HD5 - The State Salary Survey Methodology

  • Published: 1989
  • Author: Joint Legislative Audit and Review Commission
  • Enabling Authority: Appropriation Act - Item 13 (Regular Session, 1988)

Executive Summary:
The Department of Personnel and Training (DPT) conducts an annual survey of salaries paid in the private sector. The primary purpose of the survey is to provide information for adjusting the State classified salary structure. Millions of State dollars are budgeted and appropriated each year for salary increases, based on this estimation. In the 1986-1988 biennium, for example, over 110 million dollars were spent on salary increases.

Legislative interest in the salary survey led to a mandate (Item 13 of the 1988 Appropriations Act) for the Joint Legislative Audit and Review Commission (JLARC) to study:

(1) the methods used to compile and evaluate data reported In the survey, and
(2) the methods used to determine the minimum percentage salary scale adjustment for state employees.

The JLARC staff's analysis of the survey methodology concluded that, overall, the current methods are generally consistent with statutory provisions, and are adequate for producing an approximation of the gap between State and private sector compensation. However, considering the survey's potential financial impact on the State, the accuracy of the estimated salary differential can and should be improved.

The current survey process, the JLARC study issues, and the main findings of this report are summarized on the next page.

The most important recommended improvements include:

• Defining systematically the private firms to be sampled in the survey
• Increasing the number of private firms sampled in the survey
• Estimating the difference between State and private sector salaries with a more stable measure that better represents State employees.
• Estimating and taking into account the random error that is inevitable when using a sample.

In addition, JLARC staff found that a onetime, comprehensive study of estimating fringe benefits is needed.

Most of the recommended technical improvements can be phased in over a two-year period, starting with the 1988 annual salary survey. Some of these improvements may require greater resources than DPT currently allocates to the salary survey Therefore, JLARC staff recommend that DPT submit a plan for implementing these improvements to the Governor and the House Appropriations and Senate Finance Committees by December 1, 1988. This plan should include the amount and type of additional resources needed to implement the changes recommended in this study.