A Performance Audit
A Report on Executive Compensation at State Agencies
The State Auditor's Office conducted a study of the salaries and assigned salary groups for 68 executive officer positions at select state agencies. Those positions were exempt from the State's Position Classification Plan during the 2020-2021 biennium.
The State Auditor's Office determined that the majority of the executive officer positions were assigned to salary groups with competitive salary ranges. This is due, in part, to the 86th Legislature's approval of the new salary groups for exempt positions, which resulted in increases to the annual base salaries for some executive officers.
However, some disparities still existed among annual base salaries of some executive officers compared with the annual base salaries of other management employees at state agencies. Specifically:
- Seventeen (17.0 percent) executive officers were among the top 100 highest paid management employees at state agencies. However, the remaining 83 (83.0 percent) employees were in other management positions at state agencies.
- Three executive officer positions were assigned to a salary group with a pay range that may limit the agencies' ability to offer a market-competitive salary. Reassigning those three executive officer positions to a higher salary group would incur no cost to the agencies.
- Twenty-six employees at 12 state agencies had annual base salaries that exceeded the annual base salaries of their executive officers, and 31 employees at 19 state agencies had annual base salaries that were the same as or within 10.0 percent less than their executive officers' annual base salaries.
Highest Salaried Management Positions at State Agencies and Recommended Salary Ranges for Executive Officers
The State Auditor’s Office conducted a study of the assigned salary groups and salaries for 68 executive officer positions that were exempt from the State's Position Classification Plan during the 2020-2021 biennium and found the majority of those 68 executive officer positions were assigned to salary groups with market competitive salary ranges for the 2020-2021 biennium. Specifically:
- A total of 63 (92.7 percent) executive officer positions were placed in market competitive salary ranges.
- Three (4.4 percent) executive officer positions - at the School for the Blind and Visually Impaired; School for the Deaf; and Office of Court Administration, Texas Judicial Council, were placed within a salary group that could limit their respective agency's ability to offer a market competitive salary.
- Two (2.9 percent) executive officer positions - at the Teacher Retirement System, and Employees Retirement System- are not assigned to a salary group; however these positions have not-to-exceed (NTE) rates.
Included in this chapter is an analysis of executive officer salaries compared with the salaries of other executive officers and/or other management positions at state agencies (see Chapter 1-A). Also included in this chapter are recommended salary groups based on factors such as the size of an agency’s appropriations and the number of authorized full-time equivalent (FTE) employees (see Chapter 1-B).
The two highest paid executive officers at state agencies, based on annual base salaries as of June 30, 2020, were the executive officers at the Teacher Retirement System and the Department of Transportation. However, when including additional pay, the executive officer at the Employees Retirement System was the highest paid. The Teacher Retirement System’s and Employees Retirement System’s board of trustees sets the annual base salary for the respective executive officer positions. Both executive officer positions are eligible for additional compensation.
The State Auditor’s Office conducted a market comparison using public and private sector data appropriate to the nature and complexity of 68 executive officer positions that were exempt from the State’s Position Classification Plan during the 2020-2021 biennium. Based on that analysis, School for the Blind and Visually Impaired; School for the Deaf; and the Office of Court Administration, Texas Judicial Council may have recommended salary groups that are higher than their currently assigned salary groups.
Pay compression occurs when the pay of a subordinate employee comes close to, matches, or exceeds the pay of a direct supervisor, including an agency’s executive officer. When that occurs, the difference in pay may be disproportionate to the difference in the responsibilities, which could create internal inequity.
To determine whether pay compression exists, the State Auditor’s Office reviewed the annual base salaries as of June 30, 2020, of executive officers and full-time classified, unclassified, and other exempt employees at state agencies (excluding higher education institutions; legislative agencies; elected officials; the Secretary of State; the courts; and self-directed, semi-independent agencies) and determined that:
- A total of 26 employees at 12 state agencies had annual base salaries that exceeded the annual base salaries of their executive officers (see Table 5).
- A total of 31 employees at 19 state agencies had annual base salaries that were the same as or within 10.0 percent less than their executive officers' annual base salaries (see Table 6).
Table 7 lists the job titles and salaries of the 28 highest paid medical positions. All but one of those positions are at the Health and Human Services Commission. Table 8 shows the 30 highest paid investment positions. The majority of those positions are at the Teacher Retirement System.
Table 9 shows the differences in salaries over 5 years for the 30 highest paid executive officer positions at state agencies. Salaries for executive officer positions have varied among state agencies, with changes ranging from a decrease of 2.3 percent to an increase of 46.1 percent over the 5 years from fiscal year 2016 to fiscal year 2020.
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