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Financial Assistance 1


Recommendation

Texas state agencies and institutions of higher education whose employees are called to active military duty from Military Reserves or National Guard status should grant these employees a standard monthly emergency leave benefit to ensure these employees and their families do not suffer from a reduction in income while serving their country.


Summary

State law provides for a paid leave of absence of up to 15 days per annual federal fiscal year for training and active duty purposes.[1] State law also provides for an unpaid leave of absence for military reservists after the 15 days of paid leave have been exhausted.[2] An employee also may use accrued vacation time after the 15 days of paid leave have been used.[3]

Upon being called to active duty, a person assumes the job duties and the salary assigned by the military. Frequently, a person’s military salary will be less than the salary received in a civilian job. When this happens, an employee is effectively penalized when called to active duty. This can pose a hardship for an employee, particularly one with a family or other dependents.

Some employers have pledged to make up the salary differential for their employees who are called to active duty. Dell Computer Corp. has announced plans to make up the pay difference for the estimated 100 Dell reservists and National Guard employees who may be called up. Plano-based EDS announced a similar plan. Both companies plan to pay the salary differential amounts for at least the first six months.[4]

State law provides administrative heads of agencies and institutions of higher education the authority to grant employees emergency leave after determining the absence is for good cause.[5] Emergency leave, also known as administrative leave, is paid leave time for an employee. This authority can be used to pay an employee the amount necessary to make up the difference between an employee’s military pay and the employee’s previous civilian salary.

Based on a sample of state employee reservists called to active duty as of the date of this report, the estimated salary differential translates to approximately three working days each month. To simplify the administrative burden on agencies affected by this proposal, a standard emergency leave benefit of three days per month is recommended. Since this benefit is based on the average impact calculated, not all employees would receive total salaries equal to their salaries prior to their call-up. However, in conjunction with the proposal made elsewhere in this package to assist employees with benefit costs, agencies could craft a package of benefits which would ensure that no employee would receive a net salary reduction.

The General Appropriations Act for the fiscal 2002-03 biennium authorizes salary funding for employees of state agencies and institutions of higher education. The funding for these employees is part of a state agency’s budget, and any leave without pay resulting from an employee called to active duty actually saves an agency some of its salary expenses. By paying affected employees for emergency leave from funds already budgeted, no additional cost to agencies would accrue.

Assuming Texas sends 2,475 of the 50,000 troops[6] authorized to be called up; that an estimated 114 of these are state employees; and that none of them uses annual leave or compensatory time during this period, the annual amount of funding necessary would be approximately $603,000. If troops are called up for less than a year, the impact would be proportionately less. Of this figure, an estimated $465,000 would be to agencies funded by the General Revenue Fund, $72,000 would be to agencies funded by General Revenue-Dedicated Funds and $66,000 would be to agencies funded by other funds in the State Treasury. As noted above, this amount does not represent an additional cost to agencies, but rather an expenditure of funds already appropriated for this purpose.


Fiscal Impact

There would be no additional costs to the General Revenue Fund or other funds to implement this proposal. State agencies currently receive an appropriation for their salaries for fiscal 2002 and 2003. Additional funds are not required; these funds are already appropriated and budgeted for all qualifying employees.

Some agencies, such as the Texas Department of Criminal Justice, may be disproportionately affected by this proposal and may need to replace essential employees. While agencies are essentially saving the amount of budgeted salary that is not paid to its employees who are called up to military duty, the agencies may need sufficient appropriations to pay for any additional salary costs incurred to replace employees in key positions, or use budgetary flexibility to transfer current funding from other budget items.


[1] TEX. GOV’T CODE ANN. §431.005.

[2] TEX. GOV’T CODE ANN. §661.904.

[3] State Auditor’s Office, “Leave Interpretation Letter 79-01”: http://www.hr.state.tx.us/GenInfo/LeaveInter/7901.html.

[4] “For many soldiers, active duty can bring a painful cut in pay,” Austin American-Statesman (October 23, 2001), page B-1.

[5] TEX. GOV’T CODE ANN. §661.902 and TEX. EDUC. CODE ANN. §2.01 (for hospitals or clinics of a medical and dental unit of a university system).

[6] This estimate is based on the president’s original authorization to call 50,000 reservists to active duty.