1. State Administration Staffing a report by the Office of Program Evaluation & Government Accountability FINAL REPORT May 2008 FISCAL OPPORTUNIT Y STUDY

2. OPEGA Final Report: State Administration Staffing Slide 2 Introduction -----――――――---―――――― Study focused on potential opportunities to reduce administrative costs related to upper level administration and organizational structure. OPEGA used term “upper level administration” to specify strata of State government meant to be within scope of this study – executive level positions and those that primarily support executive functions. This definition differs from the way State positions are currently categorized, classified and perceived by the Administration.

3. OPEGA Final Report: State Administration Staffing Slide 3 Study included all Executive branch agencies, the Constitutional Offices and selected commissions or special agencies with State employees. Our work included researching similar administrative streamlining efforts in other governmental agencies as well as theory on organizational layers and management to staff ratios. Methods and Scope ―--―――――--―――

4. OPEGA Final Report: State Administration Staffing Slide 4 We assessed whether there had been position growth over past 10 years in Administrative Units H, M, O, Y, and Z as well as Unit X at salary grade 28 and above. Attempted to gather additional position-specific data to further limit dataset to “upper level administration” and better understand functions of those positions. After pilot survey, determined the data collection effort would not be cost- beneficial. Methods and Scope ―--―――――--―――

5. OPEGA Final Report: State Administration Staffing Slide 5 Background ―――――――――――――― Most State positions have both a job classification and working title. Positions are also placed in Administrative Units based on job classification and nature of work performed. Positions in Administrative Units H, M, O, X, Y and Z are not represented by bargaining units. Position Categories and Classifications

6. OPEGA Final Report: State Administration Staffing Slide 6 Background ――――――――――――――― Appointed positions are created or eliminated through specific legislative action. Other specific position changes, and related funding changes, are typically included in budget proposals considered by the Legislature. Bureau of Human Resources determines the job classification that new positions are assigned to. New positions or new job classifications also reviewed by the Office of Employee Relations for assignment to proper bargaining unit. Position Changes

7. OPEGA Final Report: State Administration Staffing Slide 7 Background ――――――――――――――― Existing positions can be reclassified to reflect changes in job responsibilities. Reclassifications must be reviewed and approved by Bureau of Human Resources and the Bureau of the Budget. Self-funded reclassifications do not require specific legislative approval through the budget. Trends in position changes over time may not be readily apparent to management or legislators. Position Changes (cont.)

8. OPEGA Final Report: State Administration Staffing Slide 8 Background ――――――――――――――― Many streamlining efforts in private and public sectors have included flattening organizations by decreasing management layers and increasing spans of control. There is no consensus on optimum number of management layers. Typical target is 4 or 5 layers with max of 6 for complex organizations. Also no consensus on ideal span of control ratio – heavily dependent on nature of work. Organizational Structure

9. OPEGA Final Report: State Administration Staffing Slide 9 Background ――――――――――――――― General agreement exists, however, that carefully redesigned organizational structures can increase efficiency and effectiveness. States seeking to flatten structure have focused on achieving an average span of control. Restructuring to reduce middle management may result in reclassifying rather than eliminating positions. Organizational Structure (cont.)

10. OPEGA Final Report: State Administration Staffing Slide 10 Detailed Analysis ――――――――――――― Comparison of position data for FY 1997 and 2007 shows minimal overall increase in total State positions, but a larger proportion of positions in Administrative Units H, M, O, Y, Z and X at grade 28 and above*. Number of Positions

11. OPEGA Final Report: State Administration Staffing Slide 11 Detailed Analysis ――――――――――――― The number of positions in these Admin Units can appropriately differ greatly from one agency to another. The increased proportion of State positions in the group analyzed is primarily due to an increase in Unit X – Confidential positions. The shifting of positions into Admin Units H, M, O, X, Y and Z may reflect changing nature of work or organizational structure. Number of Positions (cont.)

12. OPEGA Final Report: State Administration Staffing Slide 12 Detailed Analysis ――――――――――――― The shift has financial implications as the State covers a portion of employees’ retirement contributions, or pays a salary premium, for positions in these Units. Per DAFS, these arrangements were established in 1980’s in lieu of a salary increase. The arrangements have positive financial impact if current salaries are below market. They have negative financial impact if salaries are at or above market. Number of Positions (cont.)

13. OPEGA Final Report: State Administration Staffing Slide 13 Detailed Analysis ――――――――――――― We attempted to compare management layers and spans of control in Maine State government to benchmarks we identified. State department organizational charts submitted, however, were inconsistent in level of detail and were not in standardized formats. Consequently, they were inadequate for performing comparisons. Management Layers and Spans of Control

14. OPEGA Final Report: State Administration Staffing Slide 14 Detailed Analysis ――――――――――――― Some departmental charts appeared to show up to 8 layers, but it was not clear what constituted a layer. Some departments appeared to have spans of control ranging from 1:18 to 1:1, but it was unclear how reporting relationships had been defined. Standardized charts may show that Maine State government is already fairly flat in its structure. Layers and Spans (cont.)

15. OPEGA Final Report: State Administration Staffing Slide 15 Detailed Analysis ――――――――――――― Ideally, good organizational charts are maintained as one management tool helpful in considering a variety of issues. A planned approach to on-going management reform is generally preferable to downsizing through short-term layoffs. Layers and Spans (cont.)

16. OPEGA Final Report: State Administration Staffing Slide 16 Detailed Analysis ――――――――――――― Important considerations in evaluating and making changes to organizational structure include:  Consistent application of specified criteria in collecting organizational data.  Comparisons made should be between agencies performing similar functions.  Flattening can impact employee advancement opportunities.  Achieving structural change without negative impacts on service provision can take time. Layers and Spans (cont.)

17. OPEGA Final Report: State Administration Staffing Slide 17 Summary -----――――――――――――――― OPEGA was unable to objectively assess opportunities for savings in upper level administration and organizational structure due to lack of meaningful information. Attempts to gather additional data proved more time consuming than was cost-beneficial for this study.

18. OPEGA Final Report: State Administration Staffing Slide 18 Summary -----――――――――――――――― However, we did note: a shift of positions among Administrative Units - a larger percentage now in Units H, M, O, Y, Z and X at salary grade 28 and above than 10 years ago; organizational charts that suggest some agencies may have layers and spans of control out of line with benchmarks we identified; and a lack of monitoring cumulative changes in structure or position types from department or State-wide perspectives over time. Consequently, we believe the State should continue efforts to seek savings in this area and we suggest actions for obtaining information needed to do so.

19. OPEGA Final Report: State Administration Staffing Slide 19 Recommendations ――――――――――― A.Requiring all departments to biennially submit uniform, accurate organizational charts depicting defined reporting and functional relationships. B.Establishing a mechanism for comprehensively monitoring trends in position changes. C.Directing DAFS to conduct a market study of total compensation packages for positions in Units H, M, O, X, Y and Z. We recommend seeking sustainable administrative reductions via a comprehensive approach to evaluating State organizational structure and resources devoted to administration. To facilitate this, the Legislature should consider:

20. OPEGA Final Report: State Administration Staffing Slide 20 Acknowledgements ―――――――――――- Thanks to the Commissioner and staff of the Department of Administrative and Financial Services for the time they spent assisting us with the information presented in this report.

21. OPEGA Final Report: State Administration Staffing Slide 21 Questions?