Maureen Hayden, CNHI Statehouse Bureau Chief

INDIANAPOLIS — The $28 billion budget bill passed by state legislators in late April does more than lay out spending plans for the next two years. It also locks into law a ban on collective bargaining for state employees issued by executive order six years ago.

The nearly 300-page budget bill contains language that puts into law on July 1 some major changes to the state's civil service system, impacting how 28,500 state workers are classified, evaluated and paid.

Those changes range from weakening “last-hired, first-fired” seniority provisions to reducing the number of “merit” employees covered by federal personnel rules that have been in place for state workers since 1940.

Some of the biggest changes, including the ban on collective bargaining, were put into effect by Indiana Gov. Mitch Daniels through an executive order issued soon after he took office in 2005.

But by codifying those changes — writing them into state law as the Republican-controlled legislature did in April when it passed the budget bill – the measure takes away the power of future governors to issue executive orders to reinstate collective bargaining and other union-favored rights for state workers.

David Pippen, Daniels' general counsel, said the legislation locked into place indefinitely many of the changes that Daniels ushered in when he set about to re-organize state government six years ago.

Those changes paved the way for Daniels to cut the state work force by 7,000 employees, freeze pay increases, and outsource some services.

“We're in the last push,” Pippen said of Daniels' time left in office, which includes only one more legislative session. “We've spent a lot of time working on how government works, and we've have been acutely aware our time is finite.”

The language that changes how state employees are hired, fired and paid was put into the budget bill late in the session after House Democrats blocked GOP-backed legislation to permanently ban collective bargaining for state workers.

That legislation died after House Democrats staged a five-week walkout. But the bill's language was revived by Republicans and placed in the budget bill, along with a number of other non-budget items.

Supporters of the legislation say the effect is protection for a streamlined state government free from union rules and where employees are evaluated and rewarded for effort. An example they offer: seniority no longer carries much weight in determining who gets laid off if a state agency's budget is cut.

“We want to protect employees who are the highest performers,” said Anita Samuel, Daniels' policy director and assistant general counsel who helped to craft the legislation.

But detractors say it’s an erosion of workers’ protections that date back to a 1940 federal law aimed at safeguarding civil servants from partisan politics, and a handcuffing of future governors who support those protections.

“This has a chilling effect on all state workers,” said Nancy Guyott, the head of the Indiana AFL-CIO. “This isn't just Mitch Daniels saying we won't bargain with you folks. This goes far beyond that.”

Guyott said it means that no governor can bargain with state employees without legislative approval — an action not likely to happen anytime soon with Republicans in control of the Statehouse.

Pippen agreed with Guyott on that assessment.

“We wanted to codify what our experience has been, so we don't get into a battle of executive orders that’s happened through the years,” he said.

The failure of past legislatures to approve collective bargaining for state employees is what led Gov. Evan Bayh, a Democrat, to issue an executive order granting those powers in 1989. Democratic governors who followed him used executive orders to extend and expand collective bargaining for state workers, allowing them to negotiate pay, benefits and work rules.

In rescinding those executive orders with his own order in 2005, Daniels ended collective bargaining for state workers. As a result, about 90 percent of state employees have opted out of paying union dues.

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