[A]s Vermont prepares to reduce the size of the state workforce, government managers say a system that provides small cash benefits to employees based on performance is more important than ever.
Each year, a few hundred state employees receive non-recurring lump sums as recognition for achievement — one of three types of merit bonuses the state offers employees.
Data from the Department of Human Resources shows that in the current fiscal year through June 15, merit bonuses went to 376 employees across state government, totaling $204,929.
The sum amounts to a small drop in the bucket of state government. Yet, difficult fiscal times left lawmakers pinching pennies during the budgeting process in the 2015 legislative session, ultimately passing a budget that called for a $10.8 million reduction to labor and personnel costs.
This month, the Shumlin administration confirmed that more than a dozen state employees will be laid off in the coming weeks in order to meet the target.
Maribeth Spellman, commissioner of the Human Resources department, defends the state’s merit bonus system at a time when jobs are on the line.
“Now is exactly the time that you should be encouraging them and recognizing them when they’re feeling, maybe, that they’re a bit under the gun,” Spellman said.
The system provides managers in state government a way to appreciate the efforts of high-performing employees when resources are very limited, she said.
The awards do not necessarily have to be financial, Spellman said. She cited her department’s peer award, given out quarterly to an employee based on their performance. It comes with an option for a day off or a designated parking space for a month, along with temporary ownership of a ceramic donkey piggy bank – which has come to be regarded as a trophy.
“And you would think that that little ceramic donkey was like the greatest thing that somebody could get,” Spellman said.
The Department of Human Resources provides an umbrella policy for merit bonuses across state government. Employees are capped at one award valued at $1,000 or less, and one large award, which could be more than $1,000 or could be a recurring salary increase.
Each department then has some discretion to set up their own system for awarding bonuses, and the bonuses are funded out of the department budget.
Statistics over the last five years show that the amount the state has paid in non-recurring merit bonuses has more than doubled since fiscal year 2011, when 237 employees received merit bonuses totaling $125,998.
In FY 2014, 412 employees received a total of $255,750 in bonuses.
According to Tom Cheney, policy chief for the Department of Human Resources, the upward trend reflects the state’s economic recovery following the recession, when budgets were tight. In recent years, he said, there may also have been more of an effort to recognize the state workforce after several years of fiscal hardship.
“Employees did take some hits during the recession,” Cheney said.
The Agency of Transportation gave out the largest number of lump-sum merit bonuses of any state department, data from the last six months show.
Chris Cole, deputy secretary of the Agency of Transportation, said that when the agency was deciding what steps to take in light of the budget challenges this year, management debated merit bonuses and ultimately decided that the system needed to stay in place. “If you diminish the morale from the high achieving employees it becomes increasingly challenging to meet your goals as a state agency,” Cole said.
To meet the budget crunch, the agency cut back on employee travel and eliminated cash overtime. But the merit bonus system stayed, he said, and “that’s money well-spent.”
“If you diminish the morale from the high achieving employees it becomes increasingly challenging to meet your goals as a state agency,” Cole said.
According to Cole, the agency paid about $82,000 in merit bonuses last year, which, he noted, constituted one-tenth of a percent of the total compensation expenses.
It’s roughly equivalent to the average salary and benefits of one employee. But Cole defended the merit bonus program as especially important at a time when there are reductions in force.
State jobs generally do not pay as well as private sector jobs, he said. One of the incentives for public sector work used to be job security, Cole said, which is “no longer the case with budget difficulties.”
Steve Howard, executive director of the Vermont State Employees’ Association, the union that represents state workers, said that Vermont “has its share of money problems,” but the bonus system is not one of them.
State employees, Howard said, “are the unsung heroes and heroines of so many parts that make the state great.”
Howard said the bonus system should remain intact despite budget cuts that have led to 13 layoffs, Howard said.
“There was a lack of political courage to ask the wealthiest Vermonters to pay an additional investment in their state,” Howard said.
