Federal Pay Systems

The Constitution of the United States assigns fiscal control to the Congress. This control is exercised through appropriation acts and, in the case of Federal salaries, by enacting laws, policies, principles, and procedures to establish pay rates for Federal employees. Federal employees are covered by a number of different pay systems, some established by individual laws, some by administrative determination.

Statutory Pay Systems

The three statutory pay systems for Federal white collar employees are the General Schedule, the Foreign Service, and certain employees in the Veterans Health Administration in the Department of Veterans Affairs. Salaries under these systems are established by subchapter I of chapter 53 of Title 5, United States Code.

According to subchapter III of chapter 53 of Title 5, United States Code, the General Schedule pay system covers, with specific exemptions, most "white collar" positions in the executive branch and certain legislative branch agencies. The General Schedule consists of 15 grades, each broadly defined in law in terms of work difficulty, responsibility, and the qualifications required for performance. A salary range of 10 steps is provided for each grade. Within grade advancement is scheduled after each 52 weeks of service in the first three steps in a grade, after 104 weeks in steps 4, 5, and 6, and after 156 weeks in steps 7, 8, and 9. To qualify for advancement to the next higher step, an employee must demonstrate work at an acceptable level of competence. Employees demonstrating "high quality performance" may advance more rapidly through the rate range for their grades by being granted additional step increases, called "quality step increases (QSI)." An employee may receive only one QSI during any 52 week period.

Foreign Service pay plans and salary schedules for Officers (pay plan FO) and Personnel (FP) were established under the Foreign Service Act of 1980. Other Foreign Service pay plans which are linked to Federal pay schedules are Ambassadors (FA), linked to the Executive Schedule, and Senior Foreign Service (FE), linked to the Senior Executive Service.

The Veterans Health Administration in the Department of Veterans Affairs provides unique pay plans for their physicians and dentists (VM), and podiatrists and optometrists (VP).

Other Major Pay Systems

The Wage System category presented in this report covers employees in pay plans covered only by the Federal Wage System (FWS). The FWS covers trade, craft, and labor occupations ("blue-collar occupations") in the Federal Government. Subchapter IV, chapter 53 of Title 5, United States Code, defines how pay is determined for these employees. Employees in other blue collar pay plans are placed in the Other Acts and Administratively Determined category.

The Executive Schedule was established by Congress to cover top officials in the executive branch. As mandated in subchapter II of chapter 53 of Title 5, United States Code, this schedule has five levels, each with a single rate. In 1989, the Ethics Reform Act linked Executive Schedule increases to increases in the Employment Cost Index (ECI).

Congress authorizes agency heads to set salaries for those in Administratively Determined pay systems. These salaries may apply to the entire agency or to particular groups of positions without regard to the General Schedule. Some agencies under this pay system establish their own schedules of rates (the AD pay plan is an example of this); others use the generic General Schedule grade and step structure (pay plan GG is an example of this). Separate provisions are also made for stipend payments to certain student employees training in Government hospitals, clinics, or laboratories and for payments to member residents who work at Federal institutions, such as the Armed Forces Retirement Home. Nurses employed by the Department of Veterans Affairs' Veterans Health Administration also have a unique, locality- based pay plan (VN).

The Senior Executive Service (SES) covers most managerial, supervisory, and policy positions in the executive branch which are classified above GS 15 and do not require Senate confirmation. There are currently six salary levels in the SES. They are set by the President at the same time as the annual increases are authorized for the General Schedule.

The Performance Management and Recognition System ("Merit Pay") was abolished under Public Law 103 89, (The Performance Management and Recognition System Termination Act of 1993). The Termination Act called for a gradual transition from the GM to the GS pay plan. For this survey, GM employees are included in the General Schedule pay category.

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