[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
FEDERAL PAY POLICIES AND ADMINISTRATION
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FEDERAL WORKFORCE,
POSTAL SERVICE, AND THE DISTRICT
OF COLUMBIA
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JULY 31, 2007
__________
Serial No. 110-151
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
----------
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts CHRIS CANNON, Utah
WM. LACY CLAY, Missouri JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts DARRELL E. ISSA, California
BRIAN HIGGINS, New York KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of VIRGINIA FOXX, North Carolina
Columbia BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota BILL SALI, Idaho
JIM COOPER, Tennessee JIM JORDAN, Ohio
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont
Phil Schiliro, Chief of Staff
Phil Barnett, Staff Director
Earley Green, Chief Clerk
David Marin, Minority Staff Director
Subcommittee on Federal Workforce, Postal Service, and the District of
Columbia
DANNY K. DAVIS, Illinois
ELEANOR HOLMES NORTON, District of KENNY MARCHANT, Texas
Columbia JOHN M. McHUGH, New York
JOHN P. SARBANES, Maryland JOHN L. MICA, Florida
ELIJAH E. CUMMINGS, Maryland DARRELL E. ISSA, California
DENNIS J. KUCINICH, Ohio, Chairman JIM JORDAN, Ohio
WM. LACY CLAY, Missouri
STEPHEN F. LYNCH, Massachusetts
Tania Shand, Staff Director
C O N T E N T S
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Page
Hearing held on July 31, 2007.................................... 1
Statement of:
Faleomavaega, Hon. Eni F.H., a Delegate in Congress from
American Samoa; and Hon. Patrick J. Kennedy, a
Representative in Congress from the State of Rhode Island.. 42
Faleomavaega, Hon. Eni F.H............................... 42
Kennedy, Hon. Patrick J.................................. 43
Kelley, Colleen, National president, National Treasury
Employee Union; J. David Cox, National secretary-treasurer,
American Federation of Government Employees; and Curtis
Copeland, Congressional Research Service................... 62
Copeland, Curtis......................................... 95
Cox, J. David............................................ 76
Kelley, Colleen.......................................... 62
Springer, Linda, Director, Office of Personnel Management,
accompanied by Nancy Kichak, Assistant Director, Strategic
Human Resource Policy, Office of Personnel Management...... 49
Letters, statements, etc., submitted for the record by:
Copeland, Curtis, Congressional Research Service, prepared
statement of............................................... 97
Cox, J. David, National secretary-treasurer, American
Federation of Government Employees; and Curtis Copeland,
Congressional Research Service, prepared statement of...... 78
Davis, Hon. Danny K., a Representative in Congress from the
State of Illinois:
Prepared statement of.................................... 3
Various prepared statements.............................. 6
Kelley, Colleen, National president, National Treasury
Employee Union, prepared statement of...................... 65
Kennedy, Hon. Patrick J., a Representative in Congress from
the State of Rhode Island, prepared statement of........... 45
Springer, Linda, Director, Office of Personnel Management,
prepared statement of...................................... 51
FEDERAL PAY POLICIES AND ADMINISTRATION
----------
TUESDAY, JULY 31, 2007
House of Representatives,
Subcommittee on Federal Workforce, Postal Service,
and the District of Columbia,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 3:30 p.m. in
room 2154, Rayburn House Office Building, Hon. Danny K. Davis
(chairman of the subcommittee) presiding.
Present: Representatives Davis of Illinois, Sarbanes,
Lynch, and Marchant.
Staff present: Tania Shand, staff director; Caleb
Gilchrist, professional staff member; Lori Hayman, counsel;
Cecelia Morton, clerk; Ashley Buxton, intern; and Alex Cooper,
minority professional staff member.
Mr. Davis of Illinois. I call the subcommittee to order and
thank all of you who have been inconvenienced.
Given the fact that this is the last week before our
proposed summer recess, lots of things are going on, and
schedules are being changed, and there is a strong effort to
get as many things done before the end of Friday as we possibly
can. As a matter of fact, we passed so many bills yesterday
until I couldn't keep count of them, so nobody can suggest that
this Congress is not working. As a matter of fact, it is
working, and working well.
Welcome Ranking Member Marchant, members of the
subcommittee, hearing witnesses, and all of those in
attendance. Welcome to the Subcommittee on Federal Workforce,
Postal Service, and the District of Columbia hearing on Federal
Pay Policies and Administration.
Hearing no objection, the Chair, ranking member, and
subcommittee members will each have 5 minutes to make opening
statements, and all Members will have 3 days to submit
statements for the record.
I know that my ranking member is on the way and will be
here, so I will just go ahead, and if he comes and wishes to
have an opening statement we will make arrangements for that to
happen.
Welcome Ranking Member Marchant, members of the
subcommittee, hearing witnesses, and all of those in
attendance. More than 100 Federal agencies employ about 2.7
million civilian workers, approximately 2 percent of the total
U.S. work force, in jobs representing more than 800
occupations. In March 2007 the Congressional Budget Office
issued a report entitled Characteristics and Pay of Federal
Civilian Employees. The report examined a subset of the
civilian work force, approximately 1.4 million salaried
workers, not including the employees of the Postal Service, who
fill full-time, permanent positions in the executive branch.
The report states that, while there is a common view that
the Federal Government is a monolithic employer with a standard
pay schedule and hiring rules, Federal agencies, through
current laws, executive orders, and regulations, have been
granted considerable latitude in hiring and setting pay. This
hearing is being held to examine the Federal Government's wide
range of pay and administration policies.
Federal agencies compete with one another for talent. From
2001 to 2005, more than 50,000 employees transferred from one
agency to another. While these employees saw their basic pay
rise about $1,800, there is some concern that, as the Federal
Government's pay system becomes more fragmented, it will make
it more difficult for employees to transfer from one agency to
another.
Furthermore, this subcommittee has much to learn about how
pay is established in the Federal Government and what roles the
Bureau of Labor Statistics, the Federal Salary Council, and the
Federal Prevailing Rate Advisory Committee play in setting pay.
We need to know more about agencies' experience with pay for
performance systems and market-based compensation studies.
These issues are critical as the Federal Government seeks to
recruit and retain a quality work force.
This hearing is the first step in examining Federal pay
issues. Future hearings will take a more focused look at pay
compression, pay for performance systems, and market-based
compensation studies. Today's witnesses will help set the
foundation for those hearings.
[The prepared statement of Hon. Danny K. Davis follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. I would like to ask unanimous
consent that the statements of Representative Barney Frank, who
could not be here today due to a full committee markup he had
to chair; Representative Luis Fortuno; the Senior Executive
Association; and the Forum of U.S. Administrative Law Judges be
submitted for the record. Hearing no objection, that will be
the order.
[The prepared statements of Hon. Barney Frank, Hon. Luis G.
Fortuno, the Senior Executive Association, and the Forum of
U.S. Administrative Law Judges follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. We are, indeed, fortunate that we
have some distinguished witnesses here. Before I swear them in,
I will just indicate who they are. Even though they have been
sworn as Members of Congress, let me just indicate that our
first panel is the Honorable Eni Faleomavaega, the
Congressional Delegate representing American Samoa. Delegate
Faleomavaega served as a staff counsel for the House Committee
on Interior and Insular Affairs from 1975 to 1981, and as
Deputy Attorney General for the Territory of American Samoa
from 1981 to 1984. Mr. Faleomavaega was elected to the House of
Representatives January 3, 1989.
The Honorable Patrick Kennedy is serving his seventh term
in Congress as the Representative from the 1st District of
Rhode Island. Representative Kennedy was appointed to the House
Appropriations Committee in December 1998, but requested a
leave of absence in order to fulfill a 2-year term as chairman
of the Democratic Congressional Campaign Committee.
Representative Kennedy now sits on the House Appropriations and
Natural Resources Committee.
Gentlemen, we thank you so very much for your presence. We
will begin with Delegate Faleomavaega. You may proceed.
STATEMENTS OF HON. ENI F.H. FALEOMAVAEGA, A DELEGATE IN
CONGRESS FROM AMERICAN SAMOA; AND HON. PATRICK J. KENNEDY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF RHODE ISLAND
STATEMENT OF HON. ENI F.H. FALEOMAVAEGA
Mr. Faleomavaega. Thank you, Mr. Chairman, for giving me
this opportunity to testify before you on an ongoing issue
regarding COLA practices that discriminate against Federal
employees in my District.
I am deeply concerned that Federal employees in my District
do not receive the non-foreign-area cost of living allowance
that the Office of Personnel Management provides in other non-
foreign areas in which Federal employees are eligible to
receive additional compensation.
As you know, Mr. Chairman, OPM is authorized to designate
places in non-foreign areas eligible to receive additional
compensation by virtue of costs of living that are
substantially higher than in the Washington, DC, area. Federal
statute provides authorization for COLA, and Executive Order
10,000 establishes two separate programs providing compensation
in non-foreign areas, including COLA, based on higher costs and
post-deferential pay as an incentive to work in non-foreign
areas with extraordinarily different difficult living
conditions.
Regulations governing administration of the COLA program
are found in Title 5 of CFR Part 591.
Mr. Chairman, to determine eligibility for COLA and the
rate of COLA payment, OPM conducts price surveys for comparison
with prices in the base area of Washington, DC. Using these
survey results, OPM has determined that Federal employees in
all non-foreign areas except my District are eligible to
receive COLA.
In response to a recent inquiry from my office seeking data
to determine why Federal employees in my District do not
receive COLA, OPM staff explained that OPM has never conducted
a survey in American Samoa. Since American Samoa clearly falls
within OPM's definition of non-foreign area, it seems highly
unreasonable that OPM asserts that the cost of living in my
District is not high enough to justify payment of COLA. How in
the world can you do this when no survey was ever done by OPM
in my District? To me, that is ridiculous.
Although I have discussed these concerns with OPM
officials, I have yet to receive an explanation that justifies
withholding non-foreign COLA from American Samoa's Federal work
force. Overall, my discussions with OPM have not proven
fruitful. At this point I am looking to explore other options
that could lead to a more fair and equitable treatment of the
Federal employees in my District.
Given that American Samoa faces the same issues driving
higher prices for goods, services, and travel that face all
other insular areas in similar situations, it seems highly
discriminatory that OPM chooses not to survey my District or
provide COLA to Federal employees in my District.
The bottom line, Mr. Chairman, is that I just don't
understand why OPM treats my little District in such a cavalier
fashion, in my humble opinion. I don't even have COLA. My
understanding is that now there is a new proposal coming out
from the administration about having locality pay as another
option that is possible for Federal employees to participate
in.
I did introduce legislation to provide that COLA should be
given to my Federal employees that work in American Samoa.
I sincerely hope, Mr. Chairman, that we will pursue this
issue, and whatever proposed legislation that the
administration has to offer and what we could do simply to
correct this inequity that has existed for too long.
With that, Mr. Chairman, I will be happy to receive any
questions. Thank you.
Mr. Davis of Illinois. Thank you very much. We appreciate
your testimony.
We will move to Mr. Kennedy.
STATEMENT OF HON. PATRICK J. KENNEDY
Mr. Kennedy. Thank you, Mr. Chairman.
I appreciate the opportunity today to have a chance to
testify on behalf of the critical issue of pay equity for our
workers in the New England area. In particular, I also want to
commend my colleague, Congressman Barney Frank, who has been a
leader on this issue but who has been unable to join us due to
other committee action in the Financial Services Committee,
which he is at currently.
As Federal officials, both Congressman Frank and I are very
familiar with the economy and job opportunities and the
commuting patterns in our area. In fact, I have to drive
through Congressman Frank's District to get back to home every
evening from parts of my District, so we absolutely are in the
same area, and so we share the same market in terms of our
workers, and we also share the same economy as Boston in terms
of the cost of living.
There is a very real case for treating our workers in the
Massachusetts/Rhode Island area the same as the Boston area for
the Federal wage area. In fact, it is already the case where
white collar Federal workers are at present treated as if they
are working in the Boston areas for purposes of pay parity. The
irony is that blue collar workers in the Federal civilian
system are not paid according to the same pay parity system for
cost of living.
That logic just doesn't wash, Mr. Chairman. I don't care
how the Office of Personnel Management justifies it. If they
have already determined that it is good enough for the white
collar employees to be treated on pay parity for purposes of
the market-based compensation and so forth to be paid the same
because of the cost of living and the like, why are they not
treating those at the lowest ends of the pay scale, the blue
collar workers, the same? They are living in the same
marketplace. In fact, the case should be made that they deserve
to be compensated even more so on the same parity level as the
Boston pay scale, which is higher, because, frankly, they are
the ones who are on the lowest end of the scale and they have
the toughest time making ends meet.
Frankly, we have a tough time filling these civilian slots,
and this is, I think, a matter of great importance to us as
people who are concerned about the strength of our civilian
work force and the continuity of that work force and the
longevity. I believe it is something that needs to be
rectified, and that is the reason why I am here today to
testify on behalf of these workers and say that it is just not
justified that wage rates in Boston could be up to 33 percent
higher than the ones in Rhode Island, and yet these workers in
Rhode Island are essentially looking for homes and are paying
for cost of living rates that are roughly the same as those
that are working in and around Boston. It is just unjustified,
and we need to get this remedied.
We have report language in the House Appropriations
Committee to address this through the financial services and
general Government appropriations bill, but the real solution
lies with the Office of Personnel Management, and the decision
to make this correction is now in their hands. This
discrimination for blue collar workers needs to end, and it has
been going on too long. I hope that we are finally making
progress to have hourly workers who labor just as hard for less
pay have their work redeemed and treated the same as those who
are white collar workers whose work is acknowledged to be
worthy of being paid on the same scale as their counterparts in
the Boston area.
With that, I conclude my testimony and submit my fuller
statement for the record. Thank you, Mr. Chairman.
[The prepared statement of Hon. Patrick J. Kennedy
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. Thank you, gentlemen, very much. I
will begin with some questions.
I must confess that I find both sets of testimony to be
quite intriguing, and it causes me some thoughts that I had not
really spent a great deal of time pursuing.
Mr. Faleomavaega, how many Federal employees work in
American Samoa, and how does this number compare with the
number of Federal employees in the Commonwealth of the Northern
Mariana Islands?
Mr. Faleomavaega. I don't know if there is a threshold that
OPM determines to say, well, because of a certain number
therefore we will look after you and check what the situation
is. I don't want to mislead you, Mr. Chairman. I want to give
you a more specific number. Also, when you say Federal
employees, I have about 600 of my men and women who just came
back from Iraq. I consider them as Federal employees and when
they came to Hawaii they don't get a post differential and
soldiers from Hawaii get that increase in their wages. A lot of
these measurements that are taken are from some regulatory
portions of the OPM regulations that say the cost of living or
the standard of living may be the basis.
I don't want to render a guess here, Mr. Chairman, as to
the exact number, but I will get that number and may it be made
part of the record.
Mr. Davis of Illinois. All right.
Let me ask you how much does a gallon of milk, for example,
cost?
Mr. Faleomavaega. Mr. Chairman, we don't drink that much
milk. [Laughter.]
Maybe a loaf of bread might be better. It is very similar
to the cost of bread in the State of Hawaii.
One of the things that I am always confronted with is that
our friends at the OPM say the cost of living in your District
is small. Well, how can they ever make such generalizations and
statements when there has never been a survey done by OPM of
the cost of living in my District? It just doesn't make sense.
Now, what they have done is they have taken the cost of
living study out of the Territory of Guam and just simply
tacked on the Northern Marianas as part of it, and yet they
never conducted a survey for the Northern Marianas also. I find
it highly questionable in terms of what procedures they follow.
They treat two insular areas in one way and then treat my
little insular area in a different way. I think that is unfair.
Mr. Davis of Illinois. Let's just say if I was to go to
dinner at a moderate-priced food establishment and have myself
a couple of those exotic drinks that probably exist. When I
finished, what would my check likely be?
Mr. Faleomavaega. Mr. Chairman, I think maybe if I can
respond to your question this way, all the insular areas have
to import everything, from fuel to milk, if you will, the gas.
So if I would just simply respond, it is similar to the State
of Hawaii. They have to import practically everything. The
State of Hawaii is one of the highest cost of living States,
comparable or perhaps even higher than the Washington, DC,
area.
Now compare that, the State of Hawaii, where we have to
import just like Hawaii our goods. The gas now is $3-something
a gallon. So I don't find it any different from any of the
States, probably even higher than some of the States, simply
because we have to import practically everything that we have.
We don't have oil. We have a lot of fish, we have a lot of
sharks, but we don't have oil.
Mr. Davis of Illinois. You don't eat the sharks, do you?
Mr. Faleomavaega. Yes, we do. Shark is delicious. In fact,
shark fin is the highest-cost soup in Asia. It is about $100
for a little bowl of shark fin soup. By the way, we don't like
killing sharks indiscriminately like that, cutting only the
fins and then get rid of the carcass. We do have a Federal law
that puts restrictions on that. But shark meat is good if you
know how to prepare it.
Mr. Davis of Illinois. Well, thank you very much.
Let me ask you, Mr. Kennedy, do you know why the Federal
Prevailing Rate Advisory Committee has not made a determination
to calculate the pay of southeastern Massachusetts and Rhode
Island with the prevailing rate?
Mr. Kennedy. Well, I understand that there is a new
director coming on, in fact, tomorrow. There has been a delay
here and I think it is unfortunate that the delay has taken
place, because we are talking about people's livelihoods, and
as we spoke about today in the floor and yesterday with the
Lenny Ledbetter case, time equals money. When you are delaying
justice in terms of people's pay equity, every time that check
is less than that is another unjust check and it is another
sign of discrimination. So we need to get this rectified as
soon as possible, and I hope that administratively with the new
regional director coming onboard that will be expedited with
their new leadership as soon as possible.
I might add that this means that within the blue collar
wage scale the gap will be within the Boston market. It doesn't
mean it is going to be within the same higher pay scale as the
white collar; we are just asking for it to be on the same scale
for that type of work that is now currently being performed.
Mr. Davis of Illinois. What is there that is unique about
this area that may have caused this disparity to exist?
Mr. Kennedy. I think probably the demand, perhaps. They
could make the claim that there is a greater demand for the
white collar workers, so they made the exception for the pay
for white collar workers to accede into the Boston area pay
scale as an incentive for them to bring in those white collar
workers into a very needed area, which is the Navy Undersea
Warfare Center's very important work in Rhode Island, for
example. That could be the one explanation, and they could say,
well, we needed to do that for the purposes of attracting
people to these positions, whereas the need for us to attract
people for the positions of these other civilian jobs is not of
that critical a nature, and so we don't need to put them in the
same category.
But the problem with that is you have already defied your
own rule in terms of fairness. If you have given a break to one
class of workers that you are paying one set of wages to in the
same building, and yet the workers that are working hourly
wages in that same work force that are working alongside those
same workers are now not treated equitably for purposes of that
regional pay scale.
Mr. Davis of Illinois. Thank you, gentlemen, very much.
Let me ask Mr. Sarbanes if he has any questions.
Mr. Sarbanes. Mr. Chairman, I don't really have any
questions. I appreciate your holding the hearing. I do want to
say that I have benefited, as you have, from getting a deeper
understanding on these two issues which go to questions of
within the pay structure whether there is the kind of parity
and fairness there needs to be. I am interested in that, and
equally interested in the question of how the overall pay
structure for Federal employees compares to the work force at
large, so I look forward to hearing the rest of the testimony.
Thank you.
Mr. Davis of Illinois. Thank you very much.
Mr. Kennedy. Mr. Chairman, if I could just finally say, I
mean, it would be one thing if I was here just saying that I
would like to see my workers paid the same as the ones up in
Boston, and I could make a strong case because the cost of
living, we are all geographically so close, so the cost of
everything doesn't vary greatly because it is the proximity of
everything. The region is a high-cost region as it is. But
really a salient point is the fact that there is already a
double standard where they are already paying those same
workers in my area that are white collar the prevailing, higher
Boston wage rate, but they are not doing so for the hourly wage
workers. That is what I think is the nub of the issue here.
Thank you.
Mr. Davis of Illinois. Thank you gentlemen very much.
Mr. Faleomavaega. Mr. Chairman, I was humoring my good
friend from OPM here earlier before the hearing started, but,
on a more serious strain, I sincerely hope that OPM will be
more forthcoming and try to resolve this little problem that we
have out there in the middle of the Pacific.
I don't think it is a complicated issue, but it just seems
that when I request information or trying to find out how to go
about doing things, they don't seem to care. That disturbs me.
So with that humor, Mr. Chairman, I want to thank you for
allowing me to come.
Mr. Davis of Illinois. I thank the gentlemen very much.
There may be some written questions that we may submit for you
and ask you that you answer them.
With that, I would ask Ms. Springer to step forward. We are
always pleased to have join us for these hearings and
discussions. The Honorable Linda Springer, who is the eighth
Director of the U.S. Office of Personnel Management. She was
unanimously confirmed by the U.S. Senate in June 2005, and as
the OPM Director Ms. Springer is responsible for the Federal
Government's human resources planning, benefits program,
services, and policies for the 1.8 million employee civilian
work force worldwide.
Thank you so much, Ms. Springer. If you would, stand and
raise your right hand. It is the custom of this subcommittee to
swear in our witnesses.
[Witness sworn.]
Mr. Davis of Illinois. The record will show that the
witness answered in the affirmative.
Thank you so much. It is good to see you.
Ms. Springer. Thank you, Mr. Chairman. It is good to see
you, as well.
Mr. Davis of Illinois. And you may proceed.
STATEMENT OF LINDA SPRINGER, DIRECTOR, OFFICE OF PERSONNEL
MANAGEMENT, ACCOMPANIED BY NANCY KICHAK, ASSISTANT DIRECTOR,
STRATEGIC HUMAN RESOURCE POLICY, OFFICE OF PERSONNEL MANAGEMENT
Ms. Springer. Mr. Sarbanes, also thank you for your
interest and for the opportunity to appear before you today to
discuss the Federal Government's pay administration policies.
OPM does have responsibility for setting pay rates for the
general schedule, which covers about 1.3 million employees. We
also manage the Federal wage system, which covers about 200,000
employees, and the certification process for the Senior
Executive Service performance-based pay system, which covers
about 7,000 employees.
In addition, OPM administers special pay rates; regulates
recruitment, retention, and relocation incentives; conducts and
evaluates demonstration projects in alternative personnel
systems. Our specific responsibilities in administering these
systems and incentives is presented in my written statement. I
would like to use the balance, though, of my opening statement
time to discuss performance-based alternative pay systems and
various legislative proposals that we have.
Alternative pay systems fall into three major categories:
demonstration projects, independent systems, and Government-
wide executive pay. These systems are characterized by such
features as performance-based pay and broad pay bands.
OPM can establish and evaluate personnel motion projects to
test changes in Government-wide human resources management
systems. In excess of 50,000 employees are covered by alternate
pay system demonstration projects. The Navy's China Lake
demonstration project established in 1980 was the first of
these and was made permanent in 1994. Since 1980, OPM has
approved 17 additional demonstration projects. Four were
completed, three were made permanent by separate legislation
based on successful evaluation results, and the balance are
currently active.
The second group of alternative pay systems are agency
specific. These were established under independent authority
granted by Congress. In several of these cases, agencies
successfully argued that their recruiting and retention efforts
would have been seriously impeded by continued coverage under
the general schedule's outmoded system. Over 30,000 employees
are covered by independent systems in place in such agencies as
the FDIC, the IRS, FAA, Office of the Comptroller of the
Currency, and others. This figure does not include employees
covered by the newer NSPS and Homeland Security Department
systems.
The third category, Government-wide executive pay, applies
to the Senior Executive Service and the Senior Foreign Service,
covering about 8,000 employees. These alternative pay systems
have existed for as long as 25 years, and today cover over
90,000 Federal employees.
OPM has studied the experience under these systems and
issued a comprehensive report in October 2005 at the request of
Senators Collins and Voinovich, with our evaluation. The entire
report is available at the OPM Web site, OPM.GOV, but I would
highlight that in all these systems we have observed that
performance, not time, drives pay; success depends on effective
implementation; and employees have come to support those
alternative pay systems.
As a result of these efforts, we have learned what works
and what does not work when it comes to implementing successful
performance-based pay systems. Challenges must be addressed,
but done right. I emphasize that--done correctly. Better
performers get higher pay. Agencies can better compete for and
retain top talent. And the associated accountability structures
support agency missions.
Mr. Chairman, I also want to bring to this committee's
attention three legislative proposals related to pay. First is
the Senior Professional Performance Act of 2007. This would
increase the maximum rate of basic pay for certain senior level
and senior technical positions to executive level three from
the current limit of executive level four. It is similar to the
SES system, and that proposal further provides that, in the
case of an agency that has a certified performance application
system, the maximum rate of basic pay for those positions could
be as high as executive II, so very similar to the SES.
Our second proposal would provide that certification of an
agency's Senior Executive Service performance application
system would be in effect for a 24-month period, beginning on
the date of certification, with the opportunity to extend it
for 6 months. This remedies an unintended disadvantage in
agencies where the system is certified near the end of a
calendar year, so it is kind of a technical fix.
Mr. Chairman, we are pleased that both of these proposals
were recently approved by the Senate Committee on Homeland
Security and Governmental Affairs, and we are hopeful that both
the Senate and House will be able to adopt them before the
current session of Congress.
There is a third legislative initiative that I would like
to comment briefly on, and that is that we have proposed
legislation that would extend locality pay to non-foreign areas
outside the contiguous 48 States. Currently, employees in some
of these areas receive COLA adjustments, but, as we heard
earlier, there are some exceptions. What this would do is to
extend locality pay to all these areas, including American
Samoa, so that would resolve the question that was raised
earlier about them not having parity with other areas.
What we would do would be to phase that in over a 7-year
period to mitigate any transition effects, but that would be
the way we would propose addressing that problem.
This concludes my opening statement, Mr. Chairman, and I
would be happy to answer any questions you or any other Members
would have.
[The prepared statement of Ms. Springer follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. Thank you very much for your
testimony. Let me just ask, now that we have been joined by our
ranking member, if he had any comments prior to the
questioning.
Mr. Marchant. No, Mr. Chairman, I don't. I apologize. I had
votes in another committee. Thank you.
Mr. Davis of Illinois. Thank you very much, Mr. Marchant.
Let me just ask Director Springer, in testimony that he
submitted for the record, Representative Barney Frank notes
that OPM took over a year to appoint a Chair to the Federal
Prevailing Rate Advisory Council. Could you share with us why
that may have taken such a long time?
Ms. Springer. I can, Mr. Chairman. That position was
previously paid as if it were a full-time commitment, a very
significant salary. In fact, what I learned when I got to OPM
was that the Chair position required no more than half of
someone's time, and so I re-set the conditions there to be that
we would hire someone and only pay them commensurate with the
amount of time they would spend.
Now, the other condition on that position is that the
incumbent cannot accept any other position, so you have a
situation where someone is not able to get compensation from
another position but can only, because this is a half-time
position, receive half of a full salary. That is very difficult
to find candidates that can work under those circumstances, so
we started from the very beginning. When the previous Chair
left we tried to find someone. We have someone who is very
qualified. He has just recently retired from Federal service in
many capacities, Peace Corps among them, and others, but who
was looking for exactly that type of situation. But it is not
easy to find when you have the constraint of not being able to
supplement that position with another one. That is the reason
why it took so long. I'm being very candid with you. It is not
for lack of effort. But we do have a good candidate now. His
first day is tomorrow.
Mr. Davis of Illinois. I guess it is not a problem now
because you have found the ideal candidate. Do you think it
might make any sense to change some part of it? I mean, can the
person do what they need to do just on a part-time or half-time
basis?
Ms. Springer. I interviewed the previous Chair about that,
because it wasn't a decision to make lightly, obviously. I
wanted to make sure it wasn't a temporary change in workload or
something like that, and they said no, consistently that 50
percent was the maximum. In some cases over the course of a
year it was less than that.
They set their own agenda, and I don't set it for them. So
it just depended on the agenda, but at most it was 50 percent.
I didn't feel it was a good use of taxpayers' dollars to be
paying a large annual salary to someone who only worked at most
50 percent of the time.
Mr. Davis of Illinois. Let me ask, do you think it is maybe
something that we would want to take a look at?
Ms. Springer. I am certainly happy to do that, but at this
point the good news is that we do have a very qualified
candidate who is very happy with those conditions.
Mr. Davis of Illinois. Could you explain to us how locality
pay is calculated?
Ms. Springer. I am going to probably ask for a little help
from my associate director here on that, but clearly at this
point there are different areas which, for the general schedule
locality pay, that we look at, and look at the relative
relationship to the District of Columbia as sort of a baseline,
and then set the locality adjustment relative to that for, I
believe, a comparable work force.
This is our associate director, Nancy Kichak.
There are 32 areas. We deal with Bureau of Labor Statistics
data and we compare Federal pay to Federal pay. I don't know if
there is anything else you would like for her to add to that
might be helpful. She is the expert.
Mr. Davis of Illinois. You mentioned the District of
Columbia. Is that sort of a starting place in any kind of way?
Ms. Kichak. That is one area. District of Columbia is the
locality base. Then we look at the rates in those areas.
Ms. Springer. Right. We look at the rates in 32 areas, but
the D.C. area is the base area.
Mr. Davis of Illinois. So if the cost of living is as high
or higher than what it is in the District of Columbia, then
that area would, in all likelihood, qualify for a pay
differential?
Ms. Springer. I believe that is correct, yes. It is wages,
though. It is not cost of living; it is the actual wages that
we are looking at.
Mr. Davis of Illinois. All right.
Well, let me go to Mr. Sarbanes and see if he has some
questions.
Mr. Sarbanes. Thank you, Mr. Chairman.
I was just curious. I am learning. I am in a heavy learning
mode here, and I appreciate the hearing for that purpose,
alone.
I was curious about the demonstration projects which you
referred to, of which there have been a number, I guess, since
1980. Seventeen of them are mentioned in your testimony having
been approved. I am just interested in how you determine. I
guess my first question would be: what drives the kind of
demonstration project that sort of bubbles up as something that
ought to be done? What are the different factors that drive
that? I imagine there would be concerns about competing for
work force, about looming retirements and how to deal with
them. I imagine it would also include responding to complaints
or critique that get generated internally or externally. So my
first question is: what are the factors that drive the impetus
for these demonstration projects? And then the second is: what
criteria do you use in approving them, deciding which ones
should go forward?
Ms. Springer. That is a good question, because we have had
requests just recently--and I would say recently within the
past year or so--for additional demonstration authority. There
is a very long process, by the way. It is not as simple as an
agency coming to OPM and saying, We don't feel we are
competitive enough so we want to have authority to have an
alternate pay system, and OPM just blesses it and they go on
their way. There is a Federal Register notice process. There is
a whole set of requirements that an agency is required to do,
as well as giving public notice of how that system will work.
We have learned over the years what constitutes a sound
alternative pay system, and we look for those things. Among
them are good performance management structures and
accountability structures, ways that feedback is given to
employees, ways that the different pay bands are set up,
manager requirements, training requirements. Have the managers
been trained in how to function in this environment in a fair
way for employees?
It is not something that happens lightly or quickly. There
are limitations by Congress on the number of demonstration
projects you can have, and I think that limitation is 10 at any
given time, and the maximum number of people that could be in a
demonstration project I believe is capped at 5,000, if I am not
mistaken. And so Congress has given limited authority to
agencies to step out in that area.
The reasons why they do it are ones that you mentioned. It
often deals with competitiveness, it deals sometimes with the
mission of an agency that is considered to be very important in
the sense that they can't take the time it takes to go out and
hire on a protracted basis. They want to be a very attractive
employer in the talent market. And they want to retain those
people, and they feel that to get the very best and the very
brightest they need to have a more contemporary pay structure.
Mr. Sarbanes. Thank you. I don't have any other questions.
Mr. Davis of Illinois. Thank you very much, Mr. Sarbanes.
Mr. Marchant.
Mr. Marchant. Ms. Springer, of the legislative proposals
that OPM has submitted to Congress this year, which ones do you
think are absolutely critical to be enacted?
Ms. Springer. With respect to pay? These particular three?
Well, I think they all are, actually, but of those three I
think that the two of the three, the SES, the senior technical
and the senior level employees, those executives, letting them
have the opportunity to go to higher levels is important.
We need those people. We have a great dependency on them,
their leadership, their experience, especially with the
retirement wave. I have said this so many times, people think
it is the only thing I focus on, but we have to keep them. We
have it for senior executives who are managers. We need it for
these senior leaders who are the professional, technical
leaders, as well. I would say that is very important.
A close second would be moving from COLA to locality. If we
don't do that, then we are going to have to come back on a
case-by-case basis and try and deal with this COLA issue that
was commented on earlier. But I would rather do it across the
board.
That would be sort of my one and two.
Mr. Marchant. What sort of improvements in programs
regarding Federal pay would you like to see implemented during
the remainder of your term?
Ms. Springer. I wish I had more time, to be honest with
you, because I believe today that we have a patchwork system of
pay in the Federal Government. We have systems that I have
listed in my written statement. There are other systems that
are smaller and less, maybe, widely known, but it creates
internal inequities.
If I had all the time in the world, what I would do is step
back and come up with a whole new system. But what I hope that
we can do in this time is to just continue to raise awareness,
pass these proposals, and raise awareness of the need for
contemporary pay systems. We need to be competitive in the
market for talent that everybody else is going after, and this
is, in some cases, a competitive disadvantage in certain areas.
Not all areas.
People often say, Well, how do you think we compare to the
private sector? It really depends on the occupation, the
geographic area, tenure, all those things.
I can find people who, in my own experience, are paid
higher than what I know to be the case in the private sector,
and others that are lower. But the fact of the matter is that
we have an antiquated system that does not reflect performance.
It pays for people to show up at work. I hope we will continue
to get educated about that.
Mr. Marchant. Did you use any business models, large
corporate business models? If you did, did you find any large
corporation in America that operates under this kind of a
system?
Ms. Springer. I can't say that I have conducted or OPM has
conducted an exhaustive study, but we certainly don't find it
to be prevalent. I mean, I am not going to say there aren't
some. I am sure there are some in certain areas. But in the
companies that we have looked at, not exhaustively, but the
ones that we have and that we are competing with for talent, we
find that there is a performance element to pay, many times, to
a much greater extent than what we have. All we are talking
about is the increase in pay being a function to some degree of
how well you did your job, not that your whole pay is at risk
or half your pay is at risk the way it is found in the private
sector.
Mr. Marchant. Thank you very much. Thank you for your visit
to my office.
Ms. Springer. Thank you.
Mr. Marchant. I appreciate it.
Mr. Davis of Illinois. Thank you very much.
Mr. Lynch.
Mr. Lynch. Thank you, Mr. Chairman.
Ms. Springer, I appreciate your coming before the committee
and trying to help us with our work. I am a little bit
flabbergasted about the delay on the chairman's position at the
Federal Prevailing Rate Advisory Committee. I understand that
it was vacant for almost 2 years. What I thought I heard you
say was you had changed the position to a part-time position
and also added a requirement that person do nothing else but
that job.
Ms. Springer. If I may?
Mr. Lynch. Yes. Go ahead. I hope I am wrong. I hope that is
not what I heard.
Ms. Springer. The latter requirement that you said was not
one that I set; that is a pre-existing requirement, that the
individual in that position not hold another position. That is
not my requirement. That had been there. That was in place.
Mr. Lynch. OK. Not hold another position?
Ms. Springer. Right.
Mr. Lynch. OK.
Ms. Springer. As far as the part-time, yes, what I did was
to say that we will pay for the amount of essentially the time
commitment of the individual, which was 50 percent or less. We
are not going to pay someone--you can pick a figure. Let's say
it is $140,000 for doing a half year's work. I don't think that
would be what the taxpayers would expect us to do.
Mr. Lynch. No, but I wouldn't expect there to be a job open
for almost 2 years while we are waiting to fill it. That would
give you a little indication about the desirability of that
job.
Let me just say something else. There are five other
members on this committee. What the heck were they doing while
they had no chairman? I don't expect that there was very high
productivity in the other five people.
Ms. Springer. Well, if I may again----
Mr. Lynch. Well, let me just tell you----
Ms. Springer. We don't set the agenda for that.
Mr. Lynch. Go ahead.
Ms. Springer. They don't come under my control. They don't
set the agenda. OPM does not set the agenda. They could meet
whenever they wanted to, but I thought----
Mr. Lynch. Without a chairman?
Ms. Springer. I believe they can, but without having the
chairman I think they were not able to----
Mr. Lynch. I think they would be rudderless without a
chairman. That is why you have a chairman.
Ms. Springer. That is very possible.
Mr. Lynch. OK. You know, this reminds me of a story one of
my local mayors used to tell me. When we asked them how many
people worked at City Hall, he said, about half of them. You
know, this is the height of bureaucracy that this position
remained open, vacant, because we or you, more specifically,
made a part-time job out of this that we cant fill for 2 years.
Ms. Springer. It was about a year and a half, by the way.
Mr. Lynch. A year and a half.
Ms. Springer. Yes. I am not saying that is good.
Mr. Lynch. That is much too long, though. That is much too
long. That is low. We got zero productivity out of that
position for a year and a half, and now we think we have the
perfect candidate.
Ms. Springer. Yes.
Mr. Lynch. After a year and a half. Any company in America
that worked like that would go right out of business. You have
to realize that. You see, that is not success. You think you
saved something, but you left the job empty for a year and a
half. We have to do better than that. That is unacceptable. OK?
This is an important position. We should have figured out.
There are 55,000 Federal employees. We should have been able to
figure out some way to give that person something else to do.
Give them a broom, give them a mop, give them something, but
they should have been able to fill a full-time position and pay
them a decent salary. It is not successful to leave the job
open for a year and a half trying to find somebody willing to
take the job, unless you want to leave the job open
purposefully.
Ms. Springer. Which is not the case.
Mr. Lynch. Well, I hope it is not. It sure looks that way
to me.
I yield back, Mr. Chairman.
Mr. Davis of Illinois. Thank you very much, Mr. Lynch.
Let me just ask Ms. Springer, could you define pay
compression for us?
Ms. Springer. There are various places where pay
compression manifests itself. I will give you one that is very
noticeable. When the Senior Executive Service, which is tied to
the Executive level salary levels, when those salary levels
only increase, when they increase at a lower percentage rate
than the rate the general schedule levels increase, then you
have a problem where the level 15 in the general schedule, for
example, starts to butt up against the lowest or the first
level of senior executive pay.
What happens is that you have people in that general
schedule level 15 who don't find it particularly attractive to
move to the Senior Executive Service level.
Another one is where you have people who start to max out
within the senior executive level so that you are unable to
give them the type of performance-based pay increase that they
have earned.
Those are two examples right there.
Mr. Davis of Illinois. There seems to be a great deal of
discussion and conversation continuing about the effectiveness
of pay for performance.
Ms. Springer. Yes.
Mr. Davis of Illinois. Could you tell us your department's
views on that? How do you think it is going?
Ms. Springer. Yes, Mr. Chairman. We think that the place to
look for where the ultimate success story would be or where to
learn is from looking at these projects and systems covering
90,000 employees that have been in effect for a number of
years, to look at their experience. That is why we did the
study in late 2005.
Systems like this need to be around long enough to deal
with the cultural issues, the training issues, the migration
from an old system to a new system. It takes time. So to look
at some of the more recent examples, the newer systems, and to
pass judgment is really premature, so our agency--and I believe
I can speak for the agency in this, because we published a
report--would say that these systems over time are successful
and meet their objectives. They have to be done properly, and
there are instances where people rushed, went out too quickly,
didn't do all their training or their homework. But done
properly, as has been the case predominantly in this 90,000
employee group, we find, by and large, that they are
successful.
Mr. Davis of Illinois. You did mention some concern about
our pay system being somewhat patchy or a patchwork and in need
of review, and certainly some further scrutiny. I guess I kind
of took your thoughts on that to be similar to Representative
Lynch's conversation with his mayor in terms of half the people
down at City Hall working, and some of the individuals who show
up for work but we don't have a good way of determining what
they have done or how much they are doing or how they should be
compensated.
Other than pay-for-performance, are there other thoughts
and ideas that the department has as to what we look at as we
go through some review?
Ms. Springer. One of the things that they need to look at
before they get to any type of a pay for performance type
structure is to have the underpinning of a good performance
management system. I don't care what type of pay structure you
go to or compensation structure, you have to make sure the
agencies' managers are trained in how to set goals with
employees and that employees have their say in that, and that
there are good performance management practices through the
cycle, the performance year; that there are accountabilities;
that things are measurable. All those things are rudimentary
before you even move to a new pay system. That has been a focus
of OPM in working with the agencies, even when they don't have
an authority to move to a performance-based pay structure.
Some of the other things, though--and I will give you an
example, Congressman--you can have two people, a senior
executive who is in a performance-based pay system, and a GS-13
or -14, both working on the same project. They meet success.
They achieve it beyond expectations. The senior executive will
have that be a factor in getting an above-average adjustment to
their pay. The general service person doesn't get that
opportunity. They get the same as the person who didn't reach
for that higher level of performance.
I don't think that is fair for the rank and file employees
to not have the same up-side opportunity that the person in the
Senior Executive has. The boss has the up-side opportunity, the
rank and file person doesn't because they are stuck on this old
one-size-fits-all system.
So I am not saying that there aren't many ways to do this,
and we can look at it, but I think that to stay where we are in
a 1950's vintage system that pays everybody the same,
regardless, is just unfair.
People will say, well, you can give them a performance
award or a special act award. A dollar of a special act award
is not as valuable as a dollar of a salary increase. It is not
there the next year in your starting opening salary. It doesn't
count toward your pension. There are a lot of reasons why that
special act or performance award does not have the same value
proposition for an employee who has worked just as hard as the
boss has, who has the up-side potential.
Mr. Davis of Illinois. Any my last question is: you did
mention that over time pay for performance could prove itself,
or you can make some determination. Do you have any notion of
how much time a system would need to be in place before you
could make a real determination about its effectiveness?
Ms. Springer. I would like to get back to you on that,
check our report, and look at those particular cases to see how
long, but it is not 1 year. It is a few years, I think, before
you really start to see that it takes hold.
Mr. Davis of Illinois. Thank you very much.
Either one of you gentlemen have any further questions?
[No response.]
Mr. Davis of Illinois. Thank you very much. We appreciate
your being here and appreciate your testimony.
Ms. Springer. Thank you, Mr. Chairman.
Mr. Davis of Illinois. And we will go to our next panel.
While they are coming, I will introduce them.
Our third panel is Ms. Colleen Kelley. She is the president
of the National Treasury Employee Union, the Nation's largest
independent Federal sector union, representing employees in 31
different Government agencies. As the union's top elected
official, she leads NTEU's efforts to achieve the dignity and
respect Federal employees deserve. Ms. Kelley represents the
NTEU before Federal agencies, in the media, and testifies
before Congress on issues of importance to the NTEU members and
Federal employees. Welcome.
Mr. J. David Cox is the National secretary-treasurer of the
American Federation of Government Employees, the Nation's
largest union representing Federal and District of Columbia
government employees. He was elected during the union's 37th
convention in August 2006. Welcome, Mr. Cox.
And Mr. Curtis Copeland is currently a Specialist in
American Government at the Congressional Research Service
[CRS], within the U.S. Library of Congress in Washington, DC.
His specific area of research expertise is Federal rulemaking
and regulatory policy.
If you all would stand and raise your right hand to be
sworn in.
[Witnesses sworn.]
Mr. Davis of Illinois. The record will show that each of
the witnesses answered in the affirmative.
We thank you all again for coming, for being with us. Ms.
Kelley, we will begin with you.
STATEMENTS OF COLLEEN KELLEY, NATIONAL PRESIDENT, NATIONAL
TREASURY EMPLOYEE UNION; J. DAVID COX, NATIONAL SECRETARY-
TREASURER, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES; AND
CURTIS COPELAND, CONGRESSIONAL RESEARCH SERVICE
STATEMENT OF COLLEEN KELLEY
Ms. Kelley. Thank you very much, Chairman Davis, Ranking
Member Marchant, Mr. Lynch. I appreciate the opportunity to be
here today to talk about this important matter.
First, much has been made about a recent study by the
Partnership for Public Service suggesting that the general
schedule system of pay should be immediately dismantled.
Despite the press attention, I believe it is important to point
out that the study surveyed 55 human capital officers, mostly
political appointees, with five questions. A minority of them
recommended immediately scrapping the GS system, which covers
1.3 million Federal employees. No hard data was unearthed to
support the recommendations that the GS pay system needs
replaced by what they call a market- and performance-sensitive
pay system.
In fact, the GS is market based. It has the goal of
achieving comparability with the private sector through the 32
different locality pay areas that were talked about, and
employees received pay raises based on merit, which in my mind
is synonymous with performance. It is a structured system, and
yet managers currently have trouble implementing it. It does
not make sense to me that a more subjective system will solve
anything.
In fact, the alternative pay experiments being promoted to
replace the GS system have been dismal failures. For example,
the IRS pay banding compensation system for managers is clearly
not working, and I would recommend that this subcommittee take
a close look at that.
Just this month on July 3, 2007, the Treasury Inspector
General for Tax Administration released a report that he
titled, ``The Internal Revenue Pay for Performance System May
Not Support Initiatives to Recruit, Retain, and Motivate Future
Leaders.'' Most alarming was the finding that the IRS,
according to TIGTA, has, ``Risked its ability to provide
quality service to taxpayers, because the system hindered the
agency's ability to recruit and keep skilled leaders.''
NTEU strongly believes that in the absence of a statutorily
defined pay system like the GS system that pay should be the
subject of collective bargaining, as it is in the private
sector. At the FDIC, NTEU bargains today for pay on behalf of
its employees, and there are still problems at the FDIC. The
FDIC divorced its pay system from its performance management
system and it established a separate set of what they call
corporate contribution factors to determine employee annual pay
increases. With the heavy reliance on these vague and
subjective corporate contribution factors, employees do not
clearly understand what they must do to be evaluated at the
highest level, and the forced ranking system prevents them from
ever knowing how this might translate into a pay increase, so
the pay system does little to actually motivate performance.
In TSA, due to the lack of collective bargaining rights,
serious problems abound at that agency with the transportation
security officers' new PASS system. Allegations of favoritism
and cronyism surround the system, and no meaningful employee
appeals process exists.
At the Department of Homeland Security, while the pay for
performance system has not yet been implemented, we are very
concerned that it will push employees who are already
demoralized out of the agency, when the importance of keeping
experienced, skilled employees is greater than ever.
The proposed system is not set by statute, nor is it
subject to collective bargaining. It will have employees
competing against each other and discourage teamwork. It is
subjective and enormously complex.
Before Congress considers any further limitations of the GS
system, it should require OPM to promote existing flexibilities
and authorities that could help agencies recruit and maintain
talented Federal employees. These range from cash awards to
individuals and groups to quality step increases, retention
allowances, student loan repayments, foreign language awards,
travel incentives, referral bonuses, and many others.
Federal employees deserve what every other employee
deserves: a system that offers fair compensation for a fair day
of quality work.
When the administration proposed its fiscal year 2008
budget with a 3 percent pay raise, I spoke out in opposition
and called for a minimum 3.5 increase. That level continues the
tradition of providing Federal employees and military personnel
a pay increase based on the employment cost index plus one-half
of a percent. It also begins to close the 13 percent pay gap
between civil servants and the private sector. If we are
serious about addressing the needs of the Federal work force,
fair and adequate pay is the first place to start.
Fortunately, Congress is moving legislation with this pay
level and NTEU will not rest until both military and civilian
employees receive their fair raise.
In conclusion, there is no hard evidence that the current
pay system for Federal employees needs to be changed. The
current experiments with alternative pay systems are failing,
and the Government should use the flexibilities it currently
has before moving to new pay system experiments.
I thank you again for the opportunity to testify today and
will be happy to answer any questions you have.
[The prepared statement of Ms. Kelley follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. Thank you very much.
Mr. Cox.
STATEMENT OF J. DAVID COX
Mr. Cox. Thank you, Mr. Chairman, for the opportunity to
testify today on an important issue such as Federal pay. As has
been the case for so many issues, the Bush administration has
been relentless in its efforts to politicize Federal pay. The
methods used have been numerous and sometimes clandestine, but
unfortunately very effective.
First and foremost has been the campaign to replace a
system based on objective market data with one based on
subjectivity and discretion.
Second has been a campaign to suggest that the data
produced by the Department of Labor and calculated according to
sound statistical procedures by professionals at OPM are
fatally flawed and should be replaced by back-of-the-envelope
calculations, so-called market research, and private data on an
agency-by-agency, supervisor-by-supervisor base.
Next come the contrary claims that the Government must
contract out because it cannot match the high salaries demanded
by cutting-edge professionals versus the Government overpays
its lazy bureaucrats and needs a new personnel system with the
flexibility to deny raises to those judged over market by their
bosses. We have seen bonus programs at the DOD that have
substantially given more to political appointees than career
employees, and pay for performance schemes that want to judge
Federal employees on how effective they carry out the
President's management agenda.
The list is long and threatens to grow longer.
When the administration hasn't been busy trying to
privatize our jobs, it has been focused on taking away our
rights and protections as Federal employees. There is a reason
Federal employees have had job protections that are different
from the private sector. The merit system principles ensure
that Federal agencies and programs are administered by a work
force that is hired and paid solely on the basis of objective,
apolitical criteria.
Pay for performance is a grave threat to this merit system,
and the political independence of the Federal work force, since
it is a political initiative that can be sold using slogans and
assurances that are difficult to review. After all, how can one
oppose the concept of rewarding excellence or giving workers
financial incentive to become more efficient and productive.
When said in this context, pay for performance sounds as though
it will both pay for itself and improve the output and morale
of the work force. Who could oppose it? But what is really at
work with pay for performance is the ability of a Federal
manager to discriminate among employees for any reason and call
it performance.
Pay is such a crucial aspect of employee that the authority
to manipulate it by setting a worker's base pay and deciding
whether and by how much to adjust that pay each year gives the
political appointees that control agencies enormous power.
Under the general schedule, Federal jobs are classified
according to duties. Salaries are assigned to jobs on the basis
of market data. Employees are able to progress through a career
ladder if they meet objective performance criteria. And
Congress each year decides salary adjustments on the basis of
national and local labor market data collected by the Bureau of
Labor Statistics. No political interference whatsoever.
Pay for performance schemes also undermine congressional
authority. Law makers may vote to fund annual payroll
adjustments to express their support for Federal work force and
the programs they administer and the services they provide, but
giving political appointees the discretion to manipulate the
distribution of those payroll dollars means a simple vote to
adjust Federal pay will not produce the intended result.
However much power Congress means to accede to the
executive branch, this administration always takes the ball and
runs with it. With pay for performance, that means the merit
system protections get the shaft.
It is in this context that I hope you consider the recently
published Partnership for Public Service Survey of Human
Capital Officers' Opinions on the GS System. All of these
individuals are political appointees by the President charged
with carrying out his agenda. We know how this administration
feels about folks who think for themselves; as such, it is no
more surprising to learn that they all think the general
schedule must go and then to learn that the Bush administration
appointees all think the war in Iraq is going great. It doesn't
deserve any more comment than that, Mr. Chairman.
Federal pay should not be a contentious issue. It should be
a matter of market data. It should be subject to public
scrutiny, should be adequate to allow the Government to recruit
and retain high-quality work force dedicated to public service,
and should allow its employees to at least take the Federal
employee health insurance, participate in the thrift savings
plan, and, most of all, have a decent quality of life, raise
their children, and pursue the American dream.
Mr. Chairman, this concludes my statement. I will take any
questions.
[The prepared statement of Mr. Cox follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. Thank you very much, Mr. Cox.
Mr. Copeland.
STATEMENT OF CURTIS COPELAND
Mr. Copeland. Thank you, Mr. Chairman, Mr. Marchant. Thank
you for inviting me to testify at today's hearing on Federal
pay.
Although there are dozens of different Federal pay systems
currently in use, I will focus on three issues related to the
major Federal white collar pay systems, the first of which is
the annual general schedule pay adjustment process.
Although this is commonly referred to as a cost of living
adjustment [COLA], the actual adjustment is driven by measures
of the cost of labor outside the Federal Government. The
adjustment process was established by the Federal Employees Pay
Comparability Act of 1990 [FEPCA], which actually requires two
kinds of adjustments, one which is the same for all covered
employees, and the other which varies depending on non-Federal
pay rates in 32 areas of the country.
The locality pay portion of the adjustment was intended to
eventually bring Federal salaries to within 5 percent of non-
Federal pay in those areas; however, Federal pay adjustments
have almost never been implemented through this FEPCA process,
with either the President or Congress intervening to determine
the size of the overall increase.
Another major Federal pay issue is the increasing degree of
pay compression occurring within and between the different
white collar pay schedules. For example, the difference in pay
between Cabinet Secretaries and the top of the Senior Executive
Service is now only about one-third of what it was in 1991.
Senior-level employees can currently earn more than the heads
of small agencies that are statutorily paid at executive levels
four and five.
Members of the Senior Executive Service who work in
agencies with performance appraisal systems that have been
certified by OPM can receive pay and bonuses that equal the
salary of the Vice President, more than Cabinet Secretaries who
are not eligible for bonuses.
Pay compression is also starting to affect regular GS
employees. For example, because GS pay cannot exceed executive
level schedule four, certain GS employees in nine locality pay
areas are currently unable to receive full locality pay
adjustments. Without changes in executive schedule pay caps or
linkages, these pay compression problems will only become more
severe over time.
There have also been a number of proposals to reform the
Federal pay system, as has been mentioned today, such as making
employee pay more a function of organizational performance or
employee performance, which has been referred to as
performance-based pay. Some agencies have already begun
implementing these reforms, as has been mentioned, and studies
of the implementation of the performance-based pay systems in
the Federal Government have been done by GAO, MSPB, and a
number of other organizations. They have all generally reached
the same conclusion: agencies must have valid, reliable,
accepted performance appraisal systems in place before linking
pay to performance.
Legislation has been introduced in this Congress that could
make Federal pay systems somewhat more performance based. For
example, S. 1045 introduced by Senator Voinovich would require
employees to have a performance rating of at least fully
successful to receive annual pay adjustments, locality pay, or
other types of increases.
Market base pay is another type of pay reform that has been
garnering attention, as has been mentioned. Although the market
has always been a factor in the implementation of FEPCA and in
setting special pay rates, GAO, as you know, recently used
market pay data to conclude that some of its employees were
already over-paid and therefore should not receive an annual
pay adjustment. However, at a hearing in this subcommittee in
May an expert in market-based pay criticized how this market
study was conducted and how GAO used the results.
This experience suggests that great care must be taken in
determining what constitutes the relevant market and the
relationship of individual Federal occupations to that market.
OPM has submitted draft legislation on yet another pay
reform, as the Director mentioned, converting white collar
Federal employees in what are known as non-foreign areas like
Alaska, Hawaii, Guam, Puerto Rico, and the Virgin Islands, into
the locality pay system. Since 1948, these employees have
received tax-free supplements of up to 25 percent of base pay
in order to improve recruitment and retention, but those
supplements have not counted toward their pay when calculating
retirement.
Switching from these cost-of-living-based supplements to
cost-of-labor-based compensation, which do count as base pay--
these locality payments--represents a major change in
compensation philosophy. OPM has estimated that doing so will
cost more than $100 million over the next 10 years.
Mr. Chairman, this concludes my prepared statement. I would
be happy to answer any questions.
[The prepared statement of Mr. Copeland follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Davis of Illinois. Well, thank you all so very much.
Those buzzers have been votes that we actually have, but
they are procedural votes. One is a quorum call. The other one
is a motion to adjourn. I don't think we are going to be doing
that, so I am just going to skip the vote and continue.
Let me thank you for your testimony. Ms. Kelley and Mr.
Cox, if both of you would respond to this question: how would
you evaluate the implementation of pay for performance and the
market-based compensation studies that we have gotten up to
this point? In an overall sense, in your analysis, how is pay
for performance working?
Ms. Kelley. In NTEU's experience, the agencies that have
moved in this direction have failed miserably and have caused a
lot of problems among the employees. It has caused morale to
decrease even lower than it had been otherwise. There is no
credibility with employees that there is any interest on the
part of the agencies in putting a system in place that would
meet the employees' criteria.
And for employees, it is very simple. They are looking for
a system that is fair, that is credible, and that is
transparent. They want to know that at the beginning of the
year if they are told that they do A, B, and C, that they will
have excelled, and that the recognition and reward at the end
of that time will be X, they expect that the X will be there.
That is not the case.
Many of the demonstration projects and alternative systems
that OPM reports on failed to tell you is that many of those
projects were given additional funding in order to be able to
pay the top performers, and not to have to decrease or flat-
line the pay of other employees who were doing not only the job
that was expected of them but excelling at their job also.
You know, I must say I was very surprised and disappointed
to hear Director Springer say two things. No. 1, she said that
employees today under the current system are paid to show up. I
think that is an insult to the Federal employees who work hard
every day. They not only meet the expectations laid out for
them, but they work hard to excel. They shouldn't have to guess
what it is they have to do to excel. That would be very clear
and specific and transparent, and they should be able to reach
those goals if they so choose.
The other example she gave, though, that was very
surprising to me was about the SESer and the grade 14 working
on a project together, and that there is a way to reward the
SESer but not the grade 14. Well, NTEU does not represent
SESers, but everyone that I have ever talked to does not
applaud the system that is in place for them, their pay banding
system. In fact, what they do is trash it. They have done their
own study and analysis, and all of the results show that they
are not satisfied with that system that seems to be held out as
a model by OPM.
The grade 14, the example that they cannot be compensated
other than with the lump sum cash is absolutely false. This is
one of the sore points with NTEU and with Federal employees
there are so many flexibilities that agencies have the
authority to use today that they do not use. OPM should be
leading the way, not only encouraging but providing them with
the support, assistance as to how to do this.
One of the ways to reward that grade 14 is with a high-
quality increase or a step increase. That does go into their
base pay. They carry it forward. It is part of their retirement
contributions. It is not a one-time cash payment.
So, you know, that is just one example of misinformation
that is out there that the SES system is so good and should be
used for all Federal employees. SESers will not tell you that.
Mr. Cox. Mr. Chairman, in DOD obviously at this point none
of our bargaining unit has been put under pay for performance.
There has been the demonstration project, and, again, as Ms.
Kelley said, additional money was given in those projects, so
therefore employees got a little more money and seemed to like
it. Then, as the money dried up, it did not happen and the
employees felt discriminated against.
I am a registered nurse. I worked for the VA Medical Center
in Salisbury for 23 years as a registered nurse. Registered
nurses in the VA are under that type of performance pay and the
promotion process. I saw in my 23 years registered nurses that
did all the criteria, worked very hard, achieved the goals that
were established by regulations for them to be paid and to be
promoted, a pay for performance system. It would go to the
Professional Standards Board, they would vote the person met
the criteria, but the medical center director would stamp it
disapproved. I don't want to do this, I don't have the money.
That goes all the way back to the process, too, as Director
Springer talked about bonuses and performance awards.
Throughout the Federal Government I hear frequently about
SESers and the higher grade employees and performance awards
and things of that nature, but a lot of our members are
housekeeping aids. They are those wage-grade employees that Mr.
Lynch was speaking of earlier that are not getting recognized
in any way whatsoever. They don't get performance awards, even
with an outstanding performance, because, again, some manager
says, I don't want to spend the money that way, I would prefer
to spend it this way.
So pay for performance doesn't work. It has not worked well
in these demonstration projects. I have personally experienced
it in my Federal career that it is not the way to go. There has
to be a system, and I believe that is why Congress established
the merit system in the beginning, so that the work force would
not be hooked to the political system.
Mr. Davis of Illinois. Thank you both very much.
Mr. Lynch.
Mr. Lynch. Thank you, Mr. Chairman.
You know, at the outset I just want to say thank you, Mr.
Chairman, for holding this hearing. I was an iron worker for 20
years, and I firmly believe that the American workers don't
have a better friend in the Congress than you, Mr. Chairman. I
appreciate all the work you do.
Mr. Chairman, following the implementation of the civilian
personnel system reform--they call it reform; changes are more
likely--at the Department of Homeland Security in 2002 and the
Department of Defense in 2003, the current administration has
continually sought to erode the rights and protections afforded
to our Federal civilian employees at other Government agencies.
Most notably, in July 2005 the White House circulated draft
legislation to abolish the longstanding general schedule pay
system across the Federal Government by 2010, in favor of a
variety of untested and extremely subjective pay for
performance compensation schemes.
While the proposal was never enacted, recent agency
personnel reforms have evidenced the administration's continued
willingness to experiment with alternative compensation
systems, and specifically pay for performance, all at the
expense of the Nation's nearly two million Federal civilian
employees, their pay, and their future retirement security.
As a former union president, I can tell you that pay for
performance implementation is simply not in the best interest
of the employee morale. It is not what its title implies. It
destroys workplace unity and productivity. And with employee
pay becoming highly dependent on subjective assessments and
evaluations, it often results in vastly different salaries for
employees with identical job duties and seniority.
As a Member of Congress and the Oversight Committee, in
particular, I can tell you that the implementation of such a
highly subjective pay system across our Federal agencies defies
common sense.
Remember, this committee not very long ago, a few weeks
ago, amidst reports that officials from the White House's
Office of Political Affairs were conducting political briefings
on Federal agency property--these are the same people that are
going to review the employee performance. Specifically, earlier
this year our committee, as well as the Office of Special
Counsel, determined that they had meetings on how to help
Republican candidates win future elections, and it was
conducted on General Services Administration property in the
presence of the GSA Administrator Lurita Doan and over 30 other
GSA political appointees. These would be the people who would
be making judgments on the performance of these employees.
During a subsequent hearing in June of this year we
examined allegations that Ms. Doan sought retaliation against
GSA officials that were cooperating with the Special Counsel
and investigators. According to an interview transcript
released by the Special Counsel's office, the head of GSA, Ms.
Doan, asserted that, ``Until extensive rehabilitation of their
performance occurs, they will not be getting promoted and will
not be getting bonuses or special awards or anything of that
nature.'' This is retaliation against employees, and the
Government. The Bush administration is trying to put this
system in over our Government employees, Defense Department and
other employees.
In addition to the GSA investigator, our committee is
continuing to investigate reports that at least 20 other
political briefings were given to officials of at least 15
other Federal agencies. The implications are clear: either you
play ball with this administration or you don't get the raises,
you don't get your bonuses.
This is going back to the early 1920's and the patronage
and corruption that was attached to these jobs before we had
reform. That is a step we should not be taking.
Mr. Chairman, for these reasons I am very concerned about
this administration's inclination toward abandoning the current
Federal pay system in favor of a pay-for-patronage compensation
structure.
Again, I thank you for holding this hearing.
I just want to say that I remember the first changes that
were put in on our Defense Department employees and Homeland
Security employees. What happened is they were stripped of
their rights to bargain collectively. Their rights were taken
away, and the reason that was given by the Republican
administration for stripping them of their rights was that they
could not be trusted. They could not be trusted. The national
security would suffer if the Defense Department and Homeland
Security, the very employees who are on the front lines, they
could not be trusted with negotiating over the terms and
conditions of their own employment. That is a slap in the face.
That is a giant step backward. That will cause good-quality
employees to walk away from Government service.
I think that is something that we should reject. If there
are going to be standards for giving people raises, they should
be objective so that anyone looking at the performance of that
employee will know whether they deserve a raise or they don't
deserve a raise. That should not be allowed to be a decision
within the mind of someone who is holding Republican party
meetings in Government offices on Government time at Government
expense.
Mr. Chairman, I just think we should reject this proposal
and I yield back the balance of my time.
Mr. Davis of Illinois. Well thank you very much, Mr. Lynch.
I would have been pleased to have been a member of your union.
Mr. Lynch. I am sorry, Mr. Chairman?
Mr. Davis of Illinois. I said I would have been pleased to
have been a member of your union.
Mr. Lynch. Thank you.
Mr. Cox. I would have, too, Mr. Chairman.
Mr. Davis of Illinois. Let me ask you, Mr. Copeland, could
you share what the thinking may have been around the idea that
executive schedule positions are not eligible for locality pay?
Mr. Copeland. Sure. Essentially, the decision was made that
these executive schedule positions really should be paid on a
national basis rather than a local basis, but it is interesting
when you look at where these people are. 402 of the 475 people
in the executive schedule are in Washington, DC. In fact, 470
of the 475 are in Washington, Virginia, or Maryland. So it is
basically a pay system for people that are in this area.
Mr. Davis of Illinois. Yes. I guess one could kind of
understand, because there aren't many people who are going to
be in other locations.
Mr. Copeland. Right.
Mr. Davis of Illinois. Because this is kind of where the
action is. Well, let me ask you, this talk about pay
compression and its impact, does it limit unrealistically the
ability of certain categories of individuals to continue to
progress relative to compensation for their work and
experiences?
Mr. Copeland. I believe it does. One of the best examples
of that would be to compare people in different pay systems.
For example, in 1964, when the executive schedule was set up,
the executive schedule five, which is the lowest level of the
executive schedule, were paid 6.1 percent more than the top end
of the GS system, so there was a gap between the executive
schedule and the regular GS.
Right now executive schedule five is paid 13.5 percent less
than the top of the general schedule. Even looking within the
general schedule, you have nine locality pay areas where people
cannot get locality pay increases, basically that they are due,
because they are bumping up against the cap, which is executive
schedule four for the GS-15 step 10's. And in San Francisco it
has even been down to step seven.
Mr. Davis of Illinois. Are the administrative law judges
sort of caught in a bind in a sense in terms of comparability?
How do they rank or rate with other individuals who hold the
title of law judge and their compensation?
Mr. Copeland. It is hard to compare regular judicial
salaries to administrative law judge salaries because they are
really apples and oranges, but administrative law judges are
among the most compressed of all the pay schedules. One of the
statements that was submitted for the record today documents
that much better than I can, but I could just note that
administrative law judges are paid basically at the same level.
If you look in the Federal Employees Almanac, for example,
there is a listing for the top, I think, three or four levels
of administrative law judges. They are all paid exactly the
same, so there is no advantage to moving above a certain level.
The same thing that used to occur in the Senior Executive
Service where, once you got to a certain pay level, there was
no advantage to going up to higher levels.
Mr. Davis of Illinois. Ms. Kelley, let me just revisit if I
could a moment. You did not express a great deal of confidence
in the current implementation of the pay for performance. Do
you think it can be made to work? If so, what would need to
change about it? Or does it just need to be junked and say it
is not going to work?
Ms. Kelley. Well, I have not seen anything yet that I can
say I am convinced would work, but I would also not say that
the current system is perfect. We have said this to the
administration and we have said it to Homeland Security when we
were going through the meet and confer process in Homeland
Security. We said to them, look, identify the valid problems
you have with the GS system and we will sit and work with you
to change those. But they have to be valid problems, not just
change for the sake of change.
What we really have heard throughout any conversation we
have ever had is this focus of just wanting to dismantle the
entire system. They really don't want to fix it or have an up-
front conversation about what needs to be fixed.
They say, for example, that they cannot compensate the
highest performers. Well, I want the highest performers
compensated, too, so we would welcome the opportunity to be in
that conversation. But the answer is not scrap the current
system and then ask us to take on faith some unknown system.
So I have not seen anything that I am convinced will work,
but I want a system that allows employees to be compensated a
fair wage at market rates compared to the private sector, and
that is not happening today. So, I am interested in being in
that conversation.
Mr. Davis of Illinois. Well, Mr. Cox, we all continue to
suggest that we want Federal employment to be comparable with
private sector in terms of the ability to recruit to get some
of the best and the brightest and to make sure that the Federal
work force is as productive and as effective as any work force
that we would find any place. Do you think we can accomplish
that under the pay for performance system?
Mr. Cox. The pay for performance system will not accomplish
that for you. Pay for performance in reality is about lowering
pay and controlling pay, sir. It is about being able to give
money to who you want, how you want, when you want. We all
understand those type systems.
The GS system may have its flaws, but at this point it is
the best system that we have and we need to work to improve
that again, not just throw it out, scrap it up, tear it down,
and start from scratch again. The system does work. It
recognizes employees. There are many things in the system,
again, that is not used by the managers and the agencies to
give within-grade increases and to recognize employees because
it comes back to how the agencies want to spend their money
instead of recognizing employees.
Mr. Davis of Illinois. Well, thank you all so much. I
always thought that politics was giving money to who you wanted
to when you wanted to where you wanted to. Sounds like you are
defining a system that is fraught with some political
implications. But it has certainly been a pleasure to have you
all come and testify. We appreciate your patience and we
apologize for any inconvenience that we may have caused with
changing our schedules.
Thank you all so much.
This hearing is adjourned.
[Whereupon, at 5:08 p.m., the subcommittee was adjourned.]