COLUMBIA — After a long night last month of trying to balance the state budget’s for next year, the Senate Finance Committee had $15.8 million left over – just enough to give state employees a 1 percent pay raise.
But the true cost of that raise is $31.9 million, according to the Office of State Budget – a difference that could cause problems at many state agencies.
The $15.8 million that Senate budget writers allocated covers only the roughly 26,000 state workers whose salaries are paid from the state’s general fund. The other 29,000 state employees are paid from federal and other funds, including fees. The agencies that employ those workers will have to find the money elsewhere within their budgets for the state-ordered raises.
The proposed increase would cost Winthrop University about $440,000 each fiscal year, starting in July, spokeswoman Rebecca Masters said. School leaders have been planning for the proposed pay raises in their budget talks, she said.
Although some of the college’s employees are not completely state-funded, Masters said, Winthrop has historically budgeted to allow an equal pay raise for all of its employees “as a matter of fairness and to avoid fueling salary compression for employees doing comparable work.”
If the state-ordered pay raise becomes law, the University of South Carolina – which gets 9 percent of its budget from the state’s general fund – would give $4.6 million in raises. But it would get only $1.2 million in added money from the state to pay for those raises.
“It makes it more difficult to run the business when these costs are added on when no money is directly appropriated to cover it,” said Ed Walton, USC’s chief financial officer. “Our largest stream of income is tuition. If I have to pay for those raises, I have to pay for it through tuition.”
The pay-raise issue also affects agencies that have a lot of employees paid from fees and grants.
About 40 percent of the employees at the state Department of Probation, Parole and Pardon Services, for example, are paid from fees that are charged offenders under the agency’s supervision. That means, to give the state-ordered raise, the agency has to come up with an extra $159,486, according to Cheryl Thompson, director of fiscal and materials management.
The issue is most pronounced at the Department of Motor Vehicles, where none of the agency’s roughly 1,150 employees are paid from the general fund. That agency operates largely with driver’s license fees. Motor Vehicles would have to find $500,000 to pay for the raises.
“What we’re going to have to do is start early. We simply begin saving it,” said J.R. Sanderson, the agency’s chief of staff and director of operations.
‘A lot more for a lot less’
Senate President Pro Tempore John Courson, R-Richland, said the number of state employees has fallen by about 10,000 since 2000, so state agencies should have money to pay for raises. While state agencies have had their budgets cut since 2000, those cuts have been based on the state’s general funds, not other money that the agencies earn from other sources, such as fees.
The “general feeling is if our revenues are going up a little bit, everyone else’s are too,” said state Sen. Joel Lourie, D-Richland.
“If we’re paying general fund employees 1 percent (more), there is a reason for that. It means the economy is doing a little bit better, our revenues are better, so we would only believe that everyone else (other state agencies) would want to go along as well,” Lourie said, adding state workers “really took it on the chin” during the economic downturn.
Carlton Washington, executive director of the S.C. State Employees Association, said the raises are needed because state workers are “being asked to do a lot more for a lot less.”
“I think (agency) directors have done a good job, working out the details and making sure those raises occur,” he said. “I’ve not gotten one phone call or one comment from an agency director that is opposed to their employees getting a pay raise, for them having to work it out in their budget.”
Gov. Nikki Haley and the House of Representatives did not include the salary increase in their budget proposals, and neither seems inclined to support it.
‘It gets very costly’
The House is likely to fight the 1 percent increase during budget negotiations with senators next month, according to House Ways and Means Committee chairman Brian White, R-Anderson.
Last year, the state budget included a 3 percent raise for state workers, which showed up in the budget as $42.6 million. But it actually cost $82.4 million when state employees who work for agencies financed with other money, including federal funds and fees, were included.
In response, many state agencies this year asked for more state money to help cover the unfunded pay hikes – requests that mostly were denied because “it gets very costly,” White said.
This year, White said the House will oppose the 1 percent pay raise in the Senate’s version of the state budget, so it may not happen.
Even if it does, Motor Vehicles operations director Sanderson said that agency will not ask the state for more money to cover raises.
“We are totally and completely non-appropriated, and that’s something that’s a major pride,” Sanderson said, adding if Motor Vehicles did depend on the General Assembly for its budget, it would be like “a drug addiction.”
“That’s not good for business,” he said.