SEC pay raise passes, but OMB declares opposition

Agencies that try to exempt themselves from the government's pay system likely will face opposition from the Bush administration, the Office of Management and Budget said Thursday. OMB announced its views on agency pay raises in comments on H.R. 1088, a bill that would give employees at the Securities and Exchange Commission (SEC) an across-the-board raise and cut the fees that certain investors pay on securities transactions. The House approved the bill Thursday by a vote of 404-22. While the Bush administration supports the fee-cutting measure, it opposes a provision in the bill that would allow the SEC to leave the government's General Schedule and develop its own pay scale. The SEC contends it needs such pay authority to solve chronic recruitment and retention problems. "The administration has concerns with any legislation that would exempt individual agencies from all or part of Title 5 of the U.S. Code, adversely affecting the portability of federal employees and fragmenting personnel systems," the OMB statement on the bill said. Last month, OMB advised against an across-the-board raise for employees at Federal Aviation Administration headquarters because it disrupted pay equity between agencies, according to OMB spokesman Chris Ullman. Instead of looking for special pay authority to give employees an across-the-board raise, agencies should use existing tools such as retention and recruitment bonuses on a targeted basis to attract and retain workers, Ullman said. "There are ways the SEC could deal with these [retention] problems on a targeted basis," said Ullman. "Targeting increases is generally a more effective way of approaching specific [retention and recruitment] problems." The administration's view on pay raises is linked to its decision to not pursue civil service reform. Last week, OMB deputy director Sean O'Keefe said civil service reform is not necessary because agencies have yet to fully use existing pay and hiring authorities. "[O'Keefe] believes we do not need civil service reform until we can demonstrate that existing authorities are inadequate," said Ullman. In a speech on the House floor Thursday, Rep. Dan Burton, R-Ind., criticized the SEC for failing to use existing tools to retain key workers. "The SEC has the authority to pay retention allowances up to 25 percent of base pay," he said. "Unfortunately, the SEC has only given retention bonuses to 1.3 percent of its workforce." Burton, who is chairman of the House Government Reform Committee, added that the SEC bill sets a "terrible precedent" by encouraging other agencies to move outside of the government's pay scale. The Department of Veterans Affairs, Commodity Futures Trading Commission, Export-Import Bank, and Patent and Trademark Office are all seeking to leave Title 5, according to Burton. But the SEC bill would require the agency to make sure its pay rates are comparable to salaries at the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Office of Thrift Supervision and several other financial regulatory agencies-all of which are already allowed to set their own pay rates and ignore Title 5. Despite OMB's opposition to the pay raise in the SEC bill, Ullman would not say whether the White House would veto the bill in its current form. The bill now returns to the Senate, which passed its own version of the SEC legislation earlier this year. Colleen Kelley, President of the National Treasury Employees Union (NTEU), hailed the House vote on the bill as "a victory for employees."