COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:1305H.03C Bill No.:HCS for HB 471 Subject:State Employees; State Departments Type:Original Date:March 21, 2023Bill Summary:Allows state agencies to create incentive programs for employees.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2024FY 2025FY 2026
General Revenue*
$0 $0 to (Could exceed
$369,086,226)
$0 to (Could exceed
$369,086,226)
Total Estimated Net
Effect on General
Revenue $0
$0 to (Could exceed
$369,086,226)
$0 to (Could exceed
$369,086,226)
*Oversight notes the fiscal impact depends on numerous factors, including an appropriation(s)
for the program, formally adopted policies by the state departments, and the number of
employees meeting the targets outlined in the adopted policies. All of these considered, the
fiscal impact could be substantially less than the stated amounts. As the criteria would have to be
stated in writing at least one year before the retention or achievement payments are made,
Oversight will not reflect a potential fiscal impact until FY 2025.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Other State Funds*$0 $0 to (Could exceed
$228,823,015)
$0 to (Could exceed
$228,823,015)
Total Estimated Net
Effect on Other State
Funds $0
$0 to (Could exceed
$228,823,015)
$0 to (Could exceed
$228,823,015)
Numbers within parentheses: () indicate costs or losses. L.R. No. 1305H.03C
Bill No. HCS for HB 471
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Federal Funds$0 $0 to (Could exceed
$148,171,669)
$0 to (Could exceed
$148,171,669)
Total Estimated Net
Effect on All Federal
Funds $0
$0 to (Could exceed
$148,171,669)
$0 to (Could exceed
$148,171,669)
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2024FY 2025FY 2026Total Estimated Net
Effect on FTE 000
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Local Government$0$0$0 L.R. No. 1305H.03C
Bill No. HCS for HB 471
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FISCAL ANALYSIS
ASSUMPTION
§105.1750 – Personnel Incentive Program
Officials from the Office of Administration – Office of Personnel (OA) state if this proposal
was implemented statewide, the proposal could have a potential impact of $0 to $746,080,910.
The Office of Administration, Division of Personnel based this information on various turnover
percentage rates within the executive branch from November 30, 2022 data.
The Division of Personnel assumes that, if this proposal was passed, state agencies could pay out
bonuses of up to 20% once every other year. Following this assumption as well as assuming 0%
turnover, the potential cost would be up to $746,080,910.00 with total regular payroll with fringe
benefits.
The potential cost using a turnover rate of 27.4% would be $541,895,659.00 with total regular
payroll with fringe benefits. The potential cost using a turnover rate of 58.6% (percentage of
turnover for employees with less than two years of services) would be $308,767,684.00 with
total regular payroll with fringe benefits. Office of Administration, Division of Personnel based
this impact purely on longevity requirements, assuming the max of 20% with no consideration
for other written criteria that would affect eligibility.
OA assumes the cost will be split as follows
General Revenue (49.47%): $369,086,226
Federal Funds (19.86%): $148,171,669
Other Funds (30.67%): $228,823,015
Total (100%): $746,080,910
Oversight assumes this version of the proposal changes the potential bonuses to annually vs
biennially in the 01 version. For fiscal note purposes, Oversight will use the cost estimate
provided by OA to reflect the potential cost as a result of this proposal for the executive branch
of government. However, Oversight assumes this legislation applies to all branches of
government and will reflect the cost estimate as “could exceed” to capture potential cost to the
legislative and judicial branches.
Oversight also assumes this legislation will not be mandated and therefore will reflect the fiscal
impact as $0 (the program is not utilized) to “Could exceed” the max 20% cost estimate provided
by OA split between the General Revenue Fund, Federal Funds and Other Funds beginning in
FY 25.
Officials from the Department of Higher Education and Workforce Development (DHEWD)
assumes Section 105.1750 states “Personnel payments to encourage retention or exceptional L.R. No. 1305H.03C
Bill No. HCS for HB 471
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employment achievement, established by formally adopted policy or contract at least one year
prior to the applicable employment achievement, shall not be considered a bonus in violation of
Article III, Section 39 of the Constitution of Missouri. The retention or achievement payments
include, but are not limited to, payments that do not exceed twenty percent of base wages or
salary, to be awarded on completion of the retention period in question and not more frequent
than annually. Payments for exceptional employment achievement shall be made according to
specific, written criteria predetermined and approved by the department director in writing at
least one year prior to the exceptional employment achievement.”
DHEWD is unable to estimate either the number of individuals who will receive retention or
exceptional employment achievement payments. DHEWD's annual payroll at full employment is
$23,972,498, 20% of which is $4,794,500. DHEWD estimates an impact of $0 to $3,995,417 in
FY 2024 with $588,491 in GR, $3,320,322 in Federal Funds and $86,604 in Other funds.
In response to a previous version, officials from the Department of Labor and Industrial
Relations assumed this proposal will have a fiscal impact on their department.
Officials from the Department of Revenue (DOR) state this legislation would allow the
Department to provide monetary incentives for employee retention and reward, not to exceed
20% of salary, and such payment would not be in violation of the Missouri Constitution. If
passed, the Department would request appropriate funding for this incentive program through the
appropriations process.
Officials from the Department of Public Safety - Missouri Highway Patrol anticipate a fiscal
impact if it implemented an incentive program under the proposed legislation, to assist with
recruiting, hiring, and retention. At this time, the Patrol has not researched a methodology to
implement an incentive program. The most likely affected funds have been listed within this
response, however, the actual impact to each fund is unknown. Factors influencing the fiscal
impact would be the number of personnel granted the incentive. It is estimated the fund most
affected by House Bill 471 would be the Highway Fund (0644).
Officials from the Office of the State Public Defender assume to provide an incentive program
of a 1% salary increase per successful year of service, the annual current cost to SPD would be
approximately $1,500,000.
Officials from the Missouri Lottery Commission assume this proposal this proposal will cost
the state $1.5 million in year 1, $1.8 million in year 2 and $1.8 million in year 3. The proposal
authorizes bonuses to encourage employee retention or to award exceptional achievement, not to
exceed 20% of base salary and not more frequently than annually. The Lottery’s base salary
$8.8 million after the Governor’s 8.7% statewide pay increase, times 20% is $1.8 million.
The Lottery would need additional personal services appropriation authority to implement this
program. Without additional appropriation authority, they could only offer 1%-2% of base
salary, or approximately $40k to $80k per year in bonuses. L.R. No. 1305H.03C
Bill No. HCS for HB 471
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Officials from the Attorney General’s Office, the Department of Economic Development, the
Department of Public Safety (Alcohol & Tobacco Control Fire Safety, Gaming
Commission, Missouri National Guard and Veterans Commission), the Missouri Ethics
Commission, the Missouri Department of Transportation, the Joint Committee on
Administrative Rules, the Missouri Consolidated Health Care Plan, the Missouri the
Missouri House of Representatives, the, the Office
of the Lieutenant Governor the Office of the State Auditor, the Missouri Office of
Prosecution Services the Missouri Senate, the Office of the Secretary of State the State Tax
Commission each assume the proposal will have no fiscal impact on their respective
organizations.
In response to a previous version, officials from the Department of Public Safety – Capitol
Police, Department of Social Services, the Office of the Governor, Department of
Conservation, Office of Administration (Budget and Planning), the assumed the proposal
will have no fiscal impact on their respective organizations. Oversight does not have any
information to the contrary. Therefore, Oversight will reflect a zero impact in the fiscal note for
these agencies.
Oversight notes that the above mentioned agencies have stated the proposal would not have a
direct fiscal impact on their organization. Oversight does not have any information to the
contrary. Therefore, Oversight will reflect a zero impact on the fiscal note for these agencies.
Officials from the Department of Commerce and Insurance, the Department of Elementary
and Secondary Education, the Department of Health and Senior Services, the Department
of Mental Health, the Department of Natural Resources, the Department of Corrections, the
Department of Public Safety – Directors Office, State Emergency Management Agency and
the Missouri Department of Agriculture defer to the Office of Administration for the potential
fiscal impact of this proposal.
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Officials from the Office of the Secretary of State (SOS) note many bills considered by the
General Assembly include provisions allowing or requiring agencies to submit rules and
regulations to implement the act. The SOS is provided with core funding to handle a certain
amount of normal activity resulting from each year's legislative session. The fiscal impact for
this fiscal note to the SOS for Administrative Rules is less than $5,000. The SOS recognizes that
this is a small amount and does not expect that additional funding would be required to meet
these costs. However, the SOS also recognizes that many such bills may be passed by the
General Assembly in a given year and that collectively the costs may be in excess of what the
office can sustain with its core budget. Therefore, the SOS reserves the right to request funding
for the cost of supporting administrative rules requirements should the need arise based on a
review of the finally approved bills signed by the governor. L.R. No. 1305H.03C
Bill No. HCS for HB 471
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FISCAL IMPACT – State GovernmentFY 2024
(10 Mo.)
FY 2025FY 2026GENERAL REVENUE Cost – OA §105.1750 p.3
Incentive Programs
$0$0 to (Could
exceed
$369,086,226)
$0 to (Could
exceed
$369,086,226)
ESTIMATED NET EFFECT TO
THE GENERAL REVENUE FUND
$0$0 to (Could
exceed
$369,086,226)
$0 to (Could
exceed
$369,086,226)
OTHER STATE FUNDS Cost – OA §105.1750 p.3
Incentive Programs
$0$0 to (Could
exceed
$228,823,015)
$0 to (Could
exceed
$228,823,015)
ESTIMATED NET EFFECT TO
OTHER STATE FUNDS
$0$0 to (Could
exceed
$228,823,015)
$0 to (Could
exceed
$228,823,015)
FEDERAL FUNDS Cost – OA §105.1750 p.3
Incentive Programs
$0$0 to (Could
exceed
$148,171,669)
$0 to (Could
exceed
$148,171,669)
ESTIMATED NET EFFECT TO
FEDERAL FUNDS
$0$0 to (Could
exceed
$148,171,669)
$0 to (Could
exceed
$148,171,669)
FISCAL IMPACT – Local GovernmentFY 2024
(10 Mo.)
FY 2025FY 2026$0$0$0 L.R. No. 1305H.03C
Bill No. HCS for HB 471
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FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
FISCAL DESCRIPTION
In order to encourage retention or exceptional employment achievement, this bill provides for
personnel payments to be made according to specific, written criteria, predetermined and
approved by the department director in writing, at least one year prior to the exceptional
employment achievement. The payments authorized by the bill shall not exceed 20% of the
employee's base wages or salary and are awarded upon the completion of the retention period in
question and not more frequently than annually. The payments indicated in the bill are not
considered as a bonus in violation of Article III, Section 39 of the Missouri Constitution.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Attorney General’s Office
Department of Commerce and Insurance
Department of Economic Development
Department of Elementary and Secondary Education
Department of Higher Education and Workforce Development
Department of Health and Senior Services
Department of Mental Health
Department of Natural Resources
Department of Corrections
Department of Labor and Industrial Relations
Department of Revenue
Department of Public Safety
Office of the Director
Division of Alcohol and Tobacco Control
Capitol Police
Fire Safety
Missouri Gaming Commission
Missouri Highway Patrol
Missouri National Guard
State Emergency Management Agency
Missouri Veterans Commission
Department of Social Services
Office of the Governor
Joint Committee on Public Employee Retirement
Joint Committee on Administrative Rules L.R. No. 1305H.03C
Bill No. HCS for HB 471
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Missouri Lottery Commission
Legislative Research
Oversight Division
Local Government Employees Retirement System
Missouri Consolidated Health Care Plan
Missouri Department of Agriculture
Missouri Department of Conservation
Missouri Ethics Commission
Missouri House of Representatives
Office of the Lieutenant Governor
Missouri Department of Transportation
Missouri State Employee's Retirement System
MoDOT & Patrol Employees’ Retirement System
Missouri Office of Prosecution Services
Office of Administration
Budget and Planning
Facilities Management, Design and Construction
Office of the State Courts Administrator
Office of the State Auditor
Missouri Senate
Office of the Secretary of State
Office of the State Public Defender
Office of the State Treasurer
Public Schools and Education Employee Retirement Systems
State Tax Commission
Julie MorffRoss StropeDirectorAssistant DirectorMarch 21, 2023March 21, 2023