Summary of Report 03-701

September 2002

Report Number 03-701

The State's compensation system provides many tools to address employee pay issues. We recommend the Legislature consider pay increase options for employees and technical changes to maintain the compensation system. The total cost to implement all of our salary recommendations is $124 million for the biennium. However, this does not include the cost to provide agencies funding for merit increases.

We found that:

• Salary Schedules A and B generally provide competitive salary ranges.
• State employees' pay is not competitive with salaries for comparable work in government and private industry for many job classes.
• State trooper pay is not in line with Texas' city police departments.

Employee pay lags the market, even though the State's salary schedules provide competitive salary ranges. While that may sound contradictory, the gap exists because state agencies are unable financially or culturally to fully use the tools available to them. We recommend the Legislature adopt a formal compensation philosophy specifically outlining legislative intent regarding the three components of a compensation system-salary, benefits, and retirement.

This could reduce the amount of time legislators spend debating the methods used to grant employee pay increases during future legislative sessions. By forming this foundation for how to pay employees, legislators could then focus more strategically on funding options. We have included in this report the details of our philosophy recommendations.

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