Minn. workforce is lean even before proposed cuts

DNR office
Customer service specialist Kevin Habeck, left, assists Gene Skenandore of Woodbury with the purchase of a fishing license at the Department of Natural Resources license office in St. Paul, Minn. Friday, May 6, 2011. Habeck, who has worked for the state of Minnesota for about nine years, is somewhat worried about the proposed cut in the state workforce. "I'm just living a day at a time," he said.
MPR Photo/Jeffrey Thompson

A GOP proposal in the Minnesota Legislature would eliminate 15 percent of the state workforce — excluding state higher education employees, but still amounting to thousands of job cuts.

Other states struggling with budget deficits are also contemplating layoffs, although 15 percent appears to be the biggest cut under consideration in any state.

But a review of figures from the U.S. Bureau of Labor Statistics finds that by some measures, the state of Minnesota's non-education workforce is leaner than most states' workforces.

REP. DOWNEY: "MORE WITH LESS"

The total state workforce is about 38,000 people and many Republican legislators believe it should be cut sharply to help balance the state's $5 billion budget deficit.

"I think it is entirely possible for us to do better in state government," said Rep. Keith Downey, R-Edina, a chief sponsor of a House bill that would eventually eliminate about 5,000 state jobs and save taxpayers about $340 million a year.

The bill applies to all state employees, except those working for state colleges and universities.

Downey believes state government can get its work done with fewer people, especially with better use of technology and smarter management techniques.

"We can actually provide better service and accomplish more with less," he said. "I think our budget crisis is the catalyst we need to force us to make those moves."

Downey said much of the headcount reduction he advocates could be achieved through attrition and retirements over the next several years.

ROLNICK: "WE LOOK LEAN"

Minnesota is a high-tax state, ranking seventh in state and local taxes per capita in 2009 according to the independent, non-profit Tax Foundation.

You might think state government would have a relatively large workforce, given the taxes Minnesotans pay. But it doesn't, figures from the U.S. Bureau of Labor Statistics show.

As of last September, Minnesota had about 8 non-education state workers per 1,000 residents. That ranked 37th among the 50 states.

Economist Art Rolnick said the results are surprising given the range and quality of services Minnesotans expect from the state.

"From a national perspective, we look lean," said Rolnick, who is the former director of research at the Federal Reserve Bank of Minneapolis.

Only 8 percent of state tax dollars go to state employee compensation, benefits and other costs. But state tax dollars also fund more local government operations and jobs than in most states.

State economist Tom Stinson said Minnesota pays a greater share of local government expenditures, including education, than most states do.

"Since much of the state's spending goes to locals, who then spend the money for teachers or police or firefighters, the number of state employees is comparatively small," Stinson said in an-email.

If you compare states by looking at state and local government workers combined, Minnesota ranks among the upper half of states at 18th when you exclude education workers. If you include education workers, Minnesota drops down to 31st.

"Are we out of line in terms of state and local employees? The answer sure looks like we're not," Rolnick said.

HOW WELL WOULD THINGS WORK WITH A WORKFORCE CUT?

In the private sector, many employers have posted growing profits with smaller workforces. Steady productivity gains make that possible.

From 2000 to 2010, the productivity of U.S. private sector workers in the country grew at an annual rate of 2.6 percent. Simply put, the value of the goods and services they produced per hour has gone up.

But there's no comparable measure for government employees, so it's hard to judge how efficient they are to begin with — let alone the potential for productivity gains.

"What economists usually fall back on when they calculate these numbers is they simply measure the output they're producing by calculating how they get paid," said Louis Johnston, an assistant economics professor at St. John's University. "We don't know what the value of their production is."

But former Republican Minnesota Gov. Arne Carlson, for one, believes Minnesota state employees have always been productive.

"I don't think there's any question about that," Carlson said.

Carlson's view reflects nearly 30 years of service in state government, including a stint as the state auditor, who is elected to oversee local government finances.

"By and large most administrations have been very prudent in how they handle their limited resources," he said.

Rep. Keith Downey expects Gov. Mark Dayton would veto a 15 percent cut in state employees and their aggregate compensation. Even so, Downey expects to get some rollback in the state employee headcount and payroll.

"It's hard to predict exactly how that will go and how the process will unfold," he said. "But clearly that would be our preference."

The governor's own budget proposal calls for reductions in portions of the state workforce. One of the unions representing state employees said it would mean hundreds of job cuts.

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