THEATTORNEYGENERAL
OF TEXAS
Au-. .lkx~s 7S7ll
September 19, 1974
The Honorable Roy W Mouer Opinion No. H- 405
Securities Commissioner
State Securities Board Re: Promotion and merit
709 L. B. J. Building salary increases under the
Austin, Texas General Appropriation Act
for the 1974-75 biennium.
Dear Commissioner Mouer:,
Your opinion request involves the merit salary increase and
promotion provisions contained in the General Appropriations Act
for the current biennium. (Acts 1973, 63rd Leg., .ch. 659, p. 1789)
Relevant to your request are the following subsections of Section 1 of
Article V, then General Provisions article of the Act! :,
d. MERIT SALARY INCREASES. It is expressly
provided that Departments and Agencies haying,
appropriations for classified salaries and wages may
grant to classified,employees merit salary increases in
recognition of an encouragement for “continued and/or
satisfactory career service” with the State of Texas
as provided herein:
(1) ‘Continued and/or satisfactory career’ service”
as used in this Act shall mean service with consistent
performance equal to that normally expected or required.
“Merit Salary Increase” as used in this Act shall mean
advancement to a higher numbered Step in the same
Salary Group of the Classification Salary Schedule.
. . .
p. 1891
The Honorable Roy W. Mouer page 2 (H-405)
(3) For the biennium beginning September 1, 1973,
the maximum monthly rate or expenditures for merit
salary increases shall not exceed:. (a) an amount equal
to 3.4% of the total amount specifically appropriated
for the biennium for salaries of classified positions
divided by twenty-four (24), or (b) such amount as
may otherwise be appropriated for the biennium for
the specific purpose of granting merit salary increases
divided by twenty-four (24), or (c) where this Act
appropriates a lump sum or estimated amount for
salaries and operating expenses, the maximum monthly
rate or expenditure for such merit salary increases shall
not, during the first year of the biennium, exceed 3.4%
of the average monthly payroll for salaries of regular
fulltime employments in classified positions, for the
six-month period March 1, 1973 through August 31,
1973; nor during the second year of the biennium exceed’
3.4% of such average monthly payroll for the six-month
period March 1, 1974 thorough August 31, 1974.
. . . . ,~
e. PROMOTIONS A promotioumeans a change in
duty adsignment of an employee within an agency from
a ~position in one classification to a position in another
classification in a higher salary group requiring
higher qualifications such as a greater skill or longer
experience, and involving a higher level or responsibility.
When an employee is promoted to a position in a higher
salary group, he will receive at least a rate oneincrement
higher than his salary rate before promotion or the
minimum rate of the new salary range, whichever is
higher, and may, at the discretion of the agency
administrator, receive an annual rate up to and including
the rate designated by the same step number which
designated his former rate.
p. 1892
The Honorable Roy W. Mouer page 3 (H-40,5)
Your first question arises when an employee in a classified salary
position receives a merit salary increase to a higher step in his salary
group and then subsequently receives a promotion to the same, or lower,
step in a higher salary group. You ask whether the previously granted
merit salary increase lapses at the time of the promotion thereby making
more funds availab1.e for use in paying merit salary increases to other
employees within the agency.
Merit salary increases should not be confused with promotions.
Attorney General Opinion H-106 (1973). They are awarded in recogni-
tion of continuing satisfactory service on the job and result in a higher
rate of pay for. doing the same job. Promotions, on the other hand,
elevate the employee .to an entirely nea, job involving :more responsibility
or requiring grater skill and experience. Upon receiving a promotion,
the employee is paid more because he is classified in a new, higher
salary group. A ,p,romotion meffect .means a new job for the employee
while a mer,it salary incrgase merely means continuation of the old job
at a higher rate .of ,pay. <.~.
When,an employee receives a promotion, his old job in the lower
salary group terminates insofar as he is conce~rned, and any merit salary
increase he has received in recognition of the manner in which the old job
was .performed lapses .along with it . His new salary in its entirety .is
the product of the promotion and ie not in any respect due to a merit salary
increase. Since none of a newly ~promoted employee~‘s salary is due to a
merit salary increase, none of it should be counted against an agency’s
maximum monthly quota of expenditures for merit salary increases,
Therefore, fin our opinion; funds that would have been used to continue
paying an increase previously granted an employee are freed upon his
promotion,and become available for use in paying merit salary increases
to other employees within the agency..
Your second question concerns only those agencies which in their
appropriations have been given a Lump sum or estimated amount to be used
for salaries and operating,expenses. With respect to such agencies, sub-
section (3) (c) of the merit salary increase provision provides:. “the maximum
p. 1893
The Honorable Roy W. Mouer page 4 (H-405)
monthly rate of expenditure for such merit salary increases shall not,
during the first year of the biennium, exceed 3.4% of the average monthly
payroll for salaries of regular full-time employments in classified posi-
tions, for the six-month period March 1, 1973 through August 31, 1973;
nor during the second year of the biennium exceed 3.4% such average
monthly payroll for the six-month period March 1, 1974 through August
31, 1974. ‘I
You ask whether the merit salary increases awarded by such agencies
in the first year of the biennium count against their maximum monthly rate
of expenditures for such increases during the second year of the biennium.
Your question was ‘answered in Attorney General Opinion H-106
(1973) in which. we said:
It must be recognized that a merit salary raise has
long term consequences. The administrator must
: be able to budget funds to cover any raise for every
remaining month in the biennium. Any increase will
cause charges against the monthly maximum for all
succeeding months. H-106 at p. 501.
Subsection (3)(c) does not change our answer in this regard. It,merely
sets out the formula to be used by an agency having a lump sum or
estimated amount appropriation for salaries and operating expenses in
calculating its maximum montly rate of expenditures for merit salary
increases. It does not, however, provide that increases granted in the
first year of the biennium become classified salaries at the end of the
year thereby freeing funds budgeted for their payment for use in paying
increases to other employees. In our opinion the conclusion we’reached
in H-106 applies with equal force to agencies having .either a lump sum
or estimated amount appropriation for salaries and operating expenses:
any increase awarded during the first year of the biennium will count
against the agency’s monthly maximum for all succeeding months of the
biennium.
p. 1894
The Honorable Roy W. Mouer page 5 (H-405)
SUMMARY
A merit salary increase granted in the first year
of the biennium will count against an agency’s monthly
maximum for all succeeding months of the biennium.
However, when an employee who has previously been
granted an increase receives a promotion, his old
job in the lower salary group terminates, and any
increase he has received lapses along with it. Funds
that have been budgeted for continued payment of his
increase are freed and become available for use in
paying merit salary increases to other employees
within the agency.
fiVery truly yours,
Attorney General of Texas
DAVID M. KENDALL, Chairman
Opinion Committee
lg
p. 1895