Oklahoma's bureaucratic-overhead problem persists

March 28, 2010

About 15 years ago I discovered that the U.S. Census Bureau collects annual data on state and local government employment and compensation. The data, reported to the Census Bureau by state and local governments, are put into a comprehensive database and released for general use. An individual researcher trying to obtain the same data from state and local governments would face an impossible task, so this database serves a very useful purpose.

I have revisited the U.S. Census Bureau website on numerous occasions and have analyzed the annual employment and compensation data. Over the years I have analyzed state data only, local data only, and state and local data combined. I have compared Oklahoma government employment and compensation patterns to the national average, to the states in the Big 12 Conference, to the states contiguous to Oklahoma, and to the two states closest to Oklahoma in population. I have analyzed the data including and excluding higher education and elementary and secondary education employees. In every case, I found that Oklahoma had an excessive number of state government employees and just about the correct number of local government employees.

The Data

The state and local government employment and compensation data for March 2008 was recently posted on the U.S. Census Bureau's website. There is usually a lag of about 18 months between data collection and data publication. The state of Oklahoma reported to the U.S. Census Bureau that in March 2008 the state employed a total of 71,971 full-time equivalent employees (FTE). According to the Census Bureau, FTE is a calculated statistic. It represents the number of full-time employees that could have been employed if the reported number of hours worked by part-time employees had been worked by full-time employees. According to the Census Bureau, "This statistic is calculated by dividing the ‘part-time hours paid' by the standard number of hours for full-time employees in the particular government, and then adding the resulting quotient to the reported number of full-time employees."

The 71,971 FTE state-government employees in Oklahoma worked in 20 employment categories. Two of the 20 employment categories are for higher education employees. These 71,971 FTE employees were paid a total of $257,785,962 during the month of March 2008. Oklahoma also reported that it had 144,181 FTE local-government employees who were paid $414,380,366 during March 2008. These local FTE employees were allocated to 29 employment categories. Four of these 29 employment categories involved education.

Some researchers studying state and local government employment and compensation patterns simply add the number of full-time employees to the number of part-time employees and report this as the total number of state and local government employees. Under this approach an employer with two full-time employees and two half-time employees (working 20 hours per week) would have four employees. However, the two half-time employees (who work 20 hours per week) would only be equal to one full-time employee under the FTE approach. In the preceding example, using a FTE approach the number of employees reported would be three, not four. Using the FTE approach avoids overstating the number of state and local government employees.

The annual state government employment and compensation data, going back to 1993, is available on the U.S. Census Bureau's website. However, prior to 1999 the data contain some turbulence. One year of data is missing and two years of data appear to be suspect. For this reason I looked at 10 years of state government employment and compensation data covering the years from 1999 through 2008.

The Data Analysis and Results

Reporting Oklahoma state employment and compensation data alone would explain very little. It must be compared to something to give it meaning. I chose to compare state government FTE employment and compensation in Oklahoma to the national average state government FTE employment and compensation data.

During the 10-year period from 1999 to 2008, the number of FTE state-government employees increased by 11.82 percent in Oklahoma, while nationally the number of FTE state-government employees increased by 7.96 percent. This means the growth rate of Oklahoma FTE government employees was 148.49 percent of the national average. This growth in Oklahoma FTE government employees cannot be accounted for by growth in populations. The growth of population in Oklahoma was 8.47 percent during this period, while nationally the population growth was 11.50 percent. In other words, the population growth in Oklahoma was 73.6 percent of the national average.

To make national and Oklahoma figures comparable I divided the Oklahoma FTE state-government employees by the state population. I also divided the nationally reported FTE state-government employees by the national population. This simple process tells me the percentage of the Oklahoma population that works for the state as FTE employees and the percentage of the national population that work as FTE employees for all state governments combined.

By subtracting the national percentage of FTE government employees working for all state governments from the Oklahoma percentage of FTE government employees and multiplying the Oklahoma population by the quotient you can determine the number of surplus FTE state government employees there are in Oklahoma. Moreover, by using the compensation data it is possible to calculate the annual salary for each Oklahoma FTE government employee, and multiplying these yearly salaries by the yearly surplus Oklahoma FTE employees yields the total annual cost of the surplus employees in Oklahoma. This annual amount has almost doubled during the past 10 years. In 1999 the surplus FTE state government employees cost the Oklahoma taxpayers $505,327,809. In 2008 this amount had increased to $901,041,507.

Some of the growth in the total annual cost of surplus employees can be accounted for by the growth in salaries, which increased about $11,000 per employee during the 10-year study period. Some of it can be accounted for by growth in population, which increased by 284,317 between 1999 and 2008. Inflation is also a contributing factor, but there has also been a significant increase in the total annual cost due to the increase of 5,171 surplus employees during the 10-year study period.

Conclusions

Compared to the national average for 20 specific employment categories, Oklahoma had 15,792 surplus FTE state government employees in 1999. In 2008 this number had increased to 20,963. The cost of the surplus employees had increased by $395,713,698 during the 10-year study period.

I can only speculate about the cause for the initial surplus of 15,792 FTE state government employees in 1999, and I have no idea why it was necessary to add an additional 5,171 FTE state-government employees to this number by 2008. It is obvious, however, that when compared to the national average Oklahoma has a large number of excess FTE state-government employees. If the number of FTE state-government employees was reduced to the national average, Oklahoma's current budget shortfall would disappear. And over the 10-year period, these surplus FTE state-government employees have cost us $6,259,713,245.