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May252013

State Employee Pay Raise Would Costly to Many Agencies

After a long night last month of trying to balance the state budget’s for next year, the Senate Finance Committee had $15.8 million left over – just enough to give state employees a 1 percent pay raise.

But the true cost of that raise is $31.9 million, according to the Office of State Budget – a difference that could cause problems at many state agencies.

The $15.8 million that Senate budget writers allocated covers only the roughly 26,000 state workers whose salaries are paid from the state’s general fund. The other 29,000 state employees are paid from federal and other funds, including fees. The agencies that employ those workers will have to find the money elsewhere within their budgets for the state-ordered raises.

The proposed increase would cost Winthrop University about $440,000 each fiscal year, starting in July, spokeswoman Rebecca Masters said. School leaders have been planning for the proposed pay raises in their budget talks, she said.

Although some of the college’s employees are not completely state-funded, Masters said, Winthrop has historically budgeted to allow an equal pay raise for all of its employees “as a matter of fairness and to avoid fueling salary compression for employees doing comparable work.”

If the state-ordered pay raise becomes law, the University of South Carolina – which gets 9 percent of its budget from the state’s general fund – would give $4.6 million in raises. But it would get only $1.2 million in added money from the state to pay for those raises.

“It makes it more difficult to run the business when these costs are added on when no money is directly appropriated to cover it,” said Ed Walton, USC’s chief financial officer. “Our largest stream of income is tuition. If I have to pay for those raises, I have to pay for it through tuition.”

The pay-raise issue also affects agencies that have a lot of employees paid from fees and grants.

About 40 percent of the employees at the state Department of Probation, Parole and Pardon Services, for example, are paid from fees that are charged offenders under the agency’s supervision. That means, to give the state-ordered raise, the agency has to come up with an extra $159,486, according to Cheryl Thompson, director of fiscal and materials management.

The issue is most pronounced at the Department of Motor Vehicles, where none of the agency’s roughly 1,150 employees are paid from the general fund. That agency operates largely with driver’s license fees. Motor Vehicles would have to find $500,000 to pay for the raises.

“What we’re going to have to do is start early. We simply begin saving it,” said J.R. Sanderson, the agency’s chief of staff and director of operations.

‘A lot more for a lot less’

 

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