Eight more agencies win authority to hike SES pay

Eight more federal agencies have received certification from the Office of Personnel Management and the Office of Management and Budget for their performance evaluation systems for senior executives. Those agencies can now raise executive salaries to nearly $160,000 a year.

The agencies received provisional certification, which will expire at the end of 2004. To raise executives' pay up to the new cap in 2005, the agencies will have to reapply for certification. But agencies with provisional certification can initiate employee raises this year and process them in 2005, if necessary.

The eight agencies are the Agriculture, Energy, Justice and Labor departments, the Agency for International Development, the Equal Employment Opportunity Commission, the National Labor Relations Board, and OPM itself.

OPM and OMB had already granted provisional certification to 18 other agencies: the Commerce, Health and Human Services, Interior, Transportation, Treasury and Veterans Affairs departments, the inspector general's office at the Housing and Urban Development Department, the Environmental Protection Agency, Federal Communications Commission, Federal Energy Regulatory Commission, Federal Trade Commission, Merit Systems Protection Board, National Aeronautics and Space Administration, National Endowment for the Arts, Office of National Drug Control Policy, Railroad Retirement Board, Small Business Administration, and Social Security Administration.

The General Services Administration and Pension Benefit Guaranty Corporation received full certification for their performance evaluation plans, so they will not have to seek recertification until the end of 2005.

The five cabinet departments that have not yet received certification to raise executive pay caps are the Defense, Education, Homeland Security, Housing and Urban Development, and State departments.

Congress passed legislation in November 2003 that authorized OPM and OMB to raise the Senior Executive Service pay cap from the rate for Executive Level III ($145,600) to Executive Level II ($158,100), but only if agencies could demonstrate that they had developed reliable means of measuring executive performance. The law also permits certified agencies to raise the aggregate pay cap for executives to $203,000 per year when bonuses are included.

But the law eliminated regular cost-of-living adjustments for the government's senior executives, as well as locality pay. Under the new system, executives only receive raises if agency leaders determine that their performance merits an increase.

About 70 percent of executives now receive basic pay rates at or near the old base pay cap. The new cap was designed to relieve pay compression in the upper echelons of the SES. The OPM guidelines state that agency heads must approve raises above Executive Level III, and that only the best performers or those who make the greatest contributions to the agency should receive the higher salaries.

Employees at agencies that have not received certification will be eligible for raises only if President Bush raises executive schedule salary caps and agency managers determine that the executives' performance merits an increase. Those employees also will be eligible for raises only up to the old pay cap, $145,600, plus any percentage increase granted by Bush.

Last July, OPM issued regulations that established rigorous criteria for SES performance appraisal systems. Full certification requires that such systems meet nine criteria in the areas of "strategic alignment, consultation, results, balance, assessment and guidance, oversight, accountability, performance differentiation, and pay differentiation." Provisional certification is given to agencies whose performance appraisal systems have met five of the nine criteria: strategic alignment, consultation, results, balance and accountability. Full certification cannot be granted to any agency unless it can demonstrate two years of results under the pay differentiation and performance differentiation criteria.