Second Regular Session
Seventy-fourth General Assembly
STATE OF COLORADO
REENGROSSED
This Version Includes All Amendments
Adopted in the House of Introduction
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
3rd Reading Unamended
May 3, 2024
HOUSE
Amended 2nd Reading
May 2, 2024
HOUSE SPONSORSHIP
Bird and Sirota, Taggart, Amabile, Brown, Daugherty, Epps, Mauro, McCluskie, Young
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
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
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) WHEN ESTABLISHING PAY PLANS IN ACCORDANCE WITH4
SUBSECTION (5) OF THIS SECTION AND RECOMMENDING COMPENSATION5
FOR STATE EMPLOYEES IN ACCORDANCE WITH SUBSECTION (4) OF THIS6
SECTION, THE STATE PERSONNEL DIRECTOR SHALL DEVELOP , AFTER7
NEGOTIATIONS WITH THE CERTIFIED EMPLOYEE ORGANIZATION PURSUANT8
TO SECTION 24-50-1112, AN EQUITABLE PAY STRUCTURE FOR EMPLOYEES9
IN THE STATE PERSONNEL SYSTEM THAT PROVIDES CONSISTENT AND10
PREDICTABLE SALARY INCREASES IN COMPLIANCE WITH ANY FEDERAL OR11
STATE LAWS AND KEEPS THE STATE EMPLOYEE WORKFORCE COMPETITIVE12
WITH MARKET COMPENSATION. THE REQUIREMENTS OF THIS SUBSECTION13
(1)(a)(II.5) DO NOT APPLY TO EMPLOYEES OF THE STATE AUDITOR, IN14
ACCORDANCE WITH SUBSECTION (1)(h) OF THIS SECTION.15
(c) (I) The state personnel director shall establish a merit STEP pay16
system in order to provide periodic salary increases for employees in the17
state personnel system; EXCEPT THAT THE STEP PAY SYSTEM DOES NOT18
APPLY TO EMPLOYEES OF THE STATE AUDITOR, IN ACCORDANCE WITH19
SUBSECTION (1)(h) OF THIS SECTION. The purpose of the merit STEP pay20
system is to provide salary increases for employees based on performance21
evaluations and salary placement within the appropriate salary range. The22
state personnel director shall develop the merit pay system so that a merit23
pay increase is based on the relationship of performance rating24
distribution and salary range distribution. The merit pay system must25
include the following characteristics:26
(A) Salary range is divided into quartiles, except as set forth in27
1467
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(B) The lowest quartile or distribution zone in relation to the2
midpoint has the highest rate of merit pay, and the rate for each3
successive quartile or distribution zone is less than the preceding quartile4
or distribution zone, except as provided in sub-subparagraph (E) of this5
subparagraph (I);6
(C) Performance evaluations are divided into three performance7
categories, except as set forth in subparagraph (I.1) of this paragraph (c);8
(D) The highest performance category has the highest rate of merit9
pay, and the rate for each lower performance category is less than the10
preceding category, except as provided in sub-subparagraph (E) of this11
subparagraph (I); and12
(E) Employees who receive an unsatisfactory performance13
evaluation are not eligible for merit pay.14
(I.1) On or after September 1, 2015, the state personnel director15
shall review the effectiveness of the use of quartiles for salary range and16
three performance categories in the merit pay system. Based on the17
review, the state personnel director may adjust the number of distribution18
zones or performance categories to be used in the system. Thereafter, the19
state personnel director shall conduct a biennial review of the distribution20
zones and performance categories and may adjust the number of21
distribution zones or performance categories based on the review. The22
minimum number of distribution zones the state personnel director may23
establish is three, and the maximum number is six.24
(I.2) If a state department or institution of higher education has a25
performance review system that has a different number of performance26
categories than the number used by the state personnel director in the27
1467
-5- merit pay system, the state personnel director shall establish a method for1
converting the departmental or institutional categories into the categories2
used in the merit pay system.3
(I.3) Based on professionally sound survey methodologies, the4
state personnel director shall establish annually one or more priority5
groups of employees that have priority to receive merit pay based on6
available moneys. The priority groups must be based on length of service,7
relation to the salary range midpoint, performance, recruitment, retention8
needs, and other factors established by the director. The amount of merit9
pay that an employee in the state personnel system may receive depends10
first on the employee's priority group and then on the amount of merit11
pay, if any, associated with the employee's performance category and12
salary range.13
(I.5) (A) Except as set forth in sub-subparagraph (B) of this14
subparagraph (I.5), the merit pay system applies uniformly across state15
departments and institutions of higher education subject to the provisions16
of subparagraph (I.9) of this paragraph (c). For each state fiscal year the17
state personnel director shall determine the appropriate merit pay rates18
that apply to all state departments and institutions and the priority group19
or groups that receive merit pay.20
(B) Notwithstanding any provision of this section to the contrary,21
an institution of higher education may enact its own merit pay system, so22
long as the system is consistent with the provisions of this subsection (1).23
(I.7) An employee who is at or above the maximum amount for24
his or her salary range is not eligible for a merit pay salary increase, but25
is eligible for a merit pay payment that is nonbase building.26
(I.9) Merit pay is subject to available appropriations. Except as set27
1467
-6- forth in subparagraph (II) of paragraph (j) of this subsection (1), the1
general assembly shall appropriate any moneys for merit pay in the annual2
general appropriation act in suitable personal services line items or other3
line items that include salary appropriations.4
(II) In addition to any other requirements set forth in this5
paragraph (c), SUBSECTION (1)(c)(II), the department of personnel shall6
develop the merit STEP pay system so that it:7
(C) Is developed with input from employees in the state personnel8
system, managers, and other affected parties;
AND9
(D) Emphasizes planning, management, and evaluation of
10
employee performance; and11
(F) Prohibits a forced distribution of performance ratings.12
(H) M
INIMIZES EMPLOYEE PAY DISRUPTIONS RESULTING FROM13
IMPLEMENTATION OR MODIFICATION OF STEP PAY .14
(IV) Each state department and institution of higher education
15
shall ensure that it has a performance review system that can be used to16
implement a merit pay system. The state personnel director shall17
encourage state departments and institutions of higher education to18
implement performance evaluations of employees that are as objective as19
possible and that, as soon as possible and wherever feasible, include an20
assessment from multiple sources of each employee's performance. Such21
sources shall include, where applicable, the employee's self-assessment;22
the employee's superiors, subordinates, and peers; and any other23
applicable sources of an employee's performance. The state personnel24
director shall adopt procedures to establish a process to resolve employee25
disputes related to performance evaluations that do not result in corrective26
or disciplinary action against the employee. Each program established by27
1467
-7- a state department or institution of higher education pursuant to this1
subparagraph (IV) shall be SUBSECTION (1)(c)(IV) IS subject to the2
director's approval.3
(c.5) (I) The state personnel director shall provide for the4
evaluation of employee performance. Each employee shall be evaluated5
at least once a year. The evaluation of performance shall be used as a6
factor in compensation, promotions, demotions, removals, reduction of7
force, and all other transactions as determined by the state personnel8
director in which considerations of quality of service are properly a9
factor.10
(II) A supervisor, including a supervisory state employee not11
within the state personnel system, who does not evaluate subordinate12
employees in the state personnel system as required by this paragraph13
(c.5) on at least an annual basis shall be suspended from work without14
pay for a period of not less than one workday. The provisions of this15
subparagraph (II) shall only apply to supervisors who are state employees.16
(c.7) In addition to the periodic salary increases authorized by17
paragraph (c) of this subsection (1), the performance review component18
of the merit pay system established pursuant to subparagraph (IV) of19
paragraph (c) of this subsection (1) shall be used for the purpose of20
determining eligibility for a performance-based award permitted pursuant21
to section 24-38-103 (1.5). The award shall be in addition to any other22
compensation authorized by law, and it shall not affect the compensation23
that the employee is entitled to receive in subsequent years.24
(j) (II) (A) The state employee reserve fund is hereby created in25
the state treasury, which consists of money transferred pursuant to26
subsection (1)(j)(IV) of this section. Money in the fund is continuously27
1467
-8- appropriated for the purpose of providing merit pay to employees as1
provided in this subsection (1). No money from the fund shall be2
expended without the approval of the director of the office of state3
planning and budgeting.4
(4) Quadrennial compensation process. (a) The purpose of the5
quadrennial compensation process is to determine any necessary6
adjustments to state employee salaries, state contributions for group7
benefit plans, and merit STEP pay. The quadrennial compensation survey,8
based on an analysis of surveys by public or private organizations,9
including surveys by the state personnel director, shall include a fair10
sample of public and private sector employers and jobs, including areas11
outside the Denver metropolitan area. In order to establish confidence in12
the selection of surveys, the state personnel director shall meet and confer13
in good faith with management and state employee representatives.14
(b) (I) On October 1, 2025, and on October 1 of each fourth year15
thereafter, the state personnel director shall prepare a quadrennial16
compensation report based on the analysis of surveys conducted pursuant17
to subsection (4)(a) of this section. The purpose of the quadrennial18
compensation report shall be to reflect all adjustments necessary to19
maintain the salary structure, state contributions for group benefit plans,20
and merit STEP pay FOR THE UPCOMING FISCAL YEAR. The state personnel21
director shall also include a detailed analysis of salary ranges for all22
employees in the state personnel system and how employees' salaries are23
distributed within these ranges. The state personnel director shall also24
publish the report. Notwithstanding the requirement in section 24-1-13625
(11)(a)(I), the requirement to submit the report required in this subsection26
(4)(b)(I) continues indefinitely. The state auditor is responsible for27
1467
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procedures and application of data, including any survey conducted by the2
state personnel director. Beginning January 1, 2005, through January 1,3
2021, and beginning on January 1, 2026, the audits shall be conducted4
every four years. A report shall be submitted to the governor and the5
general assembly by the December 30 immediately following the6
completion of the audit.7
(c) By September 15, 2017, and by September 15 of each year8
thereafter through September 15, 2021, and on or before October 1, 2022,9
and on or before October 1 of each year thereafter, the state personnel10
director shall submit recommendations and estimated costs for state11
employee compensation for the next fiscal year, covering salaries, state12
contributions for group benefit plans, and merit STEP pay, to the governor13
and the joint budget committee of the general assembly. The14
recommendations shall reflect a consideration of the results of the15
quadrennial compensation survey, fiscal constraints, the ability to recruit16
and retain state employees, appropriate adjustments with respect to state17
employee compensation, and those costs resulting from implementation18
of section 24-50-110 (1)(a). The recommendations for state contributions19
for group benefit plans shall specify the annual group benefit plan year20
established pursuant to section 24-50-604 (1)(m). The recommendations21
submitted to the governor and the joint budget committee COMPENSATION22
REPORT shall include the results of the surveys of public or private23
employers and jobs. The state personnel director shall also publish such24
recommendations REPORT. This subsection (4)(c) is exempt from the25
provisions of section 24-1-136 (11), and the periodic reporting26
requirements of this section are effective until changed by the general27
1467
-10- assembly acting by bill.1
(5) Pay plans. (d) In the medical pay plans, there are no2
anniversary-based merit STEP increases. The salaries in such pay plans are3
based on the negotiation of an annual contract between the employee and4
the department head or the state auditor, when appropriate, and the5
amount of such salaries may increase, decrease, or remain unchanged6
from year to year. Any employee dismissed for failure to perform under7
such contract may only appeal directly to the state personnel board. 8
(e) In the pay plans for the senior executive service and those9
positions specified in section 13 (2)(a)(XI) of article XII of the state10
constitution, there are no anniversary-based merit STEP increases. The11
salaries in such pay plans are based on policies set forth by the state12
personnel director. The amount of such salaries may increase, decrease,13
or remain unchanged from year to year.14
SECTION 3. In Colorado Revised Statutes, amend 8-47-205 as15
follows:16
8-47-205. Salaries of employees of division. All deputies,17
statisticians, accountants, clerks, experts, and other employees of the18
division shall receive such compensation as may be fixed by law. The19
salaries so fixed shall be paid monthly from the fund appropriated for the20
use of the division after approval by the director.21
SECTION 4. In Colorado Revised Statutes, 8-1-103, amend (2)22
as follows:23
8-1-103. Division of labor standards and statistics - director -24
employees - qualifications - compensation - expenses. (2) All25
employees, except experts, shall have been for one year prior to such26
employment or appointment bona fide residents of this state and, while27
1467
-11- in the employ of the division, shall receive such compensation as is fixed1
by the state personnel system laws of this state, such compensation to be2
paid monthly from funds appropriated for the use of the division. All3
expenses incurred by the division and its employees pursuant to the4
provisions of law shall be paid from funds appropriated for its use upon5
the approval of the director. The traveling expenses of the director or of6
any employee of the division incurred while on business of the division7
outside this state shall be paid in the manner prescribed in this subsection8
(2), but only when such expenses are authorized in advance.9
SECTION 5. In Colorado Revised Statutes, 24-38-103, repeal10
(1.5) as follows:11
24-38-103. Agency authority and incentives for budget12
savings. (1.5) Beginning with the 2004-05 fiscal year, an agency that13
achieves cost savings, as an alternative to the transfer authorized pursuant14
to subsection (1) of this section, may transfer fifty percent of the amount15
of the cost savings from one item of appropriation made to the agency in16
the general appropriation act or any supplemental appropriation act to the17
item for personal services in the appropriation made to the same agency18
for the purpose of paying performance-based awards to employees of the19
agency. The award shall be awarded in the fiscal year in which the cost20
savings are achieved. and shall be made consistent with the performance21
review done in accordance with the merit pay system identified in section22
24-50-104 (1)(c.7). Prior to the end of the state fiscal year in which a23
transfer is made pursuant to this subsection (1.5), an agency shall submit24
written notice to the joint budget committee, the office of state planning25
and budgeting, and the state controller of the amount of the cost savings26
achieved by the agency during the state fiscal year.27
1467
-12- SECTION 6. In Colorado Revised Statutes, 24-50-109.5, amend1
(2) as follows:2
24-50-109.5. Fiscal emergencies - emergency orders. (2) With3
the advice and assistance of the state personnel director, the governor4
shall take such actions as necessary to be utilized by each principal5
department and each institution of higher education, including the Auraria6
higher education center established in article 70 of title 23, C.R.S., to7
reduce state personnel expenditures in the event of a fiscal emergency.8
Such actions shall include, but need not be limited to, separations,9
voluntary furloughs, mandatory furloughs, suspension of increases in10
salary and state contributions for group benefit plans, suspension of merit11
STEP pay, job-sharing, hiring freezes, forced reallocation of vacant12
positions, or a combination thereof. Any suspension of salary increases13
or increases in state contributions for group benefit plans shall apply14
statewide to all employees in the state personnel system. If mandatory15
furloughs are utilized in any principal department or institution of higher16
education, including the Auraria higher education center established in17
article 70 of title 23, C.R.S., such furloughs shall be implemented by each18
appointing authority so that all employees under such authority,19
regardless of status, position, or level of employment, are furloughed for20
the same length of time, consistent with section 24-2-103 (2). Employees21
of the following agencies and employees with duties as described shall22
not be subject to mandatory furlough: The Colorado state patrol,23
correctional officers, police officers, employees of the department of24
human services providing hands-on care, and employees providing25
hands-on nursing care.26
SECTION 7. In Colorado Revised Statutes, 24-50-110, amend27
1467
-13- (1) introductory portion and (1)(b) as follows:1
24-50-110. Budget control - personal services. (1) In order to2
provide controls and proper identification of personal services costs3
necessary to carry out the policy of the state regarding compensation of4
state employees, the following administrative and fiscal procedures shall5
apply:6
(b) In their annual budget requests, the heads of all principal7
departments of state government shall set forth separately the projected8
costs of personal services arising from anticipated classification reviews,9
promotions, and other increases in compensation or bonuses for10
employees in their departments. The costs of personal services shall11
include any merit STEP pay.12
SECTION 8. In Colorado Revised Statutes, 24-75-112, amend13
(1) introductory portion and (1)(b) as follows:14
24-75-112. Annual general appropriation act - headnote15
definitions - general provisions - footnotes. (1) As used in the annual16
general appropriation act, the following definitions and general provisions17
shall apply for the headnote terms preceding and specifying the purpose18
of certain line items of appropriation:19
(b) "Centralized appropriation" means the appropriation of funds20
to an executive director of a department or a central administrative21
program intended for subsequent allocation and expenditure at and among22
a department's divisions, programs, agencies, or long bill groups in order23
to reflect the amount of such resources actually used in each program or24
division. Such centralized appropriations may include salary survey, merit25
STEP pay or anniversary increases, senior executive service, shift26
differential, group health and life insurance, capital outlay, ADP capital27
1467
-14- outlay, information technology asset maintenance, legal services,1
purchase of services from computer center, multiuse network payments,2
vehicle lease payments, leased space, financed purchase of an asset,3
certificate of participation, payment to risk management and property4
funds, short-term disability insurance, utilities, communications services5
payments, amortization equalization disbursements, supplemental6
amortization equalization disbursements, administrative law judge7
services, and centralized ADP. As provided in subsection (1)(l) of this8
section, capital outlay is included within the appropriation for "operating9
expenses".10
SECTION 9. Safety clause. The general assembly finds,11
determines, and declares that this act is necessary for the immediate12
preservation of the public peace, health, or safety or for appropriations for13
the support and maintenance of the departments of the state and state14
institutions. 15
1467
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