The Honorable Robert S. Calvert Opinion No. H- 106
Comptroller of Public Accounts
State Finance Building Re: Determination of merit
Austin, Texas increases under House
Bill 139, 63rd Leg., the
General Appropriations
Dear Mr. Calvert: Act
You have requested our “guidance and counsel” concerning merit
salary increases permitted by the General Appropriations Bill for the
1974 and 1975 fiscal years. (H ouse Bill 139, Acts of the 63rd Legislature).
The applicable provisions of that Bill are found in Article 5, S 1, Sub-
section d “Merit Salary Increases”. p. V-28. They are as follows:
“(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.
“(2) No merit salary increases may be granted except
by using the item of appropriations for classified salaries
and wages specified in this Act. Where this Act approp-
riates a lump sum or an estimated total sum for ‘wages
and salaries’ the,source of funds for merit salary increases
shall be only that portion allocated to salaries of classified
positions in an annual operating budget approved by the
governing board of any State Agency.
“( 3) For the biennium beginning September 1, 1973,
the maximum monthly rate of expenditures for merit salarxr
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
p. 498
The Honorable Robert S. Calvert, page 2 (H-106)
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 of ex-
penditure 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 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
through August 31, 1974.
“(4) Merit Salary Increases shall be granted to employees
in proportion to the classified salaries in each Agency dist-
ributed in the following groupings:
Salary Groups 2 - 7
Salary Groups 8 - 12
Salary Groups 13 - 2 1
“( 5) The Comptroller shall prescribe such accounting
and reporting procedures as are necessary to insure that
expenditures for merit salary increases shall not exceed
the amounts authorized herein for that purpose. Notwith-
standing any other provisions of this Act, all moneys which
become available for merit salary increases shall accumu-
late during the entire biennium and any unused portion be-
coming available in the first year of the biennium shall not
lapse, and is hereby appropriated for the second year of the
biennium for the sole purpose of granting merit salary in-
creases. (Emphasis Added)
“(6) All Departments and Agencies shall file a report
with the Gwernor and the Legislature at the close of each
fiscal year detailing the utilization of merit funds. ”
The Honorable Robert S. Calvert, page 3 (H-106)
Our responsibility in construing these provisions is to attempt to
arrive at the intent ~of the Legislature. -4rticLe 13 5 6, V. T. C. S. Deter-
mining the legislative intent in this instance has been far from easy. The
provisions are ambiguous and are subject to several contrary interpre-
tations. We have chosen that which, in our opinion, most closely con-
forms to the intent of the Legislature, and, at the same time, is possible
of application.
Generally, we interpret the provision to include the following
requirements:
(I) Merit salary increases involve advancement to a higher step
in the same salary group. They are to be distinguished from promotions
covered by Subsection e (p. V-29) which involve a step up to a higher group.
(2) Merit salary increases may be granted only out of funds appro-
priated for classified salaries. No special funds are granted for
merit increases, but it can be expected that funds may become avail-
able during the year.
(3) In the usual case, the maximum amount that can be used by an
agency for merit sa:lary increases is found by multiplying the total biennium
amount appropriated for xlassified salaries by .034. The ~product is
the amount of money which may be paid for merit salary increases over
the two year period. Only one/twenty-fourth of the total amount available
for merit raises in the biennium may be spent in any one month.
(4) Agencies with a lump sum appropriation or estimated amount for
salaries and operating expenses compute the maximum monthly rate of
expenditure for merit raises in a different manner than most agencies. The
formula by which the maximum rate is determined for these agencies is set
out in enumeration (c) of paragraph (3) of the Appropriation Act’s subsection
on merit salary increases.
(5) The merit raises w’nich are siven must ije apporrionfd ni:.o:x:
certain groupings of employees. The formula is set in the Act and remains
constant, although the relative positions of the groupings may ilucruate
during the biennium. Because raises are based on “continued and/or
satisfactory career service, I’ an agency is not required to award any merit
salary raises, but if raises are given they must be apportioned amon the
three groupmgs of workers set out in the Act.
p. 500
The Honorable Robert S. Calvert, page 4 (H-106)
(6) Although the Act requires raises to be granted in proportion
to classified salaries in each agency distributed in three designated
groupings, exact mathematical accuracy is not required. Merit rasies
are given by paying an employee at a higher step. A one step increase
can vary from as little as $13 per month to as much as $60 per month
in fiscal 1974 depending on the salary group involved. If administrators
had the authority to provide raises of any given amount of dollars and
cents, precisely accurate divisions might be required. Since admin.
istrators do not have this latitude, a less precise division must be
permitted.
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 ior all succeeding
months.
You have asked five specific questions and requested that for clari-
fication in answering them we assume a hypothetical situation as follows:
“If a State Agency has a maximum monthly rate of
expenditure for merit salary increases of $750 per month
and a number of employees in certain groups and class-
ified salaries as set out below:
Monthly Total
Salary Groups No. Employees Each Group Classified Salary
This Group
2 - 7 10 $ 5,000
8 -12 8 5, 568
13-21 10 11, 410
Totals 28 21, 978
Your first question then is:
“How much of this $750 per month could be legally
applied to each of the salary group, 2-7, 8-12, and
13-21 in the event the agency wished to expend the entire
$750 and money was available to expend that amount each
month? ”
The Honorable Robert S. Calvert, page 5 (H-106)
-4rticle 5 5 1, Subsection d(4) requires that merit aalarv increases
.ii ,iAilc:(ra i0 empoyeea in ?roporrluil iu tile ciassliiea saiailes ~~1 ;&iii
Agency distributed in the groupings.
It indicates that merit increases are to be apportioned among the
designated groupings on the basis of the relationship whi.ch each grouping’s
total classified salaries bear to the total classified salaries for the entire
Agency. Performance of the required calculations in relation to your hypo-
theticalfacts gives the following results.
Total Classified qo of $750 Maximum Monthly
Salary Salary Distributed =: Allocatable = Allocation to
Group to Group to Group Group
2,- 7 $ 5,000 22.75 i70.;25
8 -12 5.568 25. 33 189. 975
13-21 11,410 51.92 389.400
Totals $ 21, 978 100.~0 $750.000
Assuming that the $750 does not exceed one/twenty-fourth of 3.4’iu of
the biennial appropriation for salaries for classified positions, maximum
*mont‘h~ty merit increases under your hypothetical questions wouid nave LObe
as nearly as possible in the proportion of $170.625 for groups 2 - 7, to
$189.875 for groups 8 - 12, to $389.400 for groups 13 - 21.
Because of the inherent imprecision in meeting these percentages
caused by the rigidity of the classification step system and the varied sizes
of agencies, it is impossible to set a maximum allowable deviation from
the ideal; however, agency heads should make every effort to provide as
precise a distribution as possible.
Your second question is:
“Is this proportion Limitation on a ~non:i~ i:y
P. LO2
The Honorable Robert S. Calvert, page 6 (~-106)
groups 2-7 than for the two groups for any one
month, if the proportion limitation is maintained
over a period of a year of the biennium?”
Tb.e Legislature~has given no specific guidelines by which the pro-
portion limitations are to be measured. We believe that compliance can
be attained when, at the end of each fiscal year, the monthly rate of expen-
ditures for merit salary increases reflects the relative proportions of the
salaries of the three groupings. This does not mean that the proportional
limitation’is required to be maintained on a monthly basis.
Your third question asks:
“How many merit salary increases~.ndu&
any one employee receive in the first year of--ts
Appropriation B>ll? ”
The Act gives no specific guidance for the answer to this question.
By Acts 1968, 60th Leg., 1st C. S., ch. 5, p. 356, the Legislature speci-
fied that:
“(b) No employee may receive more than
two one-step increases from funds appropriated
for merit salary increases during the fiscal year
beginning September 1, 1968. ”
The present General Appropriation Act contains no such limitation.
By implication, then, the Legislature has removed the barriers to granting
to any one employee as many merit salary increases as deserved, as often
as deserved, during the first year of the biennium.
Your fourth question is:
“Could this same employee receive merit
increases in the second year of the Appropriation
Bill? ”
The answer to this question is the same as the answer to your third
question.
p. 503
The Honorable Robert S.. Calvert, page 7 (H-106)
?ina,lly, you ask:
“Does the provision in Section (5) superspd~
the maximum monthly rate as provided for in Sec.:inn
(3) or is the maximum monthly rate in effect ior !‘hz
entire biennium w,hen arrived at in accordance wit-n
the Act? It
Sub-section (5) provides:
I!
. . . Notwithstanding any other provisions of the
Act, all moneys which become available for merit
salary increases shall accumulate during the entire
biennium and any unused portion becoming available
in the first year of the biennium *ha:11 not lapse, and
is hereby appropriated for the second year of the
biennium for the sole purpose of granting merit
salary increases. I’
Section ‘5) concerns the means by which funds become available for
merit sa,lary increases while $ (3) involves the maximum rate at which those
funds may be spent. The amount spent for raises may never exceed the
mont‘hly maximum no matter how muc'h money iS aVaikLbk for inCreaSeS.
SUMMARY
1. The Legislature has given no specific guide-
lines by which the proportion limitations are to be
measured. We believe that compliance,can be attained
when, at the end of each fiscal year, the monthly rate
of expenditures for merit salary increases refle,:ts the
relative proportions of i:he salaries of the three group-
ings. This does r.oi, mca.r. tha’: the proportional limiia-
tiofi is required to be maintairzd on a monthly basis.
The Honorable Robert S. Calvert, page 8 (H-106)
3. The amount spent for merit raises can
never exceed the monthly maximum no matter how
much money is available for increases.
Very truly yours,
JOHN L. HILL
Attorney General of Texas
APPRQVED:
DAVID M. KENDALL, Chairman
Opinion Committee
p. 505