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State employee incentive program needs oversight, lawmakers say

The state budget office has spent $4.7 million since 2014 on a state employee incentive program intended to find efficiencies in government and improve services. The incentive program sees little oversight, however, and that has raised a number of questions for lawmakers.

A proposal by Rep. Sarah Anderson (R-Plymouth) would add legislative oversight on the so-called “employee gainsharing” program by requiring Minnesota Management and Budget to report the awards monthly. Held over Thursday for possible omnibus bill inclusion by the House State Government Finance Committee, HF691 would require detailed information itemizing the bonuses and about how the incentives actually improve government.

The companion, SF605, sponsored by Sen. Mary Kiffmeyer (R-Big Lake), awaits action by the Senate State Government Finance and Policy and Elections Committee.

A 2011 law requires MMB to provide financial incentives to those employees, with the maximum award being 10 percent of the savings in a fiscal year. But Deputy Commissioner Edwin Hudson said some of the 4,500 awards since 2014 are in addition to what the 2011 law outlined.

“Finding operational efficiencies is just part of our everyday work,” Hudson said. The new oversight provisions, Hudson added later, “will require us to provide a little more meat to the bones.”

The committee’s Republican majority raised concerns over the number of awards given and different versions MMB said it negotiated with employee unions in 2012.

Rep. Mark Uglem (R-Champlin) asked Hudson how many awards MMB denied. Hudson said three in the past three months.

WATCH Committee discussion of the bill 

“Three out of hundreds," Uglem said. "OK."

Asked by Rep. Jim Nash (R-Waconia) if he could point to one of the best ideas for which the person suggesting the idea received an incentive, Hudson talked about improving recruiting. “With what we have, you should be proud of our agencies.”

In 1996, the Legislature introduced a gainsharing pilot program administered by the Department of Employee Relations. Mirrored after private sector employers – a decade-old document cites steel and farm supply industries and manufacturing companies – the idea is that employees working in these systems might have insight overlooked by the brass. 


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