A ruling last week by the 7th U.S. Circuit Court of Appeals in Chicago has brought thousands of senior government executives a step closer to getting special back payments ranging from $1,000 to $5,400.

Most of the 5,000 executives involved work in the Washington area although some are retired. All are members of the Senior Executive Service whose salaries range between $59,938 and $69,600 a year.

The settlements will add up to an estimated $32 million, unless the government decides to continue the legal battle. The betting is that it will.

The government maintains that the decision by a three-judge panel of the Chicago court is invalid because the court does not have jurisdiction over federal pay matters. Uncle Sam could either ask the full nine-member court to decide whether it has jurisdiction, or take the case to the U.S. Supreme Court.

The money represents raises the top executives were denied in 1980 and 1981 when Congress refused to raise the top federal pay ceiling, even though rank-and-file civil servants were getting pay raises.

While executives have had raises since, and are due the 3 1/2 percent general civil service raise in January, the Senior Executive Association contends that senior executives are due the lump sum back payments because the cap was applied improperly. The association is a professional organization that represents many of the government's top career civil servants.

A group of government executives in Milwaukee first took the back-pay case to the U.S. District Court in that city. The court turned down their request. But its decision was later overturned in part by the Chicago panel. At that point the government asked the court to reconsider whether it had jurisdiction.

The same panel reaffirmed that it had jurisdiction over the matter. That puts the payments back on track, but still leaves them a long way from being in the executives' pockets.

An official of the Office of Personnel Management said yesterday that the solicitor general, the government's top lawyer, will ultimately decide whether to pursue the case before the full Chicago court, or take it to the U.S. Supreme Court.

Although no decision has been reached, one top federal official said yesterday that the government's inclination "is to fight the case all the way" because of the money and the jurisdictional principle involved.

As we told you in August, don't spend the money yet!