The Bush administration will publish regulations this week that should give federal executives a better understanding of what is expected of them and how they can qualify for pay raises.
Under the regulations, the top end of the pay scale for federal executives would increase by $12,800 -- to $158,100. Their combination of pay and bonuses could not exceed $203,000, the salary of the vice president.
The higher pay scales would go into effect only at federal agencies that create more rigorous performance evaluation systems and get them approved by the Office of Personnel Management with the concurrence of the Office of Management and Budget. Agencies that are making progress on setting such standards can apply for "provisional certification," which would be granted for one year.
Without OPM-OMB approval, agencies would be able to pay their executives $104,927 to $145,600. Total compensation could not exceed $175,700.
Officials at the Office of Personnel Management previewed the new system yesterday at a briefing for reporters. They included Ronald P. Sanders, an OPM associate director; Donald J. Winstead, a deputy associate director; and Barbara Colchao, a personnel management specialist.
The regulations grow out of a law, which kicked in Jan. 11, that overhauled the pay system for the Senior Executive Service. Under the law, the 6,000 members of the SES -- generally considered the government's elite cadre of managers and professionals -- are no longer entitled to annual across-the-board raises or "locality pay" adjustments.
Instead, their salary and pay raises will hinge on their duties, how well they perform them and how their agency stacks up under various program performance measures, including OMB's scorecard that tracks presidential initiatives.
The new system also represents an effort to ease "pay compression," as it is called, in the SES ranks. Last year, more than two-thirds of career executives received the same salary -- about $142,000 -- because of a pay cap set by Congress.
"We are happy that the pay cap will effectively be raised for agencies that get certified," said Carol A. Bonosaro, president of the Senior Executives Association, which represents the interests of federal executives.
Congress required agencies wanting to take advantage of the higher cap to create job appraisal systems for their executives that "make meaningful distinctions based on relative performance" and submit them for OPM-OMB approval.
The regulations lay out nine general criteria that agencies must meet to win certification to offer the higher pay. The idea is to set expectations for executives at the start of a rating cycle and later collect data to take into account such factors as agency performance and program performance. Agencies should be able to show that the largest raises and bonuses were provided to the best-performing executives, based on how they compared against other executives.
Sanders said the regulations prohibit agencies from ranking executives on a curve or by some other method that smacks of a quota.
Under the regulations, executives with an "outstanding" rating must be considered for an annual pay increase. Agencies also may not cut the pay of an executive by more than 10 percent because of performance or disciplinary reasons.
Bonosaro said she was concerned that the regulations fail to provide "inflation protection" for executives who are fully successful in their jobs. She noted that the General Schedule system ensures that 1.8 million federal employees stay ahead of inflation and suggested that "a modest adjustment" should also be provided to executives.
The possibility of a 10 percent pay cut for executives also is a worry, she said. Rather than removing executives from the SES because of lousy performance, she said some agencies might use a 10 percent pay cut as a surrogate, which would likely prompt executives to retire. The federal pension formula takes into account an average of a person's highest three years of salary.