The 2022-23 Budget: CalHR California Leads Proposal

The 2022-23 Budget: CalHR California Leads Proposal FEBRUARY 2022 Summary. In this post, we analyze the terminating state civil service employees. The State Governor’s proposal to provide 43 permanent Personnel Board is tasked by the Constitution to positions and $7.6 million ($6.3 million General oversee the implementation of the merit principle Fund) in 2022-23 and $6.8 million ($5.5 million in state government. General Fund) ongoing for the Department of State Jobs Organized Into Classifications Human Resources (CalHR) to implement specific That Establish Salary Ranges. The state civil proposals recommended by a taskforce established service is comprised of more than 240,000 full-time by the Governor aimed at finding ways to make the equivalent employees. These employees work in a state a better employer. As part of this initiative, the variety of jobs across state government. State jobs proposal would seek to improve statewide data on are organized into about 4,500 classifications. the workforce to inform a statewide diversity, equity, Each classification defines the minimum and inclusion strategy. We recommend that the qualifications needed for a candidate to be hired or Legislature approve the proposal and encourage the promoted. In addition, a salary range is established Legislature to exercise ongoing legislative oversight for each classification. These salary ranges of the process to ensure that the administration’s determine the minimum and maximum salaries that policies meet legislative objectives and priorities. an employee may earn in that job classification. CalHR Oversees Non-Merit Personnel Background Policies. CalHR is responsible for managing Civil Service Based on Merit Principle. non-merit-related state personnel policies, including California’s current system of state civil service issues related to recruitment, selection, salaries, employment dates back to the November 1934 benefits, position classification, and training. election, when voters approved Proposition 7, In addition, as we discuss in greater detail below, adding what is now Article VII to the State CalHR represents the Governor in the collective Constitution. The Constitution requires that all bargaining process and reports information to the appointments and promotions within the civil Legislature about the state workforce. In 2021-22, service be made under a general system based CalHR’s budget comprised $119.3 million on merit determined by competitive examination. ($13.7 million General Fund) and 372.9 positions. All state employees are in the civil service unless Collective Bargaining Process Determines specifically exempted by the Constitution. As a Changes in Salaries. The Ralph C. Dills Act result, practically all of the state’s non-higher authorizes collective bargaining between state education executive branch employees—outside employees and the Governor. The state’s of the very top ranks of management (such as 4,500 job classifications are organized into department directors and deputy directors)—are 21 bargaining units. Each bargaining unit is in the civil service. In the more than 80 years since represented by a union in the collective bargaining the voters first established the civil service, a variety process. The Governor is represented by CalHR. of statutes, decisions, rules, practices, and case Through the collective bargaining process, the law have built upon the constitutional framework state and its employees agree to terms and of a merit-based civil service system. Collectively, conditions of employment, including salary these civil service rules establish the state’s increases that increase the salary ranges of state policies for hiring, promoting, disciplining, and job classifications. 2022-23 Budget Series 1 CalHR Reports on Specific Demographic Hiring and Training Processes. The proposal Information of the State Workforce. Through includes components, discussed below, intended to statute, CalHR is required to submit to the Legislature improve the state’s hiring process and trainings. reports regarding demographic information about the • Adopt Anonymous Hiring (Three Positions). state workforce. These reports include the Annual In an effort to remove implicit bias from Census of Employees in State Civil Service (fulfilling the hiring decision-making process, the requirements established under Government Code administration proposes adopting an Sections 19237; 19402; 19405; 19792 subdivisions anonymous hiring process whereby certain (h), (i), and (j); and 19792.5 subdivisions (a) and (b); personal information from job applicants’ and 19793) and the Women’s Earnings in State Civil resumes or applications would be redacted Service report (in accordance with Section 19827.2 prior to hiring managers viewing the of the Government Code). In addition, the CalHR documents Implementing this policy would website includes demographic statistical reports for require updates to the Examination and each department as well as statewide (these data Certification Online System. are compiled as part of a requirement established • Establish Statewide Apprenticeship under Section 19797 of the Government Code that Programs (Ten Positions). The state currently each state department annually update and assess has very limited apprenticeships available that its equal employment opportunity plan, including are targeted to state service jobs—generally identifying racial/ethnic and gender groups that are limited to trades, like mechanics. Under the underrepresented in the department). proposal, CalHR would work to develop more “California Leads as an Employer” Taskforce. varied apprenticeship programs in an effort In September 2019, the Governor established a to establish a pipeline for job applicants who taskforce to provide recommendations to improve historically have been underrepresented in the state workplace across four areas: sexual certain job classifications. harassment and discrimination prevention and • Update CalCareers (Three Positions). response, diversity and inclusion, public safety CalCareers is the online portal used by job diversity, and racial and gender pay equity. applicants to search and apply for state jobs. The taskforce consisted of representatives from Under the proposal, CalHR would make a within the executive branch of state government. number of updates to the system intended to The taskforce submitted its recommendations to make the system more user-friendly, secure, the Governor in July 2021. The recommendations and accessible. that the taskforce made to the Governor are not • Statewide Employee Engagement Program public; however, the administration indicates that (Three Positions). Employee engagement is the proposal discussed in this analysis is based on important because it improves employee morale a number of those recommendations. and general job satisfaction. The administration Proposal proposes developing a statewide employee engagement program. Proposal to Begin Diversity, Equity, and Inclusion Effort in the State Workforce. • Establish Equal Employment and The administration requests 43 permanent positions Opportunity Academy (Four Positions). and $7.6 million ($6.3 million General Fund) in In an effort to keep equal employment 2022-23 and $6.8 million ($5.5 million General opportunity professionals in state government Fund) ongoing in order for CalHR to implement apprised of employment and civil rights laws, specific policy recommendations proposed by the the administration proposes establishing an administration’s taskforce. We provide a high-level academy that will provide trainings to these summary of the major components of the proposal individuals and provide ongoing guidance below. The overarching goal of these proposals is to departments on departmental policies. to take initial steps towards making the state a more The proposal highlights seven specific training equitable, diverse, and inclusive place to work. courses that CalHR would develop and provide. 2022-23 Budget Series 2 Improvements to Data Collection and Especially considering the sheer size of state Systems. The proposal includes components, government along with the more rigid and discussed below, intended to improve state bureaucratic nature of the state civil service, taking a human resources data collection, maintenance, multipronged approach to address diversity, equity, and analysis. and inclusion in the state workplace makes sense. • Create New Unit to Collect and Analyze The administration’s intention of making this an Data (Seven Positions). The administration iterative process also makes sense. Much of the proposes establishing a new unit under work proposed under this request could inform future CalHR’s Financial Management Division. policies and initiatives to advance the overall goal of The unit would focus on collecting and making the state a better place to work. From the analyzing demographic and other data perspective of legislative oversight, this has an added to support the administration’s efforts to benefit of giving the Legislature multiple opportunities establish a diverse and inclusive workforce. to evaluate the progress the administration is making In the short term, the unit would focus on towards its goals. Our comments below focus on the gender and racial pay equity issues across data collection efforts under the proposal because all classifications and all departments. we think that any successful effort to establish a statewide diversity, equity, and inclusion strategy • Improving Statewide Tracking of would require significant improvements to the data Training (Three Positions). Currently, currently collected. a centralized record of what trainings an employee has received during their state Existing Data Are Problematic… Federal law service is not accessible to all departments. (Public Law 88-352, Title VII of the Civil Rights Act of The administration proposes creating a 1964) requires each state and local government to system that would allow all departments to maintain specific demographic data on its workforce share and access employee training history. to report these data to the U.S. Equal Employment Opportunity Commission. The data that CalHR Development of Diversity, Equity, and currently collects and makes public about the Inclusion Strategic Plan (Five Positions). demographic composition of the state civil service The administration intends to use much of the are collected using a form (known as CalHR Form lessons it learns through the establishment of 1070) designed to comply with federal law. This the above described initiatives to develop a form asks employees to identify their gender—either statewide strategic plan aimed at making the “male” or “female”—and their race/ethnicity. When state a diverse, equitable, and inclusive place to identifying their race/ethnicity, employees may work. As this plan is developed, we anticipate only select one option from among 20 categories, that the administration would submit more budget including “multiple races (non-Hispanic or Latino).” requests to the Legislature. There is no “other” or “not listed” option. In addition, an employee can choose to not self-identify. LAO Comments However, the form specifies that, if an employee Proposal Reflects Start of a Multipronged does not self-identify, “the department is required to and Multiyear Initiative to Address Big Issue. visually identify under federal law.” The data collected This request is a major budgetary request for using this form are problematic for a few reasons. CalHR and initiates a process for major policy First, the race/ethnicity and gender options available changes in the department’s role in overseeing might not reflect how the employee actually identifies. the state’s workforce. The request attempts to For example, there is no option for an employee improve or establish a variety of state programs who identifies their gender to be non-binary or with the overarching aim of making the state a for an employee to identify their race/ethnicity as better employer and making the state workforce Middle Eastern/North African. Second, there is no more representative of the public that it serves. standardized guidance given to departments as to how they should visually identify employees. 2022-23 Budget Series 3 The form states that “if you elect not to provide the Administration’s Proposal Should Allow information requested, CalHR will not be able to for Better Data and Analyses Going Forward effectively evaluate the representation of the state to Inform State Policy. A major feature of this civil service workforce.” The administration indicates proposal is that it should allow the state to collect that, as of January 31, 2022, 14 percent of state better data. These improved data would allow employees’ race/ethnicity was visually identified the state to better identify where there might be by management. diversity issues with the state’s recruiting, hiring, …But Identify Potential Issues of Diversity in and promoting processes. This proposal in and the Workforce. Notwithstanding the problematic of itself would not lead to the implementation origins of some of the demographic data collected of a plan to address any diversity, equity, and by CalHR, a number of observations can be made inclusion issues, however. Instead, we understand that suggest the state can improve racial/ethnic that this proposal would lead to improved data and gender representation in the state service. collection and analysis that would, in turn, identify Overall, the state workforce is not representative issues—either within certain classifications or more of the demographic composition of the state broadly—and inform future proposals submitted population. For example, although Hispanic or to the Legislature by the administration. In other Latino people accounted for 37 percent of the state words, this is the first in likely a series of requests working-age population in 2021, only 26 percent of from the administration to implement a broader, yet state employees were identified to be Hispanic or to be fully defined, initiative to improve the diversity, Latino at that time. Some classifications have higher equity, and inclusivity of the state workforce. concentrations of different racial/ethnic groups than LAO Recommendations others. For example, although 40 percent of the entire Approve Proposal. We raise no objections state workforce was White in 2021, 68 percent of the to the merits of the proposal and think that state’s firefighters were White at that time. Similarly, it is a reasonable first step in identifying and although 26 percent of the state workforce was addressing diversity, equity, and inclusion issues in identified as Hispanic or Latino in 2021, 49 percent the state workforce. However, the administration’s of correctional officers were Hispanic or Latino at work in developing this diversity, equity, and that time. inclusion policy is in its infancy. As such, as we There also is significant variation in gender diversity discuss below, we think that legislative oversight by classification. Specifically, certain classifications of the process as CalHR more fully develops are more or less likely to be filled by men or the state’s specific policies in this area will be women. For example, in 2021, 75 percent of the very important. 31,347 state jobs that were considered to be office Provide Legislative Oversight of Process. and administrative support occupations were filled by This proposal, in conjunction with four other women while 86 percent of the 43,980 state jobs that proposals to augment CalHR’s budget, constitute were considered to be protective service occupations a significant increase in CalHR’s resources and were filled by men. Because compensation in staffing levels in 2022-23. Relative to 2021-22, these state employment is determined by an employee’s proposals would increase CalHR’s appropriation classification, the fact that demographic trends vary authority by 15 percent and its position authority across state classifications means that compensation by 22 percent—a large and fast increase in staffing. varies across state employees, depending on their While we understand the proposal is informed by race/ethnicity and gender. For example, the most the findings of the California Leads as an Employer recent Women’s Earnings in State Civil Service taskforce, because the full taskforce report is not report identified that the median woman in state publicly available, assessing how the administration service earns about 14 percent less than the median decided to pursue certain policy recommendations man in state service. The report explains that this from the report over others is difficult. Because pay gap exists primarily because women tend to the proposal is to fund the initial stages of what work in classifications that are lower paid than the ultimately would be a more developed initiative, classifications that men dominate. we anticipate that the administration will submit 2022-23 Budget Series 4 additional proposals related to diversity, equity, the positions requested for 2022-23; (2) its progress and inclusion in the state workforce over the next in developing a diversity, equity, and inclusion several years. The policies that will be developed in strategy; (3) any changes it would recommend to the future as a result of this proposal likely will have existing legislative reporting requirements of CalHR significant implications for the state as an employer. regarding the demographic makeup of the state As such, we think it is important that the Legislature workforce in light of new data made available from the actively oversee the development of this policy implementation of this proposal; (4) any challenges going forward. it experiences in the implementation of the initial Due to the iterative nature of this initiative—and stages of the initiative; and (5) what the administration its current early stage of development—going sees as its next steps in its overarching plan to forward, we recommend that the Legislature make the state a better employer. Going forward, we require regular, reporting on its progress. recommend that the Legislature continue to require Specifically, we recommend that the Legislature the administration to provide regular reporting on the require the administration to report to the Legislature progress of this initiative. on or before January 10, 2023 (1) its progress in filling 2022-23 Budget Series 5 2022-23 Budget Series 6 2022-23 Budget Series 7 LAO PUBLICATIONS This post was prepared by Nick Schroeder, and reviewed by Ginni Bella Navarre and Carolyn Chu. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. 2022-23 Budget Series 8