[House Document 108-121]
[From the U.S. Government Publishing Office]



                                     

108th Congress, 1st Session - - - - - - - - - - - - House Document 108-121

 
  AN ALTERNATIVE PLAN FOR ACROSS-THE-BOARD AND LOCALITY PAY INCREASES

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES



                              transmitting

  AN ALTERNATIVE PLAN FOR ACROSS-THE-BOARD AND LOCALITY PAY INCREASES 
 PAYABLE TO CIVILIAN FEDERAL EMPLOYEES COVERED BY THE GENERAL SCHEDULE 
   (GS) AND CERTAIN OTHER PAY SYSTEMS IN JANUARY 2004, PURSUANT TO 5 
                           U.S.C. 5305(a)(3)




September 3, 2003.--Referred to the Committee on Government Reform and 
                         ordered to be printed
                                           The White House,
                                       Washington, August 27, 2003.
Hon. J. Dennis Hastert,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: I am transmitting an alternative plan for 
across-the-board and locality pay increases payable to civilian 
Federal employees covered by the General Schedule (GS) and 
certain other pay systems in January 2004.
    Under title 5, United States Code, civilian Federal 
employees covered by the GS and certain other pay systems would 
receive a two-part pay increase in January 2004: (1) a 2.7 
percent across-the-board increase in scheduled rates of basic 
pay derived from Employment Cost Index data on changes in the 
wages and salaries of private industry workers, and (2) a 
locality pay increase based on Bureau of Labor Statistics' 
salary surveys of non-Federal employers in each locality pay 
area, which would cost about 10 percent of payroll for the 
calendar year. Including increases for blue-collar and other 
workers, the total Federal employee pay increase would cost 
about 13 percent of payroll in calendar year 2004. For Federal 
employees covered by the locality pay system, the overall 
average pay increase would be about 15.1 percent.
    For each part of the two-part pay increase, title 5, United 
States Code, authorizes me to implement an alternative pay plan 
if I view the adjustment that would otherwise take effect as 
inappropriate due to ``national emergency or serious economic 
conditions affecting the general welfare.'' For the reasons 
described below, I have determined that it would be appropriate 
to exercise my statutory alternative plan authority to limit 
the January 2004 GS pay increase.
    A national emergency has existed since September 11, 2001, 
that now includes Operation Enduring Freedom in Afghanistan and 
Operation Iraqi Freedom. Full statutory civilian pay increases 
costing 13 percent of payroll in 2004 would interfere with our 
Nation's ability to pursue the war on terrorism. Such increases 
would cost about $13 billion in fiscal year 2004 alone--$11 
billion more than the 2 percent overall Federal civilian pay 
increase I proposed in my 2004 Budget--and would build in later 
years.
    Such cost increases would threaten our efforts against 
terrorism or force deep cuts in discretionary spending or 
Federal employment to stay within budget. Neither outcome is 
acceptable. Therefore, I have determined that a total pay 
increase of 2 percent would be appropriate for GS and certain 
other employees in January 2004.
    A 2 percent pay increase should be complemented by $500 
million dollars from the Human Capital Performance Fund, which 
I proposed is my FY 2004 Budget and which is now contained in 
H.R. 1588, the National Defense Authorization Act for Fiscal 
Year 2004. Favorable congressional action to establish full 
funding for this initiative would be a key step towards 
rewarding the highest performing and most valuable employees in 
agencies with rigorous and disciplined performance management 
systems. Providing higher pay for employees whose exceptional 
performance is critical to the achievement of the agency 
mission is preferable to spreading limited dollars across-the-
board to all employees regardless of their individual 
performance or contribution.
    I will allocate 1.5 percent of the 2 percent total increase 
to an across-the-board increase under section 5303 of title 5, 
United States Code, and use the remaining 0.5 percent of 
payroll to continue the implementation of the locality pay 
program under section 5304. Our national situation precludes 
granting larger pay increases to GS employees at this time.
    Accordingly, I have determined that (1) Under the authority 
of section 5303(b) of title 5, United States Code, the pay 
rates for each statutory pay system will be increased by 1.5 
percent, effective on the first day of the first applicable pay 
period beginning on or after January 1, 2004; and (2) Under the 
authority of section 5304a of title 5, United States Code, 
locality-based comparability payments in the percentages set 
forth in the attached table will go into effect in January 
2004.
    Finally, the law requires that I include in this report an 
assessment of the impact of my decision on the Government's 
ability to recruit and retain well-qualified employees. I do 
not believe this decision will materially affect our ability to 
continue to attract and retain a quality Federal workforce. To 
the contrary, since any pay raise above the 2 percent I have 
proposed would likely be unfunded, agencies would have to 
absorb to pay the higher rates. Moreover, GS quit rates are at 
an all-time low of 1.7 percent per year, well below the overall 
average quit rate in private enterprise. Should the need arise, 
the Government has many compensation tools, such as recruitment 
bonuses, retention allowances, and special salary rates, to 
maintain the high-quality workforce that serves our National so 
very well.
    Sincerely,
                                                    George W. Bush.

    2004 Locality-Based Comparability Payments Under Alternative Plan

        Locality Pay Area\1\                            Locality Payment
                                                            [in percent]
    Atlanta, GA................................................... 11.50
    Boston-Worcester-Lawrence, MA-NH-ME-CT-RI..................... 15.73
    Chicago-Gary-Kenosha, IL-IN-WI................................ 16.92
    Cincinnati-Hamilton, OH-KY-IN................................. 14.04
    Cleveland-Akron, OH........................................... 12.10
    Columbus, OH.................................................. 12.28
    Dallas-Fort Worth, TX......................................... 12.74
    Dayton-Springfield, OH........................................ 11.17
    Denver-Boulder-Greeley, CO.................................... 15.46
    Detroit-Ann Arbor-Flint, MI................................... 17.02
    Hartford, CT.................................................. 16.41
    Houston-Galveston-Brazoria, TX................................ 21.49
    Huntsville, AL................................................ 10.58
    Indianapolis, IN.............................................. 10.30
    Kansas City, MO-KS............................................ 10.73
    Los Angeles-Riverside-Orange County, CA....................... 18.57
    Miami-Fort Lauderdale, FL..................................... 14.45
    Milwaukee-Racine, WI.......................................... 11.73
    Minneapolis-St. Paul, MN-WI................................... 13.54
    New York-N. New Jersey-Long Island, NY-NJ-CT-PA............... 17.73
    Orlando, FL................................................... 10.12
    Philadelphia-Wilmington-Atlantic City, PA-NJ-DE-MD............ 14.12
    Pittsburgh, PA................................................ 11.03
    Portland-Salem, OR-WA......................................... 13.60
    Richmond-Petersburg, VA....................................... 11.25
    Sacramento-Yolo, CA........................................... 13.98
    St. Louis, MO-IL.............................................. 10.46
    San Diego, CA................................................. 14.84
    San Francisco-Oakland-San Jose, CA............................ 22.23
    Seattle-Tacoma-Bremerton, WA.................................. 13.85
    Washington-Baltimore, DC-MD-VA-WV............................. 13.43
    Rest of U.S................................................... 10.09

\1\ Locality pay areas are defined in 5 CFR 531.603.
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