The Honorable Robert S. Calvert Comptroller ofPublic Accounts State Finance Building Austin, Texas

Dear Mr. Calvert: Opinion No. H- 106 Re: Determination ofmerit

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. (House Bill 139, Acts ofthe 63rd Legislature). The applicable provisions ofthat Bill are found inArticle 5, S1, Subsection d“Merit Salary Increases”
. p.V-28. They are as follows:

“(1) ‘Continued and/or satisfactory career service’ as used inthis Act shall mean service with consistent performance equal to that normally expected or required.

‘Merit Salary Increase’ as used inthis Act shall mean advancement to ahigher numbered Step inthe same Salary Group ofthe Classification Salary Schedule.

“(2) No merit salary increases may be granted except by using the item ofappropriations for classified salaries and wages specified inthis Act. Where this Act appropriates alump sum or an estimated total sum for ‘wages and salaries’ the,source offunds for merit salary increases shall be only that portion allocated to salaries of classified positions inan 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. 498The 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 alump 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 ofthe biennium, exceed 3.4% ofthe 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 ofthe 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 inproportion to the classified salaries in each Agency distributed inthe following groupings: Salary Groups 2 - 7 Salary Groups 8 - 12 Salary Groups 13 - 21

“(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 ofthis Act, all moneys which become available for merit salary increases shall accumulate during the entire biennium and any unused portion becoming available inthe first year ofthe biennium shall not lapse, and is hereby appropriated for the second year ofthe biennium for the sole purpose of granting merit salary increases. (Emphasis Added)

“(6) All Departments and Agencies shall file areport with the Gwernor and the Legislature at the close of each fiscal year detailing the utilization ofmerit funds. ”The Honorable Robert S. Calvert, page 3 (H-106)

Our responsibility in construing these provisions is to attempt to arrive at the intent ~ofthe Legislature. -4rticLe 1356, V. T. C.S. Determining the legislative intent inthis 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 tothe intent ofthe Legislature, and, at the same time, is possible ofapplication.

Generally, we interpret the provision toinclude the following requirements:

(I)Merit salary increases involve advancement to ahigher step in the same salary group. They are to be distinguished from promotions covered bySubsection e (p. V-29) which involve astep uptoahigher group.

(2) Merit salary increases may be granted only out offunds 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) Inthe 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 ofthe total amount available for merit raises in the biennium may be spent in any one month.

(4) Agencies with alump sum appropriation or estimated amount for salaries and operating expenses compute the maximum monthly rate of expenditure for merit raises in adifferent manner than most agencies. The formula by which the maximum rate is determined for these agencies is set out in enumeration (c) ofparagraph (3) ofthe Appropriation Act’s subsection onmerit 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 ofthe groupings may ilucruate during the biennium. Because raises are based on “continued and/or satisfactory career service, I’an agency is not required toaward any merit salary raises, but if raises are given they must be apportioned amon the three groupmgs ofworkers set out in the Act.

p. 500The Honorable Robert S. Calvert, page 4 (H-106)

(6) Although the Act requires **raises to**  **be granted**  inproportion to classified salaries in each agency distributed inthree designated groupings, exact mathematical accuracy is not required. Merit rasies are given by paying an employee at ahigher step. A one step increase can vary from as little as $13per month to as much as $60 per month infiscal 1974 depending onthe salary group involved. Ifadministrators 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, aless precise division must be permitted. Itmust be recognized that amerit salary raise has long term consequences. The administrator must be able tobudget funds to cover any raise for every remaining month inthe 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 ahypothetical situation as follows:

“If aState Agency has amaximum monthly rate of expenditure for merit salary increases of $750 per month and anumber 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 ofthis $750 per month could be legally applied to each ofthe salary group, 2-7, 8-12, and 13-21 inthe 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 51, Subsection d(4) requires that merit aalarv increases .ii ,iAilc:(ra i0empoyeea in ?roporrluil iutile ciassliiea saiailes ~~1;&iii Agency distributed inthe groupings.

Itindicates that merit increases are to be apportioned among the designated groupings onthe basis ofthe relationship whi.ch each grouping’s total classified salaries bear to the total classified salaries for the entire Agency. Performance ofthe required calculations in relation toyour hypotheticalfacts gives the following results.

Total Classified qoof $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~tymerit increases under your hypothetical questions 

## wouidnaveLO be as nearly as possible inthe proportion of $170.625 for groups 2- 7, to $189.875 for groups 8- 12, to $389.400 for groups 13- 21. Because ofthe inherent imprecision in meeting these percentages caused by the rigidity ofthe classification step system and the varied sizes ofagencies, it is impossible to set amaximum allowable deviation from the ideal; however, agency heads should make every effort to provide as precise adistribution as possible.

Your second question is:

“Is this proportion Limitation on a~non:i~ i:y

**P.** LO2The Honorable Robert S. Calvert, page 6 (~-106)

groups 2-7 than for the two groups for any one month, ifthe proportion limitation is maintained over aperiod ofayear ofthe biennium?” Tb.e Legislature~has given no specific guidelines bywhich 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 ofthe salaries ofthe three groupings. This does not mean that the proportional limitation’is required to be maintained ona monthly basis.

Your third question asks:

“How many merit salary increases~.ndu& any one employee receive inthefirst year of--ts Appropriation B>ll? ” The Act gives no specific guidance for the answer tothis question. ByActs 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 ofthe biennium.

Your fourth question is:

“Could this same employee receive merit increases inthe second year ofthe Appropriation Bill? ” The answer to this question is the same as the answer toyour third question.

p. 503The 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,henarrived at in accordance wit-n the Act? It Sub-section (5) provides:

I!

. . . Notwithstanding any other provisions ofthe Act, all moneys which become available for merit salary increases shall accumulate during the entire biennium and any unused portion becoming available inthe first year ofthe biennium *ha:11not lapse, and is hereby appropriated for the second year ofthe 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 atwhich 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 bywhich the proportion limitations are to be measured. We believe that compliance,can be **attained** when, at the end ofeach fiscal year, the monthly rate of expenditures for merit salary increases refle,:ts the relative proportions ofi:he salaries ofthe three groupings. This does r.oi, mca.r. tha’: the proportional limiiatiofi is required tobe maintairzd onamonthly 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