Second Regular Session
Seventy-fourth General Assembly
STATE OF COLORADO
INTRODUCED
LLS NO. 24-1184.01 Jessica Herrera x4218
HOUSE BILL 24-1467
House Committees Senate Committees
Appropriations
A BILL FOR AN ACT
C
ONCERNING MODIFICATIONS TO THE STATE EMPLOYEE TOTAL101
COMPENSATION PHILOSOPHY , AND, IN CONNECTION THEREWITH,102
REQUIRING THE DIRECTOR OF PERSONNEL TO ESTABLISH A STEP103
PAY SYSTEM FOR STATE EMPLOYEES IN THE STATE PERSONNEL104
SYSTEM.105
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov/
.)
Joint Budget Committee. Currently, the state personnel director
(director) is required to establish survey methodologies to assess total
HOUSE SPONSORSHIP
Bird and Sirota, Taggart
SENATE SPONSORSHIP
Zenzinger and Bridges, Kirkmeyer
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law. compensation practices. Under these compensation practices, a state
employee in the state personnel system (employee) may receive merit pay
as part of their total compensation. The bill requires the director to
establish a "step pay" structure that provides consistent salary increases
for employees instead of permitting merit pay.
The bill also repeals the requirement that employees of the division
of worker's compensation and the division of labor standards and
statistics in the department of labor and employment be paid on a monthly
basis.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. Legislative declaration. (1) The general assembly2
finds and declares that:3
(a) State employees are valued partners in the work of the state;4
(b) State employees should receive compensation based on a pay5
system that provides predictable salary increases;6
(c) Pay and pay schedules for classified employees should be7
aligned with the state's total compensation philosophy and step pay per8
the partnership agreement with the certified employee organization9
pursuant to section 24-50-1102.10
SECTION 2. In Colorado Revised Statutes, 24-50-104, amend11
(1)(a)(I), (1)(a)(II), (1)(c)(I), (1)(c)(II) introductory portion, (1)(c)(II)(C),12
(1)(c)(IV), (1)(c.5)(I), (1)(j)(II)(A), (4)(a), (4)(b)(I), (4)(c), (5)(d), and13
(5)(e); repeal (1)(c)(I.1), (1)(c)(I.2), (1)(c)(I.3), (1)(c)(I.5), (1)(c)(I.7),14
(1)(c)(I.9), (1)(c)(II)(D), (1)(c)(II)(F), (1)(c.5)(II), and (1)(c.7); and add15
(1)(a)(II.5) and (1)(c)(II)(H) as follows:16
24-50-104. Job evaluation and compensation - state employee17
reserve fund - created - study - report - definitions - repeal. (1) Total18
compensation philosophy. (a) (I) It is the policy of the state to provide19
innovative total compensation that meets or exceeds total compensation20
HB24-1467-2- provided by public or private sector employers or a combination of both,1
to officers and employees in the state personnel system to ensure the2
recruitment, motivation, and retention of a qualified and competent3
workforce. For purposes of this section, "total compensation" includes,4
but is not limited to, salary, group benefit plans, retirement benefits, merit5
STEP pay, incentives, premium pay practices, and leave as specified in6
statute or in policies of the state personnel director. For purposes of this7
section, "group benefit plans" means group benefit coverages as described8
in section 24-50-603 (9). Any monetary components of total9
compensation are subject to available appropriations by the general10
assembly.11
(II) The state personnel director shall establish technically and12
professionally sound survey methodologies to assess total compensation13
practices, levels, and costs. Except as provided in subsection (1)(a)(III)14
of this section, for purposes of this subsection (1)(a), to determine and15
maintain salaries, state contributions for group benefit plans, and merit16
STEP pay that meet or exceed total compensation provided by public or17
private sector employment or a combination of both, the state personnel18
director shall quadrennially review the results of appropriate surveys by19
public or private organizations, including surveys by the state personnel20
director set forth in subsection (4)(b)(I) of this section. Any surveys21
provided on a confidential basis shall not be revealed except to the state22
auditor's office and the private firm conducting the audit required in23
subsection (4)(b) of this section. The state personnel director shall adopt24
appropriate procedures to determine and maintain other elements of total25
compensation, including the payment of incentive awards to employees26
in the state personnel system. The state personnel director's review and27
HB24-1467
-3- determination of total compensation practices shall not be subject to1
appeal except as otherwise authorized by law or state personnel director2
procedures.3
(II.5) W
HEN ESTABLISHING PAY PLANS IN ACCORDANCE WITH4
SUBSECTION (5) OF THIS SECTION AND RECOMMENDING ANNUAL5
INCREASES FOR STATE EMPLOYEES IN ACCORDANCE WITH SUBSECTION (4)6
OF THIS SECTION, THE STATE PERSONNEL DIRECTOR SHALL DEVELOP ,7
AFTER NEGOTIATIONS WITH THE CERTIFIED EMPLOYEE ORGANIZATION8
PURSUANT TO THE PARTNERSHIP AGREEMENT , AN EQUITABLE PAY9
STRUCTURE THAT PROVIDES CONSISTENT AND PREDICTABLE SALARY10
INCREASES FOR CLASSIFIED AND NONCLASSIFIED EMPLOYEES WHILE11
REMAINING COMPLIANT WITH ANY FEDERAL OR STATE LAWS ,12
IMPLEMENTING THE WAGE SCALE AGREEMENT NEGOTIATED IN THE13
PARTNERSHIP AGREEMENT , SUBJECT TO AVAILABLE FUNDS, AND KEEPING14
THE STATE EMPLOYEE WORKFORCE COMPETITIVE WITH MARKET15
COMPENSATION.16
(c) (I) The state personnel director shall establish a merit
STEP pay17
system in order to provide periodic salary increases for employees in the18
state personnel system. The purpose of the merit STEP pay system is to19
provide salary increases for employees based on performance evaluations20
and salary placement within the appropriate salary range. The state21
personnel director shall develop the merit pay system so that a merit pay22
increase is based on the relationship of performance rating distribution23
and salary range distribution. The merit pay system must include the24
following characteristics:25
(A) Salary range is divided into quartiles, except as set forth in26
subparagraph (I.1) of this paragraph (c);27
HB24-1467
-4- (B) The lowest quartile or distribution zone in relation to the1
midpoint has the highest rate of merit pay, and the rate for each2
successive quartile or distribution zone is less than the preceding quartile3
or distribution zone, except as provided in sub-subparagraph (E) of this4
subparagraph (I);5
(C) Performance evaluations are divided into three performance6
categories, except as set forth in subparagraph (I.1) of this paragraph (c);7
(D) The highest performance category has the highest rate of merit8
pay, and the rate for each lower performance category is less than the9
preceding category, except as provided in sub-subparagraph (E) of this10
subparagraph (I); and11
(E) Employees who receive an unsatisfactory performance12
evaluation are not eligible for merit pay.13
(I.1) On or after September 1, 2015, the state personnel director14
shall review the effectiveness of the use of quartiles for salary range and15
three performance categories in the merit pay system. Based on the16
review, the state personnel director may adjust the number of distribution17
zones or performance categories to be used in the system. Thereafter, the18
state personnel director shall conduct a biennial review of the distribution19
zones and performance categories and may adjust the number of20
distribution zones or performance categories based on the review. The21
minimum number of distribution zones the state personnel director may22
establish is three, and the maximum number is six.23
(I.2) If a state department or institution of higher education has a24
performance review system that has a different number of performance25
categories than the number used by the state personnel director in the26
merit pay system, the state personnel director shall establish a method for27
HB24-1467
-5- converting the departmental or institutional categories into the categories1
used in the merit pay system.2
(I.3) Based on professionally sound survey methodologies, the3
state personnel director shall establish annually one or more priority4
groups of employees that have priority to receive merit pay based on5
available moneys. The priority groups must be based on length of service,6
relation to the salary range midpoint, performance, recruitment, retention7
needs, and other factors established by the director. The amount of merit8
pay that an employee in the state personnel system may receive depends9
first on the employee's priority group and then on the amount of merit10
pay, if any, associated with the employee's performance category and11
salary range.12
(I.5) (A) Except as set forth in sub-subparagraph (B) of this13
subparagraph (I.5), the merit pay system applies uniformly across state14
departments and institutions of higher education subject to the provisions15
of subparagraph (I.9) of this paragraph (c). For each state fiscal year the16
state personnel director shall determine the appropriate merit pay rates17
that apply to all state departments and institutions and the priority group18
or groups that receive merit pay.19
(B) Notwithstanding any provision of this section to the contrary,20
an institution of higher education may enact its own merit pay system, so21
long as the system is consistent with the provisions of this subsection (1).22
(I.7) An employee who is at or above the maximum amount for23
his or her salary range is not eligible for a merit pay salary increase, but24
is eligible for a merit pay payment that is nonbase building.25
(I.9) Merit pay is subject to available appropriations. Except as set26
forth in subparagraph (II) of paragraph (j) of this subsection (1), the27
HB24-1467
-6- general assembly shall appropriate any moneys for merit pay in the annual1
general appropriation act in suitable personal services line items or other2
line items that include salary appropriations.3
(II) In addition to any other requirements set forth in this4
paragraph (c), SUBSECTION (1)(c)(II), the department of personnel shall5
develop the merit STEP pay system so that it:6
(C) Is developed with input from employees in the state personnel7
system, managers, and other affected parties;
AND8
(D) Emphasizes planning, management, and evaluation of
9
employee performance; and10
(F) Prohibits a forced distribution of performance ratings.11
(H) M
INIMIZES EMPLOYEE PAY DISRUPTIONS RESULTING FROM12
IMPLEMENTATION OR MODIFICATION OF STEP PAY .13
(IV) Each state department and institution of higher education
14
shall ensure that it has a performance review system that can be used to15
implement a merit pay system. The state personnel director shall16
encourage state departments and institutions of higher education to17
implement performance evaluations of employees that are as objective as18
possible and that, as soon as possible and wherever feasible, include an19
assessment from multiple sources of each employee's performance. Such20
sources shall include, where applicable, the employee's self-assessment;21
the employee's superiors, subordinates, and peers; and any other22
applicable sources of an employee's performance. The state personnel23
director shall adopt procedures to establish a process to resolve employee24
disputes related to performance evaluations that do not result in corrective25
or disciplinary action against the employee. Each program established by26
a state department or institution of higher education pursuant to this27
HB24-1467
-7- subparagraph (IV) shall be SUBSECTION (1)(c)(IV) IS subject to the1
director's approval.2
(c.5) (I) The state personnel director shall provide for the3
evaluation of employee performance. Each employee shall be evaluated4
at least once a year. The evaluation of performance shall be used as a5
factor in compensation, promotions, demotions, removals, reduction of6
force, and all other transactions as determined by the state personnel7
director in which considerations of quality of service are properly a8
factor.9
(II) A supervisor, including a supervisory state employee not10
within the state personnel system, who does not evaluate subordinate11
employees in the state personnel system as required by this paragraph12
(c.5) on at least an annual basis shall be suspended from work without13
pay for a period of not less than one workday. The provisions of this14
subparagraph (II) shall only apply to supervisors who are state employees.15
(c.7) In addition to the periodic salary increases authorized by16
paragraph (c) of this subsection (1), the performance review component17
of the merit pay system established pursuant to subparagraph (IV) of18
paragraph (c) of this subsection (1) shall be used for the purpose of19
determining eligibility for a performance-based award permitted pursuant20
to section 24-38-103 (1.5). The award shall be in addition to any other21
compensation authorized by law, and it shall not affect the compensation22
that the employee is entitled to receive in subsequent years.23
(j) (II) (A) The state employee reserve fund is hereby created in24
the state treasury, which consists of money transferred pursuant to25
subsection (1)(j)(IV) of this section. Money in the fund is continuously26
appropriated for the purpose of providing merit pay to employees as27
HB24-1467
-8- provided in this subsection (1). No money from the fund shall be1
expended without the approval of the director of the office of state2
planning and budgeting.3
(4) Annual compensation process. (a) The purpose of the4
quadrennial compensation process is to determine any necessary5
adjustments to state employee salaries, state contributions for group6
benefit plans, and merit STEP pay. The quadrennial compensation survey,7
based on an analysis of surveys by public or private organizations,8
including surveys by the state personnel director, shall include a fair9
sample of public and private sector employers and jobs, including areas10
outside the Denver metropolitan area. In order to establish confidence in11
the selection of surveys, the state personnel director shall meet and confer12
in good faith with management and state employee representatives.13
(b) (I) On October 1, 2025, and on October 1 of each fourth year14
thereafter, the state personnel director shall prepare a quadrennial15
compensation report based on the analysis of surveys conducted pursuant16
to subsection (4)(a) of this section. The purpose of the quadrennial17
compensation report shall be to reflect all adjustments necessary to18
maintain the salary structure, state contributions for group benefit plans,19
and merit STEP pay FOR THE UPCOMING FISCAL YEAR. The state personnel20
director shall also include a detailed analysis of salary ranges for all21
employees in the state personnel system and how employees' salaries are22
distributed within these ranges. The state personnel director shall also23
publish the report. Notwithstanding the requirement in section 24-1-13624
(11)(a)(I), the requirement to submit the report required in this subsection25
(4)(b)(I) continues indefinitely. The state auditor is responsible for26
contracting with a private firm to conduct a performance audit of the27
HB24-1467
-9- procedures and application of data, including any survey conducted by the1
state personnel director. Beginning January 1, 2005, through January 1,2
2021, and beginning on January 1, 2026, the audits shall be conducted3
every four years. A report shall be submitted to the governor and the4
general assembly by the December 30 immediately following the5
completion of the audit.6
(c) By September 15, 2017, and by September 15 of each year7
thereafter through September 15, 2021, and on or before October 1, 2022,8
and on or before October 1 of each year thereafter, the state personnel9
director shall submit recommendations and estimated costs for state10
employee compensation for the next fiscal year, covering salaries, state11
contributions for group benefit plans, and merit STEP pay, to the governor12
and the joint budget committee of the general assembly. The13
recommendations shall reflect a consideration of the results of the14
quadrennial compensation survey, fiscal constraints, the ability to recruit15
and retain state employees, appropriate adjustments with respect to state16
employee compensation, and those costs resulting from implementation17
of section 24-50-110 (1)(a). The recommendations for state contributions18
for group benefit plans shall specify the annual group benefit plan year19
established pursuant to section 24-50-604 (1)(m). The recommendations20
submitted to the governor and the joint budget committee COMPENSATION21
REPORT shall include the results of the surveys of public or private22
employers and jobs. The state personnel director shall also publish such23
recommendations REPORT. This subsection (4)(c) is exempt from the24
provisions of section 24-1-136 (11), and the periodic reporting25
requirements of this section are effective until changed by the general26
assembly acting by bill.27
HB24-1467
-10- (5) Pay plans. (d) In the medical pay plans, there are no1
anniversary-based merit STEP increases. The salaries in such pay plans are2
based on the negotiation of an annual contract between the employee and3
the department head or the state auditor, when appropriate, and the4
amount of such salaries may increase, decrease, or remain unchanged5
from year to year. Any employee dismissed for failure to perform under6
such contract may only appeal directly to the state personnel board. 7
(e) In the pay plans for the senior executive service and those8
positions specified in section 13 (2)(a)(XI) of article XII of the state9
constitution, there are no anniversary-based merit STEP increases. The10
salaries in such pay plans are based on policies set forth by the state11
personnel director. The amount of such salaries may increase, decrease,12
or remain unchanged from year to year.13
SECTION 3. In Colorado Revised Statutes, amend 8-47-205 as14
follows:15
8-47-205. Salaries of employees of division. All deputies,16
statisticians, accountants, clerks, experts, and other employees of the17
division shall receive such compensation as may be fixed by law. The18
salaries so fixed shall be paid monthly from the fund appropriated for the19
use of the division after approval by the director.20
SECTION 4. In Colorado Revised Statutes, 8-1-103, amend (2)21
as follows:22
8-1-103. Division of labor standards and statistics - director -23
employees - qualifications - compensation - expenses. (2) All24
employees, except experts, shall have been for one year prior to such25
employment or appointment bona fide residents of this state and, while26
in the employ of the division, shall receive such compensation as is fixed27
HB24-1467
-11- by the state personnel system laws of this state, such compensation to be1
paid monthly from funds appropriated for the use of the division. All2
expenses incurred by the division and its employees pursuant to the3
provisions of law shall be paid from funds appropriated for its use upon4
the approval of the director. The traveling expenses of the director or of5
any employee of the division incurred while on business of the division6
outside this state shall be paid in the manner prescribed in this subsection7
(2), but only when such expenses are authorized in advance.8
SECTION 5. In Colorado Revised Statutes, 24-38-103, repeal9
(1.5) as follows:10
24-38-103. Agency authority and incentives for budget11
savings. (1.5) Beginning with the 2004-05 fiscal year, an agency that12
achieves cost savings, as an alternative to the transfer authorized pursuant13
to subsection (1) of this section, may transfer fifty percent of the amount14
of the cost savings from one item of appropriation made to the agency in15
the general appropriation act or any supplemental appropriation act to the16
item for personal services in the appropriation made to the same agency17
for the purpose of paying performance-based awards to employees of the18
agency. The award shall be awarded in the fiscal year in which the cost19
savings are achieved. and shall be made consistent with the performance20
review done in accordance with the merit pay system identified in section21
24-50-104 (1)(c.7). Prior to the end of the state fiscal year in which a22
transfer is made pursuant to this subsection (1.5), an agency shall submit23
written notice to the joint budget committee, the office of state planning24
and budgeting, and the state controller of the amount of the cost savings25
achieved by the agency during the state fiscal year.26
SECTION 6. Act subject to petition - effective date. This act27
HB24-1467
-12- takes effect at 12:01 a.m. on the day following the expiration of the1
ninety-day period after final adjournment of the general assembly; except2
that, if a referendum petition is filed pursuant to section 1 (3) of article V3
of the state constitution against this act or an item, section, or part of this4
act within such period, then the act, item, section, or part will not take5
effect unless approved by the people at the general election to be held in6
November 2024 and, in such case, will take effect on the date of the7
official declaration of the vote thereon by the governor.8
HB24-1467
-13-