SB 0931 - Fiscal Note

Fiscal Note - SB 0931 - Changes Salaries of Certain Positions in LIR Department

L.R. NO.  3503-03
BILL NO.  SB 931
SUBJECT:  Administrative Law Judges:  Compensation
TYPE:     Original
DATE:     March 6, 1996



                              FISCAL SUMMARY
                    ESTIMATED NET EFFECT ON STATE FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

General Revenue         ($105,038)          ($126,045)        ($126,045)

Workers'
Compensation
Fund                    ($291,233)          ($349,480)        ($349,480)

Total Estimated
Net Effect on All
State Funds             ($396,271)          ($475,525)        ($475,525)



                   ESTIMATED NET EFFECT ON FEDERAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999


Total Estimated
Net Effect on All
Federal Funds                   $0                  $0                $0

                    ESTIMATED NET EFFECT ON LOCAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

Local Government                $0                  $0                $0



                              FISCAL ANALYSIS

ASSUMPTION

The Office of Administration (OA), Division of Personnel does not expect to
be fiscally impacted.  OA believes that salary increases of Administrative
Law Judges (ALJ) in the Department of Labor & Industrial Relations could have
an escalating impact on salaries of ALJ's in other agencies.  OA currently
has one ALJ above the 90% level as indicated in the proposal.

The Department of Labor & Industrial Relations (DOL), Division of Workers'
Compensation (WC) estimates costs related to the salary increase for
Administrative Law Judges (ALJ).  The current salary of an ALJ is $63,312
while the current salary for an associate circuit court judge is $76,059.
The new salary of an ALJ at 90% of the salary of an associate circuit court
judge would be $68,453 or an annual increase of $5,141.  There are currently
20 ALJ's within WC plus the director of the division.  The director's salary
is tied to the salary of an ALJ.  The fringe benefit level is 40.58%  WC
assumes that this proposal would not affect ALJs or directors that have
retired prior to the effective date of this proposal.  Costs for the salary
increase would be $126,720 in FY97; $156,625 in FY98; and $161,324 in FY99.
Costs would be charged against the Workers' Compensation Fund.

The Missouri State Employees' Retirement System (MOSERS) estimates the
increase in the state's contribution for retirement as a result of the
increase in the ALJ's salary as provided in the proposal.  In an effort to
determine the increase in valuation payroll, MOSERS assumes a new salary for
an ALJ that is based upon 90% of the compensation for an associate circuit
judge plus an additional amount that is equivalent to prior salary
adjustments for each year of service.  For an ALJ in charge an additional
$2,000 was added to the base compensation.  According to an analysis
conducted by MOSERS, the proposed annual payroll would increase $296,220.
MOSERS officials also indicate that the proposal would result in an increase
in the unfunded actuarial accrued liability of the Administrative Law Judges
and Legal Advisor Plan because past actuarial valuations and resulting
contribution rates were based on significantly lower salary increases that
those being proposed by this legislation.  Officials estimate that the
increase in the unfunded actuarial accrued liability would require a rate
increase of approximately 2.4%, or an increase in the annual contribution
made by the state to the plan of $126,045.

Oversight assumes that since MOSERS accounted for prior salary adjustments
and the additional $2,000 for ALJ in-charges, their estimates for the total
increase in payroll would be more reasonable and has included their estimate
of an additional $296,220 in annual payroll, plus an adjusted fringe benefits
rate of 17.98%, reflecting omission of the retirement contribution.


FISCAL IMPACT - State Government                 FY 1997   FY 1998   FY 1999
                                                (10 Mo.)
GENERAL REVENUE

Costs-MOSERS
Increase in State's Contribution
as a Result of Increased Salaries             ($105,038)($126,045)($126,045)

ESTIMATED NET EFFECT ON
GENERAL REVENUE                               ($105,038)($126,045)($126,045)


WORKERS' COMPENSATION FUND

Costs-Department of Labor & Industrial Relations
Division of Workers' Compensation (WC)
Salary Increase for Administrative Law Judges ($291,233)($349,480)($349,480)

ESTIMATED NET EFFECT ON
WORKERS' COMPENSATION FUND                    ($291,233)($349,480)($349,480)

FISCAL IMPACT  - Local Government                FY 1997   FY 1998   FY 1999
                                                (10 Mo.)

                                                      $0        $0        $0

DESCRIPTION

The proposal would increase the compensation for administrative law judges
(ALJ) to ninety percent of the rate at which an associate circuit judge is
compensated plus salary adjustments for each year of service.  For
administrative law judges in charge compensation would be at the same rate as
an ALJ plus $2,000 and salary adjustments for each year of services.

This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.


SOURCES OF INFORMATION

Department of Labor & Industrial Relations
  Division of Workers' Compensation
Missouri State Employees' Retirement System
Office of Administration
  Division of Personnel