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Federal Law Enforcement Pay and Benefits ______ FEDERAL LAW ENFORCEMENT PAY AND BENEFITS ______ REPORT TO THE CONGRESS Working for America UNITED STATES OFFICE OF PERSONNEL MANAGEMENT Kay Coles James, Director July 2004 A MESSAGE FROM THE DIRECTOR OF THE OFFICE OF PERSONNEL MANAGEMENT I am pleased to present the Office of Personnel Management’s (OPM’s) report to Congress on law enforcement classification, pay, and benefits. This report responds to section 2(b) of the Federal Law Enforcement Pay and Benefits Parity Act of 2003, Public Law 108-196, which calls for OPM to submit a report to Congress providing a comparison of classification, pay, and benefits among Federal law enforcement personnel throughout the Government and to make recommendations to correct any unwarranted differences. The issues we address in this report are critical in light of the many dramatic challenges that face the Federal law enforcement community in the wake of the terrorist attacks of September 11, 2001, and the Oklahoma City bombing of April 19, 1995, as well as our Nation’s ongoing all-out war on terrorism. The specter of those horrific events and ongoing need to secure our homeland demand we pay careful attention to the strategic management of our Federal law enforcement personnel. The report provides relevant background information on the current state of affairs in Federal law enforcement pay and benefits and an analysis of the key factors that must be considered in making policy judgments about three critical areas: (1) retirement benefits, (2) classification and basic pay, and (3) premium pay. At present, considerable and sometimes confusing differences exist among law enforcement personnel in those three areas. We believe these differences, often the result of incremental legislation and litigation, are counterproductive to the 21st Century Federal law enforcement mission. In particular, disparities between agencies that have pay flexibilities and those that do not can harm morale, create staffing disruptions, and increase costs unnecessarily. We recommend that Congress provide OPM with broad authority to establish a Governmentwide framework for law enforcement retirement, classification and basic pay, and premium pay systems. This framework would be established in consultation with employing agencies and with the concurrence of the Attorney General and would be tailored specifically for law enforcement jobs and their mission requirements. It would provide the flexibility to make strategic decisions that support mission accomplishment in a cost effective manner. Both agency interests and Governmentwide interests would be considered and balanced. The issues surrounding this topic are extremely difficult and complex. Few topics are as emotional and important to a workforce as pay and benefits, and any time you tackle something this big it is going to be challenging. On behalf of the Administration, OPM stands ready to work with Congress to enact legislation that will modernize the Federal law enforcement retirement and compensation systems. Kay Coles James Director Executive Summary This report responds to section 2(b) of the Federal Law Enforcement Pay and Benefits Parity Act of 2003, Public Law 108-196 (December 19, 2003), which calls for OPM to submit a report to Congress providing a comparison of classification, pay and benefits among Federal law enforcement officers throughout the Government and making recommendations to correct any unwarranted differences. This report comes at a pivotal time when the demands on Federal law enforcement agencies and their personnel are global, changing, and increasing; however, the systems of pay and benefits do not reflect this reality and remain fragmented and inflexible. LEOs today are covered by a rigid retirement structure rooted in the 1940s, an archaic classification and basic pay system that is market- and performance-insensitive, and a complex and confusing system of premium payments. The report focuses on these critical areas: retirement benefits (Part II), classification and basic pay (Part III), and premium pay (Part IV). In addition, we concentrate our analysis on two categories of employees with law enforcement responsibilities: (1) those employees who qualify as law enforcement officers (LEOs) under the Civil Service Retirement System (CSRS) and the Federal Employees’ Retirement System (FERS) laws and regulations and (2) those other law enforcement employees who have authority to make arrests under Federal law (or an equivalent authority to detain persons under military law) but who do not otherwise qualify as LEOs. In this report, we make a case for a comprehensive, integrated Governmentwide approach for addressing the above three areas. We recommend a framework established and administered by OPM in consultation with employing agencies and with the concurrence of the Attorney General. Such a framework will permit agencies to tailor systems to meet their diverse mission requirements. All agencies would have the flexibility to make strategic decisions that support mission accomplishment in a cost-effective manner. Both agency interests and Governmentwide interests would be considered and balanced. The Attorney General’s concurrence will ensure that law enforcement personnel Governmentwide are deployed in the most efficient and effective manner. Retirement Findings • Legislation has extended enhanced retirement benefits to some Federal uniformed police officers within the broader law enforcement community but not others, exacerbating differences in retirement coverage of similarly situated police officers. • Merit Systems Protection Board and Federal court decisions have created unwarranted differences in LEO retirement coverage and administrative problems for employing agencies. • LEO retirement provisions encourage experienced LEOs to retire at an early age, when it may be in the interest of the Government to retain these employees. In fact, a significant percentage of retired LEOs do return to work in Federal LEO positions. i • The mission of Federal law enforcement has expanded over the years, especially since the terrorist attacks of 9/11. Federal law enforcement, inspection, and police forces currently include highly-trained, specialized units. Further, the merger of legacy customs inspection, immigration inspection, and border protection positions into a unified customs and border protection position at the Department of Homeland Security shows that law enforcement missions are continuing to expand in the post-9/11 world. This evolution in law enforcement has exacerbated the difficulty of applying the definition of “law enforcement officer” to modern missions and work situations. Classification and Basic Pay Findings • The 50+-year old General Schedule (GS) classification and basic pay system does not provide sufficient flexibility to address law enforcement-specific classification and pay problems which may vary by occupation, grade level, location, and level of performance. • Differences in pay flexibilities 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. • Pending legislative proposals (i.e., H.R. 466, H.R. 1676, and S. 985) provide across-the- board approaches to problems that require far more targeted solutions; those approaches are unnecessarily costly and produce unintended negative consequences. Premium Pay Findings • While most Federal law enforcement employees are covered by the standard premium pay provisions established in title 5 of the United States Code, some LEOs and other law enforcement personnel are covered by nonstandard premium pay provisions that result in perceptions of inequity. • Caps on aggregate premium pay for FLSA-exempt employees serve important purposes but also lead to pay compression. However, pending legislative proposals to bar their application to availability pay for criminal investigators would result in excessive pay increases for affected employees, produce pay inversions, and create new inequities by providing special treatment for one category of employees. • Codifying premium pay rules in law precludes rapid response to changing agency mission requirements. In recent years, Congress has provided such administrative authority to the Federal Aviation Administration, the Transportation Security Administration, and (with OPM) the Department of Defense. Such administrative authority provides a distinct advantage in flexibility. ii Recommendation We recommend that Congress provide OPM with broad authority to establish a Governmentwide framework for law enforcement retirement, classification and basic pay, and premium pay systems, in consultation with employing agencies and with the concurrence of the Attorney General. This framework would be tailored specifically for law enforcement jobs. It would provide the flexibility to make strategic decisions that support mission accomplishment in a cost-effective manner. Both agency interests and Governmentwide interests would be considered and balanced. Such a framework would provide all agencies with similar flexibilities that could potentially avoid morale problems, staffing disruptions, or unnecessary cost increases. We believe the existence of such a framework also
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