GovernmentExecutive.com

It may take several months for members of the Senior Executive Service to benefit from increased pay rates authorized by Congress last fall.

Currently, the SES cap is $142,500, including locality-based pay. Under new rules included in the 2004 Defense Authorization Act, locality pay is eliminated, and agencies can pay their senior executives up to $154,700.

Congress raised the pay cap to relieve pay compression in the upper echelons of the civil service, which has left 70 percent of all senior executives earning the same salary. But for agencies to implement the new rates, the Office of Personnel Management must certify that they have developed new performance management systems that tie executive compensation more closely to job performance.

The Senior Executives Association, which represents top managers, lobbied hard for raising the cap. But SEA counsel Bill Bransford says agencies may not be able to get their performance management systems certified by OPM until this spring at the earliest -- despite the fact that Congress authorized the new SES pay system to go into effect on the first pay period of 2004, which for most employees is Sunday, Jan. 11.

"It's very frustrating, because agencies are supposed to have the ability to award salaries up to [$154,700], but no one can do it," Bransford said. "No agency has certification, and no agency can have it until [regulations] are out there developed by OPM."

Doris Hausser, the chief policy adviser at OPM and the agency's chief human capital officer, said she could not set a target date for release of the new regulation because Congress required that OPM work jointly with the Office of Management and Budget to set the new rules. "There are policy issues that have to be addressed, and we have to be very careful about this. It is a major change," she said.

Among the issues to be resolved, Hausser said, is whether OPM will allow some agencies that have not implemented adequate performance appraisal systems to move ahead with provisional certifications based on promised improvements. In addition, OPM and OMB have not determined how long certifications should last before they have to be renewed.

Another issue involves the treatment of Senior Foreign Service officers under the new system. By law, Senior Foreign Service officer pay is linked to that of SES members. But Senior Foreign Service officers overseas do not receive locality pay, so the rate of pay of those serving in foreign countries on Jan. 11--which could be used to determine their base pay under the new system--is lower than that of their Washington counterparts.

The American Foreign Service Association expressed concern last month about how Senior Foreign Service officers might be treated under the new system. Hausser said OPM would seek to treat them the same way that SES members on temporary overseas assignments are treated.

Under interim rules released Friday, senior executives stationed overseas, in Alaska, Hawaii, or a U.S. territory, will receive a one-time locality pay adjustment when they return to a position in the continental United States.

Hausser said OPM and OMB were doing their best to have further regulations out "as soon as possible," and they were taking every step to ensure that agencies would know exactly what they need to do to receive certification upon release of the regulations.

Still, Bransford said the situation was exasperating because OPM and OMB were ordered by Congress to develop such regulations in November 2002, when Congress passed legislation creating the Homeland Security Department.

Meanwhile, Bransford said senior executives are waiting anxiously to see if they will receive pay increases this year. Although most federal employees will almost certainly receive a 4.1 percent pay raise this year, senior executives will receive raises only at the discretion of their agency employers. The maximum raise for them will likely be 2.2 percent.

To add insult to injury, if senior executives do receive a raise this year prior to implementation of the OPM regulations and pay cap increase, they may not be able to benefit from the new cap until at least January 2005 because federal employees are barred from receiving more than one raise per year.

The one-raise-a-year limit is meant to prevent employees from receiving more than one promotion in a year, and the annual pay raise is exempt. But SEA President Carol A. Bonosaro said her interpretation of OPM guidance sent out in December indicates that the senior executive pay raise counts against the limit because this year, for the first time, it is discretionary and based on performance, not a standard annual pay increase.

Bonosaro said SEA was encouraging OPM to lift the requirement that agencies only raise salaries once a year. OPM's Hausser, however, denied that a decision had been reached, and said the agency would resolve the question when it releases the regulations later this year.

COMMENTS

• Pay compression is no reason to increase the ceiling! The value of the job should determine the pay and the value of the job depends upon the supply of people qualified for the job and the demand for the people qualified for the job! Pay compression should have nothing to do with it. If those at the ceiling deserve better pay, they will leave to get the higher pay - they are not leaving! Therefore, do not raise the ceiling. Freeze the pay of the President and congressional members - maybe that will help to get some turnover in our politicians! GovExec.com reader Posted January 13, 2004 7:47 AM
• I have never seen described in any article about pay compression any mention about the pay cap that federal law enforcement managers are under. GS-14 and 15 federal law enforcement managers are pay capped at the Executive Level V pay level. That means that most of these federal agent managers (especially at the GS 15 level) are prevented from receiving the overtime pay that they earn under the Law Enforcement Availability Pay act (LEAP). Unlike state and local law enforcement, Federal law enforcement receive only straight time and not time and a half for overtime. And if you become a manager, it is very likely you will be receiving less than straight time because of the cap. When subordinates receive their 4.1% raise late this month, Federal law enforcement managers will be stuck with the lower raise that the Executive schedule gets. That means the difference between managers and subordinates in federal law enforcement pay will continue to narrow. GovExec.com reader Posted January 12, 2004 9:10 AM
• The new pay rules do allow for increases to the ceiling. However, there are several new authorities that seem potentially negative in return for this potential positive. First of all, pay compression is likely to be most resolved by the fact that the bottom rate for SES was dropped from about 125,000 to about 100,000. So, with the new SES "pay banding" it will be possible to appoint new members of SES at a rate just above the lower steps of a GS-15. (A real disincentive to move from GS-15 pay with less responsibility and risk). Also, in the new authority, the "pay banding" allows for members of SES to have pay reduced (after the first year of the new system) for performance. Also, there is no cost of living raise allowed. All of these potential negatives seem reasonable to me since they are performance-based. However, the return in potential reward for these negatives seems small. But, the article focuses on the raise in the top with no mention of the reduction in security and loss of any guarantee of pay raises, a one-sided presentation. GovExec.com reader Posted January 10, 2004 12:41 PM