Dave,
Oh there have been lawsuits slapped!
They've mostly been unsuccessful. This being a "right to work" state, and each state agency employing "at will," when state agencies "restructure" or "reorganize" they can do things that they cannot otherwise. . . and get away with it.
And when the Legislature tells agencies "give us money back and/or operate with less funding" and employees are let go. . . they have one deaf ear and another that listens to their appointed agency leaders and hears what they want to hear. When a governing body of a state agency is appointed by a Governor for example, and the biggest threat to them is "we're going to tell the Governor on you" (which ultimately, besides a few federal cases that are rarely won by employees, is the biggest deterrent to their behavior) then the threat is diluted beyond deterring behavior.
So I think that state employees are protected less in some states than others, and that this instance is one where they are less protected, and the agency head is put in place by the Governor and acting along loose guidelines by the Legislature. . . . Not good for the employees.