Pay plan flies through House 93-0, heads to governor

A bill overhauling the pay plan for about 25,000 state employees at a projected cost of $57 million in the coming fiscal year zipped through the Arkansas House of Representatives on Friday.

The House voted 93-0 to send Senate Bill 289 by Sen. Bart Hester, R-Cave Springs, to the governor.

The House’s action came a day after the Senate voted 34-0 to approve it and three days after the Legislature’s Joint Budget Committee recommended approval.

Rep. Karilyn Brown, R-Sherwood, said one of her constituents is a state employee who wondered how employees will be treated compared with new hires under the plan.

The plan would take effect in fiscal 2018, which starts July 1.

“People that are in all the departments, all the commissions … will be affected by this pay raise. If their minimum is already on this pay scale, they’ll receive a 1 percent increase,” said a Joint Budget Committee co-chairman, Rep. Lane Jean, R-Magnolia.

But Jean said the plan won’t cover employees of state higher education institutions, the Highway and Transportation Department, Game and Fish Commission and the seven constitutional officers.

In the rest of state government, about 54 percent of fulltime employees would get raises of more than 1 percent, to reach the new minimum salaries for their positions, and the rest would get 1 percent raises, according to the state personnel administrator, Kay Barnhill.

The average annual salary for these employees is about $38,500.

State employees aren’t getting cost-of-living raises in fiscal 2017. The current pay plan was adopted in 2009.

About $24 million of the projected increased cost of the overhaul would come from general revenue, with the remainder coming from other sources, Department of Finance and Administration spokesman Jake Bleed said this week.

To finance the overhaul, agencies will use savings from attrition and efficiency moves and may request additional money, Bleed said. The state is under a hiring freeze, which requires Gov. Asa Hutchinson’s approval to fill vacancies.

“The specific savings we could point to would be the hiring freeze, which limited overall growth in positions and payroll costs, the elimination of 1,200 positions through

the budgeting process, which has significantly reduced payroll costs now and going forward, and the implementation of new employee evaluation standards, which will improve efficiencies for hiring and retention of employees,” he said.

“Under the new pay plan, we’ll be able to more accurately assess employee performance and give managers more flexibility to operate their agencies in the most efficient and effective way possible,” Bleed said.

Some of the larger raises would be in entry-level positions. The plan would benefit family-service workers, program-eligibility specialists, registered nurses, residential-care assistants, correctional officers and state troopers, according to state records.

Officials said they intend to reward employees with merit pay raises that increase base salaries, rather than continue using one-time bonuses as they have done for the past several years.

The new system would have four compensation “tables” to replace the current two tables: a general salary table, an information-technology salary table, a medical professional salary table and a senior executive salary table.

The general salary table would range from $22,000 to $140,592, while the information-technology table would range from $33,403 to $161,681. The medical professional table would range from $63,830 to $270,455, and the senior executive table would range from $108,110 to $201,700.

The legislation allows the governor to pay state agency directors up to 50 percent above the maximum-authorized salary for the pay grade assigned to the classification with the approval of either the Joint Budget Committee or the Legislative Council. That provision is included for the governor to request approval of salaries of existing state agency directors who are paid above $201,700 a year, Barnhill said.

The current plan includes 11,037 classified positions at higher education institutions in fiscal 2017. Those institutions’ positions will be placed in a separate pay plan in fiscal 2018, said Maria Markham, director of the Department of Higher Education.

It would cost higher education institutions about $17 million more for classified employees to remain in the plan for other state employees, Markham said.

Arkansas State University System President Chuck Welch said ASU supports creating a separate higher education uniform classification and compensation act.

“This has long been a desire of higher education institutions in an effort to include all classified staff under the Arkansas Department of Higher Education, where our nonclassified staff are currently located,” Welch said.

“Higher education institutions have not historically received additional state funding when the overall state classified pay plan is adjusted. This proposed change would appropriately recognize the unique needs of higher education institutions and allow us to consider all of our staff positions in a fair and equitable manner. We are not opposed to the new pay plan, we simply think a new structure would be more efficient and appropriate,” he said.

The University of Arkansas System has been part of discussions with the governor’s office, legislators and others about issues that the new plan presents for higher education, said Nate Hinkel, a system spokesman.

These parties “have been discussing an alternative plan for higher education that would allow institutions to implement appropriate [cost-of-living adjustments] and merit raises under the current codified Classification and Compensation Act,” he said.