White House legislation includes more buyouts, bonuses and flexible hiring

Federal managers could offer $25,000 buyouts, make on-the-spot hiring decisions and design personnel systems that could be permanently exempt from portions of the Civil Service Code under legislation unveiled by the White House Monday. The Bush administration introduced two legislative proposals as part of its broad "Freedom to Manage" initiative: the Freedom to Manage Act, which would force Congress to quickly reaffirm or repeal laws that hinder sound management, and the Managerial Flexibility Act, a far-reaching package of workforce restructuring tools that would give all agencies permanent buyout authority. The Managerial Flexibility Act also contains property management reforms and a proposal to directly bill agencies for their full contribution to certain health and pension programs. Currently, agencies split benefit costs with the Office of Personnel Management. The legislation includes several personnel management reforms that Bush officials believe will help managers attract and retain high-quality workers. Some of the proposals are not new--OPM developed a plan to offer bigger bonuses last year, and in 1995 and 1997 the Clinton administration unsuccessfully lobbied Congress to directly charge agencies for pension and health benefits. But Sean O'Keefe, deputy director of the Office of Management and Budget, stressed the legislation is necessary to implement Bush's management agenda and to allow managers to do their jobs. "This is three yards in a cloud of dust," said O'Keefe. "These measures are more necessary now than ever before." The legislation would enable agencies to use $25,000 buyouts and voluntary early retirement incentives to flatten and reshape their workforces. Buyouts and "early outs" have been used to downsize agencies in the past, but the proposal allows agencies to petition the White House to let them keep or reallocate positions freed up by buyouts. Agencies could also design demonstration pay and personnel systems that deviate from the government's General Schedule pay system. The act would allow projects to become permanent after five years as an "alternative personnel system" under Title V. Title V contains the rules governing most of the federal workforce. The "alternative personnel system" proposal might be the most important part of the Freedom to Manage package, according to Don Kettl, a professor at the University of Wisconsin. "We need more experimentation to determine what works," he said. "A one-size-fits-all approach surely won't prove a very good match for today's government problems." But the largest federal employee union blasted the idea as a tactic to undercut congressional authority over Title V. After five years, OPM and agencies would decide if demonstration projects should become permanent without input from Congress. "OPM would yield to itself the authority to replace the statutory provisions of Title V," said Bobby Harnage, president of the American Federation of Government Employees. Harnage and Colleen Kelley, president of the National Treasury Employees Union, both derided the Managerial Flexibility Act as a boon for senior executives that does nothing for the rest of the federal workforce. The Managerial Flexibility Act would also give all agencies the authority to scrap the government's job ranking and selection procedures, including the "rule of three," which requires personnel officials to pick a candidate from among the three most-qualified applicants. Instead of ranking job candidates, agencies would divide applicants into two or more categories of quality. Personnel officers could then hire any candidate within the top-quality group. Applicants covered by certain preferences, such as veterans, would be listed ahead of other candidates within their "quality" group. This system has been used for years at certain agencies within the Agriculture Department, including the Forest Service. Under the legislation, personnel officers could also make on-the-spot hiring decisions for positions with a critical need or few applicants, without regard for the government's preference rules. OPM regulations would define how agencies can use on-the-spot hiring. The legislation also allows agencies to offer bigger recruitment bonuses to help fill much-needed jobs. While retention and recruitment bonuses would still be capped at 25 percent of an employee's annual rate of basic pay, agencies could offer these bonuses based on how long an employee agrees to work for the agency. If an employee signed on to work for four years, the employee could receive a hiring bonus amounting to 25 percent of his or her four-year salary. Agencies could also offer recruitment bonuses to entice current employees to fill critical staffing needs. O'Keefe said it was "likely" that agencies would receive more funds so they could offer bonuses to desired employees. "It's a two trillion dollar budget," he said. "The sooner these flexibilities are enacted, the sooner [agencies] can start to use them." The Managerial Flexibility Act also contains property management reforms. The bill would allow agencies to retain proceeds from sales of unneeded property, instead of returning these funds to the treasury. Agencies would also be required to develop asset management plans that conform with their performance plans--a "common sense" management reform, according to Stephen Perry, administrator of the General Services Administration. Perry added that Congress should not have any problems with the asset management reforms in the bill. O'Keefe stressed the other half of "Freedom to Manage," the Freedom to Manage Act itself, was crucial to eliminating statutory barriers to sound management. While agencies may request waivers of administrative rules under the 1993 Government Performance and Results Act, the Freedom to Manage Act would set up a legislative mechanism for quickly affirming or disposing of unneeded rules. After the White House submitted a list of burdensome statutes, Congress would have ten days to issue a joint resolution and thirty days to bring it to a vote. "That's pretty fast," said O'Keefe. But OMB's quest to eliminate outdated laws has already hit one snag: when the Bush administration asked agencies this summer to find statutes that interfere with their missions, the agencies only came up with a handful of laws. In mid-September, the White House told OMB itself to hunt down such statutes, according to officials at the September meeting of the Budget Officers Advisory Council, an interagency council of budget officials.