Bill Summary: This proposal provides for an annual salary increase for state employees based on the cost of living adjustment for that calendar year, unless such increase is disapproved by the General Assembly.

ESTIMATED NET EFFECT ON GENERAL REVENUE FUND
FUND AFFECTED	FY 2009	FY 2010	FY 2011
General Revenue	$0	($37,053,870)	($74,107,740)

Total Estimated Net Effect on General Revenue Fund	$0	($37,053,870)	($74,107,740)

ESTIMATED NET EFFECT ON OTHER STATE FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011
Other State Funds	$0	($23,000,000)	($46,000,000)

Total Estimated Net Effect on Other State Funds	$0	($23,000,000)	($46,000,000)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011
Federal Funds	$0	($12,464,288)	($24,928,576)

Total Estimated Net Effect on All Federal Funds	$0	($12,464,288)	($24,928,576)

ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on FTE	0	0	0

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☒ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011
Local Government	$0	$0	$0

Officials at the Office of Administration (OA) assume the proposed legislation affects all state employees. The OA's Division of Personnel administers the uniform Classification and Pay System pay plan, affecting about 40,000 employees in 12 state agencies. This proposal would impact the manner in which state employee pay increases are applied and the manner in which pay is administered. In formulating pay plan recommendations, the Personnel Advisory Board would need to estimate future increases in the CPI to comply with this legislation. The legislation would, in a sense, limit budgeting flexibility for pay increases since the CPI-based increase must be adopted. Other pay increases for state employees would be prioritized after the funding for the CPI-based increase was estimated.

Officials at the OA assume the following estimate is based on the FY 2008 Total Personal Service estimates supplied by the Office of Administration, Division of Budget and Planning. One percent of the state's Total Personal Service is used as an estimate. For every one percent increase in the Consumer Price Index, the state would incur the following costs: $14.8 million General Revenue, $4.9 million Federal funds, and $9.2 million Other funds, for a total of $28.9 million, for FY 2009.

These figures include benefit costs estimated at 27.05%. For increases to state employee salaries it is inaccurate to increase salaries by the full 44.22%, since health care and deferred compensation are "dollar-based" benefits that do not increase when an employee receives a pay increase.

Officials at the Missouri Department of Transportation (MoDOT) assume that based on the FY07 actual payroll of $268,440,746, fringe benefit rate of 38.38%, Midwest Urban CPI growth of 2.66%. The estimated increase in payroll for FY09 is $7,140,524 and the estimated increase in fringe benefits is $2,740,533 for a total increase in salaries and fringe benefits of $9,881,057. The total for FY10 is $10,143,893 and for FY11 $10,413,721.

Officials at the Department of Conservation (MDC) assume the estimated fiscal impact on MDC, based on current salaries, could be approximately $1.8 million in the first year. This fiscal impact was estimated by the Midwest Consumer Price Index average growth of 2.4% during the past five years. However, the annual increase based on the most recent Midwest Consumer Price Index on December 2008 data would be 3.8%.

Officials at the Administrative Hearing Commission assume that there is no fiscal impact from this proposal.

Officials at the Budget and Planning assume a statewide impact and they defer to the Division of Personnel for the impact.

Oversight assumes that the Consumer Price Index can vary significantly from year to year. Information obtained from the U.S. Department of Labor shows the following changes to the CPI in the last 5 years.

Dec. 2002 to Dec. 2003	1.9%
Dec. 2003 to Dec. 2004	2.4%
Dec. 2004 to Dec. 2005	3.2%
Dec. 2005 to Dec. 2006	2.4%
Dec. 2006 to Dec. 2007	2.7%

The average CPI over the last 5 years is 2.52%. For the purpose of this fiscal note Oversight assumes a CPI of 2.5%. Oversight assumes this bill does not go into effect until FY 2010.

No direct fiscal impact to small businesses would be expected as a result of this proposal.

Beginning July 1, 2009, this bill authorizes an annual salary increase for state employees equal to the cost-of-living adjustment for that calendar year when there are increases in the federal Consumer Price Index, unless the salary increase is disapproved by a concurrent resolution adopted by the General Assembly before July 1 of each year. The bill also specifies that a "state

employee" is any nonelected person employed by the state earning a salary or wage and performing duties on behalf of the state, including juvenile court personnel, regardless of whom pays their compensation.

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

FISCAL IMPACT - State Government	FY 2009 (10 Mo.)	FY 2010	FY 2011
GENERAL REVENUE

Cost- state employee salary increase	$0	($37,053,870)	($74,107,740)

ESTIMATED NET EFFECT ON
GENERAL REVENUE	$0	($37,053,870)	($74,107,740)

OTHER STATE FUNDS

Cost - state employee salary increase	$0	($12,464,288)	($24,928,576)

ESTIMATED NET EFFECT ON
OTHER STATE FUNDS	$0	($12,464,288)	($24,928,576)

FEDERAL FUNDS

Cost - state employee salary increase	$0	($23,000,000)	($46,000,000)

ESTIMATED NET EFFECT ON
FEDERAL FUNDS	$0	($23,000,000)	($46,000,000)