Fiscal Note - SB 0169 - Changes the Method of Computing Salaries For Certain Workers' Compensation Division Statutory Employees
L.R. NO. 0063-03
BILL NO. HCS for SB 169
SUBJECT: Labor: Salary Increases
TYPE: Original
DATE: April 23, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($128,392) ($154,132) ($154,132)
Workers'
Compensation
Fund ($1,951,889) ($2,007,283) ($2,058,178)
Total Estimated
Net Effect on All
State Funds ($2,080,281) ($2,161,415) ($2,212,310)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Federal ($1,117) ($1,374) ($1,409)
Total Estimated
Net Effect on All
Federal Funds ($1,117) ($1,374) ($1,409)
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
The Office of Administration (COA) - Division of Personnel does not expect to
be fiscally impacted. However, salary increases for commission members and
administrative law judges for the Department of Labor & Industrial Relations
could have an escalating impact on salaries of related positions in other
agencies.
The Department of Labor & Industrial Relations (DOL), Division of Workers'
Compensation (WC) estimates costs related to the salary increases for legal
advisors, chief legal advisors, administrative law judges (ALJ), and chief
administrative law judges. In total 37 FTE (i.e., 12 ALJs, 8 chief ALJs, 16
legal advisors, and 1 chief legal advisor) would experience salary increases.
Additionally, the proposal would allow an increase in the number of ALJ's by
ten, with the actual number being determined during the budgetary process.
WC assumes that each ALJ would require a court reporter to record evidentiary
proceedings as well as two associate legal advisors. Clerical support would
be provided by four clerk typist III's. WC assumes that the Workers'
Compensation Fund would be impacted in the amounts of $2,118,802 in FY98;
$2,199,530 in FY99; and $2,258,956 in FY00. WC assumes a fringe benefit rate
of 42.25%. Oversight adjusted the fringe benefit rate for existing and new
ALJ's and legal advisors by removing 18.24% for retirement. Fringe for the
court reporters and clerk typists was calculated at 28.53%. The
rental/utilities/janitorial costs were adjusted based on information from the
Office of Administration. Using the square footage provided by WC, a rate of
$12.06 per foot was used. As adjusted, total costs would be $1,946,227 in
FY98; $2,000,315 in FY99; and $2,051,036 in FY00.
It was assumed that chief ALJs, chief legal advisors, legal advisors or
directors that have retired prior to the effective date of this proposal
would not be affected.
The Labor & Industrial Relations Commission (LIC) would be fiscally impacted.
The proposal would provide for the LIC members salary to increase equal to
90% of the rate at which a circuit judge would be compensated. The increase
in salaries would be $2134 x 3 members for a total of $6,401 per year.
Beginning in FY98, the Division of Employment Security (ES) will be covering
salary costs for one-half of one appointed member of the LIC under the cost
allocation plan. The actual cost to ES's federal funds could change based on
pending legislation to increase a circuit judge's base rate and the
percentage of the LIC cost changeable to the ES's Administration Fund for
subsequent years under the cost allocation plan which hasn't been developed
yet. The estimated fiscal impact could be significantly higher or lower in
any given year. ES estimates costs of $1067 as a result. ES has not
received any additional federal funding for such purposes. For purposes of
this fiscal note, Oversight assumes that 2.5 FTE would be Compensation Fund;
.5 FTE would be charged against ES's federal funds; a 2.5% inflationary
factor would be included for FY99 and FY00; and fringe benefits (excluding
retirement) would be included. ES costs were calculated based on the total
costs received from the LIC.
The Missouri State Employees' Retirement System (MOSERS) estimates the
increase in the state's contribution for retirement as a result of the
increases in the salaries of legal advisors, chief legal advisors,
administrative law judges (ALJ), and chief ALJ's. In an effort to determine
the increase in valuation payroll, MOSERS assumes a new salary for a legal
advisor would be 80% of the compensation of an associate circuit judge; 80%
plus $2,000 for a chief legal advisor; 90% for an ALJ; 90% plus $5,000 for a
chief ALJ; 90% for commission members; and the director of the Division of
Workers' Compensation salary to be established by the DOL director.
According to an analysis conducted by MOSERS, the proposed annual payroll
would increase $1,054,108. 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 than those being proposed by this legislation. Officials
estimate that the increase in the unfunded actuarial accrued liability would
require a rate decrease of approximately 1.42% even though there would be an
increase in the annual contribution made by the state to the plan of
$154,132. The contribution rate decreased because the accrued liability for
existing staff was amortized over a larger payroll with the amounts for the
twelve FTE (i.e., 10 ALJ's and 2 Legal Advisors) being included.
Additionally, the calculation does not include any prior service for these
FTE.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
GENERAL REVENUE FUND
Costs-MOSERS
Increase in State's Contribution
as a Result of Increased Salaries ($128,392) ($154,132) ($154,132)
NET EFFECT ON GENERAL
REVENUE FUND ($128,392) ($154,132) ($154,132)
WORKERS' COMPENSATION FUND
Costs-Department of Labor & Industrial Relations
Division of Workers' Compensation (WC)
Personal Service
(Salary Increases/26 FTE) ($1,205,684) ($1,483,583) ($1,520,672)
Fringe Benefits ($303,790) ($373,811) ($383,155)
Expense and Equipment ($436,753) ($142,921) ($147,209)
Total Costs-WC ($1,946,227) ($2,000,315) ($2,051,036)
Costs-Labor & Industrial Relations Commission (LIC)
Personal Service (Salary Increases)($4,619) ($5,684) ($5,826)
Fringe Benefits ($1,043) ($1,284) ($1,316)
Expense and Equipment $0 $0 $0
Total Costs-LIC ($5,662) ($6,968) ($7,142)
ESTIMATED NET EFFECT ON
WORKERS' COMPENSATION FUND ($1,951,889) ($2,007,283) ($2,058,178)
FEDERAL FUNDS
Costs-Department of Labor & Industrial Relations
Division of Employment Security (ES)
Personal Service (Salary Increases) ($911) ($1,121) ($1,149)
Fringe Benefits ($206) ($253) (260)
Expense and Equipment $0 $0 $0
Total Costs-ES ($1,117) ($1,374) ($1,409)
ESTIMATED NET EFFECT ON
FEDERAL FUNDS ($1,117) ($1,374) ($1,409)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
$0 $0 $0
FISCAL IMPACT - Small Business
This proposal would not have a direct fiscal impact on small businesses.
DESCRIPTION
The proposal would increase salaries for certain statutory employees within
the Department of Labor & Industrial Relations. Salary increases would be as
follows.
- Members of the Labor & Industrial Relations Commission salaries would
increase equal to 90% of the rate at which a circuit judge would be
compensated.
- Legal Advisors would be compensated at $41,000 to not more than 80% of the
rate of an associate circuit judge.
- Associate legal advisors would be compensated at $30,000 to not more than
$49,000.
- Chief Legal Advisors would be compensated at the same rate as Legal
Advisors plus $2,000.
- Administrative Law Judges (ALJ) would be compensated at 90% of the rate of
an associate circuit judge.
- Administrative Law Judges in Charge would be compensated at the same rate
as an ALJ plus $5,000.
- Persons appointed or employed by the division for the proper administration
of chapter 287 would not receive salary adjustments pursuant to section
105.005, RSMo.
- The division director's salary would no longer have to be the same as an
ALJ plus $2,000.
- Commission members would no longer receive the salary adjustments provided
pursuant to section 105.005, RSMo.
- The number of ALJ's could be increased to not more than 30 with any ALJ
appointed after August 28, 1997, serving a six year term with possibility for
reappointment.
- The department would review the ALJ's conduct, performance and productivity
based on established standards with procedures being implemented to allow for
review of an unsatisfactory review.
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
Labor & Industrial Relations Commission
Division of Employment Security
MOSERS
Office of Administration
Division of Personnel
This Fiscal Note is not an official copy and should not be quoted or cited.