CPM 2002-14

December 2, 2002

MEMORANDUM FOR HUMAN RESOURCES DIRECTORS (CPM 2002-14)

FROM:	DONALD J. WINSTEAD Acting Director Workforce Compensation and Performance Service
SUBJECT:	January 2003 Pay Adjustments

Under the authority of 5 U.S.C. 5304a, the President has transmitted to Congress an alternative plan for locality payments payable to General Schedule (GS) employees in January 2003. (See HTML or PDF version of Attachment 1.) The President's alternative plan holds locality rates at the percentages of basic pay currently authorized. Under the alternative plan, most GS employees can expect to receive a pay increase of 3.1 percent in January 2003.

2003 Salary Tables and Effective Date

We have posted the draft salary tables discussed in this memorandum on the Office of Personnel Management's (OPM's) Web site at http://www.opm.gov/oca/payrates/index.asp. The rates of pay shown in these draft salary tables will not become official until the President issues an Executive order later this year to implement the GS pay adjustment, which will become effective on the first day of the first pay period beginning on or after January 1, 2003. Until the President issues his Executive order, agencies may use the draft salary tables for payroll planning purposes.

The General Schedule and Other Statutory Pay Systems

Section 5303 of title 5, United States Code, provides that the rates of basic pay for the statutory pay systems-the General Schedule, the Foreign Service schedule, and certain schedules for the Veterans Health Administration of the Department of Veterans Affairs-are to be adjusted effective on the first day of the first applicable pay period beginning on or after January 1 of each calendar year by a percentage based on the 12-month increase in the Employment Cost Index (ECI) (minus 0.5 percentage point) unless the President transmits a plan for alternative pay adjustments to Congress before September 1 of the preceding year. The President did not transmit an alternative plan for the ECI-based adjustment this year. Therefore, the 2003 across-the-board increase in the scheduled rates of basic pay for the GS and the other statutory pay systems will be 3.1 percent.

Locality Payments

On November 27, 2002, the President signed an alternative plan for GS locality pay adjustments in January 2003. In his alternative plan, the President determined that the locality pay percentages authorized for 2002 will remain in effect in 2003.

The locality pay areas for 2003 also are unchanged from 2002. There are 32 locality pay areas, including the "Rest of U.S." locality pay area. We have posted the definitions of the locality pay areas on OPM's Web site at http://www.opm.gov/oca/payrates/index.asp. Attachment 2 provides a chart showing an example of how the 2003 locality rate is computed for an employee in the "Rest of U.S." locality pay area. The chart also shows that the end result of applying the locality pay percentage (which remains unchanged from 2002) to the higher rate of basic pay is a total pay increase of 3.1 percent.

The Executive Schedule

By law (5 U.S.C. 5318), the rates for levels I through V of the Executive Schedule (EX-I through EX-V) will increase by 3.1 percent (rounded to the nearest $100) on January 1, 2003.

Board of Contract Appeals and Senior-Level and Scientific or Professional Positions

Pay rates for certain other employees are linked to the Executive Schedule. The rates of basic pay for Board of Contract Appeals (BCA) members are calculated as a percentage of the rate for level IV of the Executive Schedule. (See 5 U.S.C. 5372a.) Therefore, BCA rates of basic pay will increase by approximately 3.1 percent in January 2003.

The maximum rate of basic pay for senior-level (SL) and scientific or professional (ST) positions will increase by approximately 3.1 percent (to $134,000). The minimum rate of basic pay for SL/ST positions is equal to 120 percent of the minimum rate of basic pay for GS-15 and thus will increase by 3.1 percent (to $102,168) based on the 3.1 percent across-the-board GS basic pay adjustment. Subject to these minimum and maximum rates, pay adjustments for SL/ST employees are determined by the employing agency. (See 5 U.S.C. 5376.)

The Senior Executive Service and Other Non-GS Positions

Basic pay increases for members of the Senior Executive Service (SES) and administrative law judges (ALJs) are determined by the President under separate provisions of law. Basic pay increases for administrative appeals judges (AAJs) are set by reference to the rates established by the President for ALJs. Decisions on pay increases for employees covered by these pay plans will be made later this year. Wages for blue-collar employees covered by the Federal Wage System (FWS) are set under a separate local prevailing rate system. Consequently, the 3.1 percent across-the-board GS pay increase described above does not apply to SES members, ALJs, AAJs, or FWS employees.

2002 Annual Review of Special Salary Rates

The 2002 annual review of special salary rates authorized under 5 U.S.C. 5305 is now underway. We will announce the results of the annual review in a separate memorandum and post the 2003 special salary rates on OPM's Web site as soon as the annual review has been completed.

IGA Continued Rates

Certain employees in the former interim geographic adjustment (IGA) areas are entitled to a "continued rate" under 5 CFR part 531, subpart G. These continued rates were established in January 1994, when our regulations were revised to discontinue the practice of paying IGAs on top of nationwide or worldwide special rates. At the time of the January 2003 general pay increase, an IGA continued rate will be increased by the dollar amount of the increase in the employee's underlying GS rate. (See 5 CFR 531.703.) Since a continued rate is a form of saved pay, it is not affected by other pay actions, such as within-grade increases or promotions.

Law Enforcement Officers

We have prepared separate locality or geographic salary tables for law enforcement officers (LEOs) in each locality pay area. These tables incorporate the statutory worldwide law enforcement special rates for grades GS-3 through GS-10 (Special Rate Table No. 491), which are used as the basis for computing any locality or other geographic payment. While LEOs are entitled to the same locality pay percentages that apply to other GS employees, a special LEO geographic pay adjustment of 16 percent continues to apply to LEOs in the New York and Boston metropolitan areas.

Certain law enforcement officers are entitled to a "continued rate" under 5 CFR 531.307 (established in January 1994 when our regulations were revised to discontinue the practice of paying LEO geographic adjustments on top of nationwide or worldwide special rates). As with IGA continued rates, at the time of the January 2003 across-the-board pay increase, an LEO continued rate will be increased by the dollar amount of the increase in the law enforcement officer's underlying GS rate. (See 5 CFR 531.307(b).)

Questions

For further information, please contact OPM's Office of Compensation Administration by calling (202) 606-2858 or sending an email message to payleave@opm.gov.