OLYMPIA — A major state-agency restructuring that’s in the works after July 15 is setting off alarms for organized labor. But Gov. Chris Gregoire’s aides say it gives government a chance to run more efficiently and save $18 million.
The changes are part of the consolidation of five major agencies into two new agencies and one old one — the governor’s Office of Financial Management.
The most disrupted are those at the departments of General Administration, Information Services, Personnel and the State Printer, but also at Financial Management, which is gaining oversight over information technology purchases in all state agencies.
“This is about delivering the services of state government as effectively as possible,” Stan Marshburn, deputy director of the OFM, said Friday.
He said it all can be done by Oct. 1, the Legislature’s new deadline for merging agencies that will go into the state’s new Enterprise Services building and Data Center, a $255 million complex just east of the Capitol.
The mergers are expected to save $18 million, and 95 jobs go away as a result — 61 of them from the soon-to-disappear Department of Information Services.
Making the big changes gives the state flexibility and a chance to streamline how it delivers core services such as payroll, accounting and billing, human resources and information services to agencies, Marshburn said.
Senate Bill 5931, which passed on the final day of the legislative session, authorizes the creation of the departments of Enterprise Services and Consolidated Technology Services.
But the Washington Federation of State Employees is crying foul over provisions in the bill that make it easier to farm out state-provided services to private businesses.
The bill exempts Consolidated Technology Services from a 2002 state law that lets state employees compete for work when agencies propose to turn it over to private businesses. And the bill lets the governor’s budget office designate up to six functions in Enterprise Services (such as the state printer or the State Motor Pool) for outsourcing every biennium.
Greg Devereux, the executive director of the Washington Federation of State Employees, said the mergers are an ideological decision, not a financial decision and warned it will lead to shoddier work if the State Motor Pool ever were handed over to a private agency, for example.
The federation represents about 40,000 state and university employees, and Devereux said as many as 115 Information Services workers could lose union membership and protections under the bill.
Devereux said there also is a human toll in forcing the consolidations — and the state might lose money if it farms out IT work to vendors that are not held accountable.
The restructuring bill met resistance from many Democrats sympathetic to the federation. But it passed with the backing of Republicans and crossover Democrats in the Senate, who demanded the changes to allow more outsourcing before they would vote for a budget.
“Under the current system, we’ve been sued every time,” Senate Republican budget writer Joseph Zarelli of Ridgefield said, referring to past efforts to put work out to the private sector. “Labor is not willing to even work through the process.”
The federation has testified that in more than 300 instances in which agencies have suggested outsourcing, the union has examined the idea and signed off on it — sometimes with amendments — in 80 percent of the cases.
The 2002 labor-reform law gave state employees the right to collectively bargain with the governor for wages and health benefits. But it also overhauled civil service rules to give managers more flexibility in hiring and set up a process to let agencies contract out for services — after bargaining with workers.
As part of rules the state drew up for contracting out, employees were supposed to get a chance to form employee business units that could present ideas for improved efficiency and streamlining — which agencies could choose instead of outsourcing. But courts tossed the rules, and the Gregoire administration never seriously tried to outsource state work after that.
That is what has rubbed Zarelli and Republican Rep. Gary Alexander of Thurston County the wrong way.
Alexander backs the new restructuring bill. He said last week that Consolidated Technology Services needs flexibility in how it consolidates and delivers information services to other agencies.
Alexander has tried before to hand all of the state’s printing services to private firms, which already handle one-third of state print jobs. SB 5931 now makes it easier for state agencies to take all of their print work to private printers.
But Rep. Sam Hunt, an Olympia Democrat, and Rep. Chris Reykdal, D-Tumwater, characterized the merger bill as an attack on state employees. Both say a huge amount of work is already contracted.
Hunt cites General Administration statistics showing that agency alone already contracts out “$800 million a biennium for goods and services that private vendors provide to state agencies, school districts, and higher education.”
The merger can work, Marshburn said. But how is still a question. Because the merger got a final go-ahead on the final day of the special session, many details in the roughly 250-page bill were changing up to the end.
Devereux said the move might become a disaster.
“I think the governor had the best of intentions. But I don’t think anybody has any idea what human toll it will have,” he said. “I think we’ll be here in the next legislative session and future sessions cleaning up the mess from that bill.”
