    [Public Papers of the Presidents of the United States: William J. Clinton (1994, Book II)]
    [August 31, 1994]
    [Pages 1513-1514]
    [From the U.S. Government Publishing Office www.gpo.gov]

    [[Page 1513]]

    Letter to Congressional Leaders on the Revised Pay Schedule for
    Federal Employees
    August 31, 1994

    Dear Mr. Speaker:  (Dear Mr. President:)
        Action on the FY 1995 Treasury, Postal Service, and General
    Government Appropriations Bill, will not be completed before the August
    31st deadline for an alternative pay plan. Therefore, as a protective
    measure, in order to ensure that a substantially larger pay increase
    does not go into effect automatically by operation of law, it is
    necessary for me to transmit an alternative pay plan.
        Under section 5303(a) of title 5, United States Code, the rates of
    basic pay of the statutory pay systems would be increased by 2.6 percent
    effective in January 1995.
        Section 5303(b) of title 5, however, provides me the authority to
    implement an alternative pay adjustment plan if I consider the pay
    adjustment that would otherwise be required by law to be inappropriate
    because of ``national emergency or serious economic conditions affecting
    the general welfare.'' As you know, alternative pay plan authority has
    been used many times over the past 15 years. ``Serious economic
    conditions'' are defined in the statute to include consideration of
    economic measures such as the Index of Leading Economic Indicators, the
    Gross National Product, the unemployment rate, the budget deficit, the
    Consumer Price Index, the Producer Price Index, the Employment Cost
    Index, and the Implicit Price Deflator for Personal Consumption
    Expenditures.
        The budget discipline put in place by my Administration has
    contributed to sustained economic growth and low inflation. To continue
    this budget discipline and its favorable impact on economic conditions I
    have determined that an alternative pay adjustment is appropriate for
    the 1995 pay raise under section 5303.
        The 1995 budget I submitted to the Congress proposed a modest pay
    increase of 1.6 percent for Federal employees. I believed that this was
    an appropriate increase in view of the other disciplines we have worked
    with the Congress to put in place that have reduced the Federal budget
    deficit and improved our Nation's economy. Further, we are currently
    making substantial reductions in Federal employment pursuant to the
    Federal Workforce Restructuring Act enacted by the Congress this year.
    To achieve these reductions, many agencies are offering Federal
    employees early retirement and incentives of up to $25,000 to leave
    Federal service. These considerations, as well, lead me to conclude that
    the substantially larger pay increase that would otherwise automatically
    go into effect is not appropriate at this time.
        The House version of the 1995 Treasury, Postal Service, and General
    Government Appropriations Bill includes a provision offered by
    Representative Steny Hoyer that provides a section 5303 pay raise of 2.0
    percent and a limited section 5304 locality pay raise. The Senate
    version of the bill has no pay raise provision. The Administration has
    informed the conference committee that it would not object to the pay
    raise in the House version of the bill if military personnel receive a
    pay raise higher than the 1.6 percent proposed in the 1995 budget. It
    appears likely that the 1995 Defense Authorization Bill will provide
    military members a 2.6 percent raise.
        Consistent with the provisions of the House-passed Treasury, Postal
    Service, and General Government Appropriations Bill, the pay raise will
    be made in accordance with the following plan:
        In accordance with section 5303(b) of title 5, United States Code,
    the pay rates for each statutory pay system shall be increased by 2.0
    percent, effective on the first day of the first applicable pay period
    beginning on or after January 1, 1995.
        The statute also provides me alternative plan authority for
    locality-based comparability payments, or locality pay, under section
    5304 of title 5. The deadline for transmitting this alternative plan to
    Congress is November 30. In the absence of legislation, it would be my
    intent to provide Federal civilians with locality pay raises that equal
    0.6 percent of civilian payroll.
        In my opinion, this alternative pay plan for a 2 percent pay
    increase under section 5303 will not materially affect the Government's
    ability to recruit or retain well-qualified employees. Federal hiring
    rates and attrition rates are very low. In addition, most employees will
    receive

    [[Page 1514]]

    other pay increases, such as locality pay and within-grade increases.
    Thus, we have every reason to believe that these pay increases, coupled
    with appropriate use of pay flexibilities such as recruitment bonuses
    and retention allowances, will allow the Federal Government to continue
    to be competitive in attracting and retaining quality employees.
        Sincerely,

                                                          William J. Clinton

    Note: Identical letters were sent to Thomas S. Foley, Speaker of the
    House of Representatives, and Albert Gore, Jr., President of the Senate.