OPM: running out of funds is not an acceptable justification for showing a lack of pay differentiation.

OPM has issued guidance aimed at clarifying the standards used in determining the annual salary and total compensation caps for an agency’s SES members and senior level (SL) and senior scientific and professional (ST) employees.

The maximum pay rate at those levels is either the rate for Level III (currently $176,900) or the rate for Level II ($193,300) of the Executive Schedule; the higher applies when the agency’s executive performance appraisal system has been certified by OPM and OMB as making “meaningful distinctions based on relative performance.” Similarly, the total compensation cap (salary plus add-ons such as bonuses or other incentives) is $246,900 for agencies with such certification but $213,600 for those without. Most agencies have that certification.


The memo stresses that agencies “are expected to demonstrate pay differentiation across 100 percent of the applicable system’s population” and meet certain standards regardless of which of method they use to measure differentiation. “Agencies must demonstrate pay differentiation as described in this guidance utilizing their available budgets. In other words, running out of funds is not an acceptable justification for showing a lack of pay differentiation,” it says.

The memo also notes that under guidance issued in July, agencies may grant contribution-based awards for contributions outside of normal job responsibilities—such as for a special project or task. “Contribution-based awards are reviewed, annually; however, they are not considered as part of pay differentiation,” it says.

The most recent report on SES performance appraisals, issued early last year and covering fiscal 2016, showed that 51.7 of SES members were rated as outstanding, the top of their five-level system; 40.7 percent as exceeds fully successful, level 4; 7.2 percent as fully successful, level 3. They received performance awards averaging 8.6, 5.5 and 1.3 percent of salary, respectively. Just 0.4 percent were rated as minimally satisfactory or unsatisfactory, levels 2 and 1; they are ineligible for performance awards.

OPM does not produce similar reports on SL and ST ratings patterns and performance awards.