Administration seeks to raise SES pay cap

The Bush administration wants to raise the cap on federal executives' salaries, according to administration officials.

The change would allow members of the Senior Executive Service, the government's top cadre of career leaders, to earn thousands of dollars more per year.

Officials said they also want to give executive branch political appointees more control over career executives' salaries. The administration wants to create an SES pay range that, were it in place now, would range from about $102,000 to $154,700. Political appointees could set executives' salaries at any amount within that range. Under the current system, executive salaries are set at pre-determined rates on a six-step salary schedule, which limits political bosses' control over SES pay.

Raising the cap on executive pay has been a long-time priority of the Senior Executives Association, the professional association for the 7,000 members of the SES. The association has lobbied Congress and the administration to raise the cap for several years. According to Office of Personnel Management Director Kay Coles James, about 60 percent of the SES is paid at the current cap, which is $142,500 this year.

"Obviously we're delighted that the dam is finally broken and the administration is supporting an end to SES pay compression by raising the ceiling," said Carol Bonosaro, president of the executives association. "But, as is always the case, the devil is in the details and we will need to understand more about how the pay range will work."

Under federal law, salaries for the SES are capped at the third highest pay level on the Executive Schedule, the five-level schedule on which salaries are set for members of Congress and executive branch political appointees. This year, the third highest level is $142,500. The Bush administration wants to raise the cap to the second highest level of the schedule, which is $154,700 this year. If Congress approves a change in the cap, the change would take effect in 2004, when those salary rates could be higher.

The administration's proposal comes as Bush officials have been putting heat on agencies to score executives lower on performance ratings. For years, most executives have received the highest performance ratings from their bosses. OPM Director James has said that fact suggests agencies are not making meaningful distinctions in performance among executives.

Congress helped James' effort by including a provision in the legislation creating the Homeland Security Department that allows agencies to give bigger bonuses to members of the SES only if the agencies don't give all of their executives top performance ratings. The legislation raised the SES's total annual compensation limit, including salaries and bonuses, from the top level of the executive schedule, which is $171,700 this year, to the vice president's salary level, which is $198,600 this year. But agencies can take advantage of that change only if they prove to OPM that their executive performance evaluation systems spread ratings across the rating scale.

The Bush administration's proposal to eliminate the six-step salary ladder for SESers would further put control of executive compensation into political bosses' hands. The change would give the bosses the power to set SES salaries at any rate within the given range.

The change would also lower the salary threshhold for the SES from the current basement level of $116,500 to about $102,000. Lowering that level would let agencies move people into the executive ranks more quickly, said Mark Everson, deputy director for management at the Office of Management and Budget.

Bonosaro said the association would work with the administration on implementing the SES pay proposal. "We have to understand how they envision the pay range working," Bonosaro said.

Raising the cap on SES pay would cost $20 million next year, Everson said. He said the cost would not be covered by OMB or OPM. Instead, agencies would bear the cost in their budgets.

James and Everson announced the proposal simultaneously with the announcement that the administration will seek a 2 percent across-the-board pay raise for rank-and-file federal workers next year, along with a first-ever $500 million fund for performance-based salary raises for those workers.