Vacant Positions

Budget Process Is Premised on a Lower Level of Vacancies. Vacancies in authorized employee positions are a normal part of human resources management in both the public and private sectors. When employees move to other jobs or retire, it takes time to fill their positions, and when new positions are authorized, it takes time to fill them as well. Since 1943, the state budget has included provisions for “salary savings” to account for the fact that departments cannot fill 100 percent of their positions all of the time. When a department requests funding for new positions in a budget change proposal, its request for funds to cover salaries and related costs generally is reduced by 5 percent. (There are some exceptions to this rule, such as budgets for correctional officers’ salaries, which generally include no assumed salary savings.) In subsequent years, augmentations to departments to cover the increasing costs of employee salaries also generally are reduced to take account of the 5 percent salary savings factor. In short, the state budget process assumes that around 5 percent of authorized positions will be vacant at any given time during the year due to normal turnover and hiring delays. The current level of position vacancies across the executive branch—14 percent—is much higher than the assumed 5 percent level.

What Level of Vacancies Is Reasonable to Expect? Individual circumstances of departments affect the number of departmental position vacancies at any given time. Control Section 4.11 of the annual budget act requires that all new positions approved in the budget be established effective July 1 (the first day of the fiscal year), unless otherwise approved by the Department of Finance. Accordingly, in fiscal years when the Legislature authorizes significant expansions in the number of authorized personnel in a department, it is reasonable to assume that departments will need some time to fill those positions. Therefore, vacancy rates will increase temporarily in line with the authorized staffing increase. (In some cases, the budget takes account of this fact, assuming a higher–than–usual level of salary savings during the initial year of an authorized staffing increase.) Vacancy rates also can rise when departments have an unusually large number of employees retiring at the same time. As more and more “baby boomers” reach the average age of state employee retirements (around age 60 for members of the California Public Employees’ Retirement System, excluding peace officers), some departments may experience elevated vacancy rates. Finally, as discussed below, tough budget years can increase vacancies as departments seek ways to reach budget savings targets. During typical periods, however, we think it is reasonable to assume that most departments should be able to keep all but 5 percent to 10 percent of their authorized positions filled at any given time.

Salary Levels Often Are Not the Main Reason For High Vacancy Rates

Compensation levels sometimes are one factor that makes it difficult for departments to fill positions. Our experience, however, is that other factors often are much more significant in driving high vacancy levels. These factors include: (1) antiquated and inefficient hiring processes throughout the state’s civil service system, (2) departments’ usage of budgeted personnel funds to support other expenses that have not been accurately accounted for during the budget process, and (3) departmental responses to cost reduction measures enacted during tough budget years.

Causes of Vacancies Vary by Department and Can Be Difficult to Evaluate. Employee groups often attribute high vacancy rates to state salaries being lower than those for comparable jobs. In response to legislative inquiries, we have examined several departments with major vacancy problems in recent years. The reasons for departmental vacancies vary considerably from department to department, and these reasons often are complex to evaluate and understand. In some cases, uncompetitive state employee compensation levels may be one of several contributing factors to employee vacancies. In most cases, however, we have found that state salary levels are not the main cause of high vacancy rates.

Antiquated, Inefficient Civil Service Hiring Processes Are One Cause. In our experience, departments with high vacancies tend to be ones with other systemic problems affecting their hiring processes. Throughout state government, civil service hiring processes take many months to fill a vacant position. The sheer length and complexity of the civil service hiring process creates a large burden not just for applicants but also for departments seeking to keep positions filled. In some cases, human resources (HR) functions—staffing levels of HR personnel, HR technology resources, training budgets, and resources available to conduct criminal and health background checks—have been kept lean through difficult budget years, resulting in departments having limited capabilities to hire and train personnel quickly and efficiently. In May 2007, for example, we reported to the Legislature that the 14 percent vacancy rate among warden positions in the Department of Fish and Game appeared largely attributable to systemic problems in the department’s hiring process.

Use of Budgeted Personnel Funds for Other Purposes Is One Cause. In some cases, departments use budgeted personnel funds in one program to (1) keep positions filled or pay other unbudgeted expenses in another program or (2) cover expenses within the same program that end up being more than budgeted. For example, a 2002 Bureau of State Audits (BSA) report found that the majority of savings from vacant positions in five departments was used to cover higher–than–budgeted costs for filled positions.

Tough Budget Years Can Lead to Higher Vacancies. A tight fiscal situation—especially if it persists over several years—contributes to higher vacancy rates. During these times, state budgets often include actions such as elimination of price increases for operating expenses and across–the–board reductions to state operations costs. In response, departments often are forced to intentionally hold positions open or otherwise achieve salary savings above the 5 percent budgeted level in order to stay within their budgets. For example, the Office of the State Public Defender—acting in reaction to the Governor’s budget plans due to the fiscal emergency—held open six budgeted attorney positions in late 2007 despite having qualified applicants to fill the slots. By doing this, the office sought to minimize the need to lay off either these new hires or current employees. Consequently, the department reduced its ability to process new appellate death penalty cases. Should the Legislature move forward with the Governor’s proposed across–the–board budget cuts for 2008–09, we expect that vacancy rates will climb as other departments hold positions open in order to minimize layoffs and mitigate other programmatic impacts.

Recommend Repealing Ineffective Law on Abolishing Vacant Positions

An existing state law purports to abolish positions that are vacant for six consecutive months. The law, however, eliminates only a small number of vacant positions and generates significant paperwork in order for departments either to (1) correct SCO vacant position records or (2) claim one of the many specified exemptions in the law and avoid the abolition of positions. The law does not reduce departments’ budgets for the small number of vacant positions eliminated. Due to its ineffectiveness, we recommend the law be repealed.

Government Code Abolishes Certain Vacant Positions. Amended several times in budget trailer bills in recent years, Section 12439 of the Government Code requires SCO to abolish certain authorized positions in departments that are vacant for six consecutive months. Departments are prohibited from executing any personnel transactions for the purpose of circumventing the provisions of the law. The law, however, contains 14 categories of exemptions—in other words, reasons that a department can cite for avoiding the abolition of positions, even though they may have been vacant for six consecutive months. Figure 2 lists these 14 exemption categories. While the law requires SCO to abolish vacant positions, it contains no provision to reduce departments’ budgets in conjunction with these actions. In order for such reductions to take place, the Legislature would need to specifically reduce each department’s budget in the annual budget act.