New law means McCrory can hire, fire more state workers

For the second time in a year, lawmakers have granted Gov. Pat McCrory more power to hire and fire state employees. Since Gov. Bev Perdue left office, the number of at-will positions the state's sitting chief executive can designate has more than tripled.

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Tyler Dukes
RALEIGH, N.C. — Gov. Pat McCrory will soon sign into law a measure that will grant him more power to hire and fire state employees than any governor has had in a quarter-century.
It's the second time in a year lawmakers have opted to increase the governor's cap on so-called "exempt positions." Those employees serve "at-will" and can't contest their removal from the job. They lack the protections guaranteed by the State Personnel Act.

Since McCrory's predecessor left office, the number of at-will positions the state's sitting chief executive can designate has more than tripled, despite remaining relatively unchanged for 28 years under Democratic leadership.

"That's an awful lot of positions that don't need to be advertised, where people don't have to qualify for the salary they make," said Drake Maynard, a human resources consultant who retired from the Office of State Personnel in 2010.

Critics of the move say they're concerned the exemptions, which permit firing without cause and remove some hiring requirements, making state government jobs increasingly political. But McCrory contends that lifting the cap gives him the ability to streamline a government bogged down by bureaucracy. 

"We think the State Personnel Act revisions are the first steps toward reform to give myself and my cabinet more flexibility in improving the efficiency and effectiveness of state government," McCrory told reporters in July 26 news conference. "There's more to come with regard to the State Personnel Act that I know we must implement, but this is a good first step."

Change represents historic spike

Exempt employees are nothing new in North Carolina, according to Maynard. In the mid 1970s, the U.S. Supreme Court confirmed that elected officials had every right to replace "policy-making" employees who had opposed their efforts to get elected.

"The concept is that this is the governor's opportunity to see if the people who are in these positions are the kind of people who will help get his initiatives going – or if he needs to get someone else," Maynard said.

For that reason, these positions were historically political appointees concentrated in areas close to the state's chief executive. 

"They serve at the pleasure of the governor, and if their performance level is not there, he has the flexibility to remove them from the positions," Neal Alexander, current director of the Office of State Personnel, said.

In the waning days of Gov. Bev Perdue's administration in 2012, the Democrat had exempted 328 positions across eight cabinet departments. Twenty-three of these positions were vacant, according to personnel records.

The number fell short of her legislative allowance of about 400, a cap that had remained in place since Republican Gov. Jim Martin's administration began in 1985. During Martin's first summer in office, the Democratic-controlled General Assembly overhauled the State Personnel Act, limiting the number of "policy-making positions" Martin could designate to about 325.

"On the whole, it was better not to have an unlimited number of policy-making exempt designations," said Maynard, who worked at the personnel office at the time and specialized in these designations before his retirement.

Following a law passed by the Republican-controlled General Assembly in the summer of 2012, McCrory has so far designated 974 exempt positions within eight departments, including Health and Human Services, Transportation and Environment and Natural Resources. The measure the governor is expected to sign, House Bill 834, grants him 500 additional exempt designations in these departments as well as three others, including the Office of State Personnel.

Although Maynard said he suspects all governors since Martin "got as close to the max as they could," the spike in exempt positions under McCrory presents him with more options than his predecessors.

"Gov. McCrory has an expanded ability to take control of the cabinet departments in state government, and he is at least partially able to use this exempt status to get control," Maynard said.

Alexander said it's an opportunity that mirrors the private sector. A new chief executive would bring in his or her own management team to "get the right people on board."

"We've got great employees that work at the state," Alexander said. "What we're trying to do is make sure we've got the right HR programs, processes and systems in place that leverage the strengths of the employees, the managers and the supervisors to deliver the services to the citizens of North Carolina."

More political appointees, more ideology?

Asserting control with these exempt positions does have limits. Before the change last year, governors were further restricted from politicizing state employees with a technical caveat: Only about 100 of their 400 exempt positions could be "policy-making." These employees, per state law, were expected to be loyal to the governor, while the remainder were afforded some additional protection as "managerial" positions.

Managerial employees, for example, must still be selected from a "pool of the most qualified applicants" – without regard to political influence or affiliation. Policy-making positions must still meet "reasonable qualifications," but the details are left to the personnel office – not state law.

"We have the accountability in state personnel to look at the background skills of the people and determine the classification and the pay range for them," Alexander said. "We make a recommendation in a lot of cases on compensation based on the qualifications."

The General Assembly removed the policy-making limitation when it increased the cap to 1,000 exempt positions in 2012. The distinction still exists, but without a limit, governors have the unfettered ability to allocate exemptions as they please.

"It's hard to know all the details, but any time the number of political positions is expanding, the possibility of people being appointed who lack the proper credentials increases," said Rep. Paul Luebke, D-Durham.

Luebke expressed that concern on the House floor in July. In an interview Thursday, he said he's worried about the long-term impacts of more political appointees in state government.

But Alexander says his office still ensures candidates are qualified to perform their duties and earn an appropriate salary. Although workers can't appeal their termination, he says, firing an exempt employee is far from an arbitrary decision.

"With the people that are exempt, they don't have the right to disciplinary and grievance processes," Alexander said. "That doesn't mean that the decisions to remove someone from a designated position is not done without consideration, investigation, without follow-up, without any other good HR practices to make a recommendation as to what should occur."

Nor does McCrory have any interest, spokesperson Rick Martinez said, in micromanaging his cabinet staffers.

"The governor's not going to go around checking up on 1,500 employees," Martinez said.

And although Martinez said he personally understands the concern about a more politicized state government, he doesn't think it's much of a problem anymore. 

"I don't think modern-day executives – Democrat or Republican – are in that mode anymore, simply because most of them come from an executive or professional background. Or even if they come from an legislative backgrounds, they know how important staff is," Martinez said.

Most of lawmakers didn't share Luebke's viewpoint. The bill passed unanimously in the Senate, and Luebke was one of 10 – all Democrats – to vote against it in the House. Even the State Employees Association of North Carolina said it was on board with the bill after negotiations with the governor and lawmakers.

For his part, McCrory has also kept the number of policy-making positions relatively low as a percentage of the overall number; only 170 of his 1,000 positions carry this designation so far. That's only 55 more than Perdue.

But that may change soon. With his signature, his 500 additional exempt designations will be available immediately.

CORRECTION: A previous version of this story incorrectly reported that the state Supreme Court ruled on policy-making positions in the mid-1970s. It was actually the U.S. Supreme Court.

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