The pay cut that will hit more than a million government workers this October began innocently enough two years ago when a member of Congress asked the General Accounting Office a question.
Starting next month the government will shift to a new bookkeeping system. It will compute salaries on a work year of 2,087 hours instead of the 2,080-hour work year now used. The effect will be a biweekly pay cut of $3.40 for the average Washington-based civil servant.
It started in March 1981 when Rep. Mary Rose Oakar (D-Ohio) wrote the GAO asking what savings the government could make if it based salaries on actual hours worked. Oakar chairs the House Compensation and Employe Benefits subcommittee. It was under orders from the full House to cut federal pay and benefit costs.
In its report (B-202638), the GAO went back to 1943 when Congress established the 40-hour federal work week, and the 2,080-hour work-year. That, GAO said, is based on a 260-day work year even though some years contain 261 or 262 workdays.
"Thus, GOA said, the general schedule white collar pay administration procedures do not reflect the actual workdays in every calendar year, and in some years employes receive an annual salary for less than a full year's work. Because 26 biweekly pay periods cover only 364 days in a calendar year, the end of a payroll year gradually moves away from the end of the calendar year. For example, a payroll year beginning on Jan. 1 would end on Dec. 30. The next year it would end on Dec. 29, and the next year on Dec. 28, etc. This slippage of one or two days each year (two for leap year) continues for about 11 or 12 years until the pay periods are realigned with the end of the calendar year. The result is that in the 11th and 12th year, employes receive pay--a 27th paycheck--for the additional pay period."
GAO suggested two alternate methods to "better reflect the actual number of workdays in a year." One of them was to divide actual work hours in a year--either 2,080, 2,088 or 2,096--for pay computation purposes.
The second method GAO suggested, and the one Congress approved late last year, was to shift to a work-hours year of 2,087. That bookkeeping change, which will save $120 million a year, will be in effect this year (starting in October) and next year. After that the government will revert to the old computation formula, unless Congress makes the change permanent.
Some House Democrats objected to a column a couple of weeks back that said the idea for changing the formula had come from Democrats on the Post Office-Civil Service Committee.
They said that change was actually made in last year's budget reconciliation act at the request of Sen. Ted Stevens (R-Alaska). Stevens has said he will ask Congress to defer the bookkeeping change, and the pay cut, until January. That is when white-collar feds should get a raise of between 3.5 percent and 4 percent. Idea is that you should get a raise, before you take a cut.
The pay cut has infuriated many U.S. workers, even though the amounts are relatively small and resulting savings prevented other cuts being made in federal pay and retirement benefits. Many feds see it as just another kick in the backside from Congress and the White House.
The victims of this latest cut, including 300,000 here, are easy to identify. If you are a white-collar worker getting a paycheck every two weeks, you are one of them.
Many of the victims have called, and written, demanding to know how it all happened. Now you know.