The President's Pay Agent

LOCAL PAY DISPARITIES AND COMPARABILITY PAYMENTS

Table 8, below, lists the pay disparities for 32 localities under OCSP and the NCS program and the weighted average of the two pay disparities. Table 8 also derives the recommended local comparability payments under 5 U.S.C. 5304(a)(3)(I) for 2005 based on the weighted average disparities, and it shows the disparities that would remain if the recommended payments were adopted.

Table 8 includes three locations with NCS/OCSP pay disparities below the Rest of U.S. pay disparity. The Pay Agent has adopted the Federal Salary Council's recommendation to discontinue these locations as separate locality pay areas and to combine their average pay disparities with that for the RUS locality pay area. The adjusted RUS pay disparity is the weighted average of the pay disparities for RUS, Kansas City, Orlando, and St. Louis, or 24.05 percent, using the GS base payroll in each area for weights. The "RUS-adjusted disparity" column contains the adjusted RUS pay disparity for all four locations.

The law requires comparability payments only in localities where the pay disparity exceeds

5 percent; the goal was to reduce local pay disparities to no more than 5 percent not later than the year 2002 (5 U.S.C. 5304(a)(3)(I)). The "Disparity to Close" shown in the table represents the pay disparity to be closed in each area based on the 5 percent remaining disparity threshold.

The "Locality Payment" shown in the table represents 100 percent of the disparity to close. (Note: Since FEPCA contemplated that the target pay disparity would be closed by 2002, the amounts shown in columns 5 and 6 are the same.) The last column shows the pay disparity that would remain in each area if the indicated payments were made. For example, in Atlanta, the 34.15 percent NCS/OCSP pay disparity would be reduced to 5.00 percent if the locality rate were increased to 27.76 percent (134.15/127.76-1) X 100 = 5.00 percent).

The actual remaining pay disparity as of January 2005 may differ from the calculations above for two reasons. First, Federal pay will have increased by the amount of the general increases effective in January 2004 and 2005. Second, non-Federal pay will have increased by some amount from March 2003 to January 2005. For the purpose of this report, we assume that future changes in Federal and non-Federal pay will substantially cancel each other out and that the pay disparities will remain about the same.

Table 8.  Local Pay Disparities and 2005 Comparability Payments

* The location has been combined with RUS.

Average Locality Rate

The average locality comparability rate using the basic GS payroll as of March 2003 with revised pay area definitions to weight the individual rates would be 25.54 percent in 2005 under the methodology used for this report. The average rate authorized in 2003 was 12.12 percent.

Overall Remaining Pay Disparities

The pay disparities contained in this report average 31.71 percent using the basic GS payroll and pay area definitions as of March 2003 to weight the local pay disparities (31.82 percent using area definitions proposed for 2005). However, this calculation excludes existing locality payments. When the existing locality payments (i.e., those paid in 2003) are included in the comparison, the overall remaining pay disparity as of March 2003 was (131.71/112.12-1) X 100, or about 17.5 percent. Table 4, below, shows the overall remaining pay disparity in each of the 29 locality pay areas established by the Pay Agent.

Table 9.  Remaining Pay Disparities in 2003