How Performance Fund Would Work

The proposed pay-for-performance fund-formally, the Human Capital Performance Fund-would give raises over and above any annual, across-the-board pay raise for federal employees based on “individual or organizational performance and/or other critical agency human capital needs,” according to the budget. Ninety percent of the available money would be distributed to agencies on a pro rata basis according to the size of their workforces, upon the Office of Personnel Management’s approval of the agency’s plan for awarding the performance pay. OPM would have discretion over the remaining 10 percent plus any money withheld from employing agencies because their performance pay plans failed to pass its muster.