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B-216579, FEB 6, 1985

B-216579 Feb 06, 1985
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COMPENSATION - RATES - HIGHEST PREVIOUS RATE - TRANSFERS - RATE APPLICABLE DIGEST: FORMER EMPLOYEE OF THE SMITHSONIAN SCIENCE INFORMATION EXCHANGE WHICH IS NOT A MIXED OWNERSHIP CORPORATION IS NOT ENTITLED TO RECEIVE THE BENEFITS OF THE HIGHEST PREVIOUS RATE RULE UNDER 5 U.S.C. 5334. SHE WAS PAID BY PRIVATE TRUST FUNDS OF THE SSIE AND NOT FROM WHOLLY APPROPRIATED FUNDS AND SHE IS THEREFORE NOT COVERED BY THE HIGHEST PREVIOUS RATE RULE. 5 U.S.C. 5102(C)(14). MOBLEY BELIEVES THAT SHE IS ENTITLED TO HAVE HER PAY SET AT THE "HIGHEST PREVIOUS RATE" UNDER THE AUTHORITY OF 5 U.S.C. IRRESPECTIVE OF WHETHER OR NOT THE POSITION WAS SUBJECT TO THE GENERAL SCHEDULE. 5 C.F.R. THE ISSUE IS WHETHER MS. THE OFFICE OF PERSONNEL MANAGEMENT'S (OPM) POSITION ON THIS MATTER IS THAT IF MS.

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B-216579, FEB 6, 1985

COMPENSATION - RATES - HIGHEST PREVIOUS RATE - TRANSFERS - RATE APPLICABLE DIGEST: FORMER EMPLOYEE OF THE SMITHSONIAN SCIENCE INFORMATION EXCHANGE WHICH IS NOT A MIXED OWNERSHIP CORPORATION IS NOT ENTITLED TO RECEIVE THE BENEFITS OF THE HIGHEST PREVIOUS RATE RULE UNDER 5 U.S.C. 5334, AND 5 C.F.R. 531.203(C), UPON OBTAINING A POSITION AT THE INTERNAL REVENUE SERVICE. SHE WAS PAID BY PRIVATE TRUST FUNDS OF THE SSIE AND NOT FROM WHOLLY APPROPRIATED FUNDS AND SHE IS THEREFORE NOT COVERED BY THE HIGHEST PREVIOUS RATE RULE. 5 U.S.C. 5102(C)(14), 5331 AND 5334.

THE HONORABLE FRANK R. WOLF: MEMBER, UNITED STATES HOUSE OF REPRESENTATIVES SUITE 115 1651 OLD MEADOW ROAD MCLEAN, VIRGINIA 22102

DEAR MR. WOLF:

THIS REPLIES TO YOUR LETTER OF SEPTEMBER 12, 1984, IN WHICH YOU ASK US TO REVIEW A LETTER FROM ROSEANNE B. MOBLEY, 2328 NORTH WAKEFIELD STREET, ARLINGTON, VIRGINIA 22207. MS. MOBLEY BELIEVES THAT SHE IS ENTITLED TO HAVE HER PAY SET AT THE "HIGHEST PREVIOUS RATE" UNDER THE AUTHORITY OF 5 U.S.C. SEC. 5334 (1982), AND 5 C.F.R. SEC. 531.203(C) (1982), INCIDENT TO HER OBTAINING A POSITION WITH THE INTERNAL REVENUE SERVICE (IRS). APPARENTLY THE IRS HAS DECIDED THAT MS. MOBLEY'S PRIOR SERVICE WITH THE SMITHSONIAN SCIENCE INFORMATION EXCHANGE (SSIE), A PRIVATE CORPORATION, DID NOT QUALIFY HER TO RECEIVE THE HIGHEST PREVIOUS RATE.

THE HIGHEST PREVIOUS RATE RULE ALLOWS A FEDERAL AGENCY TO PAY AN EMPLOYEE THE HIGHEST PREVIOUS RATE OF BASIC PAY PREVIOUSLY PAID TO THAT INDIVIDUAL WHILE EMPLOYED IN A POSITION IN A BRANCH OF THE FEDERAL GOVERNMENT (EXECUTIVE, LEGISLATIVE, OR JUDICIAL), A MIXED OWNERSHIP CORPORATION, OR THE GOVERNMENT OF THE DISTRICT OF COLUMBIA, IRRESPECTIVE OF WHETHER OR NOT THE POSITION WAS SUBJECT TO THE GENERAL SCHEDULE. 5 C.F.R. SECS. 531.202(F) AND 531.203(C). ACCORDINGLY, THE ISSUE IS WHETHER MS. MOBLEY'S PREVIOUS POSITION WITH SSIE ENTITLES HER TO THE BENEFITS OF THE HIGHEST PREVIOUS RATE IN HER CURRENT POSITION WITH THE IRS.

THE OFFICE OF PERSONNEL MANAGEMENT'S (OPM) POSITION ON THIS MATTER IS THAT IF MS. MOBLEY'S SSIE POSITION WAS IN FACT FEDERALLY ALLOCATED, THEN IRS COULD EXERCISE THE OPTION OF GRANTING HER A PAY RATE UNDER THE HIGHEST PREVIOUS RATE RULE. HOWEVER, OPM POINTS OUT THAT THE SMITHSONIAN INSTITUTION IS UNIQUE IN THAT IT HAS AUTHORITY TO HIRE EMPLOYEES AND PAY THEM FROM APPROPRIATED FUNDS. INDIVIDUALS WHO ARE PAID FROM NONAPPROPRIATED FUNDS. INDIVIDUALS WHO ARE PAID FROM NONAPPROPRIATED FUNDS ARE ON A "PRIVATE ROLL" AND ARE NOT CONSIDERED FEDERAL EMPLOYEES. THUS, IF MS. MOBLEY IS A PRIVATE ROLL EMPLOYEE SHE WOULD FOR PAY PURPOSES BE EXCLUDED FROM THE PAY LAWS AFFECTING FEDERAL EMPLOYEES. 5 U.S.C. SEC. 5102(C)(14).

THE SMITHSONIAN INSTITUTION HAS ADVISED YOU THAT MS. MOBLEY WAS A PRIVATE ROLL EMPLOYEE SHE WAS PAID FROM SMITHSONIAN TRUST FUNDS. IT IS THE SMITHSONIAN'S POSITION THAT EMPLOYEES PAID WITH SMITHSONIAN INSTITUTION TRUST FUNDS, REGARDLESS OF THE ORIGIN OF THOSE FUNDS, WERE NOT ELIGIBLE FOR CIVIL SERVICE STATUS OR BENEFITS.

MS. MOBLEY ARGUES, HOWEVER, THAT THE SSIE WAS IN EFFECT A "MIXED OWNERSHIP CORPORATION" SINCE THE TRUST FUNDS WERE ESSENTIALLY GOVERNMENT APPROPRIATED FUNDS AS THEY CAME FROM VARIOUS OTHER DEPARTMENTAL APPROPRIATIONS.

INITIALLY, WE NOTE THAT THE SSIE IS NOT A MIXED OWNERSHIP CORPORATION. 31 U.S.C. SEC. 856(1976). AS TO THE SSIE'S ORIGIN, STATUS AND FUNDING, IT HAS BEEN DESCRIBED BY A FEDERAL DISTRICT COURT AS FOLLOWS:

"THE SMITHSONIAN SCIENCE INFORMATION EXCHANGE IS A NATIONAL REPOSITORY FOR SCIENCE RESEARCH DATA. IT ORIGINATED IN 1949 AS THE MEDICAL SCIENCES INFORMATION EXCHANGE, FUNDED BY SIX GOVERNMENT AGENCIES. IN 1953 IT BECAME THE BIOSCIENCES INFORMATION EXCHANGE AND CAME UNDER THE AEGIS OF THE SMITHSONIAN INSTITUTION. IT BECAME THE SCIENCE INFORMATION EXCHANGE IN 1960, AND IN 1971 WAS INCORPORATED AS A PRIVATE NON-PROFIT CORPORATION UNDER THE LAWS OF THE DISTRICT OF COLUMBIA AND RENAMED THE SMITHSONIAN SCIENCE INFORMATION EXCHANGE.

"THE EXCHANGE APPEARS AS A LINE ITEM ON THE ANNUAL SMITHSONIAN INSTITUTION FEDERAL BUDGET, FROM WHICH IT RECEIVES APPROXIMATELY 60% OF ITS REVENUES. THE REMAINING 40% IS DERIVED FROM USER FEES, OF WHICH THE MAJORITY COMES FROM AGENCIES, GRANTS OR CONTRACTS.

"SINCE ITS INCEPTION, SSIE HAS EXISTED AS A PRIVATE CORPORATION COMPRISED OF PRIVATE-ROLL EMPLOYEES." WINSTON V. SMITHSONIAN SCIENCE INFORMATION EXCHANGE, INC. ET AL.). 437 F.SUPP. 456, 458 (U.S.D.C. D.C. 1977).

MOREOVER, IN OUR REPORT TO CONGRESS ENTITLED "NEED TO STRENGTHEN FINANCIAL ACCOUNTABILITY TO THE CONGRESS, SMITHSONIAN INSTITUTION," GGD 77 -43, TO WHICH YOU REFER, WE MADE SEVERAL FINDINGS CONCERNING SSIE FUNDS. WE STATED THAT "APPROPRIATED FUNDS TRANSFERRED UNDER AGREEMENTS WITH THE SMITHSONIAN ARE PRIVATE FUNDS IN THE HANDS OF THE EXCHANGE" GGD-77-43 AT 17. WE CONCLUDED THAT "SINCE THE EXCHANGE IS A PRIVATE, NONPROFIT CORPORATION, IT DOES NOT HAVE TO COMPLY WITH FEDERAL STATUTES SUCH AS FISCAL YEAR LIMITATIONS AND CIVIL SERVICE AND FEDERAL PROCUREMENT LAWS, APPLICABLE TO THE USE OF APPROPRIATED FUNDS." GGD-77 43 AT 17. SEE ALSO WINSTON V. SMITHSONIAN SCIENCE INFORMATION EXCHANGE, INC., CITED ABOVE.

SINCE MS. MOBLEY'S POSITION AT SSIE WAS FUNDED BY PRIVATE FUNDS IN THE HANDS OF THE SSIE WHICH WERE NOT CONSIDERED APPROPRIATED FUNDS, AND SINCE SSIE WAS NOT A MIXED OWNERSHIP CORPORATION, MS. MOBLEY IS NOT ENTITLED TO THE HIGHEST PREVIOUS RATE BENEFITS PROVIDED BY 5 U.S.C. SEC. 5334, AND 5 C.F.R. SEC. 531.203(C). HER STATUS WAS NOT THE SAME AS THE CIVIL SERVICE EMPLOYEES AT THE SMITHSONIAN INSTITUTION WHOSE SALARIES WERE SPECIFICALLY APPROPRIATED BY CONGRESS FOR THAT PURPOSE.

ACCORDINGLY, WE CONCLUDE THAT THE IRS WAS CORRECT IN DENYING MS. MOBLEY BENEFITS UNDER THE HIGHEST PREVIOUS RATE RULE.

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