A committee recommended Wednesday that the Legislative Council approve a proposed new pay grid for the executive branch departments' lower-paid employees in response to high turnover rates in their ranks and an inability to recruit and retain these employees.
If all departments implement the proposed salary grid, state officials project the plan could benefit roughly 9,000 lower-paid employees at a projected total cost of $55 million, including $26 million in general revenue, over a three-year period, said Tony Robinson of the Bureau of Legislative Research.
In other action, the Legislative Council's personnel subcommittee also recommended the council, which meets Friday, approve the state Board of Finance's recommended 5% increase next year in health insurance premiums for both current and retired employees who get their coverage from the state. The subcommittee also agreed with the board's proposed changes in how wellness credits for current employees are handled. This health insurance plan covers more than 58,000 people.
The Department of Transformation and Shared Services' proposed new salary grid for positions in Grades GS01 through GS05 surprised some lawmakers Wednesday. The salary increases would be limited to $5,000 per year per employee.
The minimum salary for GS01 positions is now $22,000 a year and that would increase to $26,950 under the proposed grid, while the maximum salary for these positions would remain at $31,900 a year.
The minimum salary for GS05 positions would increase from $32,405 to $39,696 a year and the maximum salary for these positions would continue to be $46,987.
Several departments have contacted the Office of Personnel Management over the past several months about the constant turnover in these lower-paid positions and the inability to attract new applicants, personnel director Kay Barnhill said in a letter to the personnel subcommittee. It's a problem that the Department of Finance and Administration initially brought to the office's attention, she said.
"There has been increased media attention regarding salary increases of jobs within the national economy requiring less strenuous qualifications and duties," she said.
Walmart Inc. recently announced salary increases that bring the average Walmart employee's hourly rate to more than $15 an hour and McDonald's, Tyson, Chipotle and Amazon also have recently made similar salary announcements, Barnhill said. Some companies are offering sign-on bonuses or assistance with college tuition, she said.
"To maintain consistency in the state workforce, [the state Office of Personnel Management] would recommend that all departments be made aware of this grid as an option to address any recruitment and retention issues as funding allows," Barnhill wrote in her memo.
Rep. Fran Cavenaugh, R-Walnut Ridge, said, "It is kind of strange that two months after we are out of general session on recess that you present us with a $55 million cost possible increase to the budget."
Barnhill said departments are not being given more money for pay raises and "this was not included in the current budgets."
The departments could use salary savings or keep more positions vacant to grant these raises. She said there are about 24,500 executive branch employees and the proposed pay grid could benefit roughly 9,000 of them.
"I will admit this is a band-aid," she acknowledged. "This is the first step we have to address the problem."
Barnhill said the state implemented a new pay plan for executive branch employees several years ago and needs to consider adopting a new pay plan.
"Nobody is going to get rich off of this," said Sen. Linda Chesterfield, D-Little Rock. "But if we don't do something pretty soon, we are going to continue to have people go on to other places.. We are going to have to do better for the folks that work for us."
The personnel subcommittee also endorsed the recommendations for changes in the health insurance plan for state employees that the Board of Finance voted 6-3 to approve earlier this month.
The Board of Finance recommended a 5% increase in premiums for both active and retired state employees regardless of age next year.
For next year, the finance board also recommended reducing the wellness credit for current employees from $50 to $25 a month and creating a $25-a-month contribution for employees who don't participate in the wellness credit.
The Board of Finance also proposed to end on-site wellness clinics and, instead, recommended requiring current employees to visit their primary-care doctor for the wellness credit.
The finance board also called for increasing the state's monthly funding per employee by $50, from $450 to $500, and suggested the increase become effective Aug. 1 of this year instead of Jan. 1, 2022.
These changes are projected to eliminate the plan's projected deficit of $33.3 million in 2022, according to state officials. The Milliman firm, actuary for the Employee Benefits Division, projected a 2022 reserve estimate of $38.6 million, if the changes recommended by the board are adopted.
The finance board also recommended creating a $10 million set-aside in the restricted reserve fund for the health insurance plan in case that money is needed next year. If the Legislative Council opts not to adopt all of the finance board's recommendations, the board recommended that the council provide one-time state funding to cover the recommendations not adopted for next year.
The personnel subcommittee also recommended the Legislative Council approve the state's revised request for $35 million out of a restricted reserve fund in fiscal 2022 to help shore up the health insurance plan for public school employees next year.
The Board of Finance on Tuesday is scheduled to resume its deliberations on its recommendations for changes in the health insurance plan for public school employees for 2022.