FRANKFORT — About 550 engineers in the state Transportation Cabinet got raises averaging 20 percent last month in a plan to curb high turnover and costly contracts for private engineers.
The pay increase took effect June 16 and will cost about $7.8 million a year, cabinet spokesman Chuck Wolfe said.
The money is expected to come from savings in personal-service contracts used to hire outside engineers, Wolfe said. The affected employees are all under the state's merit system, which means they are not political appointees.
The salary increase follows an order from Kentucky's 2014 General Assembly for the state to make the Transportation Cabinet "competitive with state transportation engineering salaries" in surrounding states and private businesses.
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The increase affects 11 of the 13 classifications of engineers in the Transportation Cabinet. Salaries in the other two classifications, which include 515 workers, were deemed competitive, Wolfe said.
The average annual salary for engineers before the increase ranged from $109,764 for transportation engineer directors, who manage a major division covering a specialized phase of engineering, to $30,137 for transportation engineer technologists I, who oversee activities of sub-professional and technical personnel on minor engineering projects.
Brent Sweger, president of the Kentucky Association of Transportation Engineers and an engineer branch manager in the state cabinet, said the increase in pay was welcome news.
"We've lost a lot of good people to outside sources and we hope this move stems the tide," he said.
The association's analysis in January of departing engineers gave several examples of how high turnover has affected road projects.
It reported that three engineers in training, who make about $45,000 a year, left the cabinet's district office in Fayette County for private-sector jobs, leaving "this crew without any engineer to manage approximately $100 million in construction contracts."
"Most notably the New Circle Road widening project and the Leestown Road (U.S. 421) widening projects," the analysis said. "District 7 has had to pull a graduate engineering assistant with 11 months' on-the-job experience to manage these contracts."
Two of the three positions have since been filled, but a posting for the third job has generated no applications in six months, Wolfe said.
A lack of engineers doesn't generally delay a construction project, Wolfe said.
"The more likely effect of the engineer shortage is that more design engineering has to be outsourced," he said
The turnover rate of engineers in the Transportation Cabinet has been high.
Among the 11 categories of engineers who received pay raises, the departure rate in 2014 was 33 percent. Four of the engineering classifications lost half or more of their employees.
Throughout state government, the average turnover rate last year was 22 percent, according to the state Personnel Cabinet.
"Alarmingly high turnover in many of our engineering classifications has had costly consequences," Transportation Secretary Mike Hancock said in a statement. "We have witnessed an exodus of our best talent for significantly better pay and benefits being offered by private engineering firms, highway contractors and even some of our local governments."
The departures, Hancock said, are "threatening to destroy our core engineering competencies. It also has forced the cabinet to increasingly rely on private contractors at premium rates."
Last year, the Transportation Cabinet paid $150.7 million for professional engineering service contracts.
That compared to $101.7 million in 2004 — a 48.1 percent increase. The highest contracting total during that decade was $176.5 million in 2013.
Design engineering has been hit especially hard, Hancock said.
Fifteen years ago, he said, the cabinet performed 70 percent of its design engineering work in-house.
Today, 70 percent is performed by outside consultants.
Many former state engineers now are working for private firms, and "the cabinet is paying a consulting firm a premium for their work — in some cases more than double the in-house cost," Hancock said.
For example, the cabinet pays about $24 an hour in salary and benefits for engineers in training I. The cost for an outside consultant to do the same work is about $61 an hour, an increase of 154 percent, according to state estimates.
Hancock also said the starting salaries for engineers in the cabinet paled in comparison to those of many states.
The entry salary level for an assistant state highway engineer in Kentucky last year was $58,188. It was $128,503 in Connecticut, $72,324 in Tennessee and $62,100 in West Virginia.
CompData, a national compensation survey firm, said a salary survey of public and private engineering salaries showed Kentucky's Transportation Cabinet well below neighboring states.
The average salary for a transportation engineer in the Kentucky cabinet was $56,000. A comparable job paid $76,800 in the Southeast and $77,100 in the Midwest.
State Sen. Julian Carroll, D-Frankfort, said he's concerned about the high departure rate of engineers and the resulting increase in spending on personal-service contracts.
"Some engineers have been picking up the workload of three to five employees at the same salary level," Carroll said.
He contended that it's much better to hire an engineer full-time than to hire engineers through contracts.
"The full-time employees have the background of relating to other departments in the cabinet and know the history of projects and previous contracts," he said.
The state legislature needs to examine the salary structure for all state employees, Carroll said.
He said that in early June, Gov. Steve Beshear ordered the salaries of nearly 800 state workers to increase on July 1 to $10.10 an hour.
"I get 25 to 50 email messages a day, asking, 'why just these employees?'" Carroll said. "Others are struggling, too."
Carroll said he plans to seek approval during next year's legislative session of a raise for state workers of 3 percent to 5 percent.
"It will cost a lot of money from the budget, but we have to be concerned with the production level required in state government and make sure we have enough people to do all that has to be done," he said.