State employees would receive a two percent pay increase

Covered state employees would receive a two percent salary increase. The increase would cover classified and unclassified state employees, other state and hourly employees, judicial and legislative personnel, and certain county health department employees paid from state, county, or other approved public budgets. The increase would not apply to local salary supplements for judges or other local employees whose pay is tied to a state employee’s salary. It would not apply to Merit System or hourly employees whose pay or service is covered by a labor agreement or contract. The measure says it does not itself make an appropriation, and annual budget laws would need to provide the required money. The increase would begin with the first payday on or after October 1, 2026.

Eligible Employees’ Retirement System retirees, beneficiaries, and certain other pensioners would receive a one-time bonus based on credited service. The bonus would generally cover people who retired before October 1, 2025, and were receiving or entitled to receive a monthly Employees’ Retirement System allowance on September 30, 2026. It would also cover certain beneficiaries and retirees from local or participating employers when the required election is made. The basic formula would be one dollar for each month of credited service. Certain employers that participate under specified Employees’ Retirement System provisions would have to approve the bonus by official resolution on or before August 31, 2026, and would pay its cost. Certain city, town, county, and public or quasi-public employers would also have to elect to provide the bonus and report each eligible person’s credited service. A person would not receive the bonus if it would impair eligibility for Medicaid, including after a later Medicaid application causes that problem. The Employees’ Retirement System would pay eligible bonuses in October 2026. An employer could pay its full cost at once or, only for fiscal year 2027, pay through a higher employer contribution rate.