Daniels announces state employee pay raise for 2008

INDIANAPOLIS (December 19, 2007) - Indiana Governor Mitch Daniels today announced state employee salaries will rise 4.8 percent in 2008 on average. Since taking office, Daniels has made properly compensating state employees a top priority through his "pay for performance" program. Prior to the Daniels administration, all state employees received the same across-the-board increase regardless of job performance. This approach led some high-performing employees to leave state employment because they felt unfairly and inadequately compensated.

"It's the rule in life that those working the hardest and getting the best results are rewarded more than those doing a poor job, but Indiana state government, until now, didn't apply that rule," said Daniels. "The best public servants deserve the best pay."

"We have been able to significantly increase salaries and benefits and increase them dramatically for those doing the best job of serving taxpayers," Daniels added. "Because of the new approach, we are in an improved position to attract and retain top talent, even while holding total payroll costs flat."

All state employees will receive a 1.5 percent increase that will be reflected in the employees' final 2007 check. Those whose performance evaluations "meet expectations" will receive an additional three percent performance-based increase for a combined total pay raise of 4.5 percent. Staff who "exceed expectations" will receive an additional 8.5 percent performance-based increase for a combined total pay raise of 10 percent. These merit-based raises will become effective on the last check in February for agencies completing their employee evaluations by the end of January.

Approximately 80 percent of state employees will receive a rating of "meet expectations," while 10 percent will "exceed expectations." Employees in the lowest 10 percent will receive a work plan designed to improve their job performance to the "meets expectations" level.

In addition to salary adjustments, over the last three years, Daniels also authorized increases in the state's contribution to employees' health insurance and implemented two bonus programs. Even with larger increases in average state employee compensation, total payroll costs to the state have dropped by nearly $50 million since the start of the Daniels administration. The overall decrease was made possible by a 10 percent reduction in the number of state employees.

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