NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Suite 101 of the State Capitol Building North.

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Appropriation in The General Appropriation Act, SB 98, HB 8, SB 68, SB249/aSJC

SOURCES OF INFORMATION

LFC Files

Department of Corrections (CD)

State Personnel Office (SPO)

Children Youth and Families Department (CYFD)

SUMMARY

Synopsis of Bill

HB458 appropriates $12,466,000 from the General Fund to CD for expenditure in FY 2002 to provide a salary increase of three dollars and fifty cents ($3.50) per hour for Adult Correctional Officers of the following ranks: Correctional Officer I, Correctional Officer Sergeant, Correctional Officer II, Correctional Officer III and Correctional Officer IV. Any unexpended balance remaining at the end of FY 2002 reverts to the General Fund.

Significant Issues

CD reports the department has experienced difficulty in recruiting and retaining correctional officers. This has resulted in the need to require correctional officers to work a high number of overtime hours each week. This appropriation would reduce turnover, the number of hours of overtime and improve recruitment.

PERFORMANCE IMPLICATIONS

HB458 does not reference performance measures include output, outcome, efficiency and quality measures.

CD reports the bill would improve the recruitment and retention of correctional officers while reducing the number of overtime hours that current correctional officers must work.

FISCAL IMPLICATIONS

HB458 appropriates $12,466,000 from the General Fund to the Corrections Department to provide a salary increase of three dollars and fifty cents ($3.50) per hour for all positions within the correctional officer series. The amount appropriated is sufficient to provide the three dollar and fifty cents ($3.50) per hour increase for all positions in the correctional officer series. Any unexpended or unencumbered balance remaining at the end of FY02 shall revert to the general fund.

ADMINISTRATIVE IMPLICATIONS

CD reports since the bill is likely to improve recruitment and retention of correctional officers, it will decrease the administrative burden upon correctional officers who are currently required to work a high number of overtime hours as well as decrease the administrative burden upon administrators who are constantly faced with the difficulty of staffing mandatory posts through the use of overtime.

TECHNICAL ISSUES

This bill duplicated SB249 which was amended to include correctional officers specialists to the list of correctional officers eligible to receive pay increases.

OTHER SUBSTANTIVE ISSUES

The following information is reported on pages 601-602 of the Report of the Legislative Finance Committee to the Forty- Fifth Legislature First Session:

Correctional Officer Upgrade. Laws 2000, Chapter 106, appropriated $654.7 to implement salary grade changes for correctional officer 1s on a salary-to-salary basis. CD reported this created salary compaction and morale problems for correctional officer 1s whose hourly salaries were above the new minimum and who did not receive a salary increase. The only increases were to those new correctional officer 1s whose hourly salary was below the new minimum of salary grade 17. Also, the correctional officer sergeants and correctional officer 2s, 3s and 4s did not receive a salary increase. This also has created low morale and has contributed to higher turnover rates for these levels of correctional officers. According to CD, the department was aware this could occur and requested funding in FY01 for all correctional officers based on a matrix that rewards employees for years in class and service with the department.

For FY02, CD requested a two-part correctional officer upgrade costing $1,658.8 to address recruitment and retention problems due to national low unemployment. The first part for $718.7 is to address retention problems by rewarding employees for time in their classification. The

second part for $938.1 would increase the correctional officer 1 minimum salary from $9.86 to $10.50 per hour. Employment conditions, such as pay are critical issues because they relate directly to sound, safe and secure prison operations.

On September 26, 2000, in a letter to Governor Johnson, LFC recognized an emergency and urged the executive to implement an immediate salary increase of 50 cents per hour for each correctional officer and correctional officer specialist below the rank of major. The committee encouraged the department to implement the increase by using its budget adjustment flexibility (division and category transfer authority) to internalize the cost increases to the extent feasible. Also, the committee noted members would look favorably on a supplemental appropriation request to cover the total cost of the salary increase.

In November 2000, CD implemented a temporary salary adjustment to all correctional officers based on the following criteria:

• A recruitment and retention differential amount up to 5.236 percent of the midpoint for correctional officer 1s that, combined with the employee's current hourly salary, is equivalent to $10.50 per hour.
• A recruitment and retention differential amount up to 15 percent of the midpoint for correctional officer specialist 1s that, combined with the employee's current hourly salary, is equivalent to $10.50 per hour.
• A retention differential amount between 0.5 percent and 5 percent of the midpoint for all correctional officer specialists based on years in class.

These adjustments were partially funded with a State Board of Finance grant of $260.0.

The committee recommends $1,686.4 in general fund to permanently implement the salary increases and an additional $1.7 million for an additional 0.50 cent/hour and the additional 7 percent for all state employees.

Other Funding for Correctional Officers. The LFC recommends $1,686.4 in general fund to permanently implement the salary increases, $3.9 million in salary upgrades which includes $1.7 million. The increase for correctional officers is in addition to that implemented by the CD through a Board of Finance loan. Also, the LFC recommends funding for an average salary increase of 7 percent for state employees.

SPO reports the following rational explains why the proposals to increase Correctional Officer pay should not move their pay beyond the maximums to be established by the new pay system effective July 1, 2001.

The State Personnel Office has just gone through an exhaustive salary survey process to determine pay for various classified service occupations. Through this process, the office has determined the appropriate pay bands (i.e. minimum an maximum values) for the entire classified system. Each job within the classified service is evaluated using the Hay system of job evaluation to determine internal job worth - job worth is stated in terms of job evaluation points. Job worth and market pay is combined to determine pay for each job.

A relationship between dollar value and job evaluation points is determined through linear regression analysis. Jobs are assigned to pay bands based on the number of job evaluation points. Each pay band has a minimum, midpoint and maximum value. The midpoint value represents the average pay for similar size jobs found in the marketplace. The minimum and maximum values represent a range of pay for these size jobs. The maximum of an established pay band is the maximum dollar amount that the state is willing to pay for a job.

The minimum and maximum of the pay band represents the relative value of a job to the state. This compensation system insures internal equity of jobs of same job value as established through the job evaluation system.

At this point in time we do not know who, if anyone, will be above the maximum of the proposed pay bands in the NM.HR.2001 system.

Therefore, the State Personnel Office believes the legislature should not propose legislation that would place employees over the maximum of the pay band (i.e. their established job worth)

CYFD reports HB458 impacts adult Correctional Officer salaries only. The CYFD employs Juvenile Correctional Officers in its juvenile correctional facilities who are not included for these salary increases. It is conceivable that passage of the bill would have an negative impact on Juvenile Correctional Officers retention and recruitment.

LAT/ar