EMPLOYEE INCENTIVE PROGRAM REPORT

FY 2003-2004

BIENNIAL REVIEW OF THE EMPLOYEE INCENTIVE PROGRAM

FISCAL YEARS 2003 - 2004

Report to the Montana Legislature

PREPARED BY DEPARTMENT OF ADMINISTRATION STATE PERSONNEL DIVISION

ALTERNATIVE ACCESSIBLE FORMATS OF THIS REPORT WILL BE PROVIDED ON REQUEST. PERSONS WHO NEED AN ALTERNATIVE FORMAT SHOULD CONTACT THE STATE PERSONNEL DIVISION, DEPARTMENT OF ADMINISTRATION, 125 N. ROBERTS ST., PO BOX 200127, HELENA, MT 59620-0127. TELEPHONE 406-444-3871. THOSE USING A TTY MAY CALL THE MONTANA RELAY SERVICE AT 711. TWENTY FIVE COPIES OF THIS REPORT WERE PRODUCED AT A COST OF $1.00 PER COPY

REPORTS TO THE LEGISLATURE Numerous statutory sections require reports to be given to or filed with the Montana Legislature.1 The Department of Administration is one such reporting entity. This report is the biennial review of the Employee Incentive Program. 2 It contains a list of incentive awards agencies granted during the preceding biennium and the corresponding savings to the state or improvements in the effectiveness of state government. The Departments State Personnel Division produced this report. In addition to the Employee Incentive Program, the State Personnel Division provides guidance and assistance to State of Montana government agencies in a variety of human resource management related areas including: training, position classification and pay, collective bargaining, employee relations, and compliance with state and federal employment law. The Division publishes state rules, standards and policies relating to recruitment, selection, discipline, grievance, performance appraisal, leave and other employment related matters. The Division administers employee benefits plans that include health, life, dental and vision insurance, flexible spending accounts, a sick leave fund, and health promotion. The Division also operates the central Human Resource/Payroll system, which provides biweekly payroll processing for all state employees excluding those in the university system.

1 2

5-11-210, MCA (2003). 2-18-1103, MCA (2003).

DEPARTMENT OF ADMINISTRATION
STATE PERSONNEL DIVISION

STATE OF MONTANA
Mitchell Building, Room 130 PO Box 200127 Helena Montana 59620-0127 (406) 444-3871 FAX: (406) 444-0703 http://discoveringmontana.com/doa/spd/css/

August 20, 2004 Montana State Legislature State Capitol Helena MT 59620 RE: Employee Incentive Program Dear Members of the State Legislature: This is our report of the activity during the last biennium for the State of Montana Employee Incentive Program. This report contains a list of the state agencies that granted incentive awards, the amounts of the awards, and the resulting or projected savings and improvements in the effectiveness of state government. Hal Peck, PHR, Human Resource Consultant for the State Personnel Division, authored and produced the report with the assistance of agency administrative staff. If you have questions about this report or general questions about the Employee Incentive Program, please contact Hal at 406-444-9877 or e-mail him at hpeck@state.mt.us We commend these and other state employees who, through their ingenuity and dedication, make state government work more effectively and economically. Respectfully submitted,

Randy Morris State Personnel Division Administrator

Table of Contents Program Background..............................................................................................1 Overview.................................................................................................................1 Program Activity Summary Fiscal Year 2003......................................................3 Individual Award Descriptions By Agency Fiscal Year 2003...............................4 Program Activity Summary Fiscal Year 2004......................................................7 Individual Award Descriptions By Agency Fiscal Year 2004...............................8 Appendix 1 EIP Promotional Flyer....................................................................13

Program Background The Employee Incentive Program (EIP) recognizes and rewards individuals and teams of state employees as well as non-employees for innovations that significantly contribute to the efficiency, economy, or other improvement of state government. Agencies may present incentive awards in the form of money, paid leave or other forms of non-monetary recognition. The Legislature enacted the EIP in 1981 to help reduce costs and improve the effectiveness of state government operations. Since it's inception, the EIP has undergone several metamorphosis. Originally, the Legislature directed the Department of Administration to develop and centrally administer the EIP to award state employees for cost saving proposals. The program was set to sunset at the end of two years. After another extension, the Legislature removed the sunset provision in 1985. The programs current form is a result of legislation enacted in 1993.3 Now, each agency administers its own incentive award program. An agency head may choose to grant incentive awards and determine their monetary value using a graduated formula to determine the amounts of the monetary rewards. The general public, or people outside the ranks of state employees, also may submit ideas to improve government operations and become eligible to receive an incentive award.

Overview
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2-18-1101, et seq., MCA (2003)

During the last biennium, consisting of fiscal years 2003 and 2004, two agencies presented nine awards to twelve recipients for their individual and team efforts. These cash awards totaled $ 7,675. The program also allows agencies to award up to 40 hours of paid leave or other non-monetary awards. During the biennium, no agencies awarded paid leave and one agency awarded a non-monetary award. Participating state agencies documented an actual cash savings of $136,587. during the biennium. Agencies also implemented some ideas where the actual amount of the savings could not be precisely calculated. These savings accrued either to the implementing agency, other public agencies, customers, or any combination of the three. Agencies' projected savings were $23,913,155. during the last biennium. Detailed information about award amounts and actual or projected savings follow. It is organized by fiscal year.

Program Activity Summary Fiscal Year 2003 In fiscal year 2003, one agency presented four awards to seven recipients. Total cash awards were $1,265. Actual agency savings of $12,144. were calculated. Additional savings beyond this amount have been realized, but the agency implementing the cost saving ideas was only able to estimate the amount of savings. Table 1 provides a summary of awards, actual savings and projected savings in fiscal year 2003. Agency Labor and Industry Recipients 7 Table 1. Award Totals $1,265. Actual Savings $12,144. Projected Savings $20,889,000.

Individual Award Descriptions By Agency Fiscal Year 2003 Department of Labor and Industry Recipients: Jerry Keck, Keith Messmer, Jeanne Johns, and Wade Wilkison Division or Work Unit: Employment Relations Division Date award presented: July 11, 2003 Award Amount: $800. divided equally among the team members ($200. each). Description of how the idea eliminated or reduced agency expenditures or improved effectiveness of state government or improved agency services without increasing costs: This team worked to research the physical medicine fee schedule to determine the best solution to address complaints about a presumed imbalance in Workers Compensation reimbursement rates between chiropractors and occupational and physical therapists. The team brought the stakeholders in the issue together to voice input on the development of administrative rules revising the fee schedule in such a way that addressed complaints from the physical medicine provider group, was acceptable to insurers, and met various statutory requirements. The agency could have suffered an estimated $20,889,000. liability due to the inequity in the previous fee schedule if legal action had been taken against the agency. Recipient: Debi Peterson Division or Work Unit: Centralized Services Division Date award presented: July 11, 2003 Award Amount: $265. Description of how the idea eliminated or reduced agency expenditures or improved effectiveness of state government or improved agency services without increasing costs: Debi developed and implemented a new process for paying the Department's 67 different telephone bills using the agency procurement card. She significantly streamlined the processing time involved with paying these bills each month. Debi reduced the time involved from 20 hours under past procedures to just 5 hours under the new process. Recipient: Pam McDaniel 4

Division or Work Unit: Employment Relations Division Date award presented: July 11, 2003 Award Amount: $100 Description of how the idea eliminated or reduced agency expenditures or improved effectiveness of state government or improved agency services without increasing costs: Part of Pam McDaniels job is to have the Department's law books published after each legislative session. These law books are distributed to the general public through phone and mail requests, Assistance for Business Clinics, Work Force Center offices, etc. In the past, this book has been sent to Publications & Graphics (P&G) in WordPerfect or Word format. P&G would then reformat it using the Pagemaker desktop publishing software in order to print the books in the style requested by the Wage & Hour Unit. Because the book was placed into Pagemaker for printing, employees in the Wage & Hour Office could not personally modify it for future years and had to rely on P&G to reformat and recreate it in Pagemaker or another desktop publishing software. Pam took it upon herself to find a way to print the book by using Word rather than having P&G reformat and recreate it in Pagemaker. By doing so, Pam exceeded the expectations of a person in her position. Having the law book maintained and printed directly from Word rather than another software makes it possible for the employees in the Wage & Hour Unit to make corrections and modifications thereby reducing the Department's publication related costs. Recipient: Adele House Division or Work Unit: Billings Job Service Workforce Center Date award presented: July 11, 2003 Award Amount: $100 Description of how the idea eliminated or reduced agency expenditures or improved effectiveness of state government or improved agency services without increasing costs: Adele developed and implemented a new process to print business cards on personal computers at the Billings Job Service rather than purchasing 5

large quantities of printed cards from outside vendors. By printing the business cards on an as-needed basis, the information on the cards remains current, which eliminates waste associated with outdated cards. Adele's idea also significantly reduced printing costs.

Program Activity Summary Fiscal Year 2004 In fiscal year 2004, two agencies presented five awards to five individual recipients. Total cash awards were $6,410. Agencies calculated an actual savings of $124,443. Additional savings beyond this amount have been realized, but the agencies implementing the cost saving ideas were only able to estimate the amount of savings. Table 2 provides a summary of awards by agency, actual savings and projected savings in fiscal year 2004. Table 2. Award Totals $2,750. $3,660.

Agency Administration Labor and Industry

Recipients 2 3

Actual Savings $54,443. $70,000.

Projected Savings $3,022,555.4 $1,600.

While actual cash savings to state government agencies were realized and documented, this amount also includes savings to local government agencies. Therefore, we included these savings in the projected amount totals because the EIP is targeted to state of Montana agencies.

Individual Award Descriptions By Agency Fiscal Year 2004 Department of Administration Recipient: Jennifer Hansen Division or Work Unit: Information Technology Services Division, Public Safety Services Bureau Date award presented: April 30, 2004 Award Amount: $2,000. Description of how the idea eliminated or reduced agency expenditures or improved effectiveness of state government or improved agency services without increasing costs: In July 2002, Ms. Hansen took the initiative to re-establish the 1033 Program which had been administered in another agency, but had expired the year before. The previous agency did not intend to continue the program. The 1033 Program is a federal surplus property program administered through the Defense Logistics Agency (DLA) within the Department of Defense and provides state and local agencies with federal surplus property, primarily for law enforcement and public safety services agencies (sheriffs, police departments, emergency medical services, etc.). Examples of surplus property include communication equipment, aircraft, armored personnel carriers, weapons, computers, night-vision equipment, and a host of other items. The 1033 Program makes a wide range of surplus equipment available to participating organizations at little or no cost. The potential for state and local government agencies to save money is very large. Participating in the program requires that the State of Montana enter into a Memorandum of Agreement (MOA) with the DLA and identify an office that serves as the State Coordinator. Ms. Hansen researched the requirements of the program, worked with DLA to enter into the MOA, and developed an outreach effort to educate state and local agencies about the benefits of monitoring the surplus program for items that would be of benefit to their agency. Ms. Hansen's outreach activities included working with local law enforcement agencies to enroll them in the program and provide them access to a website to view, screen and procure equipment. Many state and local government agencies have embraced and become very active in the program. For example, the Montana National guard has assigned two national guardsmen to coordinate efforts within their organization. A large 8

number of county sheriffs and city police departments also have taken advantage of the program. As of this writing, the dollar value of the documented savings to state and local government agencies is $3,022,555. These cost savings are based on the value of items procured. There are two categories of savings: a) Equipment. Since May 2003, $2,422,555. in equipment has been acquired. This number is obtained from the DRMO computer files and is available online at their web site. Montana government agencies made 351 different requests for equipment. b) Firearms. The total of firearms that have been acquired is approximately 600, based on correspondence with local agencies and DRMO computer files. Based on an estimated value of $1,000. for an M-16, including accessories, Montana agencies have acquired approximately $600,000. in firearms. This estimate does not include handguns, which several agencies have acquired. Recipient: Ron Heilman Division or Work Unit: Information Technology Services Division, Network Technology Services Bureau Date award presented: August 22, 2003 Award Amount: $750. Description of how the idea eliminated or reduced agency expenditures or improved effectiveness of state government or improved agency services without increasing costs: Mr. Heilman developed a plan for concentrating the data traffic in Lewistown and hauling it to and from Helena over a single T-1 Frame Relay circuit. The design of the Frame Relay protocol and composition of the users traffic requirements will allow ITSD to over commit bandwidth resources and still satisfy the customer response time needs. In addition, Mr. Heilmans proposal has had a direct impact on our ability to re-initiate a contract with Qwest that reduces cost and extends frame relay into more communities. Implementation of Mr. Heilman's idea resulted in $54,443. of documented savings. An itemized breakdown of the savings is available on request.

Department of Labor and Industry 9

Recipient: Michael J. Nelsen Division or Work Unit: Unemployment Insurance Division Award Amount: $3,500. Description of how the idea eliminated or reduced agency expenditures or improved effectiveness of state government or improved agency services without increasing costs: Michael was presented with an EIP award because he took the initiative to enhance his computer programming skills to make necessary enhancements to the MISTICS system, and virtually eliminate reliance on an outside vendor for future enhancements. The improvements Michael made to the system saved the Division over $70,000 in programming costs alone, and the improvements to the system addressed specific requests from end-users of the MISTICS system, enabling them to do their jobs easier, faster, and more accurately. Recipient: Wade Wilkison Division or work unit: Employment Relations Division Award Amount: $160. Description of how the idea eliminated or reduced agency expenditures or improved effectiveness of state government or improved agency services without increasing costs: Wade was recognized for his ongoing efforts to change the face of the Workers Compensation Medical Regulations Unit. Wade has streamlined distribution of information to the units customers through use of electronic list management instead of traditional postal distribution. He provides simplified, up-to-date information to the units customers through the website and also developed self-calculating tables for customers to use in their reporting. Wade's efforts saved the Department approximately $1,600.

Recipient: Scott Slausen 10

Division or work unit: Kootenai Job Service Workforce Center Award: Lunch with Commissioner Keating Description of how the idea eliminated or reduced agency expenditures or improved effectiveness of state government or improved agency services without increasing costs: Scott embraces continuous improvement, as demonstrated by the submission of several good ideas to improve the way things work in the Department. Scotts ideas included: a monthly prize drawing for employees who submit ideas for improvements, mandatory use of direct deposits for payroll checks, using the speed dial setting on office fax machines, mystery shoppers, evaluation of state care usage, and using customer traffic data for scheduling in the local offices.

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Report Summary For a variety of reasons, many agencies did not participate in the Employee Incentive Program during the 2003-2004 biennium. Those agencies advised the Department of Administration they either did not receive ideas that merited awards or did not have the staff and resources to administer the Program. Even so, this years report is evidence that the EIPs cost saving potential is tremendous. The Department of Administration is committed to work with agencies to increase program participation. During the past biennium, the State Personnel Division developed and distributed EIP promotional materials to state agencies, which they may use in implementing agency programs.5 The Division also produced a program brochure, which is available on request. State Personnel Division has and will continue to provide agencies with guidance regarding EIP implementation and administration as well as other agency employee recognition programs.

see Appendix 1

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Appendix 1 EIP Promotional Flyer

Do you have a great idea?

Can you think of a faster, cheaper way to do it? Know a way to way to make things run more efficiently? If so, you may be eligible for a reward ($$). For more information contact your agencys human resource office today! Ask about the State of Montana Employee Incentive Program.
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