Every year, the Legislature passes a bill that adjusts the ongoing base funding for state employees’ compensation, sometimes referred to as the “compensation bill” or just the “comp bill.” This bill has a lot of moving parts, making its nickname very appropriate—it’s not just “comp-ensation,” it’s also “comp-licated!” Many factors (such as cost-of-living changes, adjustments to health and dental benefits, and savings from employee turnover) come together to determine the final appropriations amounts authorized in this bill.
What Does the Compensation Bill Do?
To help you better understand the compensation bill and everything it does, this article will highlight the major types of adjustments that are typically found in the bill and give some background on how those amounts are determined. Read on to learn about each component:
- Salary Increases (Cost of Living). Each year, the Legislature may decide to appropriate additional funds to cover cost-of-living salary increases for state employees. Before the General Session begins, the Legislative Fiscal Analyst calculates the value of a baseline 1% salary increase for state employees and puts that value in the first version of the compensation bill. Before the compensation bill is finalized and passed at the end of the session, the Legislature may decide to budget for a different percentage increase, and the value of the baseline 1% increase is multiplied accordingly and updated in the final bill version.
- Health and Dental Care Cost Increases. State agency employees receive health and dental care benefits through the Public Employee Health Plan (PEHP), and higher education employees are covered by a variety of plans, including PEHP, U Health, or other private providers depending on the institution. Each year, the compensation bill appropriates any additional funding needed to cover increases in these health and dental care costs. PEHP provides estimates of the rate increases needed, and those rates are approved by the Executive Appropriations Committee in December, before the session begins. Although higher education employees are covered through the U Health system, appropriations for their costs are made at the same rate as for PEHP plans.
- Pay-for-Performance Reallocations. Each year, funds are set aside for state employee pay-for-performance increases, which are awarded by agency administrators to their high-performing employees. After those employees are identified for targeted pay increases, the money that was previously set aside needs to be distributed appropriately throughout the state budget depending on where the funding for those individuals’ salaries comes from. This item directs those reallocations to the correct budget units.
- Retirement Rate Adjustments. This item covers changes in state employers’ contributions to employees’ retirement benefits. There are many different rates that are paid based on employees’ retirement plans (Tier I vs. Tier II) and even their job type (for example, public safety employees have their own rates). The effects of the various changes in these rates are combined to determine the increase or decrease in funding needed. These rates are calculated by actuaries at Utah Retirement Systems (URS) and approved by the URS board.
- 401(k) Match Increase. The state currently offers a 401(k) contribution match for state employees of up to $26 per pay period. This item is used to account for any additional cost increases needed to cover those 401(k) matches for the coming year.
- USDB Educator Steps and Lanes. The salary schedule for educators at the Utah Schools for the Deaf and Blind (USDB), known as “steps and lanes,” is set independently from that of other public K-12 educators. Each year, the state board of education is statutorily required to determine a weighted average percent increase to apply to this salary schedule and keep USDB educator salaries competitive with other educator salaries in the state (see 53A-8-302).
- Termination Pool Rate Adjustments. When state employees retire or otherwise end their employment with the state, the value of their accrued PTO hours is paid out to them based on their current wage. However, employees who have worked for the state for a longer period may have earned some of that PTO when they were earning a lower wage. Thus, the state needs to maintain a pool of money to cover those differences in the value of accrued PTO from the time it’s earned to when it’s paid out. The existence of this pool also helps to smooth out agency personnel costs from year to year. The termination pool helps prevent shortfalls personnel budgets when these large PTO payouts occur, eliminating the need for agencies to predict and budget for these events.
- Turnover Savings. State employers may experience savings when employees leave state employment partway through the year, when open positions that were budgeted for go unfilled for some or all of the year, or when higher-paid roles are backfilled by lower-paid employees. These savings are called “turnover savings,” and result from agencies not spending their full appropriations for the various compensation expenses described in this list, such as salaries, healthcare costs, and retirement contributions. Each year, the LFA calculates a turnover savings rate for each agency based on recent appropriations compared actual spending for personnel services. This differential rate is then used to discount any adjustments in the compensation bill.
Bringing it All Together: Passing the Bill
Each year, the compensation bill sponsored by the EAC vice-chairs, alternating between being a Senate bill and a House bill—in the 2025 General Session, it will be numbered as H.B. 8, “State Agency and Higher Education Compensation Appropriations.” The compensation bill is typically voted on during the last week of the General Session each year, after EAC makes any final adjustments to pay increase percentages (such as the cost-of-living adjustment mentioned above) and makes any other desired changes to the bill. The result is a package of updated compensation appropriations that enables state employers and their employees to continue providing key public services to Utahns for yet another year—a complicated but worthwhile effort!