Federal Civilian Personnel: Cost of Lump-Sum Annual Leave Payments to
Employees Separating From Government (Letter Report, 05/29/97,
GAO/GGD-97-100).

Pursuant to a congressional request, GAO reviewed a federal civilian
employee's entitlement under 5 U.S.C. 5551(a) to receive a lump-sum
payment for any accumulated, unused annual leave upon separation from
federal service, focusing on: (1) the governmentwide costs of providing
the lump-sum annual leave payment and recent trends in these costs; (2)
the basis for and consistency of agency practices in making the payment,
including the sufficiency of guidance to ensure that employees who have
similar pay and amounts of unused annual leave receive similar payments;
and (3) any personnel cost savings that could be achieved from limiting
the lump-sum leave payment to the employee's pay rate at the time of
separation, instead of the current method of determining payment, which
assumes the employee remains in service until the entire leave balance
has expired.

GAO noted that: (1) in calendar year 1996, the cost of lump-sum leave
payments to separating civilian employees was about $562 million
governmentwide; (2) between 1985 and 1996, lump-sum payments averaged
about $595 million per year (in constant 1996 dollars); (3) the costs
ranged from a low of about $355 million in 1991 to a high of about $700
million in 1992, when downsizing resulted in large numbers of
separations; (4) the Office of Personnel Management (OPM) has not
provided formal written guidance regarding lump-sum payments since 1993,
and the other sources of guidance that are available to agencies are
insufficient to ensure consistent agency payment practices; (5) as a
consequence, employees separating from different agencies with the same
rates of pay and amounts of unused annual leave may not receive the same
payment amount; (6) Congress gave OPM specific authority to prescribe
lump-sum payment regulations in 1992, and OPM has drafted regulations
and told GAO that it intends to publish them in the summer of 1997; (7)
in the meantime, agencies must rely on the language of the statute and
Comptroller General decisions, but these sources do not cover all
situations; (8) an OPM survey of agency practices revealed that although
there appeared to be a high degree of commonality in the types of pay
that agencies were including in the payment, practices diverged for some
types of pay; (9) based in part on GAO information and analysis, the
Congressional Budget Office (CBO) estimated that agencies could realize
personnel cost savings of $18 million over 5 years if lump-sum annual
leave payments were limited to the rate of pay at the time of
separation, instead of the current method of assuming the employee had
remained in service until the entire leave balance had expired; and (10)
however, such a limitation would not ensure consistent treatment of
employees and might cause some workforce disruptions if it were to cause
employees to use all or a substantial part of their accumulated leave
before separation.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-97-100
     TITLE:  Federal Civilian Personnel: Cost of Lump-Sum Annual Leave 
             Payments to Employees Separating From Government
      DATE:  05/29/97
   SUBJECT:  Annual leave
             Employee benefit plans
             Fringe benefit costs
             Cost control
             Payments
             Federal personnel law
             Civilian employees
             Compensation

             
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Cover
================================================================ COVER


Report to the Chairman, Committee on the Budget, House of
Representatives

May 1997

FEDERAL CIVILIAN PERSONNEL - COST
OF LUMP-SUM ANNUAL LEAVE PAYMENTS
TO EMPLOYEES SEPARATING FROM
GOVERNMENT

GAO/GGD-97-100

Lump-Sum Leave Payments

(410103)


Abbreviations
=============================================================== ABBREV

  CBO - Congressional Budget Office
  CFR - Code of Federal Regulations
  FPM - Federal Personnel Manual
  GS - General Schedule
  OPM - Office of Personnel Management
  SES - Senior Executive Service

Letter
=============================================================== LETTER


B-276038

May 29, 1997

The Honorable John R.  Kasich
Chairman, Committee on the Budget
House of Representatives

Dear Mr.  Chairman: 

Employee pay and benefits is one of many areas of the federal budget
receiving congressional attention because of scarce federal
resources.  This report was prepared in response to your request that
we examine one such benefit--a federal civilian employee's
entitlement under 5 U.S.C.  5551(a) to receive a lump-sum payment for
any accumulated, unused annual leave upon separation from federal
service. 

Specifically, as agreed with your office, the objectives for our
examination were to determine (1) the governmentwide costs of
providing the lump-sum annual leave payment and recent trends in
these costs, (2) the basis for and consistency of agency practices in
making the payment, including the sufficiency of guidance to ensure
that employees who have similar pay and amounts of unused annual
leave receive similar payments, and (3) any personnel cost savings
that could be achieved from limiting the lump-sum leave payment to
the employee's pay rate at the time of separation, instead of the
current method of determining payment, which assumes the employee
remains in service until the entire leave balance has expired. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

In calendar year 1996, the cost of lump-sum leave payments to
separating civilian employees was about $562 million governmentwide. 
Between 1985 and 1996, lump-sum payments averaged about $595 million
per year (in constant 1996 dollars).  The costs ranged from a low of
about $355 million in 1991 to a high of about $700 million in 1992,
when downsizing resulted in large numbers of separations. 

The Office of Personnel Management (OPM) has not provided formal
written guidance regarding lump-sum payments since 1993, and the
other sources of guidance that are available to agencies are
insufficient to ensure consistent agency payment practices.  As a
consequence, employees separating from different agencies with the
same rates of pay and amounts of unused annual leave may not receive
the same payment amount.  Congress gave OPM specific authority to
prescribe lump-sum payment regulations in 1992, and OPM has drafted
regulations and told us that it intends to publish them in the summer
of 1997.  In the meantime, agencies must rely on the language of the
statute and Comptroller General decisions, but these sources do not
cover all situations.  An OPM survey of agency practices revealed
that although there appeared to be a high degree of commonality in
the types of pay that agencies were including in the payment,
practices diverged for some types of pay. 

Based in part on our information and analysis, the Congressional
Budget Office (CBO) estimated that agencies could realize personnel
cost savings of $18 million over 5 years if lump-sum annual leave
payments were limited to the rate of pay at the time of separation,
instead of the current method of assuming the employee had remained
in service until the entire leave balance had expired.  However, such
a limitation would not ensure consistent treatment of employees and
might cause some workforce disruptions if it were to cause employees
to use all or a substantial part of their accumulated leave before
separation. 


   BACKGROUND
------------------------------------------------------------ Letter :2

To expedite entry of federal civilian employees into the Armed Forces
during World War II, Congress authorized agencies to make lump-sum
payments for accumulated, unused annual leave to employees who were
separating from federal civilian service to enter the armed forces. 
Previously, the Dual Compensation Act had prohibited federal
civilians entering the armed services from receiving compensation
from both civilian office and military pay if the combined amounts
exceeded $2,000 per year and agencies were not authorized to "buy
back" an employee's accumulated, unused leave.  When employees
retired or otherwise left federal service, agencies commonly carried
them on the payroll in a "terminal leave" status until they had
exhausted all unused annual leave.  These practices potentially could
have delayed federal civilian employees' entry into military service
until their leave was exhausted. 

Agencies' authority to buy back a separating employee's accumulated,
unused annual leave was extended to all employees in 1944 (58 Stat. 
845).  Under this statute, any employee who leaves federal service
with unused annual leave is to receive a lump-sum payment for that
accumulated leave.  The lump-sum payment is calculated based on the
pay that the employee would have received for the leave, as if the
employee had remained in service until the leave was exhausted.  To
illustrate the calculation method, if an employee's date of
separation had been January 3, 1997, and he or she had 200 hours of
unused annual leave, the lump-sum leave payment would have been
calculated as if the employee actually worked an additional 25 days,
excluding any holidays.  The payment, therefore, would include any
pay increases the employee would have received during those days due
to any scheduled General Schedule (GS) pay increase, if the increase
was authorized before the employee's separation.\1 The lump-sum
payment has been limited to some extent over the years.  In 1980,
Congress narrowed the definition of annual leave that agencies are to
use in the calculation and prohibited crediting hours for any holiday
occurring after separation.  In 1991, Congress also excluded from the
calculation method two specific types of premium pay for employees
serving in foreign areas--post differential pay and danger pay
allowance. 


--------------------
\1 Most federal civilian employees can accumulate up to 30 days (240
hours) of annual leave that may be carried forward from year to year. 
Any leave accumulated beyond this ceiling at the beginning of a new
leave year is subject to forfeiture, whereby the employee must "use
it or lose it." Employees working outside the United States generally
may accumulate 45 days of leave before forfeiture.  Currently,
members of the Senior Executive Service (SES) can accumulate leave up
to 90 days (720 hours) before forfeiture.  In addition, SES members
who had accumulated more than 90 days of annual leave before October
14, 1994, (when there was no earning ceiling for SES members) are
authorized under some circumstances to retain as a personal leave
ceiling any higher amount that they had earned before October 14,
1994. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

To identify the costs of lump-sum leave payments and recent trends in
these costs, we obtained from OPM a summary of the costs of lump-sum
leave payments governmentwide for a 12-year period--calendar years
1985 through 1996.  OPM retrieved this information from data reported
monthly by agencies on a standard form (SF-113A).  OPM requests
agencies, among other things, to report "monies paid for annual leave
to employees who have separated from the Federal Government." OPM
uses information from this form primarily to monitor changes in
civilian employment levels in agencies, which it summarizes in public
reports entitled "Federal Civilian Workforce Statistics:  Employment
and Trends as of [month, year]." OPM does not publish in these
monthly reports the information that it gathers on lump-sum leave
payments from this standard form.  OPM retrieved and summarized this
information at our request.  To adjust for the effects of inflation,
we converted the historical cost data that OPM provided us to
constant 1996 dollars using the gross domestic product price index
published by the U.S.  Department of Commerce, Bureau of Economic
Analysis. 

To determine the basis for and consistency of agency practices in
making lump-sum leave payments, including the sufficiency of guidance
to ensure that employees with similar pay and hours of accumulated,
unused leave receive similar payments, we reviewed (1) the
legislative history and development of the statutory criteria, (2)
prior OPM guidance contained in the now-abolished Federal Personnel
Manual, (3) the status of OPM's rulemaking on lump-sum payments, (4)
administrative decisions of the Comptroller General,\2 and (5)
applicable court cases.  We also reviewed unpublished documents that
OPM provided at our request, including a document summarizing the
results of an informal survey of agency practices that OPM conducted
between 1995 and 1996. 

To identify any personnel cost savings associated with limiting the
lump-sum leave payments to the employee's pay rate at the time of
separation, we obtained historical information from OPM on the
personnel cost of annual leave and the number of employees separating
from federal service.  CBO used this and other historical data that
we gathered, along with its own data and information, to estimate the
5-year savings for fiscal years 1998 to 2002. 

As agreed with your office, we did not independently verify the
accuracy or completeness of the cost, workforce, or other data and
information that OPM provided us during this review.  Concerning
OPM's survey of agency lump-sum payment practices, OPM officials did
not want to identify agencies by name, in part, because OPM's
information on these practices had been obtained informally and was
not verified.  Although we did not verify OPM's personnel cost data,
we independently gathered data on one federal agency's lump-sum
payments and used those data to test the reasonableness of the
governmentwide data that OPM provided.  We made available a draft of
this report to OPM for review and comment.  OPM's comments are
discussed at the end of this letter.  We conducted our review from
January 1997 through March 1997 in accordance with generally accepted
government auditing standards. 


--------------------
\2 The Comptroller General's authority to make administrative
determinations, involving federal civilian employees' compensation
and leave, was transferred to the Director of OPM by the "General
Accounting Office Act of 1996" (P.L.  104-316, Oct.  19, 1996). 


   TRENDS IN COSTS OF LUMP-SUM
   LEAVE PAYMENTS
------------------------------------------------------------ Letter :4

In calendar year 1996, the total cost of lump-sum leave payments to
federal civilian employees was about $562 million.  Between 1985 and
1996, these costs averaged about $595 million per year (constant 1996
dollars).  As shown in figure 1, the costs ranged from a low of about
$355 million in 1991 to a high in 1992 of about $700 million.\3

   Figure 1:  Governmentwide Costs
   of Lump-Sum Leave Payments, CY
   1985- 1996 (1996 dollars in
   millions)

   (See figure in printed
   edition.)

Source:  GAO analysis of unpublished OPM data. 

According to OPM officials, most of the 1992 costs can be attributed
to an unusually large number of lump-sum payments made by the U.S. 
Postal Service, which underwent a major downsizing in that year. 
Figure 2 shows, for the 12-year period of 1985 through 1996, the
trend in the cost of payments to federal civilian employees for most
of the government (top line), executive branch agencies excluding the
U.S.  Postal Service (middle line), and the U.S.  Postal Service
(bottom line).\4 Payments by the U.S.  Postal Service increased
tenfold between 1991 and 1992, from about $35 million to more than
$378 million.  Also, payments by nonpostal agencies nearly doubled
between 1992 and 1993, from about $316 million to about $605 million. 

   Figure 2:  Effect of U.S. 
   Postal Service Payments on
   Governmentwide Costs, CY
   1985-1996 (1996 dollars in
   millions)

   (See figure in printed
   edition.)

Source:  GAO analysis of unpublished OPM data. 

Appendix I contains the specific cost data we acquired from OPM and
converted to 1996 dollars for each of the 12 years included in our
trend analysis. 


--------------------
\3 According to OPM, this cost data cover employees in all work
schedules, pay systems, types of service, and all agencies except
certain intelligence-related agencies. 

\4 Unlike most federal civilian employees that have a 240-hour
ceiling on the number of annual leave hours that can be carried
forward to another leave year before forfeiture, the ceiling for the
Postal Service varies.  For the vast majority of Postal Service
employees (i.e., members of bargaining unions) the ceiling is 440
hours (55 days). 


   GUIDANCE CURRENTLY INSUFFICIENT
   TO ENSURE CONSISTENT AGENCY
   PRACTICES
------------------------------------------------------------ Letter :5

OPM has not provided formal written guidance on lump-sum payments
since 1993.\5 OPM has drafted regulations and told us that it intends
to publish them in the summer of 1997.  In the meantime, agencies
must rely on the language of the statute and Comptroller General's
decisions, but the guidance is incomplete and therefore insufficient
to ensure consistent agency payment practices. 


--------------------
\5 Prior to December 1993, OPM's Federal Personnel Manual (FPM)
chapter 550-2 and a related supplement provided instruction to
agencies regarding the calculation of lump-sum leave payments.  These
issuances were eliminated in December 1993 when most of the FPM was
abolished as part of an effort to reduce the administrative burden of
personnel rules on agencies. 


      OPM IS DEVELOPING
      REGULATIONS TO PROVIDE
      FORMAL WRITTEN GUIDANCE
---------------------------------------------------------- Letter :5.1

As the central human resource management agency for the federal
government, OPM prescribes policies and procedures that agencies are
to follow regarding civilian employee pay and benefits.  CFR title 5
part 630 includes regulations on the accumulation and use of annual
leave and part 550 includes regulations on pay administration.  OPM
currently has no regulations or other written guidance on lump-sum
leave payment calculations. 

OPM requested that Congress provide OPM specific statutory authority
to regulate lump-sum leave payments in June 1991, as part of a larger
proposal intended to correct problems arising from OPM's
implementation of its title 5 pay authorities.  In October 1992,
Congress provided OPM the requested authority in a provision of The
Technical and Miscellaneous Civil Service Amendments Act of 1992.\6
However, the act specified no deadline for OPM action, and OPM has
not as yet formally proposed regulations on lump-sum leave payments. 
In April 1997, OPM officials said that draft rules have been prepared
and are awaiting the OPM Director's approval.  According to these
officials, a notice of proposed rulemaking should be issued by the
end of June 1997. 


--------------------
\6 This provision is codified at 5 U.S.C.  5553. 


      OTHER GUIDANCE AVAILABLE TO
      AGENCIES IS INCOMPLETE
---------------------------------------------------------- Letter :5.2

OPM believes that there is a high degree of commonality in agency
approaches to making lump-sum leave payment calculations because
basic pay is the primary type of pay in a lump-sum payment, and both
the Comptroller General and OPM have provided guidance on some types
of payments in the past.  While there may be a high degree of
consensus on the types of pay that agencies include in lump-sum
payments, OPM has recognized that agency practices differ for some
types of pay. 

As discussed below, practices differ for some types of pay because
the guidance available to agencies is incomplete.  In particular, the
lump-sum payment provision of 5 U.S.C.  5551 does not define the term
"pay." The Comptroller General's decisions have interpreted the
statutory language only to the extent necessary to resolve disputes
over particular payments agencies have made.  As a consequence,
available guidance does not set forth a complete listing of the types
of pay that should be included. 

The insufficiency of guidance on the types of pay agencies are to
include is important because many employees are entitled to numerous
additional pay and allowances that may, or may not, be considered as
part of their basic pay.  As part of an ongoing effort to study the
feasibility of issuing regulations on lump-sum leave payments, OPM in
March 1995 informed agencies that it had identified at least 11 types
of pay for which there was at that time no definitive statutory or
administrative determination on whether the pay should be included in
the lump-sum payment calculation.  Table 1 shows OPM's identification
of these "undetermined" types of pay, along with past determinations
on the types of pay that should be included or excluded from lump-sum
leave payments and available OPM data on the fiscal year 1995 costs. 



                                Table 1
                
                Types of Pay Included and Excluded from
                Lump-Sum Leave Payments and Fiscal Year
                 1995 Cost of Premium Pay for NonPostal
                           Executive Agencies

                         (Dollars in thousands)

                                                               Cost of
                                                           premium pay
                                          Included or    for nonPostal
                                          excluded from      executive
                                          lump-sum        agencies (FY
Type of Pay                               payment                1995)
----------------------------------------  -------------  -------------
Overtime                                                    $2,783,990
Administratively uncontrollable           Included                  \b
Regularly scheduled                       Excluded                  \b
Irregular/unscheduled                     Excluded                  \b
Fair Labor Standards Act                  Undetermined              \b
Physicians comparability allowance        Undetermined         393,868
Holiday                                                        241,962
No work performed                         Excluded\a                \b
Work performed                            Excluded                  \b
Night differential                                             268,603
Federal Wage System                       Included                  \b
Other                                     Undetermined              \b
Sunday                                    Undetermined         213,136
Supervisory differential                  Undetermined         112,948
Hazardous duty                            Undetermined          56,647
Post differential                                               53,710
Nonforeign                                Included                  \b
Foreign                                   Excluded\a                \b
Remote work site allowance                Undetermined           6,761
Other                                                          537,688
Availability pay                          Included                  \b
Cost of living                            Included                  \b
Standby duty pay                          Included                  \b
Danger pay: foreign                       Excluded\a                \b
Environmental differential                Excluded                  \b
Retention allowance                       Excluded                  \b
Evacuation                                Undetermined              \b
Quarters allowance                        Undetermined              \b
Johnston Island                           Undetermined              \b
Uniform allowance                         Undetermined              \b
======================================================================
Total                                                       $4,669,313
----------------------------------------------------------------------
\a Excluded explicitly by statute (5 U.S.C.  5551). 

\b Cost unknown. 

Source:  GAO analysis of OPM published and unpublished data. 


      DIFFERENCES IN TYPES OF PAY
      TO INCLUDE IN PAYMENT
      CALCULATIONS
---------------------------------------------------------- Letter :5.3

In 1995, OPM surveyed agency personnel directors on how they were
defining pay for the purpose of making lump-sum payments and the
types of pay that they believed should be included.  OPM told us
that, based on the results of the survey, there appeared to be a high
degree of commonality in the kinds of pay that agencies were
including, but that agency practices diverged for some types of pay. 
As an illustration of the problem, they noted that court cases had
been brought against the federal government in recent years,
involving disputes about the types of pay agencies have included or
excluded in lump-sum payments.  For example, in March 1995 the
Justice Department agreed to settle with 696 former federal
employees.  The settlement included lump-sum back-pay claims totaling
about $570,000, or $819 per former federal employee.  OPM also said
that (1) agencies held different views on the types of pay that
should be included and that, as a consequence, (2) practices were
likely to continue to differ until the issue was clarified--either
through the issuance of binding regulations or the enactment of
statutory changes. 

OPM identified four different agency views on the types of pay that
should be included in lump-sum leave payment calculations.  The most
restrictive would limit lump-sum payments to basic pay.  A second
approach would count only the pay that is currently included in
retirement computations (i.e., basic pay, annual premium pay for
standby duty or administratively uncontrollable overtime work, and
availability pay).  A third would count any pay received by an
employee while in a paid leave status (e.g., retention allowances,
physicians comparability allowances) in addition to the pay
components of the second approach.  Finally, the least restrictive
approach would include all pay that employees would have received if
they had continued to work. 


   PERSONNEL COST SAVINGS FROM
   ELIMINATING PAY INCREASES AFTER
   SEPARATION
------------------------------------------------------------ Letter :6

As the previous agencies' views suggest, there are many ways in which
the cost of lump-sum payments to separating employees could be
calculated.  As noted in the background section of this report,
Congress has in the past revised the calculation method to restrict
the kinds of pay that can be included in the calculation. 

We were asked to identify the personnel cost savings that could be
achieved from limiting the lump-sum payment to the employee's rate of
pay at the time of separation, instead of the current method of
payment, which assumes the employee remains in service until the
entire leave balance has been exhausted.  If Congress enacted such a
limitation, no GS pay increases that go into effect following the
employee's separation would be added to the payment calculation. 
According to CBO, the savings from such a limitation would be modest. 
As shown in table 2, CBO estimated that agencies would realize total
savings of $18 million over the fiscal year 1998 to 2002 period, if
Congress limited payments to the rate of pay in effect on the day the
employee separates from federal service.\7



                                Table 2
                
                         Five-Year Cost Savings

                         (Dollars in millions)

                                    FY      FY      FY      FY      FY
                                  1998    1999    2000    2001    2002
------------------------------  ------  ------  ------  ------  ------
Budget authority                     3       3       4       4       4
Outlays                              3       3       4       4       4
----------------------------------------------------------------------
Source:  CBO. 

Limiting the lump-sum payment to the employee's pay at the time of
separation would not clarify the types of pay that agencies are to
include in the payment, and therefore, would not increase the
consistency of agency payment practices.  As OPM said, agency
practices are likely to remain different until OPM prescribes
regulations or Congress enacts legislation specifying the types of
pay that agencies are to include in lump-sum leave payments. 


--------------------
\7 The savings CBO estimated are personnel cost savings that would be
available for other agency purposes.  Savings from discretionary
spending program changes contribute to additional deficit reduction
only if the Budget Enforcement Act caps on discretionary spending are
lowered.  Savings that individual agencies would realize depend on
particular agency circumstances.  As our analysis of OPM workforce
data showed, the number of accrued hours of leave that are credited,
the value of a leave hour, and the types of pay that are counted all
will affect lump-sum payment costs.  Also, the 1985 to 1996 lump-sum
payment cost trends presented in this letter showed that payment
costs (hence, savings) could be materially affected by factors that
are not a part of the lump-sum payment calculation.  Some factors,
such as when an agency downsizes, could be hard to anticipate and
would affect agencies differently. 


      WORKFORCE MANAGEMENT ISSUES
      COULD ARISE
---------------------------------------------------------- Letter :6.1

Workforce management issues also could arise, depending on employee
responses to limiting the lump-sum payment to the employee's pay at
the time of separation.  If a separating GS employee used his or her
maximum accumulated leave (30 days) and accruing leave (26 days) in
the final year of service, the employee could be absent for as many
as 56 days--which is about 22 percent of the work year.  The
employing agency would need to manage around this disruption, unless
it could fill the position prior to the employee's separation. 
However, the likelihood of large numbers of employees doing so is
probably small.  To illustrate this point, table 3 shows how small
the maximum reduction in payments that separating employees in
January 1996 would have been at various GS pay levels if the net 2.54
percent pay increase had been eliminated from their lump-sum leave
payments. 



                                Table 3
                
                 Illustrations of the Maximum Reduction
                    in Lump-Sum Leave Payments to GS
                Employees From Eliminating January 1996
                    Net Pay Increase of 2.54 Percent

                                    Lump-sum leave   Maximum reduction
Pay level/number of unused         payment current    in payment after
leave days                                  policy          limitation
------------------------------  ------------------  ------------------
Average GS-15 pay level ($88,185)
----------------------------------------------------------------------
10 days                                     $3,380                 $86
30 days                                     10,141                 258
56 days                                     18,930                 481

Average 1996 GS pay level governmentwide ($42,139)
----------------------------------------------------------------------
10 days                                     $1,615                 $41
30 days                                      4,846                 123
56 days                                      9,046                 230

Average GS-5 pay level ($23,529)
----------------------------------------------------------------------
10 days                                       $902                 $23
30 days                                      2,706                  69
56 days                                     $5,051                $128
----------------------------------------------------------------------
Source:  GAO analysis of OPM data. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We received oral comments on a draft of this report from OPM on April
24, 1997.  OPM officials who provided comments included the Associate
Director for Human Resources Systems Service, the Deputy Chief of
Staff, the Assistant Director for Compensation Policy, and a Team
Leader in the Office of Workforce Information.  They generally agreed
with the information presented in this report and said the report
fairly presents the current situation OPM faces in developing
regulations on lump-sum leave payments.  Comments of a technical and
clarifying nature made by these officials were incorporated in this
report where appropriate. 


---------------------------------------------------------- Letter :7.1

We are sending copies of this report to the Ranking Minority Member
of the Committee, the Director of OPM, and other interested parties. 
Copies will also be made available to others upon request. 


The major contributors to this report were Assistant Director
Margaret T.  Wrightson and Senior Evaluator John J.  Tavares.  If you
have any questions on this report, please call me at (202) 512-9039. 

Sincerely yours,

Michael Brostek
Associate Director
Federal Management and
 Workforce Issues


COST OF LUMP-SUM PAYMENTS FOR
ANNUAL LEAVE, CY 1985-1996
=========================================================== Appendix I

                       (1996 dollars in millions)

                                              Nonpostal
                           Governmentwid      executive
                            e\a civilian         branch    U.S. Postal
Calendar year                  workforce       agencies        Service
-------------------------  -------------  -------------  -------------
1985                                $594           $512            $76
1986                                 613            531             76
1987                                 580            501             73
1988                                 674            583             84
1989                                 539            432            100
1990                                 587            460            119
1991                                 355            315             35
1992                                 700            316            378
1993                                 661            605             48
1994                                 643            585             46
1995                                 628            564             51
1996                                 562            490             63
12-year average                     $595           $491            $96
----------------------------------------------------------------------
\a This cost data cover, according to OPM, employees in all work
schedules, pay systems, types of service, and all agencies except
certain intelligence-related agencies. 

Source:  Unpublished OPM cost data converted by GAO to 1996 dollars. 

*** End of document. ***