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Study recommends how to implement $73M of raises for Kentucky state workers

Kentucky Capitol dome on gray day, U.S. and Kentucky flag
Ryland Barton
The Kentucky Capitol building.

Kentucky officials are recommending another round of raises for state employees, and boosting the pay of senior workers in order to retain and reward experienced personnel.

The Kentucky Personnel Cabinet released a report this month recommending how to implement $73 million of pay raises for state employees, part of an effort to help recruit and retain such workers.

The proposal called for pay increases for most executive branch workers, in addition to salary hikes for longtime employees who make little more than newly-hired colleagues.

The compensation report was a requirement of a bill passed by the Kentucky General Assembly this year, directing the cabinet to conduct a thorough review of the hundreds of job classifications and determine which should be revised or have pay grades increased.

On top of across-the-board raises all state workers have received in the past two fiscal years, the cabinet’s report recommended that 349 of the 1,317 job classifications of state workers have their pay grade increased – citing job market data, working conditions and minimum requirements.

These pay grade bumps would increase the salary of more than 16,000 employees – a majority of state workers.

Personnel Cabinet Secretary Mary Elizabeth Bailey told legislators in an interim budget subcommittee earlier this month that most of these raises have already gone into effect with available funds. But she said the cabinet is asking the legislature to set aside $17.7 million in the upcoming budget to fund remaining pay grade increases.

“There’s not enough money in existing budgets to do that, so we’ll need assistance from the General Assembly,” she said.

These employees would include dozens of classifications among social workers, probation and parole officers, corrections officers and information technology workers – positions the state has struggled to fill.

The report also deals with the fairness of state worker salaries, as new employees in some agencies earn nearly as much as senior employees who have worked there for more than a decade – an effect officials call salary compression. While all state employees received 8% and 6% raises in the past two fiscal years, many senior employees had previously not received any raise since 2009.

Presenting the report’s findings to legislators, Bailey said managers regularly hear such complaints from longtime state workers.

“Employees contact us constantly and say, you know, ‘I've been here a long time, we've got a new hire, they're making as much as me, it's just not fair,’” Bailey said. “I completely understand that.”

To address this compression, the cabinet recommended allocating $55 million to increase employees’ salaries based on the length of their employment since the 2010 fiscal year.

The biennial budget bill passed by the legislature in 2022 gave all state workers an 8% raise in the 2023 fiscal year, with another $200 million to be allocated in the current fiscal year, contingent on a comprehensive salary and classification study by the Personnel Cabinet.

In this year’s session, Republican legislative leaders called the first report issued by the cabinet insufficient and ordered them to conduct the more thorough report submitted this month, though the legislature did direct $127 million towards immediate worker raises.

Those raises included $89 million of across-the-board 6% raises for all executive, legislative and judicial branch employees, in addition to $38 million of salary increases for correctional and juvenile justice employees.

The report’s recommendations for how the remaining $73 million from that bill should be spent must be approved by the legislature to go into effect. The 2024 legislative session begins in January.

The Personnel Cabinet report also included several more recommendations for the legislature to help the state compete in the job market with other employers, including a 6% and 4% raise for all state workers in the next two fiscal years and annual salary schedule adjustments going forward.

The report also recommended establishing a student loan forgiveness program for state workers at an annual cost of $20 million, while reinstating defined benefit pension plans for recently hired hazardous and state police employees who currently receive less generous hybrid cash balance plans.

Joe is the enterprise statehouse reporter for Kentucky Public Radio, a collaboration including Louisville Public Media, WEKU-Lexington, WKU Public Radio and WKMS-Murray. Email Joe at jsonka@lpm.org.

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