Bush to propose $500M performance fund

President Bush plans to propose a $500 million "human capital performance fund" in the fiscal 2004 budget that would allow agencies to reward employees who do outstanding work and attract workers to critical, hard-to-fill positions.

"The federal pay system has been in a time warp for over 50 years. The president is committed to fixing it," said Mark Everson, deputy director for management at the Office of Management and Budget, who was recently tapped as the Internal Revenue Service commissioner.

Agencies that want money from the fund would be required to submit a workforce plan for approval to the Office of Personnel Management, which would administer the fund. The "performance" money, which is separate from any bonus, would be permanently added to the base pay of an employee and would be in addition to a proposed 2 percent across-the-board increase for civilian workers next year.

The Bush administration also plans to raise the pay cap for those in the Senior Executive Service to $154,700 from $142,500, broaden the range to allow more people into SES and abolish the six SES pay rates. Raising the cap would have an incremental cost — perhaps around $20 million — that agencies would be expected to absorb, Everson said.

OPM Director Kay Coles James said that this fund is not the beginning of the end of special pay rates, which are across-the-board and not performance-sensitive. "It's a down payment on pay reform." The General Services pay system "needs a good hard look" and that will happen, she said.