GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	2 

HOUSE BILL 1135
Committee Substitute Favorable 4/30/97

Short Title:  State Employee Incentive Bonus.	(Public)

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Sponsors:

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Referred to:  

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April 21, 1997

A BILL TO BE ENTITLED
AN ACT AMENDING THE STATE PERSONNEL ACT TO PROVIDE FOR AN INCENTIVE BONUS PROGRAM TO RECOGNIZE AND REWARD THE COST-SAVING INITIATIVE AND INNOVATIONS OF STATE EMPLOYEES.
The General Assembly of North Carolina enacts:
Section 1.  Chapter 126 of the General Statutes is amended by adding a new Article to read:
“ARTICLE 2A.
"Incentive Bonus Program.
"§ 126-7.3.  State employee incentive bonus.
(a)	A State employee or team of State employees may receive an incentive bonus or bonuses in reward for suggestions or innovations resulting in monetary savings to the State, increased revenues to the State, or improved quality of services delivered to the public. The program is restricted to current State employees.  Managers and supervisors may participate in the program.
(b)	In addition to any bonuses paid directly to individual State employees, a portion of the cost-savings associated with any savings realized from permanent efficiencies implemented pursuant to this section may be contributed to a reserve fund for State employee performance bonuses.  Funds for State employee incentive bonuses shall only come from savings including reversions above the baseline reversion of the employing State department, agency, or institution.  For the purposes of this section, ‘baseline reversion' means the two-year historical average of reversions by a State department, agency, or institution.
(c)	Savings generated by suggestions and innovations shall be determined at the end of the fiscal year in which the suggestion or innovation is implemented. Any savings are to be calculated using the actual expenditures for a program, activity, or service compared to the budgeted amount for the same.  The savings calculation shall include the amount of any reversions in excess of the baseline reversion.  Any savings realized through the State employee incentive bonus shall be weighed against continued service to the public.
"§ 126-7.4.  Allocation of incentive bonus funds; nonmonetary recognition.
(a)	If a State employee's suggestion or innovation results in a monetary savings or increased revenue to the State, the funds saved or increased will be distributed according to the following scale:
(1)	Twenty percent (20%) of the savings or fifty percent (50%) of the suggester's annual salary, whichever is less, to constitute gainsharing.  If a team of State employee's is the suggester, the bonus provided in this subdivision shall be divided equally among the team members, except that no team member may receive in excess of fifty percent (50%) of the employee's annual salary.
(2)	Thirty percent (30%) to a performance bonus reserve for all current State employees, to be distributed according to G.S. 126-7, the Comprehensive Compensation System for State employees.
(3)	The remainder to the General Fund for nonrecurring budget items.
(b)	The budget of a State agency will not be reduced by a similar amount in the following fiscal year.  The agency budget will be reduced only if structural or organizational changes are made that warrant the reductions, including the transfer of responsibility for an activity or service to another agency or the elimination of some function of State government.
(c)	If a suggestion or innovation results in improved quality of services to the public, but not in monetary savings to the State, the suggester shall receive a nonmonetary award in the form of a certificate, leave with pay, or other similar recognition.
"§ 126-7.5.  Suggestion and review process; role of agency coordinator and agency evaluator.
(a)	The process for a State employee or team of State employees to submit a cost-saving proposal shall begin by the employee or team of employees submitting the suggestion or innovation to an agency coordinator designated by the employing State department, agency, or institution. The agency coordinator, in conjunction with an agency evaluator, shall review the suggestion or innovation for submission to the Review Committee established in G.S. 126-7.6.
(b)	The duties of the agency coordinator shall include:
(1)	Serving as an information source and maintaining sufficient forms necessary to submit suggestions.
(2)	Responsibility for presenting, in conjunction with the agency evaluator, the plan of implementation for a suggestion or innovation to the Review Committee.
(3)	Working with an agency evaluator designated by the Review Committee of State employees empaneled pursuant to G.S. 126-7.6.
An agency may have more than one coordinator if required to provide sufficient services to State employees.
(c)	The duties of an agency evaluator shall include:
(1)	Reviewing the feasibility and effectiveness of cost-saving measures suggested by State employees.
(2)	Being knowledgeable of the subject program, activity, or service.
(3)	Determining the budgetary impact of a suggestion or innovation.
(4)	Judging impartially both the positive and negative effects of a suggestion or innovation on the current functions of the subject program, activity, or service.
The specific assignments of the agency evaluator shall be determined by the agency coordinator.
(d)	The State Coordinator shall be responsible for general oversight and coordination of the State employee incentive bonus program.  The State Coordinator shall be a State employee working in the Office of the State Auditor.
"§ 126-7.6.  Incentive Bonus Review Committee.
(a)	The Incentive Bonus Review Committee, hereinafter ‘Review Committee', shall consist of nine members, as follows:
(1)	The State Coordinator.
(2)	A representative of the Fiscal Research Division of the General Assembly.
(3)	A representative of the Department of Justice.
(4)	A representative of the Department of Labor.
(5)	One State employee appointed by the Speaker of the House of Representatives.
(6)	One State employee appointed by the President Pro Tempore of the Senate.
(7)	Three State employees appointed by the State Employees Association of North Carolina, Inc.
(b)	The duties of the Review Committee shall include:
(1)	Responsibility for receiving from the various agency coordinators recommendations on suggestion and innovation implementation plans.
(2)	Determining the impact of a suggestion or innovation on State government services by judging the monetary savings, increased revenues, or improved quality of services generated by a suggestion or innovation.
(3)	Ensure that the State employee incentive bonus process does not result in a negative impact on services provided to taxpayers by State government.
(c)	The Fiscal Research Division of the General Assembly shall provide staff and other necessary support to the Review Committee. The Review Committee shall publish an annual report."
Section 2.  G.S. 126-4 reads as rewritten:
"§ 126-4.  Powers and duties of State Personnel Commission.
Subject to the approval of the Governor, the State Personnel Commission shall establish policies and rules governing each of the following:
(1)	Position classification plans which shall provide for the classification and reclassification of all positions subject to this Chapter according to the duties and responsibilities of the positions.
(2)	Compensation plans which shall provide for minimum, maximum, and intermediate rates of pay for all employees subject to the provisions of this Chapter.
(3)	For each class of positions, reasonable qualifications as to education, experience, specialized training, licenses, certifications, and other job-related requirements pertinent to the work to be performed.
(4)	Recruitment programs designed to promote public employment, communicate current hiring activities within State government, and attract a sufficient flow of internal and external applicants; and determine the relative fitness of applicants for the respective positions.
(5)	Hours and days of work, holidays, vacation, sick leave, and other matters pertaining to the conditions of employment. The legal public holidays established by the Commission as paid holidays for State employees shall include Martin Luther King, Jr.'s Birthday and Veterans Day. The Commission shall not provide for more than 11 paid holidays per year except that in those years in which Christmas Day falls on a Tuesday, Wednesday, or Thursday, the Commission shall not provide for more than 12 paid holidays.
(5a)	In years in which New Year's Day falls on Saturday, the Commission may designate December 31 of the previous calendar year as the New Year's holiday, provided that the number of holidays for the previous calendar year does not exceed 12 and the number of holidays for the current year does not exceed 10. When New Year's Day falls on either Saturday or Sunday, the constituent institutions of The University of North Carolina that adopt alternative dates to recognize the legal public holidays set forth in subdivision (5) of this section and established by the Commission may designate, in accordance with the rules of the Commission and the requirements of this subdivision, December 31 of the previous calendar year as the New Year's holiday.
(6)	The appointment, promotion, transfer, demotion and suspension of employees.
(7)	Cooperation with the State Board of Education, the Department of Public Instruction, the University of North Carolina, and the Community Colleges of the State and other appropriate resources in developing programs in, including but not limited to, management and supervisory skills, performance evaluation, specialized employee skills, accident prevention, equal employment opportunity awareness, and customer service; and to maintain an accredited Certified Public Manager program.
(7a)	The separation of employees.
(8)	A program of meritorious service awards.
(9)	The investigation of complaints and the issuing of appropriate action concerning employment, promotion, demotion, transfer, discharge, reinstatement, and any other issue defined as a contested case issue by this Chapter in all cases as the Commission shall find justified.
(10)	Programs of employee assistance, productivity incentives, equal opportunity, safety and health as required by Part 1 of Article 63 of Chapter 143 of the General Statutes, and such other programs and procedures as may be necessary to promote efficiency of administration and provide for a fair and modern system of personnel administration. This subdivision may not be construed to authorize the establishment of an incentive pay program.
(11)	In cases where the Commission finds discrimination or orders reinstatement or back pay whether (i) heard by the Commission or (ii) appealed for limited review after settlement or (iii) resolved at the agency level, the assessment of reasonable attorneys' fees and witnesses' fees against the State agency involved.
(12)	Repealed by Session Laws 1987, c. 320, s. 2.
(13)	Repealed by Session Laws 1987, c. 320, s. 3.
(14)	The implementation of G.S. 126-5(e).
(15)	Recognition of State employees, public personnel management, and management excellence.
(16)	The implementation of G.S. 126-7.
(17)	An alternative dispute resolution procedure.
(18)	The implementation of G.S. 126-7.3.
The policies and rules of the Commission shall not limit the power of any elected or appointed department head, in the department head's discretion and upon the department head's determination that it is in the best interest of the Department, to transfer, demote, or separate a State employee who is not a career State employee as defined by this Chapter."
Section 3.  This act becomes effective July 1, 1997.