This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0584 - Increases salaries of certain employees of the Department of Labor and Industrial Relations
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 2569-02
BILL NO. Perfected SCS for SB 584
SUBJECT: Labor: Salary Increases
TYPE: Original
DATE: March 12, 1998
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS ($103,124) Net Effect on All State Funds SUBJECT TO APPROPRIATIONS ESTIMATED NET EFFECT ON FEDERAL FUNDS Net Effect on All Federal Funds SUBJECT TO APPROPRIATIONS ESTIMATED NET EFFECT ON LOCAL FUNDS Numbers within parentheses: ( ) indicate costs or losses This fiscal note contains 6 pages. 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 salary increases for administrative law judges (ALJ), and chief administrative law
judges. In total 20 FTE (i.e., 12 ALJs, 8 chief ALJs) would experience salary increases. This amendment
specifies a salary range for Legal Advisors and Chief Legal Advisors. Annual salaries for all 16 Legal
Advisors and the Chief Legal Advisor currently fall within the range identified by this amendment, therefore,
no fiscal impact would be realized as a result of this amendment. Oversight assumes that the Workers'
Compensation Fund would be impacted in the amounts of $99,788 in FY99; $122,787 in FY00; and
$125,856 in FY01. Furthermore, 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. This proposal also increases the number of administrative law judges from 20 to 30, to be added gradually at
a rate of two ALJ's per year beginning in FY 1999. The proposal would allow the addition of two ALJ's per
year after FY 1999 if there is a demonstrated need for an increase, subject to appropriations. Given this fact,
Oversight is ranging the costs of additional ALJ's in FY 2000 and beyond. The Division of Workers'
Compensation estimates there are 16,491 contested cases annually where the employee retains the services of
an attorney. The review of each contract and the determination of fees pursuant for such services takes
approximately one hour per case. It is estimated that 10 additional Administrative Law Judges will be
needed to handle the increased duties of determining attorney fees and holding hearings pertaining to disputes
over attorney's fees. However, it is understood that the actual number of administrative law judges allowed
will be determined by the legislative budget process. 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 $2,227 x 3 members for a total of $6,681 per year.
Beginning in FY99, 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 ASSUMPTION (continued) 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. For purposes of this
fiscal note, Oversight assumes that 2.5 FTE would be charged to the Worker's Compensation Fund; .5 FTE
would be charged against ES's federal funds. An inflationary factor of 2.5% would be included for FY00 and
FY01 along with a fringe benefit rate of 28.03%. The estimated fiscal impact to the Workers' Compensation
Fund for the 2.5 FTE Commissioners' increase in salary would be $6,087 in FY99; $7,488 in FY00; and
$7,675 in FY01. The estimated fiscal impact to federal funds as a result of the .5 FTE Commissioner
increase in salary would be $1,218 in FY99; $1,498 in FY00; and $1,535 in FY01. The Missouri State Employees' Retirement System (MOSERS) estimates a potential for an increase in the
state's contribution for retirement as a result of the increases in the salaries of administrative law judges
(ALJ), and chief ALJ's. This legislation further provides for the salary of the director of worker's
compensation to be established by the director of the department of labor and industrial relations. MOSERS
assumes no additional increase in retirement contributions for legal advisors and chief legal advisors because
all are currently salaried within this proposal's specified range. In an effort to determine the increase in
valuation payroll, ALJ would be compensated at 90% of the rate of an associate circuit judge; and chief ALJ's
would be compensated at 90% of the rate of an ALJ plus $5,000; and 90% for commission members.
According to an analysis conducted by MOSERS, the proposed annual payroll would increase $102,830.
Based on the current contribution rate of 18.7%, an increase in the annual retirement benefits contribution
made by the state would be $19,229. This proposal also increases the number of Administrative Law Judges (ALJ's) from 20 to 30. The addition
of 10 new positions will be increased gradually beginning in FY 1999. Two ALJ's will be added in FY 1999,
with two additional added each year as needs warrant. This will impact the state's contribution for retirement.
Assuming that each new ALJ will be hired at the increased salary of 90% of the compensation of an associate
circuit judge ($74,773), the increase in the annual retirement benefits contribution made by the state would be
$23,304 in FY 1999; $27,965 to $55,930 in FY 2000; and $27,965 to $83,895 in FY 2001 based on the
current contribution rate of 18.7%. This fiscal impact is based on the assumption that two ALJ's will be hired
in FY99 with the possibility of hiring two additional ALJ's per year, based on need, through FY 2001. ESTIMATED NET EFFECT ON
FUND AFFECTED
FY 1999
FY 2000
FY 2001 General Revenue
($39,328)
($47,194) to ($75,159)
($47,194) to
Worker's Compensation
Fund
($286,656)
($338,584) to ($551,261)
($347,156) to ($778,342) Total Estimated
($325,984)
($385,778) to ($626,420)
($394,350) to ($881,466)
FUND AFFECTED
FY 1999
FY 2000
FY 2001 Federal Fund
($1,218)
($1,498)
($1,535)
Total Estimated
($1,218)
($1,498)
($1,535)
FUND AFFECTED
FY 1999
FY 2000
FY 2001 Local Government
$0
$0
$0
FISCAL IMPACT - Small BusinessFISCAL IMPACT - State
Government
FY 1999
FY 2000
FY 2001
(10 Mo.)
GENERAL REVENUE FUND Cost - MOSERS Increase in State's
Contribution
as a Result of Increased
Salaries
($16,024)
($19,229)
($19,229) Cost- MOSERS Increase in State's
Contribution
as a result of 2 new ALJ's
per year
($23,304)
($27,965) to
($27,965) to
($55,930)
($83,895) NET EFFECT ON GENERAL REVENUE FUND
($47,194) to
($47,194) to
($39,328)
($75,159)
($103,124)
SUBJECT TO
APPROPRIATIONS WORKER'S COMPENSATION FUND Costs-Department of Labor & Industrial Relations Division of Workers' Compensation (WC) Personal Services (2
FTE)
($157,117) to
($161,045) to
($127,686)
($314,234)
(483,135) Fringe Benefits
($44,040) to
($45,141) to
($35,790)
($88,080)
($135,423) Expense and Equipment
($7,152) to
($7,439) to
($17,305)
($18,672)
($26,253) Total Costs- WC
($208,309) to
($213,625) to
($180,781)
(420,986)
($644,811) Costs-Department of Labor & Industrial Relations Division of Workers' Compensation (WC) Personal Services (Salary
Increases)
($99,788)
($122,787)
($125,856)
FISCAL IMPACT - State
Government
FY 1999
FY 2000
FY 2001 (Continued)
(10 Mo.)
Costs-Labor & Industrial Rel. Commission (LIC) Personal Service (Salary
Increases)
($4,754)
($5,849)
($5,995) Fringe Benefits
($1,333)
($1,639)
($1,680) Expense and Equipment
$0
$0
$0 Total Costs-LIC
($6,087)
($7,488)
($7,675) NET EFFECT ON WORKERS' COMPENSATION
FUND
($338,584) to
($347,156) to
($286,656)
($551,261)
($778,342)
SUBJECT TO
APPROPRIATIONS FEDERAL FUNDS Costs-Department of Labor & Industrial Relations Division of Employment Security (ES) Personal Service (Salary
Increases)
($951)
($1,170)
($1,199) Fringe Benefits
($267)
($328)
($336) Expense and Equipment
$0
$0
$0 Total Costs-ES
($1,218)
($1,498)
($1,535)
FEDERAL FUNDS
($1,218)
($1,498)
($1,535)
SUBJECT TO
APPROPRIATIONS FISCAL IMPACT - Local
Government
FY 1999
FY 2000
FY 2001
(10 Mo.)
$0
$0
$0
This proposal should not have a direct fiscal impact on small businesses.
DESCRIPTION
This proposal changes the salaries within the Department of Labor and Industrial Relations so that they are based on percentages of Circuit and Associate Circuit Judges' salaries.
Commissioners receive 90% of a circuit judge's compensation. Legal advisors receive at least $41,000 but not more than 80% of an associate circuit judge's compensation. Chief legal advisors receive the same rate as a legal advisor plus two thousand dollars. Administrative law judges receive 90% of an associate circuit judge's compensation. Administrative law judges in charge receive the same rate as an administrative law judge plus five thousand dollars. The salaries set in this proposal shall be subject to appropriations.
Under Section 478.013, RSMo, the base salary for a circuit judge is $79,164, plus any adjustments. Under Section 478.018, RSMo, the base salary for an associate circuit judge is $69,713 plus any adjustments.
The maximum number of ALJs in the Division of Workers' Compensation is increased from 20 to 30, to be added gradually at a rate of 2 ALJ' per year beginning in FY 1999. Additional ALJ's after FY 1999 can be added at a rate of two per year if a demonstrated need exists, subject to appropriations.
The act also clarifies the right of the Director to request the Administrative Law Judge Review Committee to review an administrative law judge, associate administrative law judge and legal advisor's conduct, performance and productivity based upon written standards established by rule by the division, with an added provision allowing appeal of unsatisfactory department evaluations by ALJs.
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
MOSERS
Office of Administration
Jeanne Jarrett, CPA
Director
March 12, 1998