For Immediate Release
Office of the Press Secretary
August 27, 2003
Presidential Letter
Text of a Letter from the President to the Speaker of the House of Representatives and the President of the Senate
Dear Mr. Speaker: (Dear Mr. President:)
I am transmitting an alternative plan for across-the-board and
locality pay increases payable to civilian Federal employees covered by
the General Schedule (GS) and certain other pay systems in January
2004.
Under title 5, United States Code, civilian Federal employees
covered by the GS and certain other pay systems would receive a
two-part pay increase in January 2004: (1) a 2.7 percent
across-the-board increase in scheduled rates of basic pay derived from
Employment Cost Index data on changes in the wages and salaries of
private industry workers, and (2) a locality pay increase based on
Bureau of Labor Statistics' salary surveys of non-Federal employers in
each locality pay area, which would cost about 10 percent of payroll
for the calendar year. Including increases for blue-collar and other
workers, the total Federal employee pay increase would cost about 13
percent of payroll in calendar year 2004. For Federal employees
covered by the locality pay system, the overall average pay increase
would be about 15.1 percent.
For each part of the two-part pay increase, title 5, United States
Code, authorizes me to implement an alternative pay plan if I view the
adjustment that would otherwise take effect as inappropriate due to
"national emergency or serious economic conditions affecting the
general welfare." For the reasons described below, I have determined
that it would be appropriate to exercise my statutory alternative plan
authority to limit the January 2004 GS pay increases.
A national emergency has existed since September 11, 2001, that now
includes Operation Enduring Freedom in Afghanistan and Operation Iraqi
Freedom. Full statutory civilian pay increases costing 13 percent of
payroll in 2004 would interfere with our Nation's ability to pursue the
war on terrorism. Such increases would cost about $13 billion in
fiscal year 2004 alone -- $11 billion more than the 2 percent overall
Federal civilian pay increase I proposed in my 2004 Budget -- and would
build in later years.
Such cost increases would threaten our efforts against terrorism or
force deep cuts in discretionary spending or Federal employ-ment to
stay within budget. Neither outcome is acceptable. Therefore, I have
determined that a total pay increase of 2 percent would be appropriate
for GS and certain other employees in January 2004.
A 2 percent pay increase should be complemented by $500 million
dollars from the Human Capital Performance Fund, which I proposed in my
FY 2004 Budget and which is now contained in H.R. 1588, the National
Defense Authorization Act for Fiscal Year 2004. Favorable
congressional action to establish full funding for this initiative
would be a key step towards rewarding the highest performing and most
valuable employees in agencies with rigorous and disciplined
performance management systems. Providing higher pay for employees
whose exceptional performance is critical to the achievement of the
agency mission is preferable to spreading limited dollars
across-the-board to all employees regardless of their individual
performance or contribution.
I will allocate 1.5 percent of the 2 percent total increase to an
across-the-board increase under section 5303 of title 5, United States
Code, and use the remaining 0.5 percent of payroll to continue the
implementation of the locality pay program under section 5304. Our
national situation precludes granting larger pay increases to GS
employees at this time.
Accordingly, I have determined that --
(1) Under the authority of section 5303(b) of title 5, United
States Code, the pay rates for each statutory pay system will be increased by 1.5 percent, effective on the first day of the first applicable pay period beginning on or after January 1, 2004; and
(2) Under the authority of section 5304a of title 5, United
States Code, locality-based comparability payments in the percentages set forth in the attached table will go into effect in January 2004.
Finally, the law requires that I include in this report an
assessment of the impact of my decision on the Government's ability to
recruit and retain well-qualified employees. I do not believe this
decision will materially affect our ability to continue to attract and
retain a quality Federal workforce. To the contrary, since any pay
raise above the 2 percent I have proposed would likely be unfunded,
agencies would have to absorb the additional cost and could have to
freeze hiring in order to pay the higher rates. Moreover, GS quit
rates are at an all-time low of 1.7 percent per year, well below the
overall average quit rate in private enterprise. Should the need
arise, the Government has many compensation tools, such as recruitment
bonuses, retention allowances, and special salary rates, to maintain
the high-quality workforce that serves our Nation so very well.
Sincerely,
GEORGE W. BUSH
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