RS21689 -- Federal Pay - Status of January 2004 Adjustments: A Fact Sheet Updated January 24, 2004 Under 5 U.S.C. 5303, General Schedule basic salaries, and those of other related statutory systems, are to be adjusted the first pay periodbeginning on or after January 1 of each year (January 11, 2004). The adjustments are determined by the change inthe private sector element of the EmploymentCost Index (ECI) from September to September. The percentage of change, minus 0.5%, becomes the scheduledrate of adjustment. For January 2004, the rateof adjustment was scheduled at 2.7%. Locality-based payments are determined separately, based on wage surveydata from 32 geographicareas. Under 5 U.S.C. 5303 and 5 U.S.C. 5304, President George W. Bush sent forward an alternative plan in August 2003 that called for a 1.5%increase in General Schedule, and related systems, basic pay and an average of 0.5% in locality-based payments forJanuary 2004. Barring any action by Congress to establish a different rate or effective date, the President's alternative plan willgovern. Both the House and Senate voted to establish a 4.1% pay adjustment, effective January 2004. (2) With passage of the 4.1%, the basic pay adjustment will be the scheduled ECI adjustment of 2.7% and the locality pay adjustment willaverage 1.4%. For the Washington, DC, area, the net adjustment will be 4.41%. Under Section 704, P.L. 101-194 , the Ethics Reform Act of 1989, salaries of Members and officers of Congress, federal judges, andexecutive branch officials on the Executive Schedule (collectively referred to herein as "officials") are to be adjustedannually based on December-to-Decemberpercentage changes in the private sector element of the ECI, effective in the same month as the GSadjustments. The scheduled January 2004 pay adjustment, based on the ECI, is 2.2%. Section 704, as amended, stipulates that officials' pay adjustments cannot exceed the rate of adjustment for GS basicpay. P.L. 108-167 , as required under Section 140, P.L. 97-92 , permits the judges to receive the annual adjustment. GS pay adjustment in January 2004, pending presidential approval of the FY2004 Consolidated Appropriations Act, is limited to 1.5% forbasic pay and an average of 0.5% for locality. The net adjustment for the Washington, DC, area has been 2.12%(Executive Order 13322, 69 Federal Register 231). The pay adjustment for officials has been limited to 1.5%. Upon approval of the Consolidated Appropriations Act, 2004, GS pay will be adjusted to a total of 4.1%, retroactive to the first pay periodbeginning on or after January 1, 2004, with the rate of 2.7% for basic pay. Salaries of officials will increase to the2.2% rate,retroactively.

Summary: Federal pay adjustment rates going into effect in January 2004, under Executive Order13322 (69 Federal Register231) were less than those in the pending Consolidated Appropriations Act, 2004 (H.R. 2673). The GeneralSchedule (GS) and related salarysystems were limited to 2.0%, as opposed to the 4.1% subsequently passed. Salaries of officials in the threebranches were temporarily limited, due to the lowerGS rate, to 1.5%, rather than the scheduled 2.2%, which upon Presidential approval of H.R. 2673, will go into effectretroactively.