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Statutory gainsharing program could get heave-ho

Minnesota Management and Budget officials believe the agency best do away with an employee-reward program they claim is not cost-effective.

“Not for a lack of trying, implementation just has not been workable,” said Rep. Andrew Carlson (DFL-Bloomington). “ … The prudent and responsible course of action at this time is to eliminate the program.”

He sponsors HF1440 that would erase a gainsharing program required by a 2011 law. It was held over Thursday by the House State Government Finance and Elections Committee for possible omnibus bill inclusion.

Gainsharing allows employees to offer cost-saving ideas and then receive financial bonuses that represent a portion of the organizational savings.

“Here we have an agency telling us this is not the best way for us to be spending our money,” said Rep. Ginny Klevorn (DFL-Plymouth).

However, a report indicates the agency barely tried to fulfill the law.

“It is feasible to implement a gainsharing program as specified by the law. MMB has just chosen not to do it,” said Rep. Anne Neu Brindley (R-North Branch), who calls the bill “embarrassing.”

Rep. Jim Nash (R-Waconia) was brusque.

“We have a state law that both past and current commissioners have chosen to ignore and now they’ve asked for Rep. Carlson to be their button man and kill the thing off,” he said.

“There is no cover up, there is nothing nefarious here,” Carlson responded. “It’s just the good work on the part of this agency of trying to make this program work that has not been proven out.”

Nash said former MMB Commissioner Myron Frans previously told a House committee the program was successfully being utilized.

A scathing January 2018 program review by the Office of the Legislative Auditor questioned the department’s implementation efforts.

“MMB has not developed formal policies for a gainsharing program or even an application form. The department asserted in 2017 that such a program would cost $1.6 million to implement annually, which was much different from the net cost savings the department estimated when the law passed in 2011,” the report states.

“Most of that cost is incurred from the multiple levels of review and vetting that would be necessary for the internal auditing process before an award of up to $50,000 could be made eligible to an employee,” said Dori Leland, MMB enterprise director for employee classification and compensation. She added no data showed award amounts would offset implementation costs.

The legislative auditor’s report also references a 2017 progress report where “MMB noted that it received no appropriation to develop and administer the program.”

Leland said a more cost-efficient program negotiated with union partners recognizes employees who go above and beyond their duties.

Per the report, instead of implementing gainsharing, “MMB had adopted a policy in February 2012 that established the Achievement Awards program, which allowed state agencies to recognize and reward employees for outstanding performance. … We determined that, for fiscal years 2012 through 2017, agencies paid for a total of more than $11 million in employee bonuses through the Achievement Awards program.

“ … The gainsharing statute focuses on agency improvements that result in verifiable cost savings, while the Achievement Awards program rewards employees using a broader definition of employee performance.”

Nash said the 2018 report questions who was honored.

“You’ll see this has always been a pretty shaky program that people who were effectively friends of management were rewarded,” he said.

An amendment unsuccessfully offered by Nash would have required Minnesota Management and Budget to credit at least $1 million to the General Fund in fiscal year 2021 “based on savings realized through implementation of the employee gainsharing program.” It went down along party lines.

“There are so many other ways to show appreciation and respect for our state employees other than this financial means of compensation,” Carlson said.

A companion, SF1340, sponsored by Sen. Jim Carlson (DFL-Eagan), awaits action by the Senate State Government Finance and Policy and Elections Committee.

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