EXPANDING FLEXIBLE PERSONNEL SYSTEMS GOVERNMENTWIDE

7/17/2001

SENATE COMMITTEE ON GOVERNMENT REFORM SUBCOMMITTEE ON GOVERNMENT MANAGEMENT

Chairman Durbin, Ranking Member Voinovich, Members of

the Subcommittee, my name is Colleen Kelley and I am the National President of the National Treasury Employees Union (NTEU). NTEU represents more than l50,000 federal employees across 25 agencies and departments of the federal government.

Thank you for the invitation to appear today to discuss the flexibilities available to the federal government and examine whether or not these flexibilities may hold the answer to the government's increasingly severe recruitment and retention difficulties. As the President of the Nation's largest independent federal employee union, I very much share your interest in solving the human capital crisis the federal government faces.

The General Accounting Office's (GAO) action in placing Human Capital Management on its High Risk List underscored NTEU's own long-held views. For too long, too little attention and too few resources have been spent on the federal government and its employees. There's little question why we face the crisis we do today.

According to the Bureau of Labor Statistics, in some parts of the country, the gap between private and public sector pay is as much as 30%. The Federal Employees Pay Comparability Act, which was designed to close this gap between private and public sector pay, has been on the books for l0 years now. It has never been fully implemented; even in this time of record budget surpluses, it has not been implemented. Yet, for most prospective employees, the most critical element in deciding whether or not to accept a job is salary.

Unfortunately, the Administration's response to this crisis has been to propose only a 3.6% federal employee pay raise next year. Although the House and Senate Budget Committees adopted bipartisan language as part of the FY 2002 Budget Resolution making clear that federal employees should receive identical pay raises to their military counterparts next year, at least 4.6%, the Administration continues to press for only a 3.6% raise for federal employees while suggesting that the military pay raise should be as high as 5%. This is not reflective of an Administration that takes the human capital crisis seriously.

Frankly, Mr. Chairman, a decision to fully implement FEPCA and provide federal employees with compensation that mirrors that received by their private sector counterparts would do more to address recruitment and retention in the federal government than all of the federal government's other incentive programs combined.

Acquiring and retaining employees with the best skills is a challenge for all employers. It is particularly so for the federal government. Federal agencies are so often hamstrung by restrictive funding levels and forced to shuffle resources between competing priorities and from one account to another, that they are never able to adequately fund the range of programs they need to become an employer of choice. This is precisely the situation agencies face once again for Fiscal Year 2002. Discretionary funding levels provided in the Budget Resolution are inadequate to meet current needs; never mind the challenges of 2002.

As the Committee knows, federal agencies currently have a wealth of flexibilities available to them. There are programs on the books that permit agencies to offer retention allowances of up to 25% of salary, bonuses of up to 25% of basic pay, performance awards, student loan repayment awards, incentive awards and even bilingual awards.

In December of l999, the Office of Personnel Management reported that overall, only 0.l4% of all Executive Branch employees received recruitment, retention or relocation incentives (3Rs) in Fiscal Year l998. Recruitment bonuses were given 0.3% of the time. Relocation bonuses were given to l.0 percent of employees and 0.09% of employees received retention allowances. Less than l/4 of l% of the federal workforce received any form of recruitment, retention or relocation incentive in Fiscal Year l998.

When asked what the most common impediments were to greater use of these types of incentives, agencies cited budgetary constraints. (See: The Three R's - Lessons Learned From Recruitment, Retention, and Relocation Incentives) Agencies simply are not being given the resources necessary to fund the very programs and incentives that might actually help them solve the human capital crisis. It makes little sense to offer this range of incentives to agencies, encourage them to use them to solve their human capital crises, yet provide them with no money or resources to accomplish the goal.

Adequate and stable agency funding coupled with appropriate pay, benefits and incentives are the keys to insuring that the federal government is able to attract, hire and keep the best employees. There is a federal pay law on the books, but it is not funded. There are flexibilities and demonstration project authority and a virtual laundry list of programs available to federal agencies to deal with the recruitment and retention problems they face, but they, too, are not funded. The problem, Mr. Chairman, is not a lack of options, it is a lack of resources. What is needed is a willingness on the part of the Administration and Congress to provide the resources necessary to get the job done. Until a decision is made to provide federal agencies with funding levels that reflect their missions and their needs, the federal government's recruitment and retention problems will remain in crisis.

As critical as I believe stable and sufficient funding levels are to solving the human capital crisis, there are other steps we should also be taking to address these serious resource management problems.

Mr. Chairman, I want to take this opportunity to thank you for your leadership in introducing S.ll52, legislation designed to bring fairness to the federal government's contracting out decisions. More dollars are doled out to contractors each year than are spent on the federal workforce, yet there is little or no oversight of these contracts once they are awarded. No one can be sure if any real cost savings has been achieved, or even if government services for taxpayers have been improved. What we do know, however, is that directives to meet contracting out quotas, such as those recently issued by OMB, send an unmistakable message to federal employees that they are not valued.

The Administration's misguided directive calls on agencies to put up for competition, or directly convert to the private sector without any competition, at least 5% of the jobs on their FAIR Act inventories during FY 2002. For FY 2003, the directive continues, l0% of agency jobs should be arbitrarily opened to the private sector. These arbitrary quotas are being pronounced with no evaluation of the potential impact on the agency's delivery of services or mission, and clearly with no concern as to the impact these directives are likely to have on the federal government's already severe recruitment and retention crisis.

We cannot continue to allow agencies to arbitrarily award contracts to private companies while simultaneously letting valuable resources - our federal employees - slip away. That is what S.ll52 is designed to prevent. It will bring a measure of accountability to the federal government's contracting practices. Too, I believe, its enactment will provide another tool to help us better address the government-wide human capital crisis.

With regard to personnel flexibilities in the IRS Restructuring and Reform Act of l998 (RRA 98), a major disincentive for the employees we represent at the IRS is Section l203 of RRA 98. Section l203 lists ten infractions for which IRS employees face mandatory termination. The infractions range from extremely serious - harassment of a taxpayer - to failure to file an income tax return on time. The broad scope and vague nature of the "l0 Deadly Sins" has created nothing but anxiety and confusion in the workplace.

IRS employees have always faced discipline, up to and including dismissal, for these same violations. However, adoption of the mandatory firing provision by Congress has had a chilling effect on collections as well as morale at the IRS. No other government employee in the executive, judicial or legislative branch - and in fact, no other taxpayer - must be fired solely on the basis of filing their tax return one day late. The law applies even when the late filing employee is due a tax refund.

Of the approximately l,300 charges that have been filed against IRS employees for harassment, or retaliation against a taxpayer since the law was enacted, only 7 of the charges have been substantiated by the Inspector General for Tax Administration. Making a minor change in the law allowing penalties less than mandatory termination in these situations seems to be not only a reasonable step, but a positive step toward addressing a serious disincentive to federal employment. NTEU seeks this Committee's help in this endeavor.

Lastly, I want to comment on proposals that have been made to institute "pay for performance" or "pay banding" in an effort to address the human capital crisis. The IRS is preparing to implement a payband for its senior managers. It will allow greater flexibility when setting salaries, however, it, too will require adequate resources to work. Without funding, it will be just another effort to address the crisis that exists only on paper.

Pay for performance has also been suggested as a step toward improving the federal workplace. NTEU is not opposed to pay for performance, however, we strongly believe that pay for performance, as well as pay banding, must be accomplished in the context of collective bargaining. Current performance evaluations are widely viewed as subjective, susceptible to favoritism and in some cases discriminatory. Only by allowing for collective bargaining in the design and implementation of a performance management system will employees have faith in, and respect for, the system.

Here again, however, without additional resources to make such a system work, the only way some employees would receive raises is if others did not. If all the employees in the pay for performance setting performed admirably, would the system provide for all of them to receive the appropriate raise? This, too, will require adequate resources and the potential exists to make the crisis worse if a pay for performance proposal were not properly funded.

Thank you again, Mr. Chairman for this opportunity to appear before your Subcommittee. I look forward to working with you on these and other issues and am pleased to answer any questions.