After 40 Years, A Look Back at the Unlikely Passage of Civil Service Reform

Imagine, if you will, “a civil service in which federal agencies could hire qualified individuals of their own choice, without first having to cut through time-consuming red tape . . . in which agencies could demote or fire incompetent workers without facing years of appeals . . . in which salaries corresponded with performance rather than longevity.”

It sounds like the challenges the Trump administration aims to address in its recent massive proposal for government reorganization, its controversial trio of workforce management executive orders, and its stated plan to restructure federal pay and benefits.

In fact, that’s a description of challenges President Jimmy Carter faced, as described by National Journal reporter Joel Havemann in October 1977.

One year later, a month before midterm elections, Carter signed the 1978 Civil Service Reform Act, the first overhaul of the government’s workforce structure since 1883.

From concept to signature in 18 months, that far-reaching reform abolished the Civil Service Commission and replaced it with the new Office of Personnel Management, the Merit Systems Protection Board and the Federal Labor Relations Authority. It created the elite and mobile 9,200-member Senior Executive Service “shielded” from political intimidation, recast federal pay scales and laid the groundwork for whistleblower protections by creating the Office of Special Counsel. It loosened Hatch Act restrictions on 2.8 million federal workers and also sought continuous improvement by authorizing personnel demonstration projects.

All were accomplished during that summer 40 years ago after intricate horse-trading among lawmakers of both parties, an ambitious and prescriptive president, long-time civil servants, labor unions and business representatives. But the feat came with some drama and broken china. And four decades later it stands out as an unusual confluence of multiple forces at work.

Stuart Eizenstat, Carter’s domestic policy adviser, in his 2018 book President Carter: The White House Years, called it “the most important reform of the federal civil service since its founding.”

Dwight Ink, a key designer of the effort, wrote in his 2018 book of public management studies Getting Things Done With Courage and Conviction (with Kurt Thurmaier), “I do not recall any other governmentwide management reforms so broad as this civil service reform being enacted at one time or in so short a time.”

What follows is a look back at the unlikely passage of that transformation that throws into relief the steep obstacles the Trump administration would likely encounter in pursuing reform.

Defining the Issues

The roots of the 1978 reform go back to the campaign trail for the 1976 presidential election. Georgia Gov. Jimmy Carter had boasted, in his 1975 book Why Not the Best?, of how he had successfully applied “zero-based budgeting” and reduced 278 state agencies to 22. “Naturally,” the ex-governor wrote, “there was opposition from the bureaucrats who thrived on confusion, from special interests who preferred to work in the dark, and from a few legislators who did not want to see their fiefdoms endangered.”

Candidate Carter even broached the wonky topic of improving federal management during a campaign stop in Syracuse, N.Y. He was building on a feeling among many that the government’s ineffectiveness had been one reason for unhappy outcomes of the Vietnam war, the early 1970s recessions and President Nixon’s misuse of agencies during the Watergate scandal.

No sooner had Carter won the presidency than his transition team set up a government reorganization operation at the National Academy of Public Administration. As Carter would later recall in his memoir Keeping Faith, the first major test of his reorganization plans was “a bill authorizing the president to address the problem of the federal bureaucracy—its complexity, its remoteness when people needed help, its intrusiveness when they wanted to be left alone, and its excessive regulation of the major industries to the detriment of consumers.”  

The Georgia Democrat did not win many feds’ hearts when he said he wanted to “hold down the number of federal employees, reduce paperwork, and consolidate or eliminate as many of the small agencies and advisory groups as possible.”

Carter’s drive for such authority and his executive committee for agency reform resulted in the April 1977 Reorganization Act that would help with creation of the Energy Department in 1977 and the Education Department in 1979.

In early 1978, Carter declared that the existing civil service system was “too often a bureaucratic maze which stifles the initiative of our dedicated government employees while inadequately protecting their rights.”

One illness that needed a cure, Carter’s Secretary of Health, Education and Welfare Joe Califano, recently told Government Executive, was that “we needed to attract first-rate people to the federal government and provide them with protections.”

Having worked in the Pentagon and as one of President Johnson’s domestic policy advisers, Califano said he had seen “how hard civil servants worked” and how committed they were. “So it was very important that we say to these people at the start that this going to be a great job, a tough job, and I know you’re worth something for doing it.” He dismissed as “nonsense” the notion that federal experts make too much money. (The dedication of Califano’s new book Our Damaged Democracy is a paean to public servants at all levels of government.)

In the government’s loftier ranks, “The system discourages full employment of talents of superior career 'super grades' because, to take a non-career policy job, they have to give up their 'tenure rights,' wrote National Journal’s Timothy Clark in 1978.  “The new system would allow careerists to take non-career jobs with a guarantee that they could return to a high level job in the career service after completing their assignments.”

Just like in 2018, studies of pay comparability between federal workers and the private sector varied, with lower-level workers tending to do better in public employment, while higher-level professionals in government were probably behind their corporate counterparts.

Labor groups in particular wanted change. Though public unions were characterized as “the stepchild of the national labor movement” by National Journal reporter James Singer, “the most important function performed by federal unions is lobbying on Capitol Hill,” which has the most impact on the lives of federal workers, he noted.

Labor’s top goal was formalizing a body to referee complaints about unfair labor practices and disciplinary decisions. Under the system at the time, challenges to adverse personnel actions, “both for performance and conduct, by statute were first considered by agencies and then could be appealed to the Civil Service Commission,” recalled Robert Tobias, then the head of the National Treasury Employees Union and now on the faculty at American University. President Nixon’s Executive Order 11491 prohibited grievances on matters covered by “statutory appeals,” and binding arbitration of adverse actions was not allowed, he said. Many times when the unions invoked advisory arbitration—which often produced a recommendation for an accused employee to win reinstatement and full back pay—the agency rejected that decision, prompting the union to press Congress for reforms that would allow binding arbitration.

Laying the Groundwork for Reform

The fledgling Carter team first had to call in the experts. In a May 27, 1977, announcement, the administration set up the Personnel Management Project, a set of task forces led by Civil Service Commission Chairman Alan “Scotty” Campbell, with OMB Associate Director Wayne Granquist as his deputy.

Also instrumental in the planning, as Carter would later recall, were Office of Management and Budget official Jim McIntyre; Stanton Williams of PPG Industries and the Business Roundtable; Ken Blaylock of the American Federation of Government Employees; Tom Donahue of the AFL-CIO; and David Cohen and John Gardner of Common Cause.

The project eventually involved 120 members.

“The members believed that the Civil Service Commission had been given a conflicting set of promotional and appellate roles that required a basic reorganization,” recalled Ink, who was executive director and “designer” until he was sidelined by a heart attack and replaced by Thomas Murphy, director of the commission’s Federal Executive Institute.

The experts parsed out such issues as whether GS-12’s to 15 should have merit pay while the “super grades” GS-16 to GS-18 would become the Senior Executive Service. The business community wanted more flexibility in federal management, and labor wanted codified, formal authority, Ink recalled. He persuaded the unions to focus on the labor-management relationship and not on budgets or programs, so that eventually business and labor would lobby Congress together.

Managers should be free to manage, but “neither do they have a right to mismanage public programs by hiring incompetent cronies,” Ink wrote.

But as National Journal reported at the time, labor unions were wary: “The options prepared by the task forces address management’s concerns, not ours,” said Irving Geller, general counsel of the National Federation of Federal Employees, American Federation of Government Employees. John Mulholland, AFGE’s director of labor-management services, said, “More management flexibility—that means they don’t want to negotiate.”

The “Final Staff Report” had 125 recommendations, which were distilled into legislative proposals by OMB’s Granquist.

“Scotty’s travels throughout the country generated a surprising amount of public support, something seldom developed for management reforms,” Ink recalled.

In March 1978, Carter, who had personally served as the project’s executive chair, sent his proposals to Capitol Hill, recalling, “I said that civil service reform and reorganization would be the centerpiece of my efforts to bring efficiency and accountability to the federal government. It will be the key to better performance in all federal agencies.”

Horse Trading on the Hill

Jimmy Carter’s first year, though not without accomplishments, would go down in history for messy relations with lawmakers and mistrust of the southern Democrats among many traditional party constituencies. House Speaker Tip O’Neill, D-Mass., had told Carter in 1977, “You have proposed so much legislation, we can’t handle it all.”

Carter, as domestic adviser Eizenstat later wrote, was used to Georgia’s “generally pliant” one-party legislature. And the president’s relations with the federal workforce were not helped when he chose to limit the autumn pay raise to 5.5 percent instead of an expected 8.4 percent.

“Federal employees are very depressed and worried,” Bun Bray, executive director of the National Association of Supervisors, told National Journal. “They expected that Carter would be a Democrat like Truman, Johnson and Kennedy—pro-government employee—but as it turns out, Carter is about as obstinate and anti-worker as Ford or Nixon.”

But Carter pressed ahead. “The president seems determined to use civil service reform to reverse his image as a president who can’t get what he wants from Congress, at least on domestic issues,” wrote National Journal correspondent Harlan Lebo in May 1978.

Lebo chronicled how how the administration pushed reform forward. Carter met personally with House committee members, twice with Democrats, once with Republicans. The president also met with the American Federation of Government Employees, and assigned all Cabinet members to do lobbying. That irked Rep. Edward Derwinski, R-Ill., who said, “I thought it was a case of overkill. Their timing was way off; they should be calling when the legislation is on the floor for a vote.”

But project leader Campbell told National Journal, “civil service is not a sexy issue, and we know we wouldn’t have gotten nearly this far without presidential involvement.”

On May 22, the Senate Governmental Affairs Committee began what would be a one-month markup. The House Post Office and Civil Service Committee, chaired by Rep. Robert Nix, D-Pa., postponed consideration until after the Memorial Day recess. Leading the charge in the House was committee vice chair Rep. Morris Udall, D-Ariz., and Jack Brooks, D-Texas. Republicans in favor included Jim Leach of Iowa.

Carter’s team learned how to lobby lawmakers such as Rep. Pat Schroeder, D-Colo., by horse-trading with her on women’s and Vietnam veterans issues. “We had the general problem of getting the bill out of committee and getting the committee to act,” recalled Richard Pettigrew, the president’s assistant for reorganization, in an oral history for the Carter Center. The Post Office and Civil Service panel was “very hostile to the civil service reform program and its pro-management tilt. It was a pro-union committee, pro-employee committee and this reorganization was designed to give managers greater flexibility in firing, two sets of incentive pay systems for systems with automatic pay increases.”

According to Congressional Quarterly’s Ann Cooper, “the widely divided [House] committee gutted a key section of Carter’s proposal and tacked on “Christmas tree amendments that include one bill vetoed by the president and another bill likely to prompt a Senate filibuster . . . The committee also voted to expand the power of federal labor unions beyond the point administration officials called acceptable,” she wrote.

Chief among labor’s supporters were Reps. William Ford, D-Mich., and William Clay, D-Mo., whose separate bill would have written collective bargaining into law and required talks on wages with seven unions.

Though consensus often proved elusive—journalists declared the bill on life-support—Republican support was strong in the Senate, under panel chairman Abraham Ribicoff, D-Conn., and subcommittee chaired by freshman James Sasser, D-Tenn.

Some, however, promised a filibuster if provisions loosening the Hatch Act were not removed, due to a common perception among Republicans that federal employees leaned Democratic.

Also controversial was the proposed Senior Executive Service, which Rep. Herb Harris, D-Va., warned “will open the door to politicization,” Congressional Quarterly reported. An amendment to make the SES a two-year experiment at three agencies chosen by the president was defeated.

Senators such as John Glenn, D-Ohio, and Charles Percy, R-Ill., successfully sought to curb the preference for veterans in hiring.

But the package was approved by the Senate panel on July 10 by an 8-2 vote, and by the House panel on July 19 by a vote of 18-7. Some Republicans were unhappy. “What started out as a bipartisan effort to write effective legislation degenerated into a blatant gutting of the bill” by Democrats, Derwinski said. Countered one Carter official, “We’d rather have a Christmas tree than a dead bush,” Cooper reported.

On Aug. 10, the bill was taken up for debate on the House floor. The Senate quickly passed its version on Aug. 24, by a vote of 87-1. Following a Labor Day recess and mid-term election campaigning, a House vote was called on Sept.14. Its version passed 385-10, a margin that encouraged Dwight Ink, who knew it would make things easier in conference with the Senate. Final passage came on Oct. 6, in time for Carter to hold what he recalled in his diary as a “delightful” signing ceremony on Oct.13.

A ‘Glow’ in the End

Carter was told by Senate Majority Leader Robert Byrd, D-W. Va., “I’ve been in the Congress 27 years, and have never seen such a tremendous legislative achievement.” Senate Minority Leader Howard Baker, R-Tenn., was equally praiseful. “We’ve got a Democratic president singing a Republican song,” the Republican said.

“Everybody was proud of this achievement, which I think is momentous,” Carter wrote in Keeping Faith. He noted it all happened within seven months—in a year that also brought passage of the Inspector General Act and the Ethics in Government Act. “During the final days of 1978, we deregulated the airlines, reformed the civil service system and raised the mandatory retirement age to seventy,” he wrote. “All the strain, frustration and hard feelings of the year were quickly forgotten in the glow of adjournment.”

In June 2018, when the Trump administration unveiled its most detailed government reorganization plan, Budget Director Mick Mulvaney said, "It's been almost 100 years since anybody really reorganized the government at this type of scale.”

Not quite. But that could have been said in 1978.