Pay for Performance Fund Idea Not a New One

The Trump administration’s proposal to create a $1 billion central fund for recognizing top performing federal employees would in large part revive similar effort of the Bush administration.

In 2003, the Bush White House proposed a “human capital performance fund” of $500 million, making the same argument that the Trump administration is now using: that the current system rewards employees for longevity more than it does for performance. It also similarly characterized the proposed fund as a down payment toward a comprehensive reform of pay.

At the time, federal unions raised the same concerns that they already have raised regarding the Trump proposal: that the performance ratings system is inconsistent, unreliable and vulnerable to favoritism and other forms of abuse. Some members of Congress at the time echoed those concerns but the key committees overseeing the federal workforce—then as now both headed by Republicans—backed the idea.

Congress eventually included language in a DoD spending bill authorizing the fund. Under its terms: each agency would receive a share based on their percentage of the overall federal payroll and would have had to craft plans, subject to OPM approval, on how they would use the money; agencies could make payouts to up to 15 percent of their employees of up to 10 percent of salary; and payouts would be raises, not bonuses, and thus would count for purposes including retirement calculations.

However, action by appropriators was needed to actually create it. They in turn allotted only enough to get the program on the books. It never has been repealed, although it also never has been funded enough to actually make payouts.