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Audit Reports Affecting Multiple Agencies

A Biennial Report on Recommended Adjustments to the Classification Salary Schedule

August 1996

Report Number 96-719

Overall Conclusion

We recommend that the Legislature adjust the Classification Salary Schedule by 3.5 percent for each year of the 1998-1999 biennium. We base our recommendation on the analysis of the impact of inflation on the real earnings of classified employees, the compensation practices of other employers, turnover data, and the competitiveness of the State's benefits package. The salary structure adjustments would cost approximately $110 million in fiscal year 1998 and $114 million in fiscal year 1999.

Key Facts And Findings

The average classified employee has experienced a cumulative loss in real earnings, or purchasing power, of $1,057 since 1992. Even after including employee promotions, merit increases, and bonuses, average classified employees' salaries have increased by only 7.47 percent since 1992, while inflation has grown by 11.80 percent.

Adjustments to the Classification Salary Schedule have not kept pace with national and local salary structure trends for three of the last five years, and will lag behind again in fiscal year 1997.

Competitive salaries take on added importance in the recruitment of employees since the value of benefits provided to new state employees now lags behind the national average. While the benefits of state employees eligible for benefit replacement pay equal 45.5 percent of payroll, benefits for new state employees (who are not eligible for benefit replacement pay) equal 33.8 percent of payroll. Nationally, benefits average 40.7 percent of payroll.

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