Spending bill hits salaries, benefits for employees overseas

An amendment to the House-passed bill funding agencies for the rest of fiscal 2011 would perpetuate a compensation gap for Foreign Service officers and other federal employees serving abroad, according to a government observer.

House lawmakers on Saturday advanced spending legislation that included a provision to cancel a third round of locality pay increases for federal employees serving overseas. Foreign Service personnel for two years have received bumps in overseas comparability pay to bring their salaries in line with employees serving in domestic posts. Rep. Tom Reed, R-N.Y., the amendment's sponsor, said eliminating the next boost would save taxpayers $140 million this year.

"At a time when other federal employees have had their salaries frozen or reduced, we cannot and should not be giving massive, automatic pay raises to any federal employees," he said.

Foreign Service employees for years did not receive locality pay while on overseas assignments, but Congress in 2009 began phasing in annual increases to close a 24 percent gap with Washington-area employees. Federal workers in posts abroad saw a 16 percent boost over 2009 and 2010 and were scheduled for an additional 8 percent in 2011.

Reed is mischaracterizing the 2011 increase, American Foreign Service Association President Susan Johnson said.

"We in the Foreign Service and AFSA certainly are behind efforts to eliminate wasteful spending, but we are concerned that the amendment calls for reversing a carefully considered bipartisan plan to modernize the pay system of the Foreign Service," she said. "Closing the pay gap is not a pay raise. It's correcting 17-year-old unintended inequity."

While Foreign Service employees serving overseas receive housing and hardship pay depending on their assignment, locality pay affects both salaries and benefits, Johnson said. Workers retiring from overseas assignments will have a smaller retirement package than those who spent their careers in Washington because Social Security and Thrift Savings Plan contributions depend on base pay, she said. Federal Employees Retirement System benefits are calculated from a "virtual" high-three salary an employee would have received while in Washington, however, she noted.

According to Johnson, the move also devalues government's efforts to bolster diplomacy because it cuts the pay of foreign affairs agency workers who are headed into the field. It also penalizes employees who already are facing risky assignments, separation from families and other hardships, she noted.

"The Foreign Service today is not the Foreign Service of yesteryear," she said. "It's a very different world out there."

The Senate has yet to approve the Republican-backed House spending measure. Senate Democratic leaders have indicated they are open to dropping spending below levels approved in the current continuing resolution, which runs out on March 4. But they are unlikely to accept the deep cuts that the House passed.