38-618

38-618. Performance based incentives
program

A. The director of the department of administration and the executive director of
the Arizona board of regents may establish a performance based incentives program to
promote efficiency and effectiveness in state government. The director of the department
of administration shall identify state agencies and the executive director of the Arizona
board of regents shall identify state universities in which to implement the program.

B. The director of the department of administration and the executive director of
the Arizona board of regents shall cooperate with the directors of agencies and the
presidents of the identified universities, respectively, to:

1. Develop a performance based appraisal system of state employee performance that
is based on agency or university goals and objectives, as identified and approved by the
agency's or university's employees, supervisors, director or president.

2. Authorize all agency directors and university presidents participating in the
program to recognize the performance of state employees, who are under their authority,
based on the outcome of the appraisal conducted pursuant to paragraph 1 of this
subsection.

C. The director of the department of administration shall cooperate with the
director of the department of public safety, the superintendent of public instruction and
the superintendent of the state schools for the deaf and the blind to implement the
performance based incentives program. The executive director of the Arizona board of
regents shall cooperate with the president of each university under the jurisdiction of
the Arizona board of regents to implement the performance based incentives program.

D. Notwithstanding section 35-174, subsection B, the director of the department of
administration, the director of the department of public safety, the executive director
of the Arizona board of regents, the superintendent of public instruction and the
superintendent of the state schools for the deaf and the blind may authorize the
expenditure of up to eighty per cent of excess vacancy savings to recognize employees of
state agencies and state universities who are under their respective authority and who
are participating in the performance based incentives program. In addition to excess
vacancy savings, the participating agency or university may use monies appropriated from
the state general fund or other sources, including federal enhanced funding an agency or
university receives for quality initiatives. Federal enhanced monies do not revert to the
state general fund but remain in a separate agency or university account at the end of
the fiscal year for use by the agency or university in accordance with the terms and
conditions imposed by the federal funding source. For the purposes of this subsection,
"excess vacancy savings" means the same as "vacancy saving" as defined in section 35-174,
subsection A, except that ¦excess vacancy savings¦ are any vacancy savings that are over
and above the amount eliminated from an agency's budget as the result of the applied
vacancy factor reported in the annual appropriations report prepared by the joint
legislative budget committee.

E. As provided for in subsection D of this section, any incentive or performance
compensation using monies from excess vacancy savings or other fund sources including
state general fund appropriations shall not be added to an agency's salary base.

F. Recognition of state employees may be in the form of increase in compensation
for future services, but the increase may not exceed two hundred seventy-five dollars per
month per employee.

G. On or before December 1 of each even-numbered year:

1. The director of the department of administration, in cooperation with the
director of the department of public safety, the superintendent of public instruction and
the superintendent of the state schools for the deaf and the blind, shall provide the
performance based incentives program oversight committee with a report on the
implementation or progress of an approved program and the expenditures of each
participating agency related to the program.

2. The executive director of the Arizona board of regents, in cooperation with the
president of each university under the jurisdiction of the Arizona board of regents,
shall provide the performance based incentives program oversight committee with a report
on the implementation or progress of an approved program and the expenditures of each
participating university related to the program.

H. An approved program shall notify the performance based incentives program
oversight committee and, as applicable, the director of the department of administration
or the executive director of the Arizona board of regents when it makes any substantive
changes to the approved program.