House votes to freeze locality pay areas until 2005

Congress approved legislation Thursday that ensures federal employees in Monterey County, Calif., will retain their special locality pay through 2004 no matter what decision the Federal Salary Council makes in October.

Under a "sense of Congress" amendment offered by Rep. Sam Farr, D-Calif., to the fiscal 2004 Transportation-Treasury appropriations bill, the Federal Salary Council would be prohibited from eliminating any special locality pay areas until 2005.

"My amendment essentially states that Congress believes current locality pay areas should be held harmless over the next year," Farr said on the House floor Thursday. "We ask that [the Office of Personnel Management] not eliminate any current locality pay area, but we do not object to OPM adding any new areas."

The government established the locality pay system under the 1990 Federal Employees Pay Comparability Act. Federal workers in 31 metropolitan areas, including Atlanta, Washington and San Francisco, receive special locality pay, based on the cost of labor in each city. Outside the 31 areas, federal workers in the 48 contiguous states are covered by the "Rest of the U.S." locality pay category. Each year the Federal Salary Council, a panel of government officials and federal union leaders, makes a recommendation on locality pay areas to the President's Pay Agent, a group that includes OPM Director Kay Coles James, Labor Secretary Elaine Chao and Office of Management and Budget Director Joshua Bolten. The Pay Agent then makes a recommendation to the president.

This year, the group decided to hold off on making changes to locality pay areas because OMB was revising its metropolitan statistical areas (MSAs) and consolidated metropolitan statistical areas, which are defined using population, population density and commuting information. In the past, locality pay areas have been developed using MSAs. In 1999, Monterey County, Calif., was added to the San Francisco locality pay area, but the redrawn MSA lines may lead to the loss of special locality pay for the county, affecting the salaries of more than 4,000 federal employees. According to Farr, who testified before the Federal Salary Council on Wednesday, the cost-of-living in Monterey County is as high as that of San Francisco and San Jose and the elimination of locality pay could send federal employees packing.

"If Monterey federal agencies are going to have any hope of recruiting and retaining qualified and talented people in the federal workforce, maintaining the highest possible locality pay we can is imperative," one Monterey County federal employee wrote in an Aug. 27 letter to the council.

A working group within the council is expected to make recommendations to the full council in the next few weeks. The council's options include adopting the new MSAs, sticking with the old MSAs or developing its own locality pay areas. The council is expected to make a decision on the matter when it meets again on Oct. 7.

Farr said his amendment would give the council time to "do the research right and to draw up a fair and defensible plan for locality pay boundary designations."

"I will do everything in my power to ensure federal employees in Monterey County do not see a decrease in their paycheck," Farr said. "The issue is too complex and too sensitive to figure out in a month. Thousands of federal employee paychecks and, consequently federal agency missions, hang in the balance."