Pay and Benefits Watch: Did somebody say $1 million bonuses?

Speaking off the cuff last week at a hearing on waste, fraud and abuse, House Government Reform and Oversight Committee Chairman Dan Burton, R-Ind., said he didn't see any reason why a hypothetical federal employee who eliminated $500 million in wasteful federal spending shouldn't get a $1 million bonus.

"Reward systems should be targeted on these incredibly wasteful high-risk problems and generously reward individuals who turn them around," Burton said.

Unfortunately for any Super Civil Servant who manages to rein in millions of wasted taxpayer dollars, the law that permits performance awards for federal employees doesn't allow for anywhere near $1 million bonuses. But a highly effective fed could take home a bonus of up to $10,000 in most cases (anything more than $10,000 requires Office of Personnel Management (OPM) approval). In a few very special cases, the President can approve bonuses of more than $25,000.

Bonuses in the thousands-of-dollars range tend to go to senior executives in the federal government. The Senior Executive Service operates under special performance bonus rules.

According to OPM's preliminary statistics, 2,256 senior executives, or 36 percent of the Senior Executive Service, received bonuses in fiscal 1997. The average SES bonus was $7,161. SESers are also eligible for Presidential Rank Awards, which are worth 20 percent of base salary for meritorious awards and 35 percent of base salary for distinguished awards.

The 683,759 non-SES managers and employees who received performance awards in 1996 averaged $749 bonuses, according to OPM data.

Bonuses along the lines of what Burton had in mind are allowed, at much lower amounts, in Title 5, the law that governs federal civilian policy. Inspectors General "may pay a cash award to any employee of such agency whose disclosure of fraud, waste, or mismanagement to the Inspector General of the agency, or to such other designated agency employee, has resulted in cost savings for the agency," the law says. The award can be an amount equal to one percent of the agency's cost savings, up to $10,000. The law allows the President to hand out similar cash awards of up to $20,000.

Gainsharing is another bonus system that agencies can use to tie pay with performance. Typically under gainsharing, management sets performance goals for units or teams. If the teams make those goals, the employees divvy up cash bonuses.

At the Red River Army Depot in Texas, management uses the annual difference between the depot's revenue and expenses, which it calls its net operating results, for deciding performance bonuses. That method focuses everyone on the bottom-line, the depot says. In 1995 and 1997, employees received $500 bonuses under the system.

A more individual gainsharing program is available to federal travelers.

Under the law, employees can receive payments of up to 50 percent of the travel savings they earn for their agencies.

For example, employees can apply for frequent flyer accounts to use when they travel on government business. Though frequent flyer miles must be used for further government travel, employees are eligible to receive a portion of the travel savings from their agencies.

Rules for taking advantage of the program differ by agency. At the Education Department, for example, employees must rack up travel savings of $400 for the department to receive 50 percent of the savings. At the General Services Administration, employees must accumulate at least $200 in savings to qualify.

Even more bonus programs are authorized by federal law. It's up to managers and employees to take advantage of them. More detailed explanations of bonus options, along with links to the all-important legal citations (useful to show the boss who says such things aren't allowed), are included on OPM's online Performance Management Technical Assistance Center.

CAP ATTACK

Next week, Pay and Benefits Watch will return to the issue of caps on overtime and regular pay.