Appropriations committee reviews Pay Act funding, schedule and concerns about wage compression
Loading...
Summary
Committee heard details of the Pay Act funding for FY27–28: multi-step raises (July 2026 2%, Jan 2027 2%, July 2027 3%), benefit changes and estimated fund totals; members raised concerns that percentage-based increases can widen pay gaps between exempt and lower-paid classified staff.
The Appropriations Committee reviewed the Pay Act provisions for fiscal years 2027–28 and questioned how percentage-based increases interact with the state’s pay charts and classification structure.
"The Pay Act provides funding for pay and benefits in the collective bargaining agreements for fiscal year '27 and '28," Beth Fastigi, commissioner of the Department of Human Resources, told the committee. She described a schedule of raises tied to the two‑year contracts: a 2% across‑the‑board increase in July 2026 plus continuation of steps; another 2% in January 2027 plus steps; and a 3% increase in July 2027.
Fastigi also reviewed benefit adjustments included in the package: vision benefit increases to $200 annually, removal of a dental deductible, an orthodontia lifetime maximum increase to $3,750, and a dental individual annual maximum increase to $2,000. She identified a general‑fund portion of approximately $23.9 million with additional amounts drawn from transportation, special and federal funds as described in committee testimony.
Committee members pressed staff on implementation mechanics. Finance and management staff explained that for the executive branch departments submit requests and the administration analyzes vacancies and prior carryforward to determine actual payout needs; pay‑act amounts approved in spring become part of agencies' base budgets for the following fiscal year.
Several legislators raised a policy concern: applying the same percentage to higher base salaries increases the dollar gap between top earners and lower-paid employees. "As you're applying the same percentage to higher wages, the gap is getting larger between the average classified employee and the average exempt employee," one committee member said, asking whether reclassification would address the problem. Fastigi replied that reclassification helps with job structure but does not by itself alter pay‑chart design and that bargaining and policy choices drive final pay outcomes.
Staff said consultant recommendations and HR/administration guidance will be provided for committee consideration once available; committee members requested follow‑up materials and data to examine wage compression and alternatives such as flat-dollar increases for lower-paid staff.
