- The Washington Times - Monday, December 13, 2004

The 360,000 white-collar feds in the Washington-Baltimore area are likely to get January raises that slightly exceed the 3.5 percent adjustment that takes effect next year.

If you are confused, welcome to the club.

Since the current pay law took effect in 1993, federal pay raises have been like a fixed fistfight on a roller coaster: exciting, filled with thrills and chills, but scripted and predictable. Presidents Clinton and Bush have tried to give feds smaller raises each year but were overridden by Congress.

This year, for example, the president posed a 1.5 percent raise for civil servants. Congress insisted they get the same 3.5 percent January raise as uniformed military personnel. After the usual skirmishes, Congress prevailed and authorized the 3.5 percent adjustment for both civilian and military personnel.

The next step is for Mr. Bush to determine how much of that 3.5 percent raise, if any, will be applied to locality pay adjustments. Feds in 28 metro areas from San Francisco to Huntsville, Ala., get locality pay differentials based in part on hometown private-sector salaries. Many insiders assume the president will allocate one percentage point of the 3.5 percent raise to locality pay. If that happens, and it’s the inside favorite, Washington-Baltimore area feds would get a raise slightly larger than the 3.5 percent.

This year, for example, the total federal pay raise was 4.1 percent. That included 2.1 percent authorized by the White House, with another 2 percent that Congress added. After locality pay was taken into account, using a formula that few can understand, Washington-Baltimore area feds got a total raise of 4.42 percent.

By contrast, when locality pay was figured into the mix, federal workers in the San Francisco area got a 5.35 percent adjustment, those in the metro New York City area got 4.86 percent, the raise for Columbus, Ohio, was 3.95 percent and U.S. government workers in Richmond got 3.98 percent.

Executive pay

The Office of Personnel Management has issued new pay-for-performance rules for top career and political executives.

Under these rules, agencies with systems in place will be able to pay a top salary of $158,100 — which could go up thanks to the upcoming pay raise — and those without systems are limited to a top salary of $145,600.

Health premiums

Congress failed to act on legislation that would permit feds, when they retire, to continue to pay their health insurance premiums in pretax dollars. The perk, called “premium conversion,” is available to working feds, but extending it to retirees would require a change in the tax code.

Legislation to provide premium conversion will be introduced early next year and it has a good chance of passage. The benefit saves the typical person $250 to $500 a year in taxes.

Performance pay

The Department of Defense will implement its national security personnel system — stressing pay for performance — first with stateside white-collar employees beginning in mid-2005.

It eventually will be applied to blue-collar skilled craft employees and then to Defense Department civilians overseas. That means the first merit-based raises, for some Defense Department civilians, could come as early as January 2006.

Thrift plan open season

The open enrollment period for the federal-military 401(k) plan ends Dec. 31. It’s important to sign up now to take advantage of new, higher tax-deferred contribution rates that go into effect in January. People who are 50 or older now, or anytime in 2005, can begin making higher “catch-up” contributions. Check out the changes at www.tsp.gov.

Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcausey@federalnewsradio.com

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