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

Table of Contents

III. Classification and Basic Pay

Overview

This part presents an analysis of issues associated with the classification and basic pay systems that apply to Federal LEOs and other law enforcement personnel. While many of these employees are today covered by the General Schedule (GS) classification and pay system, more and more are being covered by paybanding systems that provide agencies with greater flexibility Accordingly, we recommend that OPM should be given regulatory authority to establish, with the concurrence of the Attorney General, a flexible basic pay framework for Federal law enforcement employees throughout the Government that provides greater flexibility and market- and performance-sensitivity, comparable to the framework proposed for DHS. Our findings and recommendations are summarized in more detail below. (Note: The term "basic pay system" as used in this part includes the classification or job evaluation system that is used to determine the relative "value" of various job duties and responsibilities, as well as the system for setting and adjusting basic pay ranges and individual employee rates of basic pay.)

Findings

• The GS basic pay system which covers most LEOs and other law enforcement personnel is outdated, inflexible, market-insensitive, and performance-insensitive. In particular, the GS classification and pay provisions do not function well for law enforcement employees. Because of its inflexible structure, the GS system invites broad (and therefore wasteful) solutions to problems that actually are narrower in scope.
• The GS basic pay system provides special entitlements to LEOs, including some whose primary duties are outside the law enforcement field (e.g., prison support staff), but excludes other employees who have arrest authority and whose primary duties involve law enforcement (e.g., police officers).
• Disparities in pay flexibility among agencies can harm morale, create staffing disruptions, and increase Government costs unnecessarily. With the creation of new basic pay systems for employees of DHS and DOD on the horizon, we anticipate that roughly 50,000 law enforcement employees will be converted from the GS system to more flexible basic pay systems that are more sensitive to the labor market and to performance, leaving other agencies at a disadvantage.
• Staffing problems among Federal law enforcement employees vary by occupation, grade level, and location. Above-average quit rates exist for certain law enforcement occupations at the entry/developmental level (although some quits may not be attributable to pay levels). At the full performance level, law enforcement employee quit rates are generally very low. The build-up of the Federal Aviation Administration/ Transportation Security Administration law enforcement workforce, with its payband structure, resulted in a spike in transfer rates in FY 2002 for some law enforcement jobs, which demonstrates the problems that can result when one agency enjoys greater pay-setting flexibilities.
• The GS pay system does not provide sufficient flexibility to address specific pay competitiveness problems (e.g., low entry/developmental rates) among law enforcement occupations in a targeted manner. The degree of pay competitiveness varies by occupation, level, and location.

Recommendations

OPM should be given authority to establish a flexible basic pay framework for Federal law enforcement employees throughout the Government, in consultation with employing agencies and with the concurrence of the Attorney General. Consistent with the paybanding framework that has been proposed for DHS, this Governmentwide framework would include a common structure of law enforcement occupations, a structure of bands or rate ranges for various levels of work, and provisions for establishing and adjusting those rate ranges. Within that framework, Federal law enforcement agencies would have considerable flexibility to design tailored systems for performance management and individual employee pay adjustments.

Covering all law enforcement employees under the standard pay systems is not the solution, since those systems-in particular, the GS system-are in need of reform to make them more flexible, market-based, and mission-centered. With respect to law enforcement employees, the GS system is particularly problematic in that its rigid classification factors may not adequately value lower-level law enforcement work. Pending legislative proposals that attempt to "fix" the GS system for law enforcement employees are flawed. They would provide across-the-board solutions to problems that require a more targeted approach. For example, providing the same pay increase to all LEOs in a given location, regardless of occupation or grade level, would result in paying some LEOs well above labor market rates. Furthermore, these proposals would have serious unintended consequences–e.g., new inequities, pay compression/inversion problems, and unfunded costs–which outweigh any benefits. (See Appendix D.)
Under a framework established by OPM, the Federal Government would have the flexibility to adopt targeted approaches tailored to meet the needs of specific categories of LEOs, taking into account occupation, level, and location. This would allow a strategic mission-centered and market-based approach to setting and adjusting pay ranges so that payroll dollars are used as effectively as possible. That framework would also ensure that individual basic pay increases would be based on performance, with agencies afforded considerable flexibility to establish policies in this area. The Government would be able to respond more quickly to new conditions and circumstances than it can under rigid statutory systems. Through coordination with employing agencies and with the concurrence of the Attorney General, OPM would be able to ensure that both agency interests and Governmentwide interests are considered and balanced.

Standard Basic Pay Systems

The standard Governmentwide basic pay systems include the GS system, the Federal Wage System (FWS), and the pay schedules established for senior-level and scientific or professional positions and members of the Senior Executive Service. These systems are established under chapters 51 and 53 of title 5, United States Code. In some cases, special pay provisions within these systems provide higher rates of pay for some law enforcement personnel.

Most LEOs and other employees with arrest authority are covered by standard basic pay systems. Out of a total of roughly 106,000 Federal LEOs, about 91,000 are covered by standard basic pay systems (including 86,000 GS employees and 4,500 FWS employees). Groups covered by nonstandard basic pay systems include about 7,000 LEOs in the judicial and legislative branches and about 2,000 LEOs in the U.S. Postal Service. (See Section C.) Out of roughly 29,000 law enforcement employees who do not have LEO retirement coverage, about 24,500 are covered by standard basic pay systems (almost all under the GS system). Groups covered by nonstandard basic pay systems include about 1,300 Bureau of Diplomatic Security special agents who are in the Foreign Service and about 1,200 postal police officers. (See Section C.)

However, this will change in the near future. DHS and DOD, which together employ about 32,000 LEOs and about 22,000 other law enforcement personnel, have been given authority to establish new basic pay systems. (See 5 U.S.C. 9701 and 9902.) Thus, when these DHS and DOD employees are removed from the standard pay systems, this will dramatically change the current situation. DHS and OPM jointly issued proposed regulations for a new basic pay system for DHS employees on February 20, 2004. (See 69 FR 8030.)

LEOs within the GS system are entitled to higher rates of basic pay at grades GS 3 through GS-10, which increase pay by 3 to 23 percent depending on grade level. Currently, approximately 32,000 LEOs are entitled to these LEO special rates. These LEO special rates were established by section 403 of the Federal Law Enforcement Pay Reform Act of 1990 (which is found in section 529 of Public Law 101-509, November 5, 1990, as amended). These LEO special rates are used as base rates in computing locality payments. The conference report on the authorizing legislation stated that Congress was acting to address severe recruitment and retention problems caused by discrepancies in pay and benefits between Federal and State/local law enforcement personnel. (See House Conference Report 101-906, October 20, 1990, accompanying H.R. 5241, pages 90-92.) The special rates at grades GS-3 through 10 also might be interpreted as reflecting a judgment that lower-level LEO work was not properly valued under the GS classification system.

Under 5 U.S.C. 5305, OPM has authority to establish higher rates of basic pay, otherwise know as "special rates," for GS employees to address recruitment or retention problems. Employees are entitled to the higher of the special rate or the applicable GS locality-adjusted rate of pay. Only a small percentage (less than 2 percent) of LEOs receive such OPM-established special rates; most of these LEOs are medical personnel working at correctional institutions. A significant number (about 3,100) of non-LEO police officers are covered by OPM-established special rate schedules. At some grades and locations, the police special rates exceed the locality-adjusted rates for LEOs at grades GS-3 through 10.

While Department of Veterans Affairs (VA) police officers are covered by the GS system, they may receive higher special rates of basic pay established by VA under its title 38 special rate authority, subject to OPM's concurrence. (See 38 U.S.C. 7455 and Executive Order 12797, April 3, 1992.) VA police officers are entitled to the higher of the title 38 special rate or the applicable GS locality-adjusted rate of pay. As of September 2003, 1,075 VA police officers out of a total of 2,350 (about 46 percent) were covered by title 38 special rates.

Nonstandard Basic Pay Systems

Certain LEOs and other employees with arrest authority are covered by basic pay systems that are not among the standard Governmentwide systems described in Section B of this part. Congress provided independent authority for these systems. The provisions of these systems may be established directly in law, by administrative action, or by collective bargaining.

The LEO groups not covered by the GS system include those employed by the Transportation Security Administration (TSA), the U.S. Secret Service Uniformed Division (USSSUD), the U.S. Park Police, the U.S. Postal Service, the U.S. Capitol Police, and the judicial branch. Under a 1996 law, postal inspectors and Office of Inspector General criminal investigators in the U.S. Postal Service are paid at rates of basic pay that are comparable to those for GS employees.

Among law enforcement employees who do not have LEO retirement coverage, we find more variation in basic pay entitlements, especially among police officers. Some of these variations go back many years, while others are more recent.

Following are brief summaries of the major nonstandard basic pay systems for LEOs and other law enforcement personnel. Additional details regarding these systems and information on other systems for smaller groups of employees are provided in Appendix C. Also, Appendix G provides full performance level salary ranges for some of the occupations listed below.

LEOs Covered by Nonstandard Basic Pay Systems

• Judicial Branch Pay Plans. The judicial branch has several pay plans that cover probation and pretrial services officers and Supreme Court police (including the Marshal and Deputy Marshals who supervise those police). The Supreme Court Police pay plan is basically identical to the pay plan for Capitol Police (see below). Supreme Court Police officers are not covered by the definition of "law enforcement officer" in the retirement laws but receive equivalent retirement benefits and thus are included in the LEO category in this report.
• Capitol Police. By law, the basic pay plan for Capitol Police is established and maintained by the Capitol Police Board. The pay schedule for Capitol police is significantly higher than that for GS police officers and is higher than the schedules for USSSUD and Park Police officers. The pay range for Capitol Police at the Private First Class rank ranges from $49,851 to $81,168; in contrast, the pay range for a GS police officer in Washington, DC, at the most common GS-6 grade, ranges from $37,839 to $49,196 (special rate schedule 983D). Basic pay is based on rank with years of total service determining the step rate within the rank. Capitol Police officers are not covered by the definition of "law enforcement officer" in the retirement laws, but receive equivalent retirement benefits and thus are included in the LEO category in this report. (Note: Library of Congress police officers, who currently are not LEOs and who are covered by the GS system, eventually will be folded into the Capitol Police force.)
• U.S. Postal Service. The U.S. Postal Inspection Service has special basic pay systems for postal inspectors and executives. The U.S. Postal Service also has a separate basic pay authority for its Office of Inspector General. As required by 1996 law, these systems are comparable to the systems that apply to GS criminal investigators.
• Transportation Security Administration. TSA has a pay banding system for GS-equivalent employees, including Federal air marshals and criminal investigators. (Federal air marshals have been detailed to the Bureau of Immigration and Customs Enforcement but remain covered by the TSA pay system.) These LEOs are in a specialized law enforcement job category with a specific banding structure. The TSA pay bands are open ranges without steps. This TSA system, which is modeled after the FAA pay plan, has higher pay ranges than the GS system. For Federal air marshals in TSA Band I, maximum pay in Washington, DC., is currently $96,175, as compared to $93,742 for GS-13 criminal investigators (about 3 percent higher, down from a gap of 7 percent prior to the GS adjustment; note that the TSA pay schedule may be adjusted later in 2004). Also, the cap on locality-adjusted rates is the rate for level III of the Executive Schedule (EX-III), as compared to the rate for EX-IV for GS employees. TSA also has a pay plan for its senior executives, which is capped at the rate for EX-II.
• U.S. Secret Service Uniformed Division and U.S. Park Police. The pay system for USSSUD officers and Park Police officers provides higher pay than is available for GS police officers. The pay range for USSSUD/Park Police at the Private rank ranges from $42,129 to $75,864 in Washington, DC. In contrast, the pay range for a GS police officer in Washington, DC, at the most common GS-6 grade, ranges from $37,839 to $49,196 (special rate schedule 983D). Basic pay is based on rank with step rate within the rank based on years of total service.

(Note: Among the additional categories of LEOs who are covered by nonstandard basic pay systems are Internal Revenue Service criminal investigator senior managers and criminal investigators in various financial regulatory agencies, such as the Federal Deposit Insurance Corporation. See Appendix C for additional information.)

Other Law Enforcement Personnel Covered by Nonstandard Basic Pay Systems

• Bureau of Diplomatic Security (DS) Special Agents. DS special agents in the State Department are covered by the Foreign Service pay system. They are not considered LEOs for the purpose of this report, since they are covered by the Foreign Service Retirement System, rather than CSRS or FERS. However, DS special agents have been treated as LEOs for other purposes, such as premium pay. (See 5 U.S.C. 5541(3)(D)(ii).)
• U.S. Postal Service Police. The U.S. Postal Security Force personnel are paid from nonstandard basic pay schedules for both bargaining unit employees compensated under the Postal Police officers' schedule and officers (supervisors/managers) compensated under the standard Postal Service Executive and Administrative Schedule. In January 2003, Postal Police pay ranged from $29,917 to $45,004; in contrast, the 2003 pay range for a GS police officer in Washington, DC, at the most common GS-6 grade, ranged from $36,843 to $47,896 (special rate schedule 983D).
• Bureau of Engraving and Printing and U.S. Mint Police. The Bureau of Engraving and Printing (BEP) and U.S. Mint police officers are covered by a pay system administered by the Secretary of the Treasury. The rate of basic pay for these police may not be less than the minimum rate for GS-7 or more than the maximum rate for GS-15. The current BEP/Mint police pay schedule sets pay significantly above GS rates for comparable police officers, but below the rates for USSSUD officers and Park Police officers.
• Defense Protective Service (DPS) Police. The Secretary of Defense administers a special pay system for DOD/DPS police officers who protect the Pentagon and surrounding areas. DOD has administratively adopted the same pay plan that applies to USSSUD and Park Police officers.
• National Security Agency (NSA) Police. NSA police officers are covered by an NSA-administered pay plan that generally mirrors the GS system.
• Government Printing Office (GPO) Police. The GPO police officers are paid from pay schedules that correspond to GS grades, each with 10 steps like the GS, but with higher pay levels. The normal journey level for GPO police officers is grade 5, which had a rate range of $34,369 to $43,206 in 2003.

(Note: VA police who are in the GS pay system but covered by title 38 special rates could also be considered as having a nonstandard system. Among the additional categories of other law enforcement personnel who are covered by nonstandard basic pay systems are National Zoological Park Police and police employed in various personnel demonstration projects. See Appendix C for additional information.)

Classification and Basic Pay Issues

The following issues are key to an analysis of classification and basic pay issues as they relate to Federal LEOs and other law enforcement personnel:

• Should law enforcement employees be covered by a separate basic pay framework tailored for law enforcement occupations in lieu of coverage under any other basic pay system, such as the GS system?
• Which law enforcement employees should be covered by a law enforcement basic pay framework?
• How can the problem of interagency competition for law enforcement employees be addressed through a new law enforcement basic pay framework? How do we balance the need for agency flexibility with the Governmentwide interest in consistency?
• To what extent are Federal agencies experiencing recruitment and retention problems among law enforcement employees, and how can such problems be addressed through a new law enforcement basic pay framework?
• To what extent is Federal law enforcement pay competitive with non-Federal pay, and how can any competitiveness problems be addressed through a new law enforcement basic pay framework?

Issue: Need for a Basic Pay System Tailored for Law Enforcement Employees

Since the GS basic pay system covers the vast majority of Federal law enforcement employees, a central issue is whether that system is functioning well for law enforcement occupations. We find that, in addition to the general problems with the GS system, specific problems associated with law enforcement employees justify the establishment of a separate basic pay system or framework tailored specifically for Federal law enforcement employees.

Among the general problems with the GS system identified by OPM are (1) lack of occupation-specific market sensitivity, (2) lack of emphasis on individual performance, (3) excessive reliance on rigid, one-size-fits-all rules, and (4) insufficient flexibility to make strategic decisions that support mission accomplishment. Of particular relevance to law enforcement employees is the specific problem that the GS system provides the same locality payment to all occupations and all grade levels in the same geographic area. In other words, the system pretends that pay disparities within a location are equal across all occupations and grade levels. Thus, GS locality adjustments result in some jobs being paid below the labor market and other jobs being paid above the market¹⁵.

The continued coverage of law enforcement employees by the GS system has been the focus of considerable study over the years. (See Section I.E.) For example, the 1990 Report of the National Advisory Commission on Law Enforcement (NACLE) recommended that the Government explore the feasibility of a new system for LEOs. In OPM's 1993 report to Congress, "A Plan to Establish a New Pay and Job Evaluation System for Federal Law Enforcement Officers," OPM recommended a separate job evaluation and pay system for Federal law enforcement employees (defined to include non-LEO police officers, but to exclude prison support staff). Both of these reports cited the fact that the GS system is focused on traditional white-collar work and may not adequately address or value factors that are important in law enforcement work, such as physical requirements, responsibility to use deadly force, the need to make critical split-second decisions without supervisory guidance, and the need to approach or remain in dangerous situations rather than retreat from them. The 1993 OPM report found that the problems with the application of GS classification factors to law enforcement jobs were especially pronounced at the lower GS grades. (Law enforcement officers obtain higher grades based primarily on knowledge-related skills that are more similar to those possessed by other types of employees.) ¹⁶

Since enactment of the Federal Employees Pay Comparability Act of 1990, the GS system has included special rates of basic pay at grades 3 through 10 for employees who (1) meet the definition of "law enforcement officer" (LEO) in the retirement laws or (2) are not covered LEOs but serve in an approved secondary position, as defined in the retirement system regulations. These LEO special rates replace the GS rates with rates that are 3 to 23 percent higher, with higher increases at lower grades. Locality pay is paid on top of these LEO special rates. The legislative history of this provision indicates that the rates were established to close the gap in pay that existed between Federal and State/local law enforcement personnel at lower grades. Congress relied on the 1990 NACLE report, which found significant pay gaps at LEO entry-level grades and identified recruitment and retention difficulties at these same levels. As already discussed above, the NACLE report also noted concerns regarding whether the GS classification factors assigned adequate weight to law enforcement work. Thus, the special rates at lower grades can also be viewed as addressing concerns regarding the valuation of law enforcement work at lower grades.

Through the LEO special rates at grades 3 through 10, the GS system has already been significantly "torqued" in an attempt to make the system work for law enforcement employees. However, problems remain. The general flaws in the GS system-market insensitivity, performance insensitivity, etc.-still exist. The LEO special rates were provided as a simple, broad, one-size-fits-all solution to a problem that was actually more complex in nature. Since the LEO special rates do not address the differing needs of specific law enforcement occupations, we still have some situations where entry/developmental rates are too low for particular occupations in particular locations. Also, the LEO special rates apply only to employees in positions approved as LEO retirement positions, which includes prison support staff and excludes other law enforcement personnel, such as most GS police officers. In 2003, OPM administratively established special rates under 5 U.S.C. 5305 for many GS police officers. These special rates provide large increases at lower grades like the LEO special rates. Thus, what we see emerging is an ever more complicated and difficult-to-administer pay system as we attempt to modify it to address fundamental deficiencies. We believe the Government needs a simpler, more flexible system for LEO occupational groups that allows pay needs generally to be addressed as part of normal system operation, instead of through "special solutions."

Based on the above analysis, we conclude that law enforcement employees should be covered by a separate basic pay framework established and maintained by OPM. This framework would be tailored specifically for law enforcement jobs. It would provide the flexibility to make strategic pay decisions that target specific occupations based on labor market conditions and other factors. Pay ranges and pay adjustments would be coordinated with all agencies, while still providing considerable agency flexibility within the framework to design pay systems that deal with agency-specific needs and challenges. (See "Issue: Disparities in Pay Flexibilities Among Agencies" for further discussion of this issue.) Finally, the new framework would allow for greater emphasis on pay progression based on performance.

Issue: Defining Which Law Enforcement Employees Are Covered

A key issue in analyzing basic pay for law enforcement personnel concerns which employees should qualify for coverage by any basic pay framework for law enforcement employees. Do we rely on the definition of "LEO" used in the retirement laws, or do we modify that definition for the purpose of basic pay entitlements? The definition of "LEO" under the retirement laws is discussed in Part II of this report. Any changes in the retirement definition may affect conclusions regarding which employees should be subject to any basic pay framework. At the same time, different definitions for retirement and pay system coverage may be justified, since those systems are established for different purposes.

The current GS pay system includes certain special provisions that apply to employees who meet a statutory definition of "law enforcement officer," which is linked to the definition in the retirement laws. For example, as already noted, LEO special rates apply at GS grades 3 through 10. However, these LEO special rates do not apply to certain other employees, such as non-LEO police officers, even though they have law enforcement duties and skills that are similar to State/local law enforcement personnel that are part of the law enforcement labor market.

On the other hand, the LEO retirement definition covers certain support personnel in correctional institutions who have frequent, direct contact with convicted criminals, even though their primary duties and skills are outside the law enforcement field. For example, we find prison support staff covered by LEO retirement who serve in such occupations as secretary, nurse, human resources specialist, recreation specialist, cook, and maintenance mechanic. The 1990 NACLE report (page 119) noted that it may be appropriate to place LEOs holding support positions in prisons under different pay provisions than other LEOs. In particular, the NACLE report noted that it may not make sense to include such LEOs in a special classification system that is designed for those whose primary duties are actual law enforcement.

We believe OPM should be authorized to issue regulations that define which employees are covered by a basic pay framework for law enforcement employees based on labor market and other factors and the nature of their primary duties.

Issue: Disparities in Pay Flexibilities Among Agencies

As described in Section C, certain LEOs and other law enforcement personnel are covered by nonstandard basic pay systems. Many of these nonstandard systems are established under a flexible administrative authority rather than by specific statutory provisions. Agencies with pay flexibilities have an advantage over agencies without such flexibilities.

For example, many agencies whose law enforcement employees were covered by the standard pay systems expressed concern about being at a competitive disadvantage vis-à-vis TSA while it was building its law enforcement workforce in 2002 and 2003. TSA administratively established pay levels for Federal air marshals that exceeded the pay levels for certain other law enforcement employees.

Another example is the pay authority for police officers at the Department of Treasury's U.S. Mint and the BEP who were removed from the GS system by statute in 1990 and became entitled to higher rates of pay than GS police officers. Today, these Mint and BEP police officers continue to be paid at higher levels than GS police officers, but they are paid less than USSSUD officers who protect the White House (among other duties). The rates for Mint and BEP police officers are set administratively by the Secretary of the Treasury (subject to a GS-15, step 10, salary ceiling). The rates for USSSUD officers are set by statute. (USSSUD was formerly part of the Department of Treasury; it is now part of the Department of Homeland Security.)

With the prospect of large numbers of DHS and DOD law enforcement employees being converted to more flexible pay systems, we may have reached a "tipping point." Given the critical nature of law enforcement work, we believe it is essential that law enforcement employees in all other agencies have access to new flexibilities. We believe all law enforcement employees can be accommodated under a framework that provides for general consistency in pay structure, while providing considerable agency flexibility in setting and adjusting individual rates of pay within that structure.

Issue: Recruitment and Retention of Law Enforcement Employees

An important factor in determining appropriate basic pay solutions for Federal law enforcement employees is the level of recruitment and retention difficulty agencies are experiencing. As explained below, we find that recruitment and retention difficulties among law enforcement employees vary by occupation, grade level, and location. For example, we present quit rate data showing that the Government generally does not have problems in retaining law enforcement employees at the full performance level. This supports providing a flexible basic pay authority to respond in a strategic, targeted manner to recruitment and retention problems where they exist.

It is true that the success or failure of agency recruitment and retention efforts may be related to factors other than pay, such as the mission of the agency, nature of the work itself, working conditions, location of the worksite, availability of training and growth opportunities, the existence of family-friendly policies (e.g., flexible work schedules), employee morale, general labor market conditions, agency recruitment programs, early retirement provisions, etc. Nonetheless, we believe recruitment and retention statistics can provide valuable insights regarding a pay strategy.

Agencies have not reported significant general problems in recruiting law enforcement personnel, with the exception of non-LEO GS police officers. OPM established special salary rates for many of these GS police officers in 2003. Since agencies have not requested new or higher special rates in recent years for other types of law enforcement employees, we are left to conclude that recruitment is not a major problem area, except perhaps for some jobs in cities with extremely high labor costs, such as New York, San Francisco, and Los Angeles. However, we acknowledge that the quality of applicants and newly hired employees is affected by the level of starting salaries and that this is an area where greater flexibility might be appropriate. For example, the proposed pay system for DHS would establish broad pay ranges for entry/ developmental employees and provide more flexibility in setting starting salaries compared to the GS system. With this flexibility, DHS would be more market-sensitive in setting starting salaries and would enhance its ability to attract high-quality applicants.

OPM has considerable data regarding retention or turnover rates from its Central Personnel Data File. For the purpose of this report, we generated data for fiscal years 2001 through 2003. We focused our analysis on quits (voluntary resignations) and transfers (movements to other Federal agencies), since those are the components of turnover that are most significant in evaluating basic pay issues. (We do not address retirement rates. We note that LEO retirement rates are largely a function of past hiring patterns and the design of the LEO retirement benefit, which encourages early retirement and generally requires separation at age 57.) We arrayed quit and transfer data by selected variables, including LEO retirement status, occupational series, grade, agency, and geographic location. Quit rates were expressed as an average annual percentage of the average employee population under consideration. Some of the key findings are summarized below. (Appendix B provides a more detailed summary of our findings.)

LEO Quit and Transfer Rates

• Overall annual quit rates for employees who qualify as LEOs under the retirement law definitions ranged from 2.2 to 2.5 percent, which are relatively low. These rates are close to the overall quit rates for all GS employees in all occupations, which ranged from 1.6 to 2.1 percent. There is no indication of a trend toward higher quit rates. (By comparison, a 1993 OPM report showed the average LEO quit rate for the FY 1984-1990 period was 3.0 percent, so current quit rates are relatively low in historical terms.)
• Quit rates varied by occupation as shown in the table below:
  
  

  Selected LEO Occupations	Range of Annual Quit Rates (Percent) FY 2001 - 2003
  GS-0007 Correctional Officers	2.7 - 3.9
  GS-0025 Park Rangers	0.9 - 1.6
  SP-0083 Park Police	1.5 - 2.3
  LE-0083 Secret Service Uniformed Officer	3.2 - 5.2
  GS-1811 Criminal Investigators	0.7 - 0.8
  GS-1896 Border Patrol Agents	5.2 - 5.8

Generally, the higher quit rates for certain occupations were largely attributable to higher quit rates at entry/developmental grades. In some cases (e.g., Border Patrol agents), the higher quit rates at entry/developmental grades can be associated with resignations in response to failure to meet the training requirements. Such quits are not attributable to a pay problem.

• LEO quit rates varied significantly by grade level, with quit rates decreasing at higher grades. Quit rates were about 10-20 percent at grades GS-4 and 5, about 7 8 percent at GS-6, about 1-4 percent at GS-7 through 9, and generally 1 percent or less at grades GS 11 through GS-15. LEO quit rates at grades GS-6 and below were significantly higher than the average quit rates at those grades for all GS occupations. (Note: The high average LEO quit rates at low grades primarily involve correctional officers at GS-5 and GS-6 and Border Patrol agents at GS-5 and GS-7.)
• LEO quit rates were lowest at GS grades representing an occupation's nonsupervisory full performance level(s) or higher (e.g., GS-11 and above for Border Patrol agents and GS-12 and above for criminal investigators). Generally, these quit rates were less than 1 percent. (See tables showing quit rates by occupation and grade in Appendix B.) We note that most LEOs reach the full performance level within 2-4 years of being hired.
• The average transfer rates for LEOs were 1 percent or less in FY 2001 and FY 2003 but were 3.3 percent FY 2002. The higher LEO transfer rate in FY 2002 is largely attributable to the build-up of the FAA/TSA Federal air marshal workforce in that year. Now that the Federal air marshal workforce has stabilized, transfer rates appear to have returned to lower levels. (See General Note 10 in Appendix B regarding the definition of "transfer.")
• The FY 2002 transfer rates varied by occupation. LEO occupations with particularly large transfer rates included GS-1896 Border Patrol agents (8.2 percent), LE-0083 Secret Service Uniformed officers (14.8 percent), and Park Police officers (9.2 percent).

Non-LEO Police Officers Quit and Transfer Rates

• Overall annual quit rates for non-LEO police officers in the 0083 occupational series ranged from 5.8 to 6.9 percent during the FY 2001-2003 period. This group consisted of about 7,000 GS police officers and about 1,200 non-GS police officers. The quit rates for GS police officers were slightly higher, ranging from 6.1 to 7.4 percent. These quit rates are significantly higher than the average GS quit rates for all occupations. However, as a general matter, average GS quit rates for all occupations are low when compared to other employers. There is a slight trend toward increasing quit rates. (OPM established higher special rates for many GS police officers in FY 2003 and will monitor GS police quit rates to see if the higher pay rates begin to reduce quit rates.)
• For GS police officers, quit rates varied by GS grade. The quit rates were high at grades GS-3 through GS-5, ranging from about 15 to 20 percent at GS-3 and GS 4, which are lowly populated entry/developmental grades, and from about 8 to 11 percent at GS-5, which is an entry/developmental grade for some officers and a full performance level for others. At the most populated full performance level, GS-6, the quit rates were about 6 to 7 percent. At GS-7, the quit rates were about 3 percent. At GS-8 and above, the rates were generally about 2 percent or lower. (We note that quit rates at entry/developmental levels can sometimes be associated with factors other than pay, such as failure to meet training requirements or an employee's realization that the nature of the work does not meet expectations.)
• Transfer rates for GS police officers were 2.1 percent in FY 2001, 3.6 percent in FY 2002, and 2.6 percent in FY 2003. The peak in FY 2002 likely reflects transfers to FAA/TSA.

Non-LEO Border Inspector Quit and Transfer Rates

• Overall annual quit rates for GS-1816 immigration inspectors and GS-1890 customs inspectors ranged from 1.7 to 2.4 percent during the FY 2001-2003 period, which corresponds closely to the overall average quit rates for all GS employees.
• Border inspector quit rates varied by GS grade level as shown in the table below:
  
  

  GS Grade	Range of Annual Quit Rates (Percent) FY 2001 - 2003
  	GS-1816 Immigration Inspector	GS-1890 Customs Inspector
  5	4.9 - 8.3	10.7 - 13.1
  7	1.3 - 3.9	6.5 - 7.1
  9	1.8 - 2.3	1.3 - 1.9
  11	0.6 - 1.2	0.4
  12	0.0 - 0.8	0.2
  13-15	0.0 - 0.7	0.0 - 0.3

  In August 2002, the normal nonsupervisory full performance level for these inspectors was increased from GS-9 to GS-11. Prior to that time, only certain nonsupervisory inspectors could hold a GS-11 grade. As shown above, quit rates are low at l performance level and higher.

• Border inspector transfer rates were less than 1 percent except in FY 2002, when the transfer rates were 2.2 percent for customs inspectors and 3.7 percent for immigration inspectors. Again, the peak in FY 2002 is largely attributable to transfers to FAA/TSA.

In summary, it appears that quit rates for LEOs and selected other law enforcement employees are generally low at the full performance level or higher. However, quit rates for non-LEO police officers are above GS averages at the GS-5 and GS-6 full performance levels. This indicates that, except for non-LEO police officers, pay levels at normal full performance levels may generally be adequate. Since OPM recently established special rates for most non-LEO police officers, this situation bears further monitoring.
In certain law enforcement occupations, we find high quit rates at entry or developmental grades which apply during the first 2-4 years after an employee is hired. These rates may be affected by nonpay factors such as failure to meet training requirements or an employee's reevaluation of a career choice after exposure to the work. However, it may also be the case that more flexibility in setting starting rates is needed to make Federal agencies more competitive in specific local labor markets and to attract higher quality employees who have a greater commitment to the career in question.

We found a spike in turnover rates for law enforcement employees in FY 2002, which appears be largely attributable to the build-up of the Federal air marshal workforce by FAA and then TSA. Available evidence indicates that the transfer rates returned to lower levels in FY 2003. However, this experience spotlights how an agency with a more generous pay structure can produce staffing problems for agencies under standard pay systems.

Issue: Pay Competitiveness with Non-Federal Employers

Another key issue concerns pay competitiveness. Are pay levels for Federal law enforcement employees competitive with the pay levels for comparable non-Federal law enforcement employees? How should a pay system be designed so that market-based pay disparities are identified and addressed appropriately? As explained below, we find that pay relationships between Federal and non-Federal law enforcement personnel vary by occupation, level, and location. Also, making salary comparisons presents a number of practical challenges that require room for judgment. Accordingly, we believe the Government needs a more flexible pay framework that will support reasoned solutions strategically tailored to address specific problems.

It is generally not appropriate to evaluate salary competitiveness for Federal law enforcement employees on an across-the-board basis. The law enforcement field consists of a variety of different occupations and levels of work. Since GS grades were established in law and were not assigned based on labor market value, the salary competitiveness of different law enforcement jobs can vary significantly. Salary comparisons should be targeted to specific occupational categories. Proposals that provide general, across-the-board increases to all law enforcement-related jobs, regardless of occupation or level, should be evaluated carefully to determine whether the increases are actually warranted for all jobs.

Also, it is important to make comparisons at several work levels (e.g., entry level, normal journey or full performance level, etc.) and in different geographic locations. Equal pay increases should not be provided at all work levels or in all locations if the actual pay disparities are limited to certain narrower situations. For example, available data indicate that pay disparity problems for certain Federal law enforcement officers may lie primarily at the entry/developmental level in certain high-cost labor markets and that the Federal Government is generally competitive at the journey level or higher. (See Appendix H.) This suggests a targeted remedy that focuses on entry/developmental pay for specific occupations in specific locations.

Another factor to consider in measuring salary competitiveness is that many Federal criminal investigators and other LEOs regularly receive a 25 percent supplement for overtime work-either administratively uncontrollable overtime (AUO) pay or law enforcement availability pay. While this supplement is a stable addition to salary, it is appropriately not included in salary comparisons, which compare non-overtime salary rates. However, we cannot ignore the fact that providing a virtually guaranteed 25 percent supplement gives the Federal Government a competitive advantage over non-Federal employers who do not guarantee such an overtime supplement.

We believe most job seekers give great weight to the total regular pay they would receive in a job, since it is that total pay that determines their standard of living. While the value of AUO pay and availability pay may not be as great as the overtime rates paid by non-Federal employers on an hourly basis, those supplements are highly valued as stable additions to salary. Furthermore, since the AUO pay and availability pay received by Federal LEOs is creditable as basic pay in determining retirement and certain other benefits, the value of these payments is even greater. For example, an availability pay recipient will receive a defined benefit pension that is 25 percent higher than another employee at the same salary level. Also, Thrift Savings Plan holdings will be proportionally larger as an availability pay recipient is entitled to a larger Government match than another employee at the same salary level.

In comparing entry salary rates, it is important to remember that the GS pay system generally offers more rapid pay progression in the years immediately after entry because employees commonly receive regular (generally annual) promotions until they reach the full performance level. These promotion increases can be very significant. For example, a Border Patrol Agent hired at GS-5 is generally promoted to GS-7 after 6 months and then to GS-9 after another 6 months, which results in a 27 percent increase after just 1 year. After another year, the agent can be promoted to GS-11 and thus receive another 17 percent increase. In other words, in just 2 years an agent will move from GS-5, step 1, to GS-11, step 1, and receive a total salary increase of almost 50 percent. One policy issue is whether the Government's interests would be better served by having a system that allows higher starting salaries while providing smaller increases during the developmental phase of an employee's career. Such an approach might help attract higher quality employees from the outset without the need to increase full performance level salaries.

Appendix H provides an analysis of the competitiveness of Federal law enforcement pay compared to pay for State and local law enforcement personnel based on available data. We analyzed data for comparable law enforcement occupations by geographic region and by level. That data support the conclusion that pay relationships between Federal and State/local law enforcement employees vary by occupational category, level, and location. For certain occupations in various locations, Federal pay appears to be competitive or even superior at the full performance level. We find that the most significant problem is low pay at the entry/developmental level for certain law enforcement occupations, with the degree of the problem varying by geographic region. Also, we found evidence that some Federal law enforcement occupations, like non-law enforcement occupations, may have less significant pay disparities at the full performance level in several areas with extremely high labor costs-in particular, San Francisco, New York City, and Los Angeles.

The complexities associated with making salary comparisons point to the need for a pay framework that provides flexibility to target pay increases where the increases are determined to be most needed. The Government needs flexibility to determine pay adjustments based on salary data, staffing data, other labor market factors, mission-related concerns, budget conditions, and other relevant factors. Setting pay using a rigid, formula-driven approach is not effective and is not standard practice among non-Federal employers. Salary data can be incomplete or erratic. The basic assumption underlying any salary survey-namely, that the jobs being compared are actually similar in terms of work type and level-is always subject to question. Salary surveys are not a precise science, but merely a tool that can help guide the application of informed judgment.

Based on the above analysis, we conclude that proposals for general, across-the-board increases for all law enforcement employees, or for all law enforcement employees in a given locality area, are unnecessary and unwise. For example, certain proposed bills now pending before Congress&ndashH.R. 1676, H.R. 466, and S. 985–would establish higher geographic adjustments for LEOs generally without regard to occupation or level. As shown in the preceding analysis of recruitment and retention and in this analysis of pay competitiveness, the primary problems appear to exist at the entry/developmental level and those problems vary by occupation. Problems at the entry/developmental level should not drive unwarranted increases at the full performance level. Targeted solutions should be devised for specific problems as they exist in reality so that the Government's limited resources are used wisely and effectively. (In Appendix D, OPM provides a detailed analysis of the three proposed bills.)

In sum, we find compelling arguments for a flexible law enforcement pay framework that allows for pay adjustments that are tailored to the needs of specific occupational categories in specific locations, with separate consideration of the entry/developmental level and the full performance level. The proposed DHS pay system is such a flexible system, but the concept needs to be extended to all other agencies.

Classification and Basic Pay Recommendations

In formulating a recommendation on classification and basic pay for law enforcement employees, we considered past studies (such as the 1990 NACLE report and the 1993 OPM report), current legislative proposals, as well as the findings and analyses included in this report. As discussed in Section D, the issues relating to law enforcement classification and basic pay vary by occupation, grade level, and location. Many of these issues are related to general inflexibilities associated with the GS pay system.

We carefully reviewed several pending legislative proposals—H.R. 466, H.R. 1676, and S. 985–which would establish new LEO geographic adjustments and remove caps that limit the payment of availability pay. As documented in Appendix D, we find that these bills are flawed in many respects and that they would produce negative effects that greatly outweigh any positive outcomes. The bills provide overly broad solutions to more narrow problems and in the process create unnecessary costs and new inequities.

Based on our analysis, the key problems relating to law enforcement classification and basic pay are the following:

• The GS basic pay system, which covers most LEOs and other law enforcement personnel, is outdated, inflexible, market-insensitive, and performance-insensitive. In particular, the GS classification and pay provisions do not function well for law enforcement employees, as demonstrated by the establishment of special rates for lower-graded law enforcement employees. Because of its inflexible structure, the GS system invites across-the-board (and therefore wasteful) solutions to problems that require a more targeted approach.
• The GS basic pay system provides special entitlements to LEOs, including some whose primary duties are outside the law enforcement field (e.g., prison support staff), but excludes other employees who have arrest authority and whose primary duties involve law enforcement (e.g., police officers).
• Disparities in pay flexibilities among agencies can harm morale, create staffing disruptions, and increase Government costs unnecessarily.
• Above-average quit rates exist for certain law enforcement occupations at the entry/developmental level (although some quits may not be attributable to pay levels). The build-up of the FAA/TSA law enforcement workforce resulted in a spike in transfer rates in FY 2002 for some law enforcement jobs.
• The GS pay system does not provide sufficient flexibility to address specific pay competitiveness problems among law enforcement occupations in a targeted manner. Entry- and developmental-level pay rates for some LEO jobs are not competitive in a number of local labor markets, with more severe disparities in areas with the highest labor costs (such as San Francisco, Los Angeles, and New York City). The GS locality pay system does not provide adequate flexibility to adjust rates so that larger increases can be provided to LEOs in high labor-cost areas and lesser increases to LEOs in locations where Federal LEO pay already is competitive or superior.

OPM concludes that the kind of authority Congress recently provided jointly to OPM and the Departments of Homeland Security and Defense strikes a reasonable balance between the goals of consistency and flexibility -- namely, more modern and flexible pay systems operating under an OPM-established framework that provides some controls, but also offers considerable agency flexibility in administering individual employee pay.

A critical part of the DHS and DOD authorities is the role provided to OPM to ensure that Governmentwide interests are protected. DHS and OPM have proposed a flexible system for DHS employees that allows rate ranges to be set strategically for specific occupational categories as necessary to meet labor market requirements and agency needs, subject to coordination with OPM. Under proposed rules issued jointly by DHS and OPM (69 FR 8030, February 20, 2004), DHS would have considerable flexibility to determine individual pay adjustments and pay administration rules. While the proposed pay system applies to all GS employees employed by DHS, it offers flexibilities that would allow DHS to address the pay problems faced by specific categories of law enforcement employees in a targeted manner. However, the system also provides for OPM involvement and coordination in those elements that may impact other agencies.

Another advantage of a system like the one proposed for DHS is the ability to establish broad band or pay ranges, which would (1) allow fewer work level distinctions, (2) simplify job evaluation, and (3) provide the opportunity to place greater emphasis on pay progression based on individual performance (instead of on duties and longevity). We note that the merit system principle that equal pay should be provided for work of equal value (5 U.S.C. 2301(b)(3)) includes the concept that employees should be recognized for excellence in performance (i.e., individual equity).

Accordingly, we recommend that Congress enact legislation giving OPM authority to establish a basic pay framework for Federal law enforcement employees throughout the Government, including the legislative and judicial branches (since their law enforcement personnel are covered by CSRS and FERS), in consultation with employing agencies and with the concurrence of the Attorney General. The legislation should provide OPM the authority to play a central coordinating role in working with agencies to devise a system with a basic level of consistency in terms of pay levels and key governing principles, while allowing for flexibility in evaluating and rewarding employee performance–areas where agency flexibility is most important. Finally, because the new law enforcement pay framework would not be based on rigid statutory rules, it would be easier to modify over time to address problems that surface or to keep pace with changes in mission and/or human resources practices.

We recommend a more strategic, mission-centered approach to setting pay for Federal law enforcement employees–an approach that will allow the Government to prioritize needs and problems based on mission demands and to establish policies and allocate resources consistent with those priorities. We will be better able to provide targeted and tailored solutions rather than across-the-board approaches that apply resources in a wasteful manner or create new problems. We will have the ability to more quickly respond to new conditions and circumstances. Through coordination with employing agencies and with the concurrence of the Attorney General, OPM will be able to ensure that both agency interests and Governmentwide interests are considered and balanced in designing and adjusting the framework.

¹⁵See April 2002 OPM informational discussion paper entitled "A Fresh Start for Federal Pay: The Case for Modernization." The views expressed in this paper are those of OPM and not necessarily of any other individuals or organizations. [Back]

¹⁶Most Federal law enforcement personnel are covered by occupational series in the GS-1800 job family. Within the limits of the statutory grade level definitions codified in chapter 51 of title 5, United States Code, OPM is also in the process of modernizing the occupational structure and classification standards for these series based on many of the findings outlined in this report. [Back]

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