THE MISSISSIPPI LEGISLATURE

Introduction

In response to legislators' concerns regarding selected salary increases by state agencies, the PEER Committee reviewed the means by which state agencies utilize salary, wages, and fringes funds and developed policy options available to the Legislature for controlling such means. This report describes salary increases at state agencies during FY 1996 and the first quarter of FY 1997 that were given outside of the Variable Compensation Plan (VCP).

PEER reviewed salary records of agencies under the authority of the State Personnel Board (SPB), which oversees approximately 31,000 filled positions in state government. SPB does not oversee legislative, Institutions of Higher Learning, and certain non-state service positions in the executive branch.

Overview

State agencies may award pay increases in accordance with State Personnel Board rules and regulations either through the Variable Compensation Plan or through other personnel actions. Non-VCP salary increases are not specified or provided for in the language of each agency's annual appropriation bill.

How do state agencies give raises above and beyond those included by the Legislature in the Variable Compensation Plan?

Agencies implement non-VCP salary increases in accordance with rules and procedures of the State Personnel Board. Non-VCP salary increases are attributable to personnel actions such as non-budgeted reallocations and inter-agency and intra-agency promotions. These actions entail an employee moving from one position to another, or the assignment of a position to a different job class (reallocations and career ladder promotions). For those agencies whose positions are under the State Personnel Board, FY 1996 non-VCP salary increases totaled $21,201,977.

How does and how should the Legislature ensure that it receives information needed relative to state agency-granted salary increases?

The Legislature requests agency input as to agency resource needs, including number of positions, each year via agencies' budget requests to the Joint Legislative Budget Committee. The Budget Committee reviews the submitted requests and recommends funding levels and these recommendations form the basis for appropriations to agencies during the subsequent legislative session.

MISS. CODE ANN. Section 25-9-148 (1972) requires the State Personnel Board to submit by September 1 of each year a report to the Appropriations and Fees and Salaries committee chairs "describing every increase in compensation other than salary increases authorized by the Legislature or additional compensation that was awarded to any state officer, administrator, executive head, employee, or employees during the next preceding fiscal year." However, because this report is not due until after agencies have submitted their budget requests for the subsequent fiscal year, the report has not been a significant factor in budget deliberations and contains raw data presented without benefit of analysis. The report could be better utilized by legislators if it contained a synopsis for each agency as to trends or prevalent practices, rather than just providing bulk data regarding transactions.

How might the Legislature control state agency-granted salary increases?

Any departure from current practices should consider the fact that:

• prevailing modern personnel management theory provides for agency discretion in determining promotions;
• any proposal for managing salary funds should be consistent with the state's program budgeting laws which stress managing for results; and,
• determination of executive agency promotions has historically been an executive, rather than legislative, function.

The Legislature could exert more control over non-VCP salary increases by utilizing general restrictive language in appropriation bills and requiring more disclosure from agencies regarding such increases.

Recommendations

1. The Legislature should amend MISS. CODE ANN. Section 25-9-148 (1972) to require the State Personnel Board to:

• require that agencies provide to SPB no later than July 1 of each fiscal year an annual report explaining all non-VCP increases in salary, including a justification for increasing the salary, for the most recently completed fiscal year;
• provide an analysis of this information, together with the raw data reports, to the Legislative Budget Committee and to the chairs of the Appropriations and Fees and Salaries committees, no later than July 15 of each fiscal year; and,
• provide input to the Legislature to ensure that agencies implement State Personnel Board rules and regulations in a manner which does not undermine the intent of the appropriations process.

2. The Legislature should require agencies to project in their annual budget requests the amounts needed to fund non-VCP salary increases and, unless specifically directed otherwise by the Legislature, to pay for such increases through their continuation budget without additional funding.

3. By September 1 of each year, the State Personnel Board should report to the Legislative Budget Committee and Appropriations committees on state agencies' compliance with the appropriate policy memorandum for the prior fiscal year, if any, on granting equity-based salary increases. This report should include an analysis of the frequency and fiscal impact of such increases and the impact that the practice has on the state's pay range structure.

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