Pay lowdown

When the Bush administration's fiscal 2004 budget was released on Monday, it included a proposal to raise the salaries of Senior Executive Service members.

Annual SES pay increases are computed under the same two-part formula used for the annual increases of civil service employees: an across-the-board increase based on increases in the Labor Department's Employment Cost Index, plus an increase in supplemental locality pay that varies from city to city based on local labor costs. About 60 percent of the SES is earning the same salary because of a cap on executive salaries, which are set at predetermined rates on a six-step salary schedule. Under the current system, senior executives can't make more than Level III of the Executive Schedule, which is $142,500 this year.

Under the Bush administration's proposal, the six steps would be eliminated and a broader pay range would be instituted. Political appointees would have more control over SES pay because salaries could be set anywhere within a $102,000 to $154,700 pay range. But the plan as described so far leaves much to be determined, according to Carol Bonosaro, president of the Senior Executives Association, a professional organization that advocates for the federal government's 7,000 SES members.

"It's simple on its face, no one can argue with pay for performance, but it raises a lot of questions that have to do with how it will, in fact, operate," Bonosaro said Wednesday. "If you abolish SES rank and you have a wide open pay range, interestingly enough, you take authority that is now given to the president to set the pay at different levels and therefore the pay of executives. Now you give it to the agencies and it is basically unfettered, it could become [Office of Management and Budget Director] Mitch Daniels' worst nightmare, because agencies, as we know from appraisals, think highly of executives' work, and if they set their pay accordingly, then we would have some very happy executives indeed."

Last year Congress included a provision in legislation creating the Homeland Security Department that requires agencies to distinguish executives who are merely meeting performance goals from those who are exceeding goals. The impetus lies in the revelation that nearly 84 percent of federal executives received their agency's highest performance rating in 2001.

Under the new law, the higher salaries proposed in the budget request, would have to be tied to certified performance appraisal systems.

"If they proceed with their requirement for a so-called certified pay-for-performance system, it's almost inescapable that in some form or other, quotas will be operative," Bonosaro said. "On its face, once you hit a certain number of outstanding [ratings], that will raise suspicion."

Bonosaro is working on hammering out the details, talking to legislators and administration officials about crafting a plan that would address questions such as minimum or maximum amounts for pay increases, the rights of employees to appeal a salary decrease, how much a senior executive's level of responsibility and performance influences salary, and how bonuses fit into the picture. A final plan would also have to ensure that the SES corps remain nonpartisan.

"None of these executives have any concern if they have assurance that their work will be judged fairly," Bonosaro said. "The problem is that it's very hard to have that assurance…given the nature of political and career interface, and because of this performance plan certification and the specter of quotas."

Health Premium Help

House Minority Whip Steny Hoyer, D-Md., is making good on a December 2002 promise to reintroduce legislation that would increase the government's contribution to federal employees' health insurance premiums.

In March 2001, Hoyer introduced H.R. 1307, which would have raised the government's portion of health care premiums from 72 percent to 80 percent. Several other lawmakers offered similar bills, but none of them were passed during the last congressional session. This year federal employees' health insurance premiums increased by an average of 11.1 percent.