Budget Reduction Proposals Affecting Federal Compensation Programs

The Salary Reform Act established the principle that salary rates for Federal white collar employees should be comparable with salaries for the same level of work in private enterprise. Reducing or delaying annual comparability adjustments, along with salary ceilings for Federal executives, have saved the Federal Government at least $6.9 billion since 1975, but not without a significant accompanying cost in morale. GAO has cited recruitment and retention problems, the creation of an environment where there is little incentive for executives to seek positions of greater authority and responsibility, and the retirement of top officials as soon as they become eligible. A policy which allows for adjusting not only pay but also benefits to achieve total compensation comparability should be developed. GAO supports proposed legislation to provide for a locality pay system for white-collar workers. This would also obviate the need for separate cost-of-living allowances in non-foreign areas. The Office of Personnel Management should be required to take local benefits into account when assessing and adjusting Federal compensation. GAO would oppose a proposal to establish the Federal compensation standard at 94 percent of average non-Federal compensation. GAO supports: the proposed inclusion of State and local governments in the Federal white- and blue-collar pay surveys as an appropriate refinement of the comparability principle; suggested changes in certain features of the blue-collar pay system; a proposal to provide annual cost-of-living adjustments to Federal retirees; and the elimination of a practice which allows Federal employees who are on active training duty with the National Guard or military reserve to receive dual compensation.