U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

Attachment 1

2008 ANNUAL REVIEW INSTRUCTIONS

1. General

The U.S. Office of Personnel Management (OPM) is conducting the 2008 annual review of special rates authorized under 5 U.S.C. 5305 and 5 CFR part 530, subpart C. OPM authorizes special rates for specific occupations, grades, and locations to alleviate existing or likely significant recruitment or retention difficulties. Under 5 CFR 530.307(a), OPM may, at any time, conduct general or targeted reviews of established special rates to determine whether they should be increased, decreased, or discontinued based on staffing considerations.

2. Deadline

Agencies must submit all annual review materials to OPM by October 10, 2008, unless an extension is approved by OPM. Please send your materials to the Center for Pay and Leave Administration by email at pay-performance-policy@opm.gov, by fax at (202) 606-0824, or by mail to the following address:

3. Agency Reviews

In conducting the annual review of special rates, OPM relies on the reviews conducted by agencies employing special rate employees. As explained further in these instructions, for the 2008 annual review of special rates, OPM requests agencies to-

• Conduct a general review of special rate schedules for the purpose of determining the special rate adjustments in January 2009.

• Conduct a specific review of special rate schedules currently covering zero employees to determine if the schedules are needed.

• Review a proposal to split each nationwide and worldwide special rate schedule into multiple special rate schedules with more specific geographic coverage.

4. Special Rate Adjustments, Reductions, and Terminations

Please review the special rate schedules listed in Attachment 2 applicable to your agency for possible adjustment, reduction, or termination in January 2009. (Note: The six schedules for information technology (IT) employees, tables 999A-999F, are listed in the third row of the index and are applicable to all agencies employing General Schedule (GS) IT employees even though they are not shown in the individual agency listings.) Agencies must submit information to OPM only when requesting (1) an adjustment greater than or less than the January 2009 GS annual pay adjustment for a special rate schedule or (2) the reduction or termination of a special rate schedule. In conducting reviews for adjusting special rates, agencies must consider the circumstances and factors consistent with OPM's regulations at 5 CFR 530.304 and 530.306.

Note that under 5 CFR 530.304(c), a special rate generally is computed by adding a special rate supplement (i.e., a fixed dollar amount or fixed percentage amount) to the underlying GS rate. At the time of a GS annual pay adjustment, special rate employees will receive the same adjustment in their underlying GS rate (or law enforcement officer (LEO) special base rate) as other GS employees. However, OPM must make a separate determination as to whether to adjust (increase or decrease) or discontinue a special rate supplement, taking into account the circumstances and factors that led to establishing the special rate schedule. Based on the adjustment of a special rate supplement, the corresponding special rate (i.e., underlying GS rate plus supplement) may be increased, reduced, or discontinued.

Adjustments Equal to the GS Adjustment

Agencies do not need to submit any documentation to request adjustments in special rate schedules equal to the GS annual pay adjustment in January 2009. As permitted by 5 CFR 530.307, special rate schedules will be adjusted automatically in January 2009 by the GS annual pay adjustment without any agency action, unless OPM specifically approves an alternative adjustment. This means fixed-dollar special rate supplements will be adjusted by approximately the same percentage as the January 2009 GS annual pay adjustment, while fixed-percentage supplements will remain at the same percentage amount.

Adjustments Greater Than the GS Adjustment

Agencies requesting special rate adjustments greater than the January 2009 GS annual pay adjustment must submit additional data in accordance with OPM regulations and the instructions on OPM Form 1397. (See 5 CFR 530.304 and 530.306.) Staffing data should cover the period from May 27, 2007, through May 24, 2008, if possible. (A copy of OPM Form 1397 is available at http://www.opm.gov/oca/compmemo/2000/ssrpage.asp.)

All requests for special rate adjustments greater than the January 2009 GS annual pay adjustment must address the existing or likely significant recruitment or retention difficulties justifying the proposed increase. Requests for special rate increases to keep up with GS locality pay increases or to maintain an advantage over GS locality rates without evidence of an existing or likely significant recruitment or retention difficulty will not be considered.

When determining whether to request a special rate adjustment greater than the January 2009 GS annual pay adjustment, agencies also should consider the use of other human resources flexibilities to address targeted, short-term recruitment and retention problems. These flexibilities include recruitment, relocation, and retention incentives; the superior qualifications and special needs pay-setting authority; and the student loan repayment program. For example, recruitment, relocation, and retention incentives are appropriate for short-term staffing problems and do not confer the same ongoing impact on agency salary outlays associated with a special rate increase. Information on these flexibilities is available at http://www.opm.gov/oca/pay/HTML/factindx.asp.

Adjustments Less Than the GS Adjustment

Agencies requesting special rate adjustments less than the January 2009 GS annual pay adjustment must submit a written justification and any applicable supporting data in accordance with OPM regulations and the instructions on OPM Form 1397. Such a request may be appropriate if you have determined special rates are no longer necessary to prevent a serious staffing problem and you wish to phase out special rates by reducing the special rate supplement. (See also "Reduction or Termination of Special Rate Schedules.")

Reduction or Termination of Special Rate Schedules

Agencies may request to reduce or terminate special rate schedules or grades of a schedule as part of the annual review process. (See also section 5 of these instructions regarding OPM's proposal to terminate zero population special rate schedules.) These types of requests trigger the pay retention provisions of 5 U.S.C. 5363 for eligible employees. Therefore, OPM advises agencies to consider phasing out special rates they no longer need by reducing special rate supplements without reducing the corresponding special rate. (A special rate supplement may be reduced without triggering pay retention as along as the employee's underlying base rate is increased simultaneously by a sufficient amount to prevent the employee's special rate from being reduced. In other words, if the increase in the underlying base rate exceeds the reduction in the special rate supplement, the employee will still have a net increase in his or her special rate.)

Under 5 U.S.C. 5305(h) and 5 CFR 530.303(d), an employee's entitlement to a special rate is eliminated if the employee is entitled to a higher rate of basic pay, such as a locality rate under 5 U.S.C. 5304. As a result of the January 2009 GS annual pay adjustment, some special rate schedules may be terminated because higher locality rates apply at all steps of each covered grade, or certain grades or steps of a special rate schedule may be discontinued because higher locality rates apply. Some special rates also may be terminated because the applicable locality rate is equal to the special rate, or they are included in zero population special rate schedules listed in Attachment 3. (See section 5 of these instructions.) The termination of special rates will not result in a loss in pay for any covered employees because all affected employees will receive an equal or higher locality rate to which they are otherwise entitled. OPM will notify agencies of any terminated special rates when we announce the results of the 2008 annual review of special rates.

If a special rate schedule (or grade of a schedule) applicable to a position is discontinued or decreased by OPM, and the employee holding the position is placed in a non-special rate position or a lower-paid special rate position, the employee may be entitled to pay retention under 5 CFR 536.301(a)(8). Agencies must follow the rules in 5 CFR 536.304 to determine the employee's pay retention entitlement. (See also the Grade and Pay Retention Examples at http://www.opm.gov/oca/pay/HTML/Grade_PayRetention_EX.asp.)

Certification

The head of each agency must document and certify his or her recommendation for any special rate adjustment not equal to the January 2009 GS annual pay adjustment or to terminate a special rate schedule and submit such certification to OPM on OPM Form 1397. A headquarters official designated to act on behalf of the head of the agency may sign the certification.

If there are substantial differences among agency recommendations for a particular special rate schedule, OPM will designate a lead agency (usually the agency with the largest number of covered employees). The lead agency will be responsible for obtaining a consensus from the major agencies involved and submitting a final recommendation for that schedule. We expect each agency covered by a schedule to cooperate with the designated lead agency in attempting to reach a consensus.

5. Special Rate Schedules with Zero Populations

For the 2008 annual review, we propose to terminate special rate schedules for which there are no longer any covered employees-i.e., zero population special rate schedules-unless an affected agency specifically requests otherwise. Attachment 3 provides a list of zero population special rate schedules based on December 2007 Central Personnel Data File data.

OPM will retain a special rate schedule listed in Attachment 3 if an agency determines it currently has employees covered by the schedule or plans to have employees covered by the schedule. We suggest consulting with your payroll provider to confirm that none of your agency's employees are covered by the listed schedules. Your payroll provider can check special rate ID codes or pay rate determinate (PRD) codes to determine if an employee in your agency would be impacted by the termination of any of the schedules.

Please send your agency's concurrence with the termination of the special rate schedules listed in Attachment 3 in your annual review report to OPM (see section 2 "Deadline"). If you propose to retain a zero population special rate schedule, please specify the reason. We will terminate each zero population special rate schedule, unless an agency specifically requests OPM to retain a schedule.

6. Splitting Nationwide and Worldwide Special Rate Schedules

For the 2008 annual review, we propose to break each nationwide and worldwide special rate schedule into (1) a schedule covering the 48 contiguous states and the District of Columbia, (2) schedules covering certain nonforeign areas, and, for worldwide schedules, (3) a schedule covering all foreign areas. Attachment 4 provides our proposed breakout of the current nationwide and worldwide special rate schedules. We propose establishing a schedule to replace the nationwide and worldwide special rate schedules only in those locations where there are covered employees (based on December 2007 Central Personnel Data File data).

Please carefully review the coverage of the proposed new schedules to confirm that those employees currently covered by each of the nationwide and worldwide special rate schedules will be covered under one of the proposed new schedules. (You may need to consult with your payroll provider to confirm.) For example, unless an agency requests otherwise, we plan to establish a replacement special rate schedule for the nonforeign areas of Alaska, American Samoa, Guam, Hawaii, Midway Atoll, Northern Mariana Islands, Puerto Rico, and U.S. Virgin Islands only if there are employees in those locations currently covered by the applicable nationwide or worldwide schedule. Please inform OPM in your annual review report if you need additional replacement schedules to ensure employee coverage under the proposed breakout of the nationwide and worldwide special rate schedules. (See section 2 "Deadline.") However, if your agency identifies a need for additional replacement schedules after this year's annual review cycle, OPM will establish new schedules on an expedited basis.

7. New Requests Not Part of the Annual Review

Agencies should indicate how requests to establish a new special rate schedule submitted between now and December 31, 2008, relate to the anticipated January 2009 GS annual pay adjustment.

8. Effective Date

Adjustments in special rate schedules, termination of special rate schedules, and splitting the nationwide and worldwide special rate schedules resulting from this year's annual review will take effect on the first day of the first applicable pay period beginning on or after January 1, 2009. If there is no GS pay adjustment in 2009, the amount of the special rate adjustment will be zero, unless an adjustment greater than the GS pay adjustment is requested and approved. Any such adjustment will take effect on the first day of the first applicable pay period beginning on or after January 1, 2009. However, OPM may authorize new schedules and changes in existing special rate schedules at any time during the year if all the required criteria for establishing or adjusting special rates are met. (Note: Incomplete requests for special rate supplement increases greater than the January 2009 GS annual pay adjustment may delay OPM review and approval beyond the first day of the applicable first pay period beginning on or after January 1, 2009.)

9. For More Information

For more information on the 2008 annual review of special rates, contact the Center for Pay and Leave Administration by telephone at (202) 606-2858, by fax at (202) 606-0824, or by email at pay-performance-policy@opm.gov. Agencies contemplating a request for an adjustment greater than or less than the January 2009 GS annual pay adjustment or a reduction or termination of a special rate schedule should contact OPM's Center for Pay and Leave Administration for additional information and instructions.

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