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
