State government boosts average employee salaries to over $67K by fiscal year 2025

During the latest Senate and Joint Committee on Appropriations meeting, a significant focus was placed on the state government's compensation structure, revealing a marked improvement in employee salaries. The discussion highlighted the ongoing efforts to address previously low pay rates for state employees, with the average salary rising from $48,434 in FY 2020 to $67,139 in FY 2025.

The meeting detailed how the state utilizes a pay grade system to classify jobs across various departments, ensuring equitable compensation based on responsibility levels. The classification and compensation team has worked diligently to eliminate "artificial minimums," which previously left many employees earning below 80% of their pay grade midpoint. This initiative has been bolstered by targeted pay increases and a strategic approach to salary adjustments based on market comparisons.

Key strategies included a $12 million allocation from projected savings to provide decompression pay, which aimed to elevate the salaries of long-serving employees. Additionally, the state conducts a remuneration study every four years to assess its competitiveness against surrounding states and the private sector.

Looking ahead, the governor's recommended budget for FY 2026 includes a 1.25% salary increase for state employees, alongside a similar adjustment to pay grades. This approach aims to maintain current compensation ratios while ensuring that state salaries remain competitive in the evolving job market.

The discussions underscored the state's commitment to improving employee compensation and addressing past disparities, marking a significant step towards a more equitable pay structure for South Dakota's workforce.