Administration seeks Foreign Service pay-for-performance

State Department officials have requested $32 million in the fiscal 2007 budget to fund a new pay-for-performance system for the Foreign Service.

In testimony earlier this week before the Senate Foreign Relations Committee, Secretary of State Condoleezza Rice said the system is a necessary part of the agency's mission of transformational diplomacy.

"In addition to requesting new positions, we will continue to invest in our people, our greatest resources," Rice said. "With your help, as part of our efforts to modernize the Foreign Service, we will institute a new pay-for-performance system that fairly compensates our men and women working abroad."

According to budget documents, the program would "eliminate longevity-based pay increases and institute a strictly pay-for-performance system similar to that instituted for the Senior Foreign Service" starting April 2008. The Senior Foreign Service pay system has been in place for two years, and is akin to the department's Senior Executive Service pay-for-performance system.

State Department spokeswoman Brenda Greenberg said the department has not worked out the details of how the broader pay-for-performance arrangement would work.

State is working with the Office of Personnel Management and the Office of Management and Budget to write a draft Foreign Service modernization bill. Greenberg said there is no date set for its completion, but the department expects to submit a formal proposal to Congress "soon."

In addition to pay for performance, Rice said her proposal will address the lack of locality pay for employees abroad.

"More and more, we are calling upon our diplomats to leave their families and serve at unaccompanied 'hardship posts' that now make up 20 percent of our yearly overseas assignments," Rice said.

State budget documents said the proposal "addresses the increasing pay disincentive to overseas service from the loss of locality-based payments." The bill under development would set Foreign Service locality pay at the Washington, D.C., area's rate. For 2006, Washington-based employees received a locality boost of 1.34 percent in addition to a 2.1 percent across-the-board raise.

The budget would fund a transition period starting April 2007, with full implementation slated for April 2008. State will request additional funding in 2008 and 2009 to fully close the locality pay gap, budget documents stated.

This is just one of many pay-for-performance initiatives in various stages across the government as the Bush administration seeks to replace what it sees as a rigid, outdated General Schedule pay system that rewards employees for longevity rather than performance.

The Homeland Security and Defense departments received congressional approval for and are in the process of designing their own pay-for-performance systems. The administration also is promoting draft legislation to extend these reforms to civilians in the remaining domestic agencies.

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