From left: Office of Personnel Management Director Kay Barnhill, Secretary of Transformation and Shared Services Leslie Fisken, Republican Sen. Breanne Davis of Russellville and Secretary of Finance and Administration Jim Hudson present a proposed overhaul of Arkansas’ state employee pay plan during a meeting of the Joint Budget Committee’s personnel subcommittee on Tuesday, March 11, 2025. (Tess Vrbin/Arkansas Advocate)
Arkansas lawmakers will vote next week on a proposed overhaul of the state employee pay plan, which is expected to cost a total of $139 million, the bill’s lead sponsor said Tuesday.
Sen. Breanne Davis, R-Russellville, presented the proposal in Senate Bill 392 to the Joint Budget Committee’s Personnel subcommittee alongside executive branch officials Tuesday. The meeting was for discussion only, and the subcommittee will be first to vote on the bill March 18.
The full Legislature is responsible for approving the plan, which is part of Gov. Sarah Huckabee Sanders’ proposed fiscal year 2026 budget.
Roughly two-thirds of state agencies’ workforce — more than 14,000 state employees — will receive pay raises that make their salaries competitive with the private sector, Sanders said in November when she announced the proposed pay plan. She said one of the main goals of the pay plan is to recruit and retain employees in hard-to-fill positions, particularly nurses, social services workers, corrections officers and state troopers.
Sanders also said the plan will clarify the promotion ladders in each state agency and consolidate roughly 2,200 job titles into roughly 800 without reducing the number of available jobs.
The state has typically had separate job titles for the same job, such as accountants, in different agencies, Office of Personnel Management Director Kay Barnhill told lawmakers.
“They all required the same type of skills, and they may not have been paid consistently across departments previously,” Barnhill said. “That was one of our major thrusts here with this plan, trying to ensure that we had equity and consistency across state government.”
Barnhill and Davis echoed the governor’s promise to bring some state employees’ entry-level salaries up to labor market rates in order for the state government to compete with the private sector.
State employees with years of government experience whose salaries are above the minimum labor market rate would not receive raises under the new plan, Barnhill said in response to a question from Rep. Denise Ennett, D-Little Rock.
Nearly 18% of 66,000 Arkansas executive branch and higher education jobs remained unfilled in 2024, the Advocate reported in December.
The pay plan is part of Sanders’ Arkansas Forward initiative, which is meant to increase government efficiency. State officials devised the proposed pay plan with help from McKinsey, a Washington, D.C., consulting firm the state hired in February 2024 under a three-year, $5.5 million contract.
Sanders initially projected the pay plan’s base cost to be $102 million, with $60 million coming from the state’s general revenue and the remaining $42 million “from other sources.” The base cost estimate is now $123 million, plus a $23 million match from each state agency, Barnhill said. She added that the initially projected match was $14.5 million.
“We did meet with agencies and departments one more time in December, and they brought forth some [job] classifications they thought we had missed,” Barnhill said.
Finance and Administration Secretary Jim Hudson repeated Sanders’ statement that agencies must find the money within their own budgets to cover as much of the pay plan as possible. The state has a $72 million “performance fund” that agencies can use to fulfill the plan if they exhaust their existing resources, he said.
The subcommittee’s House chair and vice chair, Republican Reps. Jim Wooten of Beebe and Frances Cavenaugh of Walnut Ridge, both expressed concern that the officials presenting the pay plan legislation did not have an estimate for how much its proposed Arkansas State Employee Student Loan Program would cost.
The program would provide up to five installment payments of $2,000 toward a state employee’s unpaid student loans if the employee used the loans to get a degree in the field related to his or her job. Barnhill said she did not have data on how many state employees would qualify.
“As somebody who looks at numbers all the time, throwing out a program for a benefit and [no] idea of what it might cost us creates a little heartburn for myself,” Cavenaugh said.
The program would not be implemented without a clear picture of how it would impact agency budgets, Hudson said, but he believed the state should “see how it goes” and adjust as needed.
Wooten said he remained skeptical of leaving a program “open-ended” because “if we start something in government, it never ends.”