CHEYENNE - Wyoming continues to lag behind market rates in the salaries it pays its 7,580 government employees, a report from the state's nonpartisan Legislative Service Office says.

State government is Wyoming's biggest employer, and the report says that although the state has made regular appropriations for employee salary increases, only once since 2000 has state worker pay been equal to market rates.

It's difficult for state policy makers to reach and sustain agreement on state compensation policy, the report states.

"Each governor puts his own stamp on the compensation system, and as one observer noted, 'With every new governor, there's a new pay system,"' the report says. That problem is complicated, the report said, when "the Legislature continues a tradition of neither granting the Governor's full exception (budget) request, nor specifying its intention for the funding it does appropriate."

The report also concludes that the state's Human Resources Division puts out only minimal information to employees about the state's pay plan and how it's implemented. The Department of Administration and Information agrees with the report's conclusion that the division should put out an annual report on the status of the compensation system.

The LSO report recommends that the Human Resources Division retain outside professional help to review whether the division is defining the term "market" appropriately when it considers employee pay.

While Wyoming relies on information about the pay packages of other states in setting worker salaries, the report notes that state managers complain they're not competing with other states but rather losing key employees to the private sector.

The state's Management Audit Committee approved the report Thursday and released it Friday.

"It's an excellent report concerning the difficulty and the complexity of establishing what the market is for our state employees," Randall Luthi, R-Freedom and committee chairman, said Friday. "It also indicates how difficult it is to establish a uniform pay scale when, with each administration, the emphasis changes on how to determine an equitable pay scale."

Gov. Dave Freudenthal said Friday he's encouraged by the report's suggestion that the state go outside to get an independent, professional review of employee compensation issues.

Freudenthal noted that his budget proposal to the Legislature this year called for roughly $17 million to bring state employees up to market rates, but that the Legislature only approved about half that much.

He said the report tells him that dealing with employee pay needs to be more of a joint undertaking between his office and the Legislature, rather than being "an executive suggestion that the Legislature thinks it needs to cut back."

"I'm not sure that this doesn't point us in a pretty good direction, in ending up in an agreement on a compensation system that would be fully funded based on executive branch recommendations," Freudenthal said of the report.

Luthi said the committee directed the Legislative Service Office Thursday to draft a bill that would allow the State Employee Compensation Commission to appear before appropriation committee in the Legislature and make its case about how much the state needs to spend on employee compensation to be competitive.

Luthi said having commission members appear before legislators "would then give their recommendations far more credence, and the bill would help establish that this commission would be that very link of consistency that appears to be lacking in this administration."

Brian Foster, Human Resources administrator with the Wyoming Department of Administration and Information, said Friday that about 4,000 state employees - roughly half the total - are currently being paid less than market rates.

Foster said his agency disagreed with the report's recommendation that it hire an outside consultant to address the question of defining the "market" of employees in which the state needs to be competitive. He said there's expertise in his division and the Department of Employment to do the job in-house.

Foster said he agreed with the report's conclusion that state employee pay has only reached market levels once since 2000. And while the state doesn't have to match private sector pay dollar for dollar because of the good benefits the state provides, he said low pay ultimately does affect state employee morale.

"When that gap on the base pay side starts getting really wide, they start saying, 'Now wait a minute, maybe I should take my experience and skills else where they'll reward me a little more,"' Foster said.