top of page
  • Writer's pictureThe San Juan Daily Star

Oversight board provides guidelines for classification & compensation of public workers

Financial Oversight and Management Board Executive Director Robert Mujica

By The Star Staff

The Financial Oversight and Management Board provided guidelines this week for agencies and public corporations exempted from the Government of Puerto Rico Human Resources Administration and Transformation Act of 2017 to develop classification and compensation plans for workers.

The new plan, which is part of the Civil Service Reform (CSR), aims to allow agencies to recruit and retain talent using objective market data. Salary raises will be based on merit rather than tenure. It is not clear how the CSR will impact existing collective bargaining agreements.

“To ensure that resources are maximized and prioritized, the CSR seeks to limit salary adjustments to employees who have below-market salaries,” according to a letter from Robert Mujica, the executive director of the oversight board, to Office of Management and Budget Director Juan C. Blanco Urrutia. “Any additional adjustment to an employee salary should only be based on merit (e.g., to acknowledge additional proficiency gained or performance), as assessed through an employee evaluation process.”

The entities exempted from the 2017 law that will have to implement the new guidelines for the CSR are the legislative branch, the judicial branch, public or public private corporations or instrumentalities that function as private companies or businesses, the University of Puerto Rico, the Office of the Governor, the Puerto Rico State Election Commission, the Puerto Rico Government Ethics Office, municipalities, the Corporation of the ENLACE project of Caño Martín Peña, the Company for the Comprehensive Development of the Cantera Peninsula, the Office of the Electoral Comptroller, the Office of the Special Independent Prosecutor Panel, and the Municipal Revenue Collections Center.

Under the new CSR compensation philosophy, salary increases will not be based on tenure, but rather determined by the periodic evaluation of employees’ skill proficiency and accomplishments.

The letter notes that many exempt entities have outmoded compensation practices that adversely impact the work experience of government employees.

“Nevertheless, the process of updating and modernizing salary structures and compensation plans must be done in a fiscally responsible manner using leading practices in human resource management,” Mujica said in the letter. “Increasing salaries for existing employees without proper guidelines and principles would not only be insufficient but would increase the government’s expenditures without meaningfully increasing the performance of the civil service.”

The best practice in developing compensation plans and salary structures dictates that a compensation philosophy and strategy be articulated by the agency’s human resources (HR) department and executive team prior to the development of a new compensation plan and salary structure, he said.

Prior to developing and implementing a new salary structure, Mujica said, it is essential to have a coherent and up-to-date job classification system with current and revised job descriptions and specifications.

One key principle of the CSR is the use of objective market data to develop the central government’s new salary structure and to determine the appropriate compensation levels of government employees. Without the use of market data, establishing fair, justifiable and fiscally responsible salaries is exceedingly challenging, he said.

Given the importance of the public sector wage bill, it is essential for exempt entities to have an objective, transparent, data-driven methodology, the oversight board director said.

“The pay-setting methodology should seek to minimize underpaying or overpaying workers, given that underpayment will adversely impact recruitment efforts and workforce morale, while overpayment is wasteful and contrary to sound fiscal management,” Mujica said.

Exempt entities should select highly reputable and up-to-date sources of external market data to develop salary structures and conduct salary benchmarking, Mujica said in the letter. He recommended using data from the Bureau of Labor Statistics and the Economic Research Institute (ERI).

It is important to note that the surveys used in market studies, such as the ERI’s, already incorporate cost-of-living adjustments, Mujica noted.

When using market data to develop a new salary structure, there must be a clear link between the market data and the salary structure, he said.

“Developing a salary structure that is closely aligned to the market ensures that a governmental entity does not pay above market – which needlessly increases costs – or pay too little – which leads to difficulties recruiting and retaining talent,” Mujica reiterated.

The central government’s new uniform compensation plan does not offer minimum guarantees providing all employees with a salary adjustment. The plan prioritizes efficient use of funds, providing salary adjustments to those whose salaries are less competitive compared to the market.

Mujica noted that under special circumstances, employees may be hired above the minimum of the scale when the role is critical to the government, increasing the ability to attract and retain talent for mission-critical positions.

The implementation of a new salary structure and compensation plan should be accompanied with the publication of new salary administration guidelines or policies by the exempt entities, the letter says.

137 views1 comment

1 Comment

Aug 10, 2023

Let us discuss the elephant in the room. For an Island that is 100 miles long and 35 miles wide, Puerto Rico has far to many Politicians, Mayors, Bureaucrats, and superfluous Political Patronage Jobs that are Not subject to compensation review. Puerto Rican Government is top heavy, slow, lethargic, wasteful, bloated, fat, ineffective, insufficient, and corrupt. Puerto Rican government needs to be slimmed down, cut, audited, reorganized, made responsive, timely, productive, efficient, and effective. The "Old Boy" network is destroying the Island and driving Puerto Rico's workforce to the Mainland. What I'm describing surprises no one. $23 Million dollars in lost Public School Educational funding should have never have happened. Heads should have rolled from such mismanagement. Instead, all the…

bottom of page