Authority: Discretionary Inclusion.

A. Transfers from this Item may be made to supplement general fund appropriations to state agencies for:

1. Adjustments to base rates of pay;

2. Adjustments to rates of pay for budgeted overtime of salaried employees;

3. Salary increases for positions with salaries listed elsewhere in this act;

4. Salary increases for locally elected constitutional officers and their employees;

5. In-band salary adjustments for employees subject to the Virginia Personnel Act to recognize changes in duties or professional skill development, establish internal alignment (equitable salary relationships), or respond to labor market conditions (retention).

6. Employer costs of employee benefit programs when required by salary-based pay adjustments; and

7. Salary increases for local employees supported by the Commonwealth, other than those funded through appropriations to the Department of Education.

This appropriation provides for the compensation adjustments described in paragraphs F, G, and L of this Item, subject to conditions stated in this Item.

B. Transfers from this Item may be made when appropriations to the state agencies concerned are insufficient for the purposes stated in paragraph A of this Item, as determined by the Department of Planning and Budget, and subject to guidelines prescribed by the department. Further, the Department of Planning and Budget may transfer appropriations within this Item from the second year of the biennium to the first year, when necessary to accomplish the purposes stated in paragraph A of this Item.

C.1. The Department of Human Resource Management may approve pilot compensation programs within agencies that support the redesigned classified compensation plan. Such pilot programs approved by the Department shall have clearly defined objectives, specified time frames, and shall be restricted to no more than two years. Such pilot programs shall be funded from existing agency appropriations or from funds provided for increases specified in paragraph F of this Item, or a combination of both. A report on such pilot programs shall be made to the Governor and the Chairmen of the House Appropriations and Senate Finance Committees by October 1, 2005. The Secretary of Administration shall approve any change in compensation plans based on pilot programs, prior to their implementation.

2. Any pilot programs or alternative pay plans authorized under the provisions of this paragraph, shall provide for average annual salary increases that are no greater than those authorized in this Item for classified state employees.

D. The Governor is hereby authorized to transfer funds from agency appropriations to the accounts of participating state employees such amounts as may be necessary to match the contributions of the qualified participating employees, consistent with the requirements of the Code of Virginia governing the deferred compensation cash match program. Such transfers shall be made consistent with the following:

1. The maximum cash match provided to eligible employees shall not be less than $20.00 per pay period, or $40.00 per month. The Governor may direct the agencies of the Commonwealth to utilize funds contained within their existing appropriations to meet these requirements.

2. The Governor may direct agencies supported in whole or in part with nongeneral funds to utilize existing agency appropriations to meet these requirements. Such nongeneral revenues and balances are hereby appropriated for this purpose, subject to the provisions of § 4-2.01 b of this act. The use of such nongeneral funds shall be consistent with any existing conditions and restrictions otherwise placed upon such nongeneral funds.

3. Employees who are otherwise eligible but whose 403 (b) provider does not participate in the cash match program by establishing a 401 (a) account are ineligible to receive a cash match.

4. The procurement of services related to the implementation of this program shall be governed by standards set forth in § 51.1-124.30 C, Code of Virginia, and shall not be subject to the provisions of Chapter 7 (§ 11-35 et seq.), Title 11, Code of Virginia.

E. Included in this appropriation is $8,465,663 the first year and $8,833,735 the second year for an increase in the employer contribution rate for the Virginia Sickness and Disability Program, resulting from an update of the valuation of program assets and liabilities, and the pooling of law enforcement and non-law enforcement positions for the purposes of calculating program contributions.

F.1. The base salary of employees listed in this paragraph shall be increased by three percent on November 25, 2005, for those employees set out in subparagraphs 2 a through 2 d of this paragraph. The base salary of employees set out in subparagraph 2 e of this paragraph shall be increased by three percent on December 1, 2005. This appropriation includes the following estimated amounts for these purposes:

2. Transfers from this Item shall be used to effect this increase and related increases in employee benefits for:

a. Executive Department

1. Full-time employees of the Executive Department subject to the Virginia Personnel Act;

2. Full-time employees of the Executive Department not subject to the Virginia Personnel Act, except officials elected by popular vote;

3. Teaching and Research and Administrative Faculty at the institutions of higher education;

4. Any official whose salary is listed in § 4-6.01 c and d of this act, subject to the ranges specified in the agency head salary levels in § 4-6.01 c; and

5. Full-time professional staff of the Governor's Office, the Lieutenant Governor's Office, the Attorney General's Office, Cabinet Secretaries Offices, including the Deputy Secretaries, the Virginia Liaison Office, and the Secretary of the Commonwealth's Office.

b. Legislative Department

1. Heads of agencies in the Legislative Department;

2. Full-time employees in the Legislative Department, other than officials elected by popular vote; and

3. Secretaries and administrative assistants as provided for in Item 1, of this act.

c. Judicial Department

1. Judges and Justices in the Judicial Department;

2. Heads of agencies in the Judicial Department; and,

3. Full-time employees in the Judicial Department.

d. Independent Agencies

1. Commissioners of the State Corporation Commission and the Virginia Workers' Compensation Commission, the Executive Directors of the Virginia College Savings Plan and the Virginia Office for Protection and Advocacy, and the Directors of the State Lottery Department, and the Virginia Retirement System;

2. Full-time employees of the State Corporation Commission, the Virginia College Savings Plan, the State Lottery Department, Virginia Workers' Compensation Commission, the Virginia Retirement System, and Virginia Office for Protection and Advocacy.

e. State-Supported Local Employees

1. Locally elected constitutional officers;

2. General Registrars and members of local electoral boards;

3. Full-time employees of locally elected constitutional officers; and,

4. Full-time employees of Community Services Boards, Centers for Independent Living, secure detention centers supported by Juvenile Block Grants, juvenile delinquency prevention and local court service units, local social services boards, and local health departments where a memorandum of understanding exists with the Virginia Department of Health.

3.a. Employees in the Executive Department subject to the Virginia Personnel Act shall receive the three percent base salary increase authorized in this paragraph only if they attained at least a rating of "Contributor" on their latest performance evaluation.

b. Salary increases for employees listed in paragraphs F 2 a 2 through F 2 a 4 and paragraphs F 2 c through F 2 d shall be consistent with the provisions of this paragraph, as determined by the appointing or governing authority. The appointing or governing authority shall certify that employees receiving the awards are performing at levels at least comparable to the eligible employees as set out in the preceding paragraph 3 a.

G. Employees in the Executive Department subject to the Virginia Personnel Act who have attained a rating of "Extraordinary Contributor" on their latest performance evaluation shall receive an additional one percent salary increase on November 25, 2005 for a total of a four percent increase. Included in the appropriation for this Item is $1,669,304 from the general fund in the second year for this purpose.

H.1. To ensure fair and equitable performance reviews, the Department of Human Resource Management is directed to provide performance management training to agencies and institutions of higher education with classified employees.

2. Agency heads in the Executive Department are directed to require appropriate performance management training for all agency supervisors and managers.

I. The Department of Human Resource Management shall increase the minimum and maximum salary for each band within the Commonwealth's Classified Compensation Plan by three percent on November 25, 2005. No salary increase shall be granted to any employee as a result of this action. The Department shall develop policies and procedures to be used in instances where employees fall below the entry level for a job classification due to poor performance. Movement through the revised pay band shall be based on employee performance.

J. The agency heads listed in this paragraph may, at their discretion, utilize the funds provided pursuant to paragraph F of this Item, to implement the provisions of existing pay plans.

1. The heads of agencies in the Legislative and Judicial Departments;

2. The Commissioners of the State Corporation Commission and the Virginia Workers' Compensation Commission;

3. The Attorney General;

4. The Director of the Virginia Retirement System;

5. The Director of the State Lottery Department;

6. The Director of the University of Virginia Medical Center;

7. The Executive Director of the Virginia College Savings Plan;

8. The Executive Director of the Virginia Port Authority; and

9. The Executive Director of the Virginia Office for Protection and Advocacy.

K. The base rates of pay, and related employee benefits, for wage employees may be increased by up to three percent on November 25, 2005. The cost of such increases for wage employees shall be borne by funds appropriated to each agency.

L. Agencies supported in whole or in part by nongeneral funds shall pay the proportionate share of costs, from nongeneral fund revenues, of wages, salaries, and employee benefits as stated in this Item, subject to rules and regulations prescribed by the Governing Authority.

M.1. The appropriations contained in this item include an amount estimated at $50,892,792 from the general fund in the second year for the state share of salary increases along with the related fringe benefit costs to public school instructional and support staff positions funded through the Standards of Quality and other state-funded accounts.

2. These compensation payments shall be made in the second year on the basis of an amount equivalent to the state share of a three percent salary increase effective December 1, 2005.

3. It is the intent that the average classroom teacher salary throughout the state be improved in the second year by an amount equivalent to at least three percent in the second half of the year. Sufficient funds are appropriated in this item to finance the state share of such salary increases.

4. These compensation payments shall be paid to school divisions that certify to the Department of Education, no later than March 1, 2005, that equivalent increases have been granted in the second year.

5. These funds shall be matched by the local government, based on the composite index of local ability-to-pay.

6. This funding is not intended as a mandate to increase salaries.

N. Out of this appropriation, the expenditure of $105,309,298 the second year from the general fund for the salary increases referenced in Paragraphs F, G, I, J, and L of this Item, is contingent upon the passage into law of the provisions contained in Enactment Nos. 2, 3 and 5 of Part 5 of introduced House Bill 30/Senate Bill 30 of the 2004 Session.

O.1. Out of this appropriation, the expenditure of $3,593,030 the first year and $2,254,819 the second year from the general fund for the provision of a pooled retirement contribution rate for state employees and public school teachers, is contingent upon the passage into law of the provisions contained in Enactment Nos. 2, 3 and 5 of Part 5 of introduced House Bill 30/Senate Bill 30 of the 2004 Session.

2. Subject to the passage into law of the provisions contained in Enactment Nos. 2, 3 and 5 of Part 5 of introduced House Bill 30/Senate Bill 30 of the 2004 Session, the Director, Department of Planning and Budget, shall transfer to this Item from the general fund appropriation for Direct Aid to Public Education an amount estimated at $24,909,601 the first year and $27,487,057 the second year from savings associated with the pooling of retirement contribution rates for state employees and public school teachers.

3. Subject to the passage into law of the provisions contained in Enactment Nos. 2, 3 and 5 of Part 5 of introduced House Bill 30/Senate Bill 30 of the 2004 Session, the Director, Department of Planning and Budget, shall transfer to state agency general fund appropriations amounts listed in subparagraph O 1 and O 2 preceding, for the additional cost associated with the pooling of retirement contribution rates for state employees and public school teachers.