OPM Tells Agencies to Submit Annual Special Pay Rate Requests

Federal agencies have until Oct. 14 to submit documentation requesting special pay rates for hard-to-fill jobs in 2017, according to a new memorandum from the Office of Personnel Management.

Agencies that aren’t asking for an increase, decrease or elimination of existing special rates for certain occupations and plan to just go with the 2017 annual across-the-board pay raise (likely to be 1.6 percent), don’t have to respond to OPM’s annual call for the salary rate review.

OPM has the authority to set special rates for specific occupations, grades and locations to boost recruitment and retention of hard-to-fill jobs. Agencies must prove they have an existing or likely hiring challenge in a certain job if they want to pay more than the base pay raise for the coming year; they also can ask for an adjustment that is less than the expected pay raise. “Such a request may be appropriate if an agency has determined special rates do not need to be increased by the same amount as the across-the-board increases in GS base rates to prevent a serious staffing problem,” the memo said.

The special rates -- which apply to hundreds of federal occupations including law, medicine, engineering and law enforcement -- are calculated by adding a fixed-dollar amount or fixed-percentage amount to the underlying GS base rate. OPM has broad flexibility to establish alternate pay rates to address staffing issues. According to the agency’s website they can do so for any of the following reasons:

• The existence of significantly higher non-federal pay rates compared to federal pay within the same geographic area or occupational group;
• The job is in a remote location or the working conditions are “undesirable;”
• “Any other circumstances OPM considers appropriate.”

Over time, the special higher pay rates are designed to ultimately converge with the General Schedule, as increases in base pay eventually catch up to the special rate. If a special rate employee is entitled to higher locality pay than the special rate pay in an area, then the employee’s special rate is terminated (with an exception for certain law enforcement officers). So, when agency pay increase recommendations do not exceed the annual GS increase, the special pay rates move closer to alignment with GS salaries.

“Depending on pay adjustments, if any, made in January 2017, OPM may terminate some special rate schedules because higher locality rates apply at all steps of each covered grade, or certain grades or steps of a special rate schedule may be discontinued because higher locality rates apply,” said the Aug. 4 memo. “OPM may also terminate some special rates because the applicable locality rate is equal to the special rate.”

President Obama has until Aug. 31 to formally announce his 2017 pay raise proposal for federal employees. He is expected to propose a 1.6 percent across-the-board pay hike for civilian federal employees -- the recommendation he outlined in his fiscal 2017 budget and the amount he has supported so far this year.

If the president doesn’t inform Congress of his alternative pay plan for feds by Aug. 31, then the increase mandated by the 1990 Federal Employees Pay Comparability Act kicks in. Under FEPCA, the raise would be determined by the change in the Employment Cost Index minus 0.5 percent. For 2017, that is around 2.1 percent.