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Obama Administration Finalizes Plan to Give 108K Feds a Big Raise in 2016

Size of locality pay bumps will vary by region, OPM says.

The Obama administration finalized on Tuesday its proposal that 102,000 federal employees receive a significant raise next year, implementing its decision to create 13 new locality pay areas.

An additional 6,300 federal workers would also receive a pay bump as they are moved from the “rest of United States” designation and into specific localities, according to a final rule issued by the Office of Personnel Management. OPM did not set the exact amounts for each locality percentage, saying President Obama would determine those rates in a forthcoming executive order.

The locality pay adjustments will increase by an average of 0.3 percent across the 46 regions with their own designations, plus the “rest of U.S.” grouping, the Office of Management and Budget announced in August. The creation of the new pay areas could lead to smaller increases than would have otherwise been issued for the existing localities, OPM said in the rule.

Locality pay has been frozen since 2010, however, so any positive adjustment has come as a welcome change for most federal employee advocates. OPM received more than 700 comments since it issued its proposed rule in June, most of which supported the new areas. The locality adjustments will come in addition to a 1 percent raise for General Schedule employees’ base salaries. The employees in the “rest of U.S.” designated areas received a 14.16 percent bump on top of their annual base salaries in 2015, while those in the specific areas received between 15 percent and 35 percent bumps.

The new regions established by the rule are: Albany, N.Y.; Albuquerque, N.M.; Austin, Texas; Charlotte, N.C.; Colorado Springs, Co.; Davenport, Iowa; Harrisburg, Pa.; Kansas City, Mo.; Laredo, Texas; Las Vegas, Nev.; Palm Bay, Fla.; St. Louis, Mo.; and Tucson, Ariz.

The Office of Management and Budget has told labor groups the new locality areas will be in effect in 2016, and OPM’s final rule noted the regulations were applicable “on the first day of the first pay period on or after Jan. 1, 2016.”

OPM also announced it would change the boundaries of the locality areas in 21 of the 33 existing regions to increase the number of employees receiving the larger salary bump. Since issuing the proposed rule, OPM decided to include Berkshire County, Mass., in the Albany, N.Y., locality and Harrison County, Ohio, in the Cleveland, Ohio, locality.

OPM said it was following the guidance of the Federal Salary Council and the President’s Pay Agent in issuing the rule. Obama has received criticism from federal employee advocates for giving historically low across-the-board raises to base pay in recent years -- following three years of no raises at all -- and the new locality pay areas and definitions provide the administration with a different avenue for increasing feds’ compensation. The salary council, made up of labor union representatives and pay experts, has for years clamored for new localities.

An OMB official previously told Government Executive Obama decided to move forward with the new locality areas because of “years of pay freezes, furloughs and sequestration.”

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