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.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

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(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates parts of HB2, HB318, SB2, SB245 and SB308.

SOURCES OF INFORMATION

LFC Files

The following agencies also provided an analysis of this bill: State Personnel Office, Administrative Office of the Courts, Administrative Office of the District Attorneys, Children, Youth and Families Department, Corrections Department, and State Department of Education.

SUMMARY

Synopsis of Bill

House Bill 263 appropriates $87,957.2 from the general fund to the Department of Finance and Administration to be distributed to public schools, higher educational institutions and state agencies for the purpose of providing salary increases and associated benefits to public employees. This bill provides a 3.5 percent salary increase to teachers and other educational employees in both the public schools and in institutions of higher learning; a 4 percent salary structure adjustment and 3.5 percent of mid-point merit anniversary date increase to eligible employees covered by the State Personnel Act as well as to employees of the Judiciary and District Attorney; a 2.2 percent to 3.0 percent merit pay increase to state police officers in accordance with the State Police Pay Plan, and 5 percent increases to exempt Executive Branch employees and employees of the Legislative Branch.

Significant Issues

This bill supports the merit pay provisions for employees covered by the State Personnel Act, and permanent employees of the Judiciary and District Attorney offices; maintains the integrity of the State Personnel merit System and maintains the integrity of the "Hay system" which has been adopted by the State Personnel Office, the Administrative Office of the Courts and the Office of District Attorneys.

FISCAL IMPLICATIONS

This bill appropriates $87,957.2 in recurring general fund to provide salary increases as follows:

TYPE OF EMPLOYEE SALARY INCREASE MERIT PAY APPROP.

PROVISIONS PROVISIONS

The appropriations provided in this bill are sufficient to achieve the intended increase except for the amount provided for Executive Branch exempt teachers which requires an additional $29.5.

ADMINISTRATIVE IMPLICATIONS

This bill will assist public school and higher education administrators and directors of state agencies to recruit and retain competent employees.

Teachers and Public School Employees

The Department of Education reports that the New Mexico average salary of teachers lags the regional average by 4.9%. The salary of the New Mexico average teacher is $32.2 compared to the regional average of $33.9. The provisions of this bill is intended to increase the salary of public school teachers, and bring the average New Mexico teacher's salary to $33.5.

Employees in Institutions of Higher Education

This bill grants a 3.5 percent increase to all employees in post-secondary institutions. Salary data collected from institutions of higher education in the eight survey states used by other New Mexico state government personnel systems indicates that New Mexico's salaries are well below the regional average. The average salary of New Mexico State University (NMSU) professors is 13.89 percent below the average salary of regional states, while the average salary of University of New Mexico (UNM) professors is 8.11 percent below the regional average. The lag in the average salary of associate professors is between 4.90 percent to 6.85 percent. The lag in the average salary in assistant professors is between 6.60 percent and 9.12 percent. The provisions of this bill will bring the average NMSU professors' salary from $57.1 to $59.1 and the average salary of UNM professors will be increased from $65.2 to $67.5.

Employees Under the State Personnel Act, Judicial and District Attorney Employees

The State of New Mexico invested several thousand dollars for the "Hay Consultant Group" to develop and implement sound public administration pay practices for state employees. While originally for employees covered by the State Personnel Act, the "Hay" methodology has since been adopted by the Administrative Office of the Courts and the Administrative Office of District Attorneys. The recommended compensation practices provide for internal salary equity, competitive market pricing and variable performance pay. The provisions of this bill are in keeping with the principles of the Hay study, will help maintain the integrity of these systems, will help keep New Mexico state salaries at a competitive level, and will prevent the need for New Mexico public administrators to violate principles of fairness or resort to unorthodox pay practices in order to retain and hire good employees.

The last funding authorized by the Legislature for a salary structure adjustment for employees covered by the State Personnel Act was the 3 percent authorized in FY94. A study conducted by a consultant hired by the Legislative Finance Committee indicates that the average salary within the classified service lags the regional survey states by 7.27 percent. When benefits are factored, the New Mexico classified average salary and benefit is 3.16 percent below the eight state average.

The current average salary of employees covered by the State Personnel Act is $27.2 and will increase to $28.3 under the structure adjustment provisions of this bill.

The average salary of employees under the jurisdiction of the Administrative Office of the Courts is $28.0. The proposed structure adjustment will increase the average salary to $29.1.

The statewide average salary of employees in District Attorney Offices is $33.5. The proposed structure adjustment will increase the average salary to $34.8.

The salary structure adjustment to employees under the State Personnel Act will correct existing pay administration problems by enabling placement of most employees currently outside the maximum value of their salary grade onto the last value of their grade, improving the integrity and fairness of the pay system of the classified service.

The merit pay provisions of this bill will enable the most productive employees who are below the mid-point of their salary grade to receive a salary increase of 3.5 percent of the mid-point value of their assigned grade on their anniversary date. Employees with satisfactory or better work performance who are currently at higher values in the salary grade will receive less than a 3.5 percent of mid-point merit pay increase on their anniversary date, anticipated to range from 2.5 percent to 1.5 percent of mid-point but will be dependent upon the plan developed by each jurisdiction.

Commissioned State Police Officers

During FY99, commissioned officers of the State Police were granted a structure increase resulting in salaries above the regional average. The mid-point of the salary range for New Mexico state patrolmen is $35.9 compared to the regional average mid-point of $32.3. The provisions of this bill will continue the merit pay aspects of the State Police Pay Plan, while maintaining competitive overall pay levels for these commissioned officers. Commissioned state police officers will receive from a 2.2 percent to 3.0 percent increase under this proposal.

Judicial Employees - Salary set by Statute

The Administrative Office of the Courts reports that justices, judges, hearing officers and special commissioners have not received salary increases for the last two fiscal years. The provisions of this bill will increase the salaries of the Supreme Court Justices from $83.6 to $86.9, Court of Appeal Judges from $79.4 to $82.6, and Magistrate Judges from $50.9 to $52.9.

District Attorneys - Salary set by Statute

The provisions of this bill will increase the salaries of elected District Attorneys other than those elected from a district that does not include a class A county, from $70.3 to $73.1 and increase the salaries of those District Attorneys serving in a district including a class A county, from $73.9 to $76.9.

Exempt Employees in the Executive and Legislative Branches

This bill provides a 5 percent salary increase for exempt executive and legislative employees.

CONFLICT/DUPLICATION

House Bill 263 is duplicated by the employee compensation portion of House Bill 2 and Senate Bill 2. These two General Appropriation bills provide a 2 percent salary increase for all employees mentioned in this bill with a general fund appropriation of $43,886.3 to cover salary and benefit costs.

House Bill 263 is partially duplicated by Senate Bill 245 which provides an appropriation of $50.0 from the general fund to the state department of public education in FY2000 to provide all certified teachers in public school s a pay increase of $2.5.

House Bill 263 is partially duplicated by House Bill 318 and its duplicate bill Senate Bill 308. House Bill 318 appropriates $264.5 to increase the salaries of District Attorneys to an annual salary of $85.0.

TECHNICAL ISSUES

This bill contains three minor technical errors.

1. Page 1, line 17, the words "two hundred dollars ($87,957,200)" should be changed to "one hundred sixty dollars ($87,957,160)". While the individual amounts when totaled produce $87,957,160.00, the total on line 17 is $87,957,200. If item 2 below is corrected, this amount should be changed accordingly.

2. Page 3, strike line 12, and the words "hundred dollars ($314,100)" on line 13 and insert in lieu thereof: "three hundred and sixty-one thousand three hundred dollars ($361,300)". The amount to provide a five percent increase for exempt teachers in CYFD, Corrections and Health Departments will require an additional $29.5.

3. Page 4, line 3 strike first reference to "other than employees,".

OTHER SUBSTANTIVE ISSUES

The provisions of this bill increase the salaries of Judicial and Executive public officials whose salaries are determined by statute. Should the provisions of this bill be adopted, appropriate changes will be needed to the following New Mexico State Statutes: Sections 34-1-9, 36-1-6, and 8-1-1 NMSA 1978.

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