The data that we are reporting today provide a demographic snapshot of the career SES as well as the levels that serve as the SES developmental pool for October 2000 and September 2007. Table 1 shows the number of career SES as well as those in the developmental pool, including the percentages of women and minorities. For more information on demographic data governmentwide, see appendix I. Table 2 shows a further breakdown of the number of SES members, including the percentages of women and minorities, by Chief Financial Officers (CFO) Act agency. For more information on demographic data by CFO Act agency, see appendix I. As we reported in 2003, the gender, racial, and ethnic profiles of the career SES at the 24 CFO Act agencies varied significantly in October 2000. The representation of women ranged from 13.7 percent to 41.7 percent, with half of the agencies having 27 percent or fewer women. For minority representation, rates varied even more and ranged from 3.1 percent to 35.6 percent, with half of the agencies having less than 15 percent minorities in the SES. In 2007, the representation of women and minorities, both overall and for most individual agencies, was higher than it was in October 2000. The representation of women ranged from 19.9 percent to 45.5, percent with more than half of the agencies having 30 percent or more women. For minority representation, rates ranged from 6.1 percent to 43.8 percent, with more than half of the agencies having over 16 percent minority representation, and more than 90 percent of the agencies having more than 13 percent minority representation in the SES. For this testimony, we did not analyze the factors that contributed to the changes from October 2000 through September 2007 in representation. OPM and the Equal Employment Opportunity Commission (EEOC), in their oversight roles, require federal agencies to analyze their workforces, and both agencies also report on governmentwide representation levels. Under OPM’s regulations implementing the Federal Equal Opportunity Recruitment Program (FEORP), agencies are required to determine where representation levels for covered groups are lower than the civilian labor force and take steps to address those differences. Agencies are also required to submit annual FEORP reports to OPM in the form prescribed by OPM. EEOC’s Management Directive 715 (MD-715) provides guidance and standards to federal agencies for establishing and maintaining effective equal employment opportunity programs, including a framework for executive branch agencies to help ensure effective management, accountability, and self-analysis to determine whether barriers to equal employment opportunity exist and to identify and develop strategies to mitigate or eliminate the barriers to participation. Specifically EEOC’s MD-715 states that agency personnel programs and policies should be evaluated regularly to ascertain whether such programs have any barriers that tend to limit or restrict equitable opportunities for open competition in the workplace. The initial step is for agencies to analyze their workforce data with designated benchmarks, including the civilian labor force. If analysis of their workforce profiles identifies potential barriers, agencies are to examine all related policies, procedures, and practices to determine whether an actual barrier exists. EEOC requires agencies to report the results of their analyses annually. In our 2003 report, we (1) reviewed actual appointment trends from fiscal years 1995 to 2000 and actual separation experience from fiscal years 1996 to 2000; (2) estimated by race, ethnicity, and gender the number of career SES who would leave government service from October 2000 through October 2007; and (3) projected what the profile of the SES would be if appointment and separation trends did not change. We estimated that more than half of the career SES members employed in October 2000 will have left service by October 2007. Assuming then-current career SES appointment trends, we projected that (1) the only significant changes in diversity would be an increase in the number of white women with an essentially equal decrease in white men and (2) the proportions of minority women and men would remain virtually unchanged in the SES corps, although we projected slight increases among most racial and ethnic minorities. Table 3 shows SES representation as of October 2000, our 2003 projections of what representation would be at the end of fiscal year 2007, and actual fiscal year 2007 data. We projected increases in representation among both minorities and women. Fiscal year 2007 data show that increases did take place among those groups and that those increases generally exceed the increases we projected. The only decrease among minorities occurred in African American men, whose representation declined from 5.5 percent in 2000 to 5.0 percent at the end of fiscal year 2007. For more information on our projections, see appendix II. Table 4 shows developmental pool representation as of October 2000, our 2003 projections of what representation would be at the end of fiscal year 2007, and actual fiscal year 2007 data. We projected increases in representation among both minorities and women. Fiscal year 2007 data show that increases did generally take place among those groups. For more information on our projections, see appendix II. As stated earlier, we have not analyzed the factors contributing to changes in representation; therefore care must be taken when comparing changes in demographic data since fiscal year 2000 to the projections we made in 2003, as we do in tables 3 and 4. For example, we have not determined whether estimated retirement trends materialized or appointment and separation trends used in our projections continued and the impact these factors may have had on the diversity of the SES and its developmental pool. Considering retirement eligibility and actual retirement rates of the SES is important because individuals normally do not enter the SES until well into their careers; thus SES retirement eligibility is much higher than for the workforce in general. As we have said before, as part of a strategic human capital planning approach, agencies need to develop long-term strategies for acquiring, developing, motivating, and retaining staff. An agency’s human capital plan should address the demographic trends that the agency faces with its workforce, especially retirements. In 2006, OPM reported that approximately 60 percent of the executive branch’s 1.6 million white-collar employees and 90 percent of about 6,000 federal executives will be eligible for retirement over the next 10 years. If a significant number of SES members were to retire, it could result in a loss of leadership continuity, institutional knowledge, and expertise among the SES corps, with the degree of loss varying among agencies and occupations. This has important implications for government management and emphasizes the need for good succession planning for this leadership group. Rather than simply recreating the existing organization, effective succession planning and management, linked to the strategic human capital plan, can help an organization become what it needs to be. Leading organizations go beyond a “replacement” approach that focuses on identifying particular individuals as possible successors for specific top- ranking positions. Rather, they typically engage in broad, integrated succession planning and management efforts that focus on strengthening both current and future capacity, anticipating the need for leaders and other key employees with the necessary competencies to successfully meet the complex challenges of the 21st century. Succession planning also is tied to the federal government’s opportunity to affect the diversity of the executive corps through new appointments. In September 2003, we reported that agencies in other countries use succession planning and management to achieve a more diverse workforce, maintain their leadership capacity, and increase the retention of high-potential staff. Racial, ethnic, and gender diversity in the SES is an important component for the effective operation of the government. As we have testified before the House Subcommittee on Federal Workforce, Postal Service, and the District of Columbia, Committee on Oversight and Government Reform, the Postal Service expects nearly half of its executives to retire within the next 5 years, which has important implications and underscores the need for effective succession planning. This presents the Postal Service with substantial challenges for ensuring an able cadre of postal executives and also presents opportunities for the Postal Service to affect the composition of the PCES. Table 5 updates information we provided last year for the PCES and EAS levels 22 and above, from September 1999 to September 2007, showing increases in the representation of women and minorities. Since last year’s testimony, we have studied the pools of potential successors that the Postal Service can draw from in selecting PCES promotions. The Service’s policy encourages selecting employees from the CSP program when it promotes employees to the PCES. The current CSP program—which first accepted participants in 2004—is intended to identify pools of potential successors for PCES positions and develop these employees so that they can promptly and successfully assume PCES positions as these positions become available. Nearly 87 percent of postal employees promoted to the PCES in fiscal years 2004 through 2007 were participating in the CSP program, and nearly 7 in 10 promotions were drawn from CSP program participants in EAS levels 25 and above. Table 6 shows increases in the representation of women and minorities in the CSP program from September 2004 to September 2007 among program participants at EAS level 25 and above. We also have not analyzed factors that contributed to changes in the representation levels in the PCES, EAS, or CSP program. The Postal Service, like executive branch agencies, has responsibility for analyzing its workforce to determine (1) where representation levels for covered groups are lower than the civilian labor force and take steps to address those differences and (2) whether barriers to equal employment opportunity exist and to identify and develop strategies to mitigate or eliminate the barriers to participation. The Postal Accountability and Enhancement Act, enacted in 2006, expressed Congress’s interest in diversity in the Postal Service. It required the Postal Service Board of Governors to report on the representation of women and minorities in supervisory and management positions, which is a different focus from this statement on the PCES, EAS, and CSP program. This Board of Governors’ report provided trend data for supervisory and management positions for fiscal years 2004 through 2007, as well as for the career workforce as a whole.