[Weekly Compilation of Presidential Documents Volume 39, Number 35 (Monday, September 1, 2003)]
[Pages 1121-1122]
[Online from the Government Publishing Office, www.gpo.gov]
<R04>
Letter to Congressional Leaders Transmitting an Alternative Plan for Pay
Increases for Civilian Federal Employees
August 27, 2003
Dear Mr. Speaker: (Dear Mr. President:)
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 increases.
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
[[Page 1122]]
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 in 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 the additional cost and could have to freeze hiring
in order 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 Nation so very well.
Sincerely,
George W. Bush
Note: Identical letters were sent to J. Dennis Hastert, Speaker of the
House of Representatives, and Richard B. Cheney, President of the
Senate.