State panel OKs new pay system for fiscal 2024

Executive branch workers to be evaluated differently

An Arkansas legislative panel on Wednesday signed off on a revised performance pay system for state government’s executive branch employees in fiscal year 2024 that ends June 30.

The Legislative Council’s personnel subcommittee recommended the Legislative Council review the state Department of Transformation and Shared Services’s proposed policies and procedures for the merit pay system for fiscal 2024. The council will consider the proposed policies and procedures during its meeting Friday.

There are 22,586 executive branch employees making an average salary of $50,578 a year, according to the transformation department.

Under the revised merit pay system, the state’s personnel director Kay Barnhill said evaluating managers will score an employee’s job performance based on one of the four ratings: (1) Unsatisfactory; (2) Needs Improvement; (3) Meets Expectations and (4) Exceeds Expectations.

Under the previous system, evaluating managers scored an employee’s performance based on one of five ratings: (1) Unacceptable; (2) Needs Development; (3) Solid Performer; (4) Highly Effective and (5) Role Model.

The Office of Personnel Management has created a rating definitions matrix as a guidance tool to assist evaluating managers in determining what performance levels are expected within each rating group, Barnhill said in the written proposal to the personnel subcommittee.

State Rep. Julie Mayberry, R-East End, said some state employees have often told her in the past that the evaluating managers told them the managers were not allowed to give the highest rating “because they were told by their superiors, basically do not give out the highest rating.”

“So moving forward is that kind of the underlining tone?” she asked.

In response, Barnhill said, “No.

“We have totally moved away from that,” she said. “There is no bell curve. … This time, we are telling supervisors to rate the employees as they perform.”

There are seven performance standards categories, including customer service, communication, accountabil

ity, professionalism, initiative, supervisory/leadership, and job knowledge, skills and work product, Barnhill said. Each department will determine the standards that are job-related for each position, and the same standards should be selected and established for employees who perform the same or similar job functions, she said.

Under the revised merit pay system, an employee must have been employed by the executive branch since July 1, 2023, and must have remained with their department beginning Jan. 2, 2024 through June 30, 2024, to be eligible for performance compensation as determined by their overall rating, she said.

Employees who transfer, promote or demote between departments after Jan. 2, 2024, are ineligible to receive performance compensation under this revised merit pay system, Barhill said.

She said employee evaluations are expected to take place in late May and early June.

The performance compensation percentage is determined by the governor, and performance compensation is added to an eligible employee’s base salary around the beginning of the next fiscal year which starts July 1, according to Barnhill. Eligible employees who are compensated near, equal to or above their maximum pay level may receive their performance compensation as an increase to their base salary with resulting salary exceeding the maximum pay level with the approval of the Legislative Council.

Under the revised merit pay system for fiscal 2024, each department is required to establish a Performance Review Committee that reviews all performance evaluations within that department to ensure accurate and consistent performance standards are established within a classification as well as accurate and consistent performance evaluation results with sufficient supporting documentations, she said. Each department is also required to establish a process that allows employees an opportunity to appeal their performance evaluation to the evaluating department’s Performance Review Committee.

“I think most employees are happy with these changes,” Barnhill said in response to a question from Sen. Linda Chesterfield, D-Little Rock.

“We listened loud and clear from last year, listened to y’all when you were talking about the 2023 evaluation process, and we tried to improve most everything that was brought to our attention at that particular point in time, so I think employees will be happier with this particular process,” she said.

The transformation department’s plan to revise the merit pay system for fiscal year 2024 comes several months after Gov. Sarah Huckabee Sanders in June authorized merit pay raises for what she called exceptional employees in the state’s executive branch agencies. The transformation department said the move meant about 5,760 of the state’s more than 22,000 executive branch employees received merit raises, effective July 9, 2023, with a total cost of $16.3 million, including $6 million in state general revenue. For state employees who have served for more than one year, those deemed “highly effective” received a 4.5% base salary increase, while those deemed “role models” received a 5% base salary increase.

Sanders’ plan led to some state employees grumbling to state lawmakers about the merit raises authorized by the Republican governor and led the Legislative Council’s personnel subcommittee co-chair Rep. Mark Berry, R-Ozark, to tell fellow lawmakers in June: “I guarantee that the governor wants this [performance evaluation] process fixed.

“She inherited the performance evaluation system from the previous administration and, as a Cabinet secretary, I hated it. It is the worst evaluation system that I have ever seen,” Berry, who served a stint as secretary of the state Military Department under former Gov. Asa Hutchinson, said in June.

Under the state Department of Transformation and Shared Services’ efficiency consulting contract with McKinsey & Co. of Washington, D.C., the deadline for recommendations from the consultant for a state pay plan and merit pay evaluation system for the future is June 1 to prepare for the 2025 regular session, department Secretary Leslie Fisken told a legislative panel Tuesday.

In March, Sanders said she wouldn’t support a broadbased pay plan increase in state government’s employee classification and compensation bill with a total price tag of $80 million that doesn’t consider the strategic needs in education, public safety, health care and corrections. At that time, the governor directed the state Department of Transformation and Shared Services to review and rework the existing classification and compensation structure of the state.

State government last overhauled its pay plan in 2017. That plan was projected to cover 25,000 full-time state workers and cost about $57 million to implement in fiscal 2018, including about $24 million from general revenue, with the remainder coming from other revenue sources.