The Honorable Robert S. Calvert 

Comptroller of Public Accounts 

State Finance Building 

Austin, Texas 

Dear Mr. Calvert: 

Opinion No. H- 106 

Re: Determination of merit 

increases under House 

Bill 139, 63rd Leg., the 

General Appropriations 

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, Subsection 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 appropriates 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 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 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 distributed 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. Notwithstanding any other provisions of this 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 shall not 

lapse, and is hereby appropriated for the second year of the 

biennium for the sole purpose of granting merit salary increases. (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. Determining the legislative intent in this instance has been far from easy. The 

provisions are ambiguous and are subject to several contrary interpretations. We have chosen that which, in our opinion, most closely conforms 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 appropriated for classified salaries. No special funds are granted for 

merit increases, but it can be expected that funds may become available 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 clarification 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 classified 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 hypotheticalfacts 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 LO be 

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 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 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 specified 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 guidelines 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 groupings. This does r.oi, mca.r. tha’: the proportional limiiatiofi 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