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F I S C A L I M P A C T R E P O R T

SPONSOR Rainaldi

DATE TYPED 01/27/05 HB

SHORT TITLE Full – Time Judicial Employee Salary Increase

SB 222

ANALYST Moser

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

1,626.1

Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts

SUMMARY

Synopsis of Bill

Senate Bill 222 appropriates $1,626.1 million from the General Fund to the Department of Fi-

nance and Administration to fund salary increases for full-time judicial employees in the state

courts. Of that amount, $868 thousand is appropriated to bring full-time judicial employees to

90 percent compa-ratio of their assigned salary range and $758.1 thousand is to implement a one

and three-tenths percent compa-ratio restoration for judicial employees to keep pace with salary

range adjustments. The salary increases shall be effective the first full pay period after July 1,

2005.

Significant Issues

The following definitions may be helpful to this analysis:

1.

Compa-Ratio - Pay expressed as a percentage of the midpoint of a salary range.

2.

Midpoint - The salary midway between the minimum and maximum pay rates of

a salary range. The midpoint represents the competitive market rate for jobs with

the same relative worth in relevant labor markets.

3.

Salary Ranges/Salary Structure - The range of pay rates, from minimum to maxi-

mum. The Judicial Branch salary range has a minimum value of 80 percent and

the maximum value of 125 percent.

Senate Bill 222 -- Page 2

90% compa-ratio initiative ($868.0)

This adjustment would raise the salaries of all employees whose salaries are below the 90

th

per-

centile of the salary range to the 90

th

percentile level. This increase would be without regard to

experience, tenure, status or performance. Based on this bill new hires with no experience would

be moved in pay to the 90

th

percentile. Moving inexperienced employees can be viewed as mov-

ing the entry level of the salary range from the 80

th

percentile to the 90

th

percentile. Such an ap-

proach has the potential of creating employee morale issues and compaction between tenured

experienced workers and those relatively inexperienced and new to their profession. The 80

th

percentile exists because it represents the minimum of the salary range. It is where inexperienced

employees typically begin their employment. The 90

th

percentile typically recognizes a compe-

tence level slightly below that of an employee who is fully trained to perform all of the functions

of the position. In structuring such movements in pay plans a phased approach is utilized with

increases being staggered to the 90

th

percentile recognizing employees’ overall tenure, skill, and

job performance. If such an approach were developed, the same result could be achieved of mov-

ing employees upward in the salary range without as significant a cost.

The AOC states that thirty-eight percent of Judicial Specialists statewide are below the 90

th

per-

centile. A total of 395 employees of the judiciary located throughout all judicial districts are

compensated at less than 90 percent of their compa-ratio, of which 250 are Judicial Specialists.

This funding would equalize the pay rate for employees statewide who are in the same positions

and are performing the same job duties.

1.3% Compa-Restoration ($758.0)

The AOC states that the judicial branch salary structure has been adjusted over the past five

years by 19.3 percent, and judicial branch employee performance increases on average have in-

creased 18 percent. The structure adjustment is necessary to maintain a salary structure competi-

tive within relevant labor markets.

If salary increases are provided by the General Appropriations Act they may be in addition to

these salary increases.

FISCAL IMPLICATIONS

The appropriation of $1,626.1 million contained in this bill is a recurring expense to the General

Fund. Any unexpended or unencumbered balance remaining at the end of FY 2006 shall revert to

the General Fund.

This bill creates a new fund and provides for continuing appropriations. The LFC objects to in-

cluding continuing appropriation language in the statutory provisions for newly created funds.

Earmarking reduces the ability of the legislature to establish spending priorities.

ALTERNATIVES

Recognition of experience, job skill, and performance should be utilized in moving employees

forward towards the 90

th

percentile.

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