sector employers surveyed provide dental coverage for the “retiree plus family” category, either as a separate dental benefit or as part of the overall medical benefits.
There was no data available regarding dental benefit coverage for retirees in the private sector.

Exhibit I shows retiree dental benefits provided by the public sector employers surveyed.

Paid Leave

The State of California offers two types of leave programs – Annual Leave and Vacation/Sick Leave – and 14 paid holidays. In general, the State’s leave programs are more generous than such programs in the private sector. The public sector employers surveyed offer similar annual leave and vacation/sick leave programs, but relatively few of them provide as many paid holidays.

Unlike many public employers, the State does not provide paid administrative leave or a leave buy-back program.16 However, regulations allow for a buy-back program subject to available funds and DPA approval.

Exhibit J compares public sector leave practices. Exhibit K describes private sector practices.

Of the 65 public sector employers we surveyed, only 16 provide 14 or more paid holidays. Private sector employers average 12 paid holidays (9 fixed, 3 floating).
Only 37 of the public employers provide as much sick leave as the State (12 days per year), while 13 of them provide less (5 to 11 days). Twelve of the public respondents provide more than 12 days per year (up to 15 days).
Private sector employees typically accrue 9 - 10 days of sick leave each year, with a maximum accrual cap of 29 - 37 days for non-managers and 48 days per year for managers. The State does not cap sick leave.
33 of the 65 public sector employers provide paid administrative leave for managers (4 -16 days per year). Six of the public employers provide this benefit to non-managerial employees (2.5 - 10 days per year). The State does not provide paid administrative leave as a benefit.
28 of the 65 public respondents offer leave buy-back programs for managers; 22 also offer leave buy-back to non-managerial employees.

Recommendations

Continue the analysis of the data gathered during this project to determine the correlation, if any, between significant compensation lags and vacancies/turnover in the State. Determine the degree to which working conditions affect recruitment and retention.
Conduct surveys or contract for a study that sheds light on the factors that influence an employee’s decision to work for the State or leave for a job with another employer. The State does not have a policy on exit interviews, but such a policy could help the State identify other factors it needs to address besides compensation.
Establish a State compensation policy to determine generally where the State wants to position itself in the labor market and that ensures the State employer can attract and retain a qualified workforce.
For future surveys of total compensation, contract with a human resources consulting firm or professional survey organization, or augment State personnel resources, to ensure the shortcomings of this first survey are corrected. Private sector data should allow for “total compensation” comparisons, and all data should be weighted.
Given that some public sector classifications simply do not exist in the private sector, evaluate how best to measure the State’s competitiveness in the labor market for these uniquely public occupations. For future surveys, consider modifying the benchmarks to ensure the best representation of the State’s workforce.

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