Call to Order and Roll Call
The 2nd meeting of the Interim Joint Committee on Transportation was held on Tuesday, July 7, 2015, at 1:00 PM, in Room 171 of the Capitol Annex. Senator Ernie Harris, Chair, called the meeting to order, and the secretary called the roll. The minutes from the Committee’s June 2, 2015 meeting were approved.
Present were:
Members: Senator Ernie Harris, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Joe Bowen, Jared Carpenter, C.B. Embry Jr., Jimmy Higdon, Gerald A. Neal, Dorsey Ridley, Albert Robinson, Brandon Smith, Johnny Ray Turner, and Whitney Westerfield; Representatives Denver Butler, Tim Couch, Will Coursey, David Floyd, Tom McKee, Russ A. Meyer, Charles Miller, Jerry T. Miller, Terry Mills, Rick G. Nelson, Tanya Pullin, Marie Rader, Steve Riggs, Sal Santoro, John Short, Arnold Simpson, Diane St. Onge, Fitz Steele, Jim Stewart III, Tommy Turner, David Watkins, and Addia Wuchner. Senator Dorsey Ridley and Representative David Watkins attended the meeting via approved videoconference.
Guests: Mary Elizabeth Bailey, Commissioner of the Department of Human Resource Administration, Kentucky Personnel Cabinet; Carol Beth Martin, Executive Director of Office of Human Resource Management, Kentucky Transportation Cabinet (KYTC); Rodney Kuhl, Commissioner, Department of Vehicle Regulation, KYTC; and Heather Stout, Deputy Executive Director of the Office of Information Technology, KYTC
LRC Staff: John Snyder, Brandon White, Dana Fugazzi, and Christina Williams.
Update on KYTC actions in response to the Engineer Salary Study mandated by HB 236 of the 2014 Regular Session
Mary Elizabeth Bailey, Commissioner, Department of Human Resource Administration, Kentucky Personnel Cabinet, and Carol Beth Martin, Executive Director, KYTC Office of Human Resource Management, gave an update on KYTC actions in response to the Engineer Salary Study that was mandated by HB 236 in the 2014 Regular Session of the General Assembly.
Commissioner Bailey stated the plan that was developed to revise the engineer series salaries has allowed the Transportation Cabinet to be competitive with private entities as well as state engineering salaries in surrounding states. The plan resulted from a joint effort of collecting data and surveying various entities by the Personnel Cabinet and KYTC. The information collected included variables of work week schedules, benefits, and salaries. The engineer series contains 13 classifications and the plan presents two options for addressing the salary concern.
Commissioner Bailey stated the highest turnover rate of the engineer classifications tend to be Engineer I (57 percent turnover rate) and Engineer II (40 percent turnover rate). Director Martin stated because of the turnover rate, KYTC has been faced with the challenge of losing engineers that the Commonwealth has spent time, money, and resources to train. Many private consultants, contractors, and city or county governments are offering engineers higher salaries to work for them. Because of this loss, contract costs for engineering services have increased. In 2014, the KYTC contracted for approximately $150 million in professional engineering services in comparison to just over $100 million in 2004, a 48 percent increase. Director Martin stated approximately fifteen years ago, 70 percent of the design work was performed by KYTC employees and currently, 70 percent of the design work is performed by outside consultants.
Commissioner Bailey stated the various entities that were surveyed include the National Compensation Association of State Governments (NCASG), the American Association of State Highway and Transportation Officials (AASHTO), and other public and private entities. The state uses NCASG often when trying to obtain classification data from various states to determine how other states are paying their employees, including the amount of pay, the benefit packages, and incentives, etc. Of the 13 states that responded to one survey, all stated they have retention problems in the engineer series. Of the states that responded to a separate survey, 8 of 14 states stated recruitment and retention is a problem particularly because of the lack of competitive salaries. One problem states, including Kentucky, generally have had is that they are not able to offer any type of signing bonuses, moving expenses, or any incentives that most private sector companies are able to offer engineers. The NCASG has offered some strategies that states have shared, however nothing has been as successful as raising the bottom line dollar of an employee’s salary.
The AASHTO study paid particular attention to the six states surrounding Kentucky (Illinois did not participate), comparing entry, midpoint, maximum, and average salaries for nine engineering job classes. Tennessee and Indiana ranked above Kentucky in every job classification surveyed.
Other public and private entities were surveyed, which showed that Kentucky Transportation Cabinet engineer salaries were well below neighboring states. For a position comparable to Kentucky’s Transportation Engineering supervisor, ($60,950), the average annual salary in the Midwest Region is $94,400, in the South Central Region is $92,500, and in the Southwest Region is $91,400. The United States Bureau of Labor Statistics showed that Kentucky ranked sixth among the surrounding states in Civil Engineer salaries for both private and public sectors.
The conclusion following the study was that there are a couple of ways the salary issue could be addressed. By reviewing the classifications, education, and experience needed for each classification, and utilizing a point factor analysis, pay grade changes became options for eight of those classifications. Pay grades may increase based on market conditions as determined through a point factor analysis or salary surveys of both public and private employers. Personnel regulation 101 KAR 2:034 Section 3 (7)(8) permits a combination of grade changes and special entrance rates to reach a salary necessary to combat recruitment and retention problems.
Commissioner Bailey stated special entrance rates (SER) were available options for nine classifications. Special entrance rates can aid recruitment problems, primarily when a grade change is not possible. A SER sets the minimum salary for a class at a rate above the minimum of the pay grade. The SER can be any amount up to the grade midpoint.
Salary compression is also an issue that needs to be addressed. The Personnel Cabinet provided salary compression adjustment options for seven classifications. For employees in a class for which a special entrance rate is established, current employees may receive a salary adjustment equal to the difference between the former entrance rate and the new entrance rate if funds are available.
The final results of the study resulted in higher pay grades and/or higher minimum salaries within some classifications for approximately 550 employees effective June 16, 2015. The cost for these salary changes in addition to fringe benefits is approximately $7.8 million per year. The Kentucky Transportation Cabinet Secretary is quoted as saying “Alarming turnover, far greater than for state government as a whole, threatens our core engineering competences. For taxpayers, it also has the costly consequence of forcing the cabinet to increasingly rely on private consultants, at premium rates.”
Chairman Harris stated he believed the $7.8 million cost increase is well spent money when compared to the fact that there was approximately a $50 million increase in consulting between one year and another.
In response to a question asked by Representative Floyd, Director Martin stated Engineering Technologists do not have to have a degree. She explained the different classifications and requirements of several job classifications.
In response to a question asked by Representative Collins, Commissioner Bailey stated 70 percent of the design work is done by outside consultants, and the 30 percent of the design work that is done in-house is done by central office in Frankfort. Representative Collins suggested some of that design work be distributed throughout the different district offices.
Senator Robinson suggested analyzing not only salary and benefit costs but retirement costs as well to determine a true cost of adjusting the salaries for the engineer series. He also suggested a program to help engineers pay for their degrees if they agree to continue to work for the cabinet for a specified amount of time to work off the cost. Director Martin stated the cabinet does have a similar scholarship program in place where a stipend is given to students who are enrolled in an approved engineering program and in return, they must work for the cabinet for a period of time. There is a success at retaining those individuals and if the individual does not work the specified amount of time, they must reimburse the cabinet for the classes.
In response to a question asked by Representative Wuchner, Commissioner Bailey clarified the levels of education and training required for engineers in training and engineer technologists, as well as the other classifications.
In response to a question asked by Chairman Harris, Director Martin stated some Engineering Technologists have their degrees and some do not. She further clarified the avenues that a person could take who wishes to become an engineer within the cabinet.
Referencing the 70 percent of the consulting that is done outside of the cabinet, Commissioner Bailey stated there is not a specific percentage goal in mind to have the work done in-house, rather the goal is to help ease the Chief District Engineer’s job in dealing with the loss of trained and knowledgeable employees. She added there have recently been some employees that have had offers from outside consultants but have chosen to stay because of the changes coming.
In response to a question asked by Senator Higdon, Commissioner Bailey stated one solution that has been considered but not yet implemented to help the salary issue was to change the engineer employee’s work week from 37.5 to 40 hours per week. The raise the employees would realize would be the compensation for working the additional 2.5 hours per week.
In response to a question asked by Senator Higdon, Director Martin stated the 550 employees that this plan would impact is just an estimate on the amount of employees that would be affected. She added the cabinet would like to see a reduction in turnover and would like to realize savings to help offset the $7.8 million as well as being able to do more work in-house with the cabinet’s own employees.
Representative St. Onge reiterated that a consequence of employees leaving for better paying jobs is that projects get delayed.
Representative Collins stated it is important to consider if an engineer that does the design work of a project has to see the project through to completion and if not the extra cost associated with following through of the project needs to be considered as well.
In response to a question asked by Senator Higdon, Commissioner Bailey stated in order to make a true comparison of salaries, a conversion of the cabinet’s 37.5 week salary schedule and engineers in other states and the private sector’s 40 hour work week schedule was done in order to see if the cabinet could compete with outside salaries.
In response to a question asked by Representative Jerry Miller, Commissioner Bailey stated the 550 positions that are being considered for raises are various positions and not just top-level engineer classifications. Commissioner Bailey added the $7.8 million in funding needed for the raises averages out to approximately a 20 percent increase per position. Representative Miller also urged the cabinet to factor in the value of the benefits that working for Kentucky State Government has to offer.
Senator Westerfield questioned why the KYTC was focusing on engineers, who are only one of several jobs within Kentucky State Government that their salaries are not competitive with other states or private sector jobs, and therefore have high turnover rates. He also asked that the benefit packages that Kentucky State Government offers versus the benefits that employees receive in the private sector be considered when increases in pay are decided.
Chairman Harris stated that the study was in direct response to a directive in the KYTC budget bill adopted in the 2014 Regular Session. He reiterated that the Road Fund money is separate from the General Fund money and as a result the Road Fund money can be spread outside of the Transportation Cabinet with a few exceptions.
Update on the progress with the new Automated Vehicle Information System (KAVIS)
Rodney Kuhl, Commissioner, Department of Vehicle Regulation, KYTC; and Heather Stout, Deputy Executive Director of the Office of Information Technology, KYTC, gave a brief update on KAVIS. Ms. Stout stated the previous update that the Committee received was via a letter that was sent in November 2014 that stated the cabinet rejected the 3M software after a technical assessment. The Commonwealth took control of the project and was planning to proceed with new development which consisted of a modular approach. A team was assembled to finish the development of KAVIS, which is now being referred to as KAVIS:2.
Ms. Stout stated the cabinet has broken down the KAVIS:2 approach into two objectives; to enhance the use of AVIS minimally through interfaces to gain benefits for citizens and stakeholders, and to replace AVIS gradually through the implementation of modules.
Some of the accomplishments to date for enhancing the use of AVIS include a print on demand decal system and scanning within the county clerk offices which was fully implemented in May 2015. The benefits of this approach is that it is expected to decrease the time in the county clerk offices for customers, eliminate double entry of data for clerks, reduce paper handling and archiving, decrease maintenance of aging printers, reduce postage for clerks and motor vehicle licensing, reduce annual audit time, and to greatly improve access to vehicle documents. All of those benefits have been realized as well as immediate access to title documents and other vehicle related documents by other agencies and improved tax review and audits by the Department of Revenue.
Ms. Stout stated in enhancing the use of AVIS there were some implementation problems that were experienced such as paper jams, a confusion of the process, SD cards for printers were misplaced and/or not shipped or not functioning, technical connectivity with the Xerox Server, and gradual implementation required two processes to be run concurrently in Motor Vehicle Licensing causing a title application backlog. She added some remaining issues are the technical connectivity with the Xerox server, and a resolution is expected shortly. There is also a title application backlog, but the initial backlog of 41 days has been reduced to 21 days. Resources have been retrained and business and technology process improvements are being implemented.
Ms. Stout stated another enhancement for the use of AVIS is a new web renewal site that will be deployed in the summer of 2015 which will include the same functionality with a new design. With this new web renewal, county clerks will receive money collected immediately. There will also be an enhanced web renewal site to be deployed in the fall or winter of 2015 which will include all eligible plates being renewable online, not just standard issue plates. The process for county clerks to approve renewals will also be streamlined.
Ms. Stout stated there will be a modular approach to replacing AVIS. The benefits of a modular approach are that the cabinet can roll out smaller pieces of functionality over time; incrementally remove functionality pieces from AVIS; minimize the risk for the KYTC, Motor Vehicle Licensing, county clerks, and stakeholder groups; it enables the focus to be on data cleansing/conversion efforts just on specific modules that need to be converted; enables focus for training efforts; and it allows organization by vehicle type and volume.
Ms. Stout further explained in detail each module. The following modules that will be used in replacing AVIS are: 1) menu and disabled placards, 2) boats, 3) off road, 4) mobile home, 5) all trailers, 6) motor home/house car, 7) bus, 8) motorcycles, 9) trucks/wreckers, and 10) passenger cars. The modular approach will build on the implementation of various aspects of the registration process to develop more complex modules later. Ms. Stout stated the cabinet is currently in module one. The project life cycle is a sprint development cycle and the modules will be completed through iteration. The estimate is that the work in module one will be completed in October 2015 and will be rolling out within the end of 2015 or the beginning of 2016, depending on county clerk availability.
The project life cycle will include seven iterations of work that will be in three week time periods. During the sprint development, the starting and initiating of module two will develop as module one is being completed so as soon as module one is completed, the cabinet moves straight into development of module two. The hope is that as the cabinet is planning and initiating module two, they will have the estimate of completion on module two by fall of 2015. Ms. Stout reiterated she does not have an estimate of completion of the entire KAVIS:2 system, however, as the modules are being completed, each module will have a completion estimate. The hope is that some modules will be able to be combined in order to shorten the life cycle of the entire project. Additionally, later modules should take less time to complete because many functions have been addressed in previous modules.
Ms. Stout stated that to maximize the success of replacing AVIS, the KYTC is welcoming the project management office reviews throughout the entire process. The cabinet has also hired a project manager that is working under Ms. Stout. That project manager, Ms. Stout, and all of the members in the project management office are certified project managers.
Ms. Stout stated the cabinet has hired a vendor, KiZAN, which is very experienced in the sprint development life cycle that KYTC is following and they provide process guidance as well. The cabinet also has Microsoft technical assessments to review the project, including the architecture that has been planned and the code that is being developed in order to make sure the cabinet is on the right track. The Microsoft technical assessment team will be called upon for one week checkpoints throughout the course of the project. The Commonwealth Office of Technology will also be doing independent verification and validation of the process.
Ms. Stout stated some issues and risks with replacing AVIS is that the cabinet is sharing resources with AVIS Maintenance and support staff and they must be able to do their work to support the AVIS system while the cabinet continues to try to replace it. Scheduling around different stakeholder busy times such as elections or the end of the month where county clerks are always busy has also been a challenge. Another issue is that resource time is being consumed by assessment services.
Ms. Stout stated some of the positive things that are showing momentum on the project are that the cabinet has a highly motivated team with a sense of pride and a will to prove their capabilities. Resources, both existing and new, have formed into a cohesive team and feedback on work completed thus far has been positive. The cabinet has also had encouraging and supportive stakeholders. The modular approach was easily accepted and the Working Committee (various stakeholders) meets weekly to validate requirements.
In response to a question asked by Senator Westerfield, Ms. Stout stated the cabinet does share information and is able to interface with different parking authorities and/or other vendors.
In response to a second question by Senator Westerfield, Ms. Stout stated the cabinet could outsource the code that is being used to build KAVIS:2 to other states, however, this would not be for profit. She stated states will often share codes and information to other states, however there is no cost associated with sharing that information.
Senator Westerfield asked if the state owes 3M any money or if 3M owes the state any money for the contract obligation that was not fulfilled. Ms. Stout stated there is a mediation scheduled for August for the 3M contract situation, and litigation will follow if the situation is not resolved and a settlement agreed to.
In response to a question asked by Representative Collins, Ms. Stout stated there is no current recommendation to raise any fees.
In response to a question asked by Representative Collins regarding complaints on decals, Commissioner Kuhl stated there have been a few comments that law enforcement in some of the smaller jurisdictions have made regarding the aversion to the one year digit on the decal. He stated the cabinet worked with the state police on the design of the decal.
In response to a question asked by Representative Collins, Commissioner Kuhl stated the cabinet has a plan in place to lower the time it takes to get the titles, and that plan will be reviewed within the next 30 days and the process will be evaluated. Commissioner Kuhl further stated the contract for titles being made out of state is not up for renewal for approximately another year and the contract will be revaluated at that time.
In response to a request made by Chairman Harris to elaborate on security procedures, Ms. Stout stated the KYTC does have a security liaison with COT that is involved with all of the ongoing projects to at least make sure we are meeting COT’s policy. Part of the Microsoft technical assessment team’s tasks is to evaluate security. She also mentioned that the KAVIS architect has a great background in security.
The committee reviewed Administrative Regulations 601 KAR 9:135 and KAR 14:020. No objections were raised, and Chairman Harris adjourned the meeting at 2:14 P.M.