Fedweek

A raise of 4.6 percent presumably would be split into an across the board component and a locality component. Image: Andy Dean Photography/Shutterstock.com

UPDATED: The House has effectively endorsed a 4.6 percent federal employee pay raise in January, following its approval last week of a separate bill providing for an additional 2.4 percent of salary “inflation bonus pay” for DoD employees with basic pay rates of $45,000 or less.

The House on Wednesday passed HR-8294 containing the annual general government appropriations bill, which takes no position on a raise. If Congress were to remain silent on a raise through the year—a common practice of recent years—President Biden would set a raise by default. In almost all cases in that situation Presidents have kept to their original figure—in this case the 4.6 percent Biden recommended in his budget proposal.

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Senate leaders have indicated that they will produce their own appropriations bills as soon as next week but voting likely won’t occur until after the August congressional recess. Final action is not expected until after the elections since Congress will again be in recess starting in late September.

A raise of 4.6 percent presumably would be split into an across the board component and a locality component that would vary by area. That typically is not specified until an annual late-August letter to Congress from the White House stating its intent regarding the raise if no specific figure is enacted by year-end.

Meanwhile, in passing its version of the DoD authorization bill (HR-7900) the House kept the inflation add-on despite opposition from the Biden administration. The only action on the provision during House floor voting was adoption by voice vote of an amendment giving the Pentagon discretion to increase the amount, which would similarly apply to military personnel at that pay level.

The bonus pay would apply to DoD employees with salaries below that cutoff regardless of pay system, and it would be paid proportionately by pay period—not as a one-time lump sum—starting with the first full pay period of 2023. That would continue through year’s end for eligible employees under the GS and other white-collar pay systems but cut off on that September 30 for wage grade employees because their pay technically is set on a fiscal year basis.

The language further specifies that the money “shall not be considered to be basic pay of an employee for any purpose.” That would mean, for example, that it would not count toward a “high-3” for future retirement benefits calculations, nor for purposes such as FEGLI life insurance or for agency contributions into a TSP account for a FERS employee.

The House still has provided no explanation for why the amount was set at 2.4 percent nor why the threshold was set at $45,000.

The next step will be for the Senate to consider its own version of the bill, which contains no inflation bonus pay provision. Final acceptance of the provision remains uncertain because by applying only to DoD employees, it would create pay disparities between those employees and those of other agencies in the same pay grade and location. An OPM online database shows nearly 330,000 federal employees with basic pay below $50,000, of whom 90,000 work at DoD.

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In a policy statement released just before the House vote, OMB said “The administration strongly opposes the limited inflation bonus that would apply only to Department of Defense civilian employees for calendar year 2023. This provision would create significant pay inequities among federal civilian employees and creates other problems, including for the calendar year 2024 pay adjustment, as currently drafted. The administration urges the Congress to support the robust government-wide civilian pay increase of 4.6 percent included in the FY 2023 budget request.”

Both versions of the bill provide a 4.6 percent raise for military personnel and assume that DoD civilians will receive the same base amount. However, the assumption regarding civilians is not binding because federal employee raises are set through the separate appropriations process.

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See also,

House Republicans Revive Retirement Benefit-Cutting Proposals

Installments vs. Annuity: Using Your TSP for Regular Income

Retiring from a Federal Job – Getting Started

Retiring from a Federal Job: Make Sure Your Agency Gets it Right

Nine Hours on Hold: Pressure Builds on TSP to Improve Customer Service

2022 Federal Employees Handbook