Skip to content

Texas Payroll/Personnel Resource

Note: To navigate this guide on a mobile device you must use the Table of Contents.

General Provisions
Salary Adjustments for State Agency Employees

Background

This policy document focuses on salary changes for state agency employees.

State agencies are authorized in the Texas Government Code to administer various salary and classification-related actions for their employees.

Additionally, the Texas Government Code and Texas Administrative Code provide specific requirements and deadlines to agencies for reporting actions to the Comptroller’s office that affect an employee’s:

  • Salary
  • Status
  • Classification
  • Descriptive information

To help ensure consistency in reporting actions to the Comptroller’s office, reason codes were established based on statutory guidelines. Agencies use these reason codes to properly report salary administration actions, including:

  • Acquisition of employees
  • Salary changes
  • Entitlements
  • Terminations

back to top

Salary Adjustments for Legislative Branch Employees

Promotions, demotions and other adjustments to salary for employees of the legislative branch, including employees of the lieutenant governor, are determined:

  • For employees of either house of the Legislature, employees of a member of the Legislature or employees of the lieutenant governor: determined by the presiding officer of the appropriate house of the Legislature; and
  • For employees of a legislative agency: determined by the administrative head of the agency.

back to top

Promotions (Reason Code 020)

For an action to be a promotion, agencies must change the classified employee’s duty assignment and job classification.

The new job classification must be in a salary group with a higher minimum salary than the employee’s current position.

When moving the employee to the higher salary group for the promotion, agencies must ensure:

  • Salary Schedule A employees receive an increase of at least $30 per month
  • Salary Schedule B employees receive at least a 3.4 percent increase

At the agency’s discretion, the promotion increase could be up to, but not exceed, the maximum of the new salary group.

Important Note: Agencies should be aware there are salary groups with the same minimum salaries across the salary schedules. For example, a B11 may have the same minimum salary as an A11. Though the position is in a different salary schedule, a move between these two salary groups is not a promotion. As the minimum salary is the same for both positions, this example does not meet the requirement that a promotion must move the employee to a salary group with a higher minimum salary.

Salary Schedule C employees who are promoted must receive the established higher rate for the new salary group.

Qualifications

A promotion is not a way to reward an employee’s longevity or loyalty to the agency. Instead, the promotion must involve a higher level of qualification, such as:

  • Greater skills
  • More experience
  • A higher level of responsibility than that required in the employee’s current position

Agencies may promote an employee:

  • When the employee applies for and is selected for an internal agency position meeting the requirements (higher salary group, more responsibility, etc.) or
  • Based on a management decision

Timeframe

Unlike some salary actions, no specific timeframe is required between promotions. For example, an employee may be promoted on one day and receive another promotion effective the next day.

Promotions can be effective any time during the month. However, employees cannot receive a promotion:

  • While they are on leave without pay (LWOP)
  • While in a temporary assignment
  • When their salary has been reduced for disciplinary reasons

back to top

Demotions (Reason Codes 021, 023, A23)

A demotion is a change to a classified employee’s duty assignment to a job classification in a salary group with a lower minimum salary rate.

Although by definition a demotion means moving to a lower minimum salary rate, it does not always mean a decrease in the employee’s salary. Depending on the reason for the demotion, the salary of the employee can:

  • Stay the same (reason codes 023, A23)
  • Decrease (reason codes 021, 023, A23)
  • Increase (reason code A23 only)

If an agency demotes an employee (reason code 021)

If an agency demotes an employee, the agency must reduce the employee’s salary.

For Salary Schedule A employees: Reduction must be to a lower minimum salary group and at least $30 per month lower than the pre-demotion salary.

For Salary Schedule B employees: Employee must be moved to a lower minimum salary group and receive a salary decrease of at least 3.4 percent.

If an employee moved to a lower salary group in lieu of a reduction in force (reason code 023)

In this case, the agency is not required to reduce the employee’s salary as the employee accepted a position in a lower salary group rather than lose his or her job.

Example: An HR Specialist II/job class 1731/salary group B16, making $35,000.00 annual salary, accepts an Accountant I position in job class 1012/salary group B14 in lieu of being laid off. The salary range for the new position is $31,144 to $49,134. As the employee’s old salary is within this new lower salary group range, the agency could opt to leave the employee’s salary intact.

The agency may also choose to reduce the salary to any rate within the new salary range, but the reduction is not required. The salary could not be increased with this action, even though a higher salary is also within the new salary range.

If an employee accepts a position classified in a lower salary group because he or she applied for the posted position (reason code A23)

In this case, the agency is not required to reduce the employee’s salary.

Example: An employee currently classified as a Program Specialist V/job class 1574/salary group B21 applies and is selected for a Planner II/job class 0517/salary group B19. If the employee’s current salary is within the range of the new lower salary group, the agency does not have to reduce the salary.

The agency may decide to increase the employee’s salary to any salary within the new range, or leave the salary the same.

Timeframe

Demotions can occur at any time during the month.

While there is no specific timeframe required between demotions, an employee cannot receive a demotion in any of the following situations:

  • While on leave without pay (LWOP)
  • While in a temporary assignment
  • When his or her salary has been reduced for disciplinary reasons

    Important Note: Agencies should be aware there are salary groups with the same minimum salaries across the salary schedules. For example, an A14 may have the same minimum salary as a B14. Though the position is in a different salary schedule, a move between these two salary groups is not a demotion as the minimum salary is the same for both positions.

back to top

Merit Salary Increase and One-Time Merit Payment (Reason Codes 025, 035)

State agencies are authorized to use two types of merit methods to reward employee performance:

Note: The job classification may not change when an employee receives either of these merit awards.

Merit salary increase (reason code 025)

A merit salary increase is an addition to an employee’s base salary the employee receives each pay period.

For Schedule A employees, agencies must provide an increase of at least $30 per month. The increase in salary is limited to a salary at or below the maximum of the employee’s salary group and the agency budget.

For Schedule B employees, agencies may award employees an increase to any amount within their salary group. There is no specified minimum increase. However, the increase cannot cause the new rate to exceed the maximum of the employee’s salary group.

One-time merit payment (reason code 035)

A one-time merit payment is a single payment to an employee that does not change the employee’s base salary.

Agencies are not limited by statute to a certain percentage or amount for a one-time merit payment.

This type of award is ideal for employees who are at or near the maximum rate for their salary group. As it is a one-time payment and not added to the employee’s base salary, the maximum of the salary group is not impacted.

back to top

Merit Salary and One-Time Payment Criteria/Eligibility

Agencies must use specific criteria and maintain documentation to support granting merit salary increases or one-time merit payments to their employees.

Texas Government Code specifies an employee’s performance expectations must relate to the goals in the agency’s strategic plan.

Additionally, the agency must apply merit increases throughout the range of salary groups within the agency, i.e., an agency with salary ranges from A6-B22 could not single out only employees in salary group B11 to receive a merit salary increase or one-time merit payment.

Texas Government Code authorizes state agencies to grant merit salary increases or make one-time merit payments to eligible employees whose job performance and productivity are consistently above the normal or expected levels.

The performance requirement is not the only criterion that needs to be met for an employee to receive a merit action.

The employee:

  • Must be an employee on Schedule A or B — employees on Schedule C are not eligible for merit salary increases; however, employees on schedules A, B and C are eligible for one-time merit payments.
  • The employee must have been employed by the agency for at least six continuous months.
  • Employees who recently received a promotion, enhanced compensation award, one-time merit payment, emergency one-time merit payment or a merit salary increase at the agency are not eligible to receive another merit salary increase unless six months have passed since that last action.

    Example: If an employee received a promotion on January 15 and the agency wanted to grant a merit salary increase for the employee in the same year, the soonest it could be effective would be July 15.

  • Employees on temporary assignment or currently under a disciplinary reduction are not eligible to receive merit salary increases.

Employees transferred due to a legislative mandate

Employees transferred from one agency to another due to a legislative mandate do not lose their merit eligibility simply because of their transfer. The employee’s service at both agencies determines the service requirements for that employee.

Example: The Legislature mandates one agency must merge into another agency. An employee would have no choice in the move. This employee would transfer his or her service into the new agency. If the employee had a merit action two months before the move, the employee would be eligible for another merit action after four months at the newly combined agency.

General Exclusions/Conditions

  • Certain employees who are eligible for salary level adjustments through a career ladder system are not eligible for a merit salary increase or a one-time merit payment. This includes employees in certain job class codes at:
    • Texas Department of Criminal Justice
    • Texas Juvenile Justice Department
  • Employees who have been on leave without pay for a full calendar month cannot count that time toward their six continuous months of service. An exception to this is military leave without pay, which would not affect an employee’s merit eligibility.
  • Employees who move from a line-item exempt position to a classified position must hold the classified position for six continuous months before becoming eligible.
  • Employees who move from an unclassified position to a classified position do not have to meet additional service requirements, providing they have six continuous months of service with the agency.

back to top

Emergency One-Time Merit (Reason Code 039)

This one-time merit payment is awarded for employee performance during a natural disaster or other extraordinary circumstance. The chief administrative officer of an agency must document the natural disaster or other extraordinary circumstance.

Qualifications

To qualify for this merit payment, a classified employee must be employed by the agency for at least six months before the effective date of the emergency one-time merit.

Eligibility

Prior merit salary increases or one-time merit payments do not affect the eligibility to receive an emergency one-time merit payment. However, an emergency one-time merit payment does impact eligibility for a regular one-time merit payment or merit salary increase.

Amount

Furthermore, there is no limit on the amount of an emergency one-time merit payment. As it is a one-time payment and not added to the employee’s base salary, the maximum of the salary group is not impacted.

back to top

Salary/Rate Reduction for Disciplinary Reasons (Reason Code 027)

If justified by an employee’s job performance, state agencies are authorized to reduce an employee’s salary or rate of pay. Only the administrative head of the agency may authorize the action.

The salary may only be reduced within the employee’s salary group; an employee cannot make less than the minimum salary for their salary group after the reduction.

A salary reduction action cannot change the job classification or salary group the employee is assigned to (see “Demotions” in this statement.) The employee’s performance justifies the action, not their position or classification.

In addition to employees in regular positions, a salary or rate reduction may be applied to employees in temporary assignments as well.

An agency may authorize multiple salary reduction actions. The law allows consecutive salary reductions, and there are no requirements for specific timeframes between reductions or a return to a higher salary before a reduction action.

back to top

Salary/Rate Restoration (Reason Code 028)

Following a salary/rate reduction and as an employee’s performance improves, an agency’s administrative head can decide to restore all or some of the employee’s salary. The employee’s performance is the determining factor for allowing this action.

The agency can choose to restore the employee’s salary to any rate within the salary range; however, it may not exceed the employee’s salary before the reduction.

An employee may have multiple restorative actions if the agency decides to incrementally increase the employee’s salary based on improved job performance standards; however, the rate is not required to return to the original salary.

As with the reductive action, there is no specific timeframe required between salary restorations; they may occur as needed based on the employee’s job performance improvement, at the agency’s discretion.

back to top

Line-Item Exempt Employees/Positions Salary Changes (Reason Code 029)

Changes in salary, job classification code or work hours for line-item exempt and unclassified employees must also be recorded according to statute.

The General Appropriation Act (GAA) establishes a maximum salary rate for line-item exempt employees. The amount listed in an agency’s appropriation pattern is the Not-to-Exceed amount for that position.

Generally, if an agency board or commission wishes to increase the salary of the executive director to an amount less than or equal to the Not-to-Exceed amount listed in the appropriation pattern, the board or commission must submit a letter to the governor, the Legislative Budget Board (LBB) and the Comptroller. The letter must specify the new salary, state that the new salary was approved in a public meeting, and be signed by the presiding officer.

There are specific exceptions to the authority listed in the preceding paragraph:

  1. The salaries of those line-item exempt positions that are for elected officials are Not-to-Exceed amounts and cannot be increased.
  2. The governor may establish the title and compensation rate for certain line-item exempt positions regardless of the listing under that agency’s appropriations. (See GAA, Article IX, Section 3.04(b)(3).) The compensation rate must be within the minimum and maximum salary established for the position’s group.

See the GAA for the current schedule of exempt position salary rates. (Article IX, Section 3.04(b)(2).)

In the case of line-item exempt positions for the agencies listed in Article IX, Section 3.04(c)(6), the board or commission may request to set the rate at an amount within the minimum/maximum range. The request must be submitted by the board or commission and must include:

  • The date the board approved the request
  • A statement to justify the need to exceed the limitation
  • The source of funds that will be used to pay the increased amount

Copies of the letter must be submitted to both the LBB and the governor. The request is considered approved if neither office issues a letter disapproving the request by no later than:

  • The thirtieth business day after the LBB staff concludes its analysis and forwards its review to the chair of the House Committee on Appropriations, the chair of the Senate Finance Committee, the speaker of the House and the lieutenant governor.
  • The thirtieth business day after the receipt of the proposed increase by the governor.

back to top

Salary, Classification Code and/or Work Hours Change for Line-Item Exempt or Unclassified Employees (Reason Code 029)

Line-item exempt salary amounts can only change as described in the preceding paragraph. However, an agency that has authority for unclassified titles can change:

  • The number of hours scheduled to be worked by either line-item exempt or unclassified employees
  • The classification code for unclassified job titles
  • The salaries of unclassified positions

The changes must be supported by proper documentation, such as a personnel action form, and must be entered or reported to the appropriate Comptroller’s office system.

back to top

Status Change for an Employee Moving From a Line-Item Exempt/Unclassified Position to a Classified Position (Reason Code 030)

Occasionally, agencies may move employees from a line-item exempt or unclassified position to a classified position on Schedule A or B.

If a line-item exempt employee moves to a classified position on Schedule A or B, his or her new salary may not exceed the old salary before the change and must fall within the range of the new salary group.

A line-item exempt employee cannot be moved into a position with a salary group that has a higher minimum salary than the employee’s current salary. A line-item exempt employee who moves to a classified position will not be eligible for a merit increase or one-time merit payment until he or she has been in the classified position for at least six continuous months.

If an unclassified employee moves to a classified position on Schedule A or B, his or her new salary may not exceed the old salary before the change unless the old salary is below the minimum of the new group. If the old salary is lower than the minimum of the new group, the salary will equal the minimum of the new group.

back to top

Status Change for an Employee Moving From a Classified Position to a Line-Item Exempt/Unclassified Position (Reason Code 031)

Agencies also need to account for the reverse action — a classified employee moving to a line-item exempt or unclassified position.

The GAA provisions for line-item exempt Not-to-Exceed salaries will still apply in this case. If the employee was making more as a classified employee, the maximum they could receive would be the Not-to-Exceed rate. If they were making less before the change in status, their salary could increase, but could not exceed the rate listed in the GAA.

back to top

Performance Reward for Classified Employees of Eligible Agencies (Reason Code 036)

The intent of this program is to reward outstanding performance. It also:

  • Aids in the retention of employees
  • Supports high performing employees whose work on innovative programs helped meet agency goals and improve productivity

Only qualified agencies may issue performance rewards to its employees. This reward may also be known as an enhanced compensation reward.

To become qualified to give this reward, agencies must achieve or exceed goals set by the Legislature. Agencies must:

  • Meet 80 percent of these goals or performance measures for each fiscal year
  • Have received certification from the State Auditor’s Office (SAO) on at least 70 percent of their performance measures during their most recent certification review

Once authorized, agencies must file a report describing the innovative program(s) used to meet goals, and the criteria used to assess the improvements, with:

  • The Comptroller’s office
  • The Legislative Budget Board
  • The Governor’s Office of Budget and Planning
  • The House Appropriation Committee
  • The Senate Finance Committee

Agencies must also send another report 60 days before implementation to describe how the increased flexibility of the performance reward program will continue to improve the agency’s goals.

The rewards are earned based on the fiscal year achievement and can only be awarded in the following fiscal year.

Example: If the agency met all the eligibility requirements for fiscal year 2019, the award can be granted in fiscal year 2020.

Reward amounts are limited to 6.8 percent of the employee’s base salary at the time of the reward. Rewards may be paid to employees in multiple payments, but cannot exceed 6.8 percent of their salary at the time of the initial reward.

Example: If the employee’s base annual salary is $30,000, the maximum reward is $2,040. Even if the employee first receives a 5 percent increase from a performance reward and brings his or her annual base to $31,500, the remaining 1.8 percent increase is based on the initial $30,000 salary.

back to top

Equity Adjustments (Reason Code 040)

Agencies have the authority to issue equity adjustments. State agencies may use equity adjustments to maintain desirable salary relationships. Equity adjustments are intended to maintain salary equality between or among agency employees or in comparison to employees in similar positions in relevant job markets.

Example: If private companies were routinely paying higher wages and affecting the turnover for a specific position, the agency may offer the employees an equity adjustment to bring their salaries in line with the competition and aid in retention.

Any increase to the salary through an equity adjustment must not exceed the employee’s current maximum for his or her salary group, but may increase to any amount within the group. An employee’s job class or salary group may not change with an equity adjustment.

Agencies do not have the authority to remove or rescind an equity adjustment once it has been awarded.

back to top

Lateral Transfer (Reason Code 046)

An agency may need to reclassify an employee to a new job with a different job classification in the same salary group. This is known as a lateral transfer. The minimum salaries of both groups must be the same for the change to be a lateral transfer.

Note: The job classification number must change with a lateral transfer.

The agency has a choice regarding the employee’s salary for a lateral move. The salary can:

  • Remain the same
  • Increase by up to 3.4 percent
  • Decrease, but not below the minimum of the salary group

back to top

Salary Adjustment Upward for Certain Classified Employees (Reason Code 034)

The following agencies are authorized by the GAA and may provide salary adjustments for classified employees on Schedule A or B:

  • Texas Department of Criminal Justice (TDCJ)
  • Texas Juvenile Justice Department (TJJD)
  • Office of the Attorney General (OAG)

The salary adjustments for TDCJ and TJJD are career ladder increases that provide incremental salary increases for employees in specific job classes based on agency-determined criteria, such as service years.

Employees eligible for career ladder increases at TDCJ and TJJD are not eligible for merit salary increases or one-time merit payments.

The salary adjustments for OAG are to provide cost-of-living adjustments for assistant attorneys general.

The salary adjustments for TDCJ, TJJD and OAG staff do not change the salary group or salary schedule of the affected employee; the employee must remain within the salary range for his or her designated group.

back to top

Salary Level Adjustments/Class Code Change for Certain Schedule C Employees (Reason Code 049)

Schedule C employees receive salary increases based on years of service, as determined by their employing agency.

When an employee on Salary Schedule C achieves the next level of service, an authorized agency may use a salary level adjustment to record the salary increase.

To be eligible for the increase, the employee must not be on leave without pay, temporary assignment or disciplinary reduction.

back to top

Additional Resources

See the USPS Process Guide or SPRS User Guide for more information.

back to top

Definitions

Classified position
A position classified under the state’s position classification plan.
Demotion
A change in duty assignment within a state agency from one classified position to another classified position in a salary group with a lower minimum salary rate.
Line-item exempt employees
The executive head of the agency such as the director, executive director, commissioner, administrator, chief clerk or other individual who is appointed by the governing body of the state agency or by another state or local official to act as the chief executive or administrative officer of the agency and who is not an appointed officer. The term also includes the chancellor or highest-ranking executive officer of a university system and the president of a public junior college or university as defined by Texas Education Code, Section 61.003.
Merit salary increase
An increase to salary of at least $30 per month on Salary Schedule A or an increase to salary on Salary Schedule B within the same salary group.
Promotion
A change in an employee’s duty assignment within a state agency from one classified position to another classified position in a salary group with a higher minimum salary rate; requires higher qualifications such as greater skill or longer experience and involves a higher level or responsibility.
State agency
State department, entity or other agency in the executive or judicial branch of state government that employs a state employee.

Sources

Government Code, Sections 659.251, 659.253, 659.2531, 659.255, 695.2551, 659.256-259, 2101.035 and 2101.037.
General Appropriations Act, Article I, Section 32 – Office of the Attorney General; Article II, Section 24; Section 28 – Special Provisions Relating to all Health and Human Services Agencies; Article V, Section 22 – Texas Juvenile Justice Department; Section 9 – Texas Department of Criminal Justice; Article IX, Part 2; Article IX, Parts 3.01-3.04; 3.07; 6.13.
Texas Administrative Code, Section 5.41.