Pay deadline looms

President Bush has until the end of the day tomorrow, Aug. 31, to decide what he wants to do about federal employees' pay next year. The decision Bush faces is whether to provide or deny a 3.6 percent across-the-board increase to federal employees in January 2002. Under a formula in federal law, civilian government employees are due a 3.6 percent across-the-board increase next year. Employees are also due additional increases, depending on where they work, under the locality-based system of federal pay rates. Last year, President Clinton gave federal workers an average locality-based pay increase of 1 percent on top of a 2.7 percent across-the-board increase. In February, President Bush proposed a total pay increase of 3.6 percent for 2002. Bush did not say how that increase would be divided between an across-the-board increase and locality-based raises. In July, the House of Representatives approved a 4.6 percent total pay increase for federal workers. Some of the factors Bush must consider as he makes his decision by tomorrow:

• If Bush does nothing before the end of the day on Aug. 31, then a 3.6 percent across-the-board increase becomes official. The President proposed and later defended this figure as a total increase. If he sticks to the 3.6 percent total increase, there would be no room for locality-based increases. So, by the end of November, Bush would have to issue a decision that there would be no locality-based raises in 2002.
• Bush could follow President Clinton's precedent by announcing a 2.6 percent across-the-board increase, leaving an additional 1 percent to use for locality-based increases. Then, by the end of November, Bush would have to issue a decision explaining how the additional 1 percent would be divided up among workers in each locality.
• If the Senate follows the House's lead and approves a 4.6 percent total increase, as it seems likely to do, then Bush's efforts to hold to the total increase of 3.6 percent would be meaningless. Bush's advisers could concede that Congress is going to approve the higher raise and tell the President to do nothing this week. The 3.6 percent across-the-board increase would stick, and then Bush would issue a decision by the end of November divvying up the additional 1 percent among localities.
• If Bush thinks he has a chance of preventing Congress from boosting the raise to 4.6 percent, or if he might veto the Treasury-Postal appropriations bill which includes the higher raise, then his advisers may urge him to announce a lower across-the-board increase. The Congressional Budget Office's estimate that spending will dip into the Social Security surplus could bolster Bush's argument that the higher raise is too expensive. The Office of Management and Budget estimates that a 4.6 percent average civilian raise would cost $900 million more next year than a 3.6 percent raise would.

The Aug. 31 deadline was set under the 1990 Federal Employees Pay Comparability Act. The act sets the formula for the across-the-board increase: 0.5 percentage points less than the annual change in the Employment Cost Index at the end of the preceding September (for 2002, September 2000). The act then says, "If, because of national emergency or serious economic conditions affecting the general welfare, the President should consider the pay adjustment which would otherwise be required ... in any year to be inappropriate, the President shall prepare and transmit to Congress before Sept. 1 of the preceding calendar year a plan for such alternative pay adjustments as he considers appropriate, together with the reasons therefor." Office of Personnel Management officials have recommended a course of action to the President. But Donald Winstead, OPM's acting associate director for the workforce compensation and performance service, declined on Tuesday to reveal OPM's recommendation.