Cost of fed pay reform could become an issue

Testimony on the Working for America Act

In recent hearings on Capitol Hill, officials have raised questions about the cost of changing the way agencies pay federal employees. As testimony reveals details of the Bush administration's civil service reform proposal, even advocates of change say that switching to a new federal pay system could be expensive.

Some proponents of the administration's plan to eliminate General Schedule pay regulations say that any replacement system based on appraising and rewarding employee performance would require a big investment in manager training.

Comptroller General David Walker, the top official at the Government Accountability Office, testified recently that a new federal pay system would fail unless agencies "build up their basic management capacity and engage in fundamental training and a variety of communications initiatives."

Walker suggested that Congress create a governmentwide fund from which agencies could draw for building that capacity. "I question whether people will be able to fund that one-time cost out of their baseline budget without having adverse implications in other areas," he said.

Sen. George Voinovich (R-Ohio) joined Walker in raising the cost issue at a recent subcommittee hearing on alternative federal pay systems. Addressing Dan Blair, deputy director of the Office of Personnel Management, Voinovich asked, "Does the administration understand the financial commitment that must be made to move forward with this human capital agenda?"

Under the Bush administration's legislative proposal, known as the Working for America Act, agencies would be able to design employee appraisal and pay systems within certain limits. The flexibility granted agencies to design their pay systems, however, would be contingent on OPM's certification that they are ready to handle the change, said OPM Director Linda Springer.

Legislation passed in the late 1940s established the current General Schedule pay grades, Springer said. The proposal would update that pay system while preserving the basic fairness of the civil service, she said.

Under the current system, poorly performing employees still receive across-the-board and locality pay increases. Under the new system, a significant portion of pay would be merit-based, Springer said.

If enacted, she said, Working for America would end the General Schedule and the Federal Wage System by 2010.

In other testimony, Max Stier, president and chief executive officer of the Partnership for Public Service, said the federal pay and job classification system is "no longer good enough to attract and retain the best and brightest."

However, he added, "selecting, training and otherwise preparing federal managers to manage effectively will require a significant investment of time and money in agencies and in the OPM."

Stier said the current system has permitted federal managers to become lax. "Many managers across government have been distanced from personnel decisions as a whole and have devoted little time to the people issues that are so essential" to the success of the federal workforce changes that the Bush administration wants, he said.