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1/23/2006 HB 78
APPROPRIATION (dollars in thousands)
or Non-Rec
General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates Appropriation in the General Appropriation Act, HB2 and HB 7
Relates to Appropriation in the General Appropriation Act , HB2 and HB 7
LFC Files
Report of the Legislative Finance Committee to the Forty-seventh Legislature, Second Session,
January 2006 for Fiscal Year 2006-2007, Volume I. pp. 116-122.
Responses Received From
Higher Education Department (HED)
State Personnel Department
Public Education Department
Department of Cultural Affairs
Department of Corrections
Synopsis of Bill
House Bill 78 appropriates $187,482,250 from the General fund for the purpose of providing sal-
ary and benefit increases to public employees. The salary increases apply to public school em-
ployees, faculty and staff at post-secondary educational institutions, executive classified employ-
ees, executive exempt employees, legislative permanent employees, judicial employees, district
attorney employees and state police. The bill contains language to ensure that employees whose
salaries are funded from non-general fund appropriations will be covered by the same salary in-
crease provisions in the bill. It also provides benefit increases for public and higher education
employees and funds increasing the employer contribution to the educational retirement fund by
three-fourths of a percent.
House Bill 78 – Page
The appropriation of $187,482,250 contained in this bill is a recurring expense to the General
Fund. Any unexpended or unencumbered balance remaining at the end of Fiscal Year 2007 shall
revert to the appropriate fund. The State Personnel Office indicates that $22,784.944 is not suffi-
cient funding to provide classified employees governed by the Personnel Act indicated in Section
1 – Part 5 with the proposed salary increase included in this bill. It would require $23,867,484 to
provide a 2% of actual pay increase and then a 3% of pay band midpoint salary increase or
$23,587,118 to provide a 2% of pay band midpoint salary increase and then a 3% of average ac-
tual pay increase in general fund (including compounding the second part of the increase) de-
pending on the interpretation of the language as indicated in paragraph 3 of the Technical Issues
in this FIR. If correct an additional $802.2 thousand may need to be included. The amount in the
bill is based upon consensus numbers reached with DFA regarding general fund costs for classi-
fied employees.
The State Personnel Office also indicates $502,130 is not sufficient to provide state employees
classified as probation and parole officers, librarians, library technicians, library assistants, and
police, fire and ambulance dispatchers as indicated in Section 1 – Part 10 with the proposed sal-
ary increase included in this bill. It would require $585,263 in general fund to provide the addi-
tional three percent increase indicated in this bill.
This bill provides for the following salary and benefit increases. It differs form the executive’s
proposal by providing larger increases to judicial, legislative and exempt employees and by pro-
viding state classified employee salary increases to be effective July 1, 2006 rather than the ex-
ecutive’s proposal of July 1, 2006 for the 2 percent increase and January 1, 2007 for the average
3 percent compa-ratio adjustment:
An increase of the base salary for the chief justice of the Supreme Court to $115,040.
This will result pursuant to Section 34-1-9 NMSA 1978 in a 7.4 percent increase for all
other justices, judges and magistrates;
An average 5 percent increase for all other employees of the judiciary based upon a plan
as developed by the Administrative Office of the Courts (AOC);
A 5 percent increase for district attorneys;
An average 5 percent (2 percent increase and an average 3 percent compa-ratio adjust-
ment) for all district attorney permanent employees;
An average 5 percent (2 percent increase and an average 3 percent compa-ratio adjust-
ment) for all incumbents governed by the Personnel Act;
An average 5 percent increase for all executive exempt and legislative employees;
A 10 percent increase for all commissioned officers of the Department of Public safety
(state police, motrr transportation and special investigative officers).
A total compensation increase of 5.25 percent consisting of a 4.5 percent increase for
all executive exempt teachers and all public education employee and funding for statu-
tory third tier increases. Additionally an additional “employer” contribution of .75 per-
cent to the educational retirement fund.
A total compensation increase of 5.25 percent consisting of a 4.5 percent increase for all
faculty and staff of two and four-year public post-secondary institutions and an additional
“employer” contribution of .75 percent to the educational retirement fund; and
An additional 3 percent increase for state employees classified as probation and parole
officers, librarians, librarian technicians, library assistants and police, fire and ambulance
House Bill 78 – Page
Compa ratio adjustments, depending upon the plan of the particular agency, are scaled to provide
higher level of adjustments for employees who are at the lower ends of a pay plan. For example
the state classified employees pursuant to the collective bargaining agreement would receive the
following adjustments based upon their compa-ratio:
<85% = 4.5 percent increase
85% to 94% = 3.5 percent increase
94% to 105% = 2.5 percent increase
>105% = 1.5%
This bill is very similar with respect to the proposal provided by the executive with regard to
state classified employees and facilitating their movement through the pay plan. The bill also
provides SPO authority to develop a plan for both the 2 percent midpoint increase and compa-
ratio adjustment as negotiated by the executive.
The key difference between the executive’s proposal for classified employees and HB 78 is in
the timing of the implementation. HB 78 proposes to award both increases on July 1, 2006.
Analysis indicates that HB 78 places more money into employee’s pockets sooner and yet still
focuses on those employees whose compa-ratio is below the 85
percentile and significantly re-
duce compaction throughout the entire pay-plan.
The executive’s proposal calls for a 2 percent midpoint adjustment to be effective on July 1,
2006 and the 1.5 to 4.5 percent compa-ratio adjustment to be effective on January 1, 2007. It is
the opinion of the State Personnel Office that this bill does not support accelerated salary move-
ment within an employee’s pay band to reduce compaction for 6,087 employees with a compa-
ratio less than 85% at the bottom of the pay band. The executive’s pay package provides for a
2% of pay band midpoint salary increase in July 2006 and a percentage of actual pay ranging
from 1.5% to 4.5% in January 2007 based on compa-ratios. The SPO indicates that the execu-
tive negotiated with AFSCME a three year proposal of which this is a part. Subsequent executive
salary packages, to be proposed in FY08 and FY09, will be based upon the FY07 rate resulting
in a slightly higher percentage increase over time. By having delayed implementation, SPO ar-
gues general fund costs are reduced as they are carried forward each year. Analysis indicates that
the executive’s proposal will have an FY07 cost of $16.1 million dollars but the full impact in
FY08 will be approximately $22.7 million.
SPO points out that under the Public Employee Bargaining Act (PEBA), the executive negotiated
in good faith with labor a comprehensive three year compensation plan and specifically did not
include additional increases for probation and parole officers, librarians, library technicians and
library assistants. The Legislature under PEBA retains the authority to appropriate funds as it
deems to be in the best interests of the state. In this regard PEBA is quite clear that the executive
may only recommend to the legislature the compensation language negotiated with the unions
and there is no obligation on the legislature’s part to agree to that language. It is free to accept
modify or reject what was negotiated regarding compensation. It is also important to note that
House bill 78 specifically addresses only the funding for FY07. Future years even though they
have been negotiated cannot be obligated.
SPO states that the additional increases for probation and parole officers, librarians, library tech-
nicians and library assistants will have a negative impact on other employee classifications
House Bill 78 – Page
within the impacted agencies and across agencies creating additional erosion to internal equity.
SPO indicates that it is unclear what employees in “budgeted positions” means in this bill. Typi-
cally, compensation increases are given to term and regular positions, however this language ap-
pears to allow temporary employees in budgeted positions to receive a salary increase. For ex-
ample, there are many budgeted temporary positions for employees who work in the PIT proc-
essing tax returns during tax season at the Taxation and Revenue Department
The intention in
drafting this legislation was to exclude from receiving a salary increase individuals whose posi-
tion are not budgeted.
SPO raises concern as to the meaning of the term “incumbents”. The “Personnel Act (Chapter
10-9-1) defines an “employee” as a person in a position in the service that has completed his
probationary period. Traditionally, an incumbent has been defined as a person who is in the em-
ployment of the state.
The language regarding increases for commissioned officers within the department of public
safety refers to those within the state police division. This would exclude those motor transporta-
tion division and special investigative division. This bill should be amended to allow all commis-
sioned officers of the department of public safety with the specified increase. The following lan-
guage is suggested to correct this issue:
Proposed Amendments to HB 78 Section 1, A, paragraphs (5) and (7)
5) twenty-two million seven hundred eighty-four thousand nine hundred and forty-four
dollars ($22,784,944) to provide incumbents in agencies governed by the Personnel Act,
other than commissioned officers of the department of public safety, with a two percent
salary increase and an average three percent compa-ratio adjustment as determined by the
state personnel office;
(7) three million one hundred twenty-seven thousand eight hundred forty-six dollars
($3,127,846) to provide all commissioned officers of the New Mexico state police division
of the department of public safety with a five percent general salary increase and an
additional five percent to address compaction issues for those officers below the rank of
Lieutenant in accordance with the New Mexico state police career pay system and the
Personnel Act as determined by the Secretary for the department of Public Safety and the
state personnel director;