More than 400 state workers are being paid more than the range established for their jobs because of work rules that allow them to keep their old salaries even though they've been reassigned to lower-paying positions.

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As budget cuts and reorganization shrank a division of the state Department of Commerce by nearly two-thirds, the agency moved in 2010 to keep two directors seen as having valuable skills and experience.

The pair had no one to manage any longer, but in their new roles, the agency allowed them to keep earning their old salaries — even though both made more than $15,000 above the top of the pay scale for their new front-line jobs.

More than 400 state employees have the same dispensation to make higher pay than the range established for their jobs.

In a practice that dates back decades, they are allowed to stay at their salary or wage levels after being reassigned, adding more than $2.5 million a year to the state’s payroll, according to records obtained through a public-disclosure request.

“You’ve got people working side by side with other people doing exactly the same work, but they’re paid $15-20,000 a year more,” said Jennie Stephenson, a now-retired social worker who saw the policy in practice at Western State Hospital. “… There’s just something that’s rotten in Denmark about that, when you’re cutting people off health care and food stamps.”

Employees in this situation make, on average, nearly $6,000 more than the top pay for their new jobs. More than 30 are at least $15,000 above the normal pay ceilings, including seven at the psychiatric hospital in Lakewood.

The practice is known as “Y-rating,” apparently after a line on an old form that is no longer used. It usually happens after a job becomes the target of reorganization, such as a 2008 and 2009 elimination of ward managers at Western State.

A guaranteed right

It’s a guaranteed right in union contracts that agencies can choose to also apply to nonunion workers. Labor groups and state personnel officials say workers who have been demoted through no fault of their own deserve to be protected.

“I think a lot of times (with) the deck reshuffling, you still have a person there that has all the experience and all the capabilities that they did five minutes before,” said Matt Zuvich, a lobbyist for the Washington Federation of State Employees. “I think that it isn’t their fault that management or the Legislature or whoever has decided that they’re going to (move the) deck chair around.”

The federation this year fought off legislation backed by state Sens. Rodney Tom, of Medina, and Jim Kastama, of Puyallup, two centrist Democrats, that tried to end Y-rating.

The practice has been embedded in union contracts since 2005, after state employees gained the right to bargain over money. But it originated long before, in the early days of the civil-service or merit system that replaced political patronage in the 1960s, said two veteran state human-resources officials: Sandi LaPalm, of the Department of Labor and Industries; and Kathy Andruss, who’s now with the federation.

Less than 1 percent of the state’s general-government workforce of roughly 60,000 is affected.

60 managers keep pay

While most of the beneficiaries are union workers, others come from the ranks of management, which the federation complains is often bloated and overpaid.

Gov. Chris Gregoire’s administration has sought to reduce layers of middle management. Officials tout statistics showing the Washington Management Service (WMS) shrank to 4,065 in 2011 from more than 5,300 in 2005.

But some received new jobs, or at least new titles, only to keep making the same pay they did as managers. At least 60 former WMS managers have that arrangement, The News Tribune’s analysis of the database found.

Gregoire’s administration aims to keep management below 7.5 percent of the state’s workforce. Agencies are assigned target percentages. To comply with those goals, Secretary of State Sam Reed’s office removed the WMS designation from several of its information-technology workers and others.

“It didn’t seem fair to us to cut their salaries when their duties remained essentially the same,” said Dan Speigle, deputy secretary of state. “In these cases, it seemed like we were really just changing the title.”

New jobs, new duties

Other Y-rated state managers and supervisors changed more than just a title.

The two Commerce managers, Maury Forman and Ken Olson, were part of the agency’s business-services group, which assists companies and markets Washington — and which declined from 72 to 26 employees over four years, spokeswoman Penny Thomas said.

The two managing directors were transferred to other high-level jobs in the agency and allowed to retain their salaries, to keep them on board.

“We didn’t want to lose, essentially, that intellectual capital and that experience,” Thomas said.

Now Olson monitors recipients of Housing Trust Fund money while Forman leads statewide outreach to rural economic developers. Forman has written 14 books on economic development and travels around the country making speeches, with proceeds from the books and speeches going to the state — and some of that used to pay his salary. He doesn’t receive general-fund money.

“I would think my job now is even more difficult than a managing-director position,” said Forman, who started at the agency in 1991. “There, I was managing people to go out and do things. Now I’m working out in communities trying to change their ideas of what economic development is.”

It’s much more difficult and time consuming, he said.

At Western State Hospital, some workers who once were responsible for running a ward, whether they were in unions or considered management, are now doing hands-on patient care.

Following its reorganizations, Western State has at least seven employees who make more than $15,000 a year above their current jobs’ top pay rates.

Downside for workers

A Y-rating can help some workers afford to stay in a job. It also gives employees an incentive not to exercise their layoff right to move to another position, LaPalm said. That kind of move can bump a less-senior employee and start a domino effect that causes headaches for agencies.

But there’s a downside for workers, which is why 48 Y-rated employees at the new Department of Enterprise Services (DES) appealed the reclassification of their jobs last October.

Those workers come from the state printer, which lawmakers folded into DES last year. They don’t necessarily have new job descriptions, but they needed new titles. While the printing office could create its own classifications for employees, DES jobs are in the state’s regular classification system.

It was hard to find spots that fit. Some workers landed in much lower-paying classifications but were allowed to keep their old salaries.

One might think workers such as Paul Gisi would be happy. After all, the Y-rating doubles the pay Gisi would otherwise earn at his new designation, copy center lead A. He receives the most money from a Y-rating of anyone in the state, more than $30,000 above the top pay.

But Gisi and other printer workers contend in their appeals that they never should have been placed in those lower-paying positions to start with.

The downside for them is that employees who are Y-rated are not allowed to receive raises. They must wait until the pay scales of their new jobs catch up with their pay, through cost-of-living increases.

But Gisi’s pay is so far above the scale, he could work decades more in his job making printing plates from digital files and never see the scale catch up. “I would have to be there the rest of my life” to get a raise, Gisi said.

There’s a flip side to that rule. State government has suspended cost-of-living increases in recent years. With pay scales frozen, the gaps between the Y-rated workers and their peers are frozen, too.

That could lead to more irritation among their lower-paid co-workers, the federation’s Andruss acknowledged.

It certainly irritated workers such as Stephenson, who worked at Western State 26 years before retiring in 2010. The University Place social worker is predisposed to side against unions — she sits on the national board of the National Right to Work Legal Defense Foundation, which represented her in a legal complaint against the federation and the state about union dues.

She brought the Y-rated issue to Republican state Sen. Mike Carrell, of Lakewood, who said he also heard complaints while attending a meeting at the hospital this year.

“It certainly is not fair to other employees,” Carrell said, “that are working at the same job but earning significantly less.”