The House Oversight and Government Reform Committee has set a hearing for tomorrow on federal employee pay and benefits, potentially the first firm step in a widely expected bid to revise key pocketbook policies that many Republicans and conservative organizations long have favored.

One focus will be a recent CBO report finding that on average federal employees are slightly ahead in pay, and well ahead in terms of benefits, compared with private sector employees of similar education levels. However, that report also showed that those differences vary greatly by educational level, with federal workers having the lowest levels the farthest ahead by both measures, while the most-educated employees are slightly behind in benefits and well behind in salary–again, on average.

Another point of focus, according to the panel, will be that “the retirement benefits available to most federal employees are an important factor contributing to the compensation differences.” The CBO report said that much of the advantage on the benefits side was due to the existence of the defined benefit aspects of CSRS and FERS retirement, a type of benefit increasingly scarce in the private sector. Fiscal conservatives have been stressing that difference for years and could use the report and hearing as an opportunity to argue for giving future employees only the TSP, perhaps sweetened with a higher employer contribution than FERS employees currently get, as a retirement benefit.

Federal employee organizations and Democrats generally counter that if there is a problem with the disparity, it is that private employers are too stingy, not that the federal system is too generous.

There similarly is much debate over comparisons of pay, with the CBO figure contradicting the official Federal Salary Council figure that federal employees on average are underpaid by more than 30 percent. The two comparisons were performed in very different ways, however–as were other studies that concluded that federal employees are substantially overpaid on average–and those who favor one method or another have not budged from their positions over many years.

The committee also said it will focus on “potential areas for improvement and modernization in the current federal compensation system.” Fiscal conservatives also commonly argue that the pay systems, particularly the GS and wage grade systems, are outmoded and that they do not provide enough rewards to incentivize good performance nor penalize poor performance. They generally favor pay for performance based systems in which employees are paid within broader pay ranges, with more discretion for management in setting salaries.

The same unions and Democrats, though, argue that the present systems have both carrot and stick flexibilities and say the fault lies with agency management for not using them. They also argue that pay for performance systems in the government have proven to be vulnerable to favoritism, discrimination, and other violations of merit principles.

Scheduled to testify are witnesses from CBO, the GAO and two conservative think tanks; no employee organizations are on the list but they typically issue position papers of their own in such situations.