TITLE: CONCERNING THE STATE EMPLOYEE COMPENSATION LAW, AND, IN CONNECTION THEREWITH, RESTRUCTURING THE PROVISIONS CONCERNING STATE EMPLOYEE JOB EVALUATION AND COMPENSATION.

STATE FISCAL IMPACT SUMMARY	FY 1998/99	FY 1999/2000
State Revenues General Fund Other Fund
State Expenditures General Fund Other Fund		($35,000)
FTE Position Change	None	None
Local Government Impact — None

This bill restructures and consolidates the current statutory provisions regarding state employee job evaluation and compensation within the State Personnel System. The bill repeals certain unnecessary or outdated provisions and relocates other provisions, some with amendments, governing the State Personnel System. Other, more substantive changes include:

• requirements for the State Personnel Director to develop a performance management, evaluation, and reward system that permits periodic salary increases based upon demonstrated performance;

• requirements for the director to implement a performance-based pay plan over a period of three years beginning July 1, 1998;

• the authority of the director to establish special procedures for classifying employees of the State Auditor’s office who are within the State Personnel System in order to take into consideration special circumstances unique to those employees;

• the requirement for the records of all positions in the State Personnel System to be included in the State Personnel Data System by January 1 of each year;

• requirements for the director to conduct a prevailing total compensation survey rather than a salary and fringe benefit survey. Current law specifies that no changes in employee fringe benefits which are granted by statute shall take effect until enacted by the General Assembly. This bill repeals that requirement and provides that total compensation recommendations for employee salary, as submitted by the director, be automatically effective on July 1 of the ensuing year, unless otherwise directed by the Governor. The bill requires the General Assembly to approve recommended changes to statutory benefits;

• the requirements for the State Auditor to contract with a private firm to conduct a performance audit of the compensation survey every two years rather than every year effective January 1, 1999;

• the establishment of 125 positions in the Senior Executive Service, and the requirement for the director to establish criteria for inclusion in the Senior Executive Service;

• requirements for the director to establish the general criteria and processes for the State Personnel System to fully comply with all applicable federal employment laws;

• requirements for the director to establish standards and an internal review process of alleged violations of federal employment laws; and

• revisions to the definition of “dependent” that allow a full-time student child to be a dependent through the age of 24 instead of 23.

The bill will become effective at 12:01 a.m. on the day following the ninety-day period after adjournment sine die of the General Assembly, or on the date of the official declaration of the vote of the people as proclaimed by the Governor, if a referendum petition is filed pursuant to Article V, Section 1 (3) of the State Constitution.

The provisions of this bill will reduce state General Fund expenditures for FY 1998-99. Therefore, the bill is assessed as having a state fiscal impact.

Performance based-pay plan. This bill makes some changes to existing provisions regarding the performance based-pay plan requirements. This bill will not affect state expenditures associated with these provisions. HB 96-1262 authorized the Department of Personnel to implement the performance-based pay plan and specified the implementation process. As a result, the department was appropriated moneys for personal services costs, consultant fees, and legal services to implement the plan. No appropriations were made for computer system (COFRS, EMPL, and CPPS) upgrades which may be necessary to accommodate the performance-base pay plan. Additionally, no appropriations were made to other state agencies because the implementation costs for each affected agency could not be quantified at that time.

This fiscal note assumes that all state agencies will incur additional costs for training, legal services, operating expenses, and computer system modifications to accommodate the performance-based pay plan. This fiscal note cannot ascertain whether state agencies will be able to absorb these additional expenditures within existing resources.

Audit requirements. This bill authorizes the State Auditor to contract for a performance audit of the compensation survey every two years, effective January 1, 1999. Under current law, the State Auditor conducts an annual performance audit at a General Fund cost of $35,000. This fiscal note assumes the performance audit will be conducted during FY 1998-99, but not during FY 1999-2000 and every other year thereafter.

Remaining provisions. The majority of the remaining provisions of the bill represent current practices or requirements of the Department of Personnel and the other state agencies. Some provisions represent revisions that are considered to be of insignificant cost impact and may be absorbed within existing resources. The Department of Personnel indicates the remaining provisions of the bill will not affect the expenditures of other state agencies.

This fiscal note would imply that no new state spending authority or appropriations are required for FY 1998-99 to implement the provisions of the bill.