OPM begins annual process of adjusting special pay rates

Office of Personnel Management Director Kay Coles James has kicked off the annual process for adjusting pay rates for employees covered under special salary rates.

In a July 14 memorandum sent to chief human capital officers, James asked agencies to respond by Oct. 15 with recommendations for 2005 rate increases for the roughly 140,000 employees covered under special salary rates.

James also said that agencies have until January 2005 to complete the reclassification of computer specialists now under the GS-334 special rate schedule. OPM initially asked agencies in 2001 to reclassify those workers from GS-334 into more flexible pay schedules.

Special salary rates, which are higher than those paid to General Schedule employees, have been established by OPM on a case-by-case basis to help agencies plug hard-to-fill openings in particular occupations or locations. About 400 occupations are covered under the special rates, including medicine, law enforcement, information technology and engineering.

In the memo, James says that the recommendations must include data comparing government pay and retention data with that of local markets. Agencies can recommend increases more than those given to GS employees based on continuing hiring and retention problems. They also can recommend raises equal to, or less than, GS employees if those problems have been eliminated.

When they are established, the special rates are higher than those paid to GS employees, but over time, the special pay rates are designed to erode in value and come back into alignment with the General Schedule. Special rate employees are entitled to the annual across-the-board pay raise approved by Congress and the president, but they do not receive locality pay adjustments. So, when agency pay increase recommendations do not exceed the annual General Schedule increase, the special pay rates move closer to alignment. When they reach alignment, special rate employees are converted back to the General Schedule.

Special raters received an average raise of 2.7 percent in 2004, compared to 4.1 percent for the average General Schedule worker, according to OPM.

From 1982 to 1988, OPM did not provide any pay increases to some special salary rate employees. The National Treasury Employees Union sued, and a court ruling overturned the policy in 1988, requiring that special rate employees receive at least the annual increase provided to General Schedule workers. After a 20-year legal battle, the government last year began providing back pay to special rate employees denied raises in the 1980s.