As the tables and charts I have included with FMA's written testimony indicate, the President's proposed pay reduction would have a serious impact on the income of the average Federal worker and on Federal managers. In 1993, the average Federal worker earned about $38,000 per year. Under the assumptions contained in the President's fiscal year 1995 budget, the average worker could expect to lose almost $17,000 in pay over the next five years. Federal supervisors and managers in grades GS-9 Step 1 through GS-15 step 10 could expect to lose between $12,400 and $38,700 over the next five years if the President's budget assumptions are adopted. On page 166 of the "Budget of the United States Government" the Administration states: "the Administration plans to consult with employee organizations and other interested parties on the best approach to distributing pay increases; i.e., a national pay raise, locality pay, or some combination of the two."

This statement is a reflection of the much-improved relations between the Administration and employee groups. We thank you, Madam Chairwoman, for your role in encouraging the Administration to work more closely with FMA. In a recent meeting, FMA National President Michael Styles commended the Vice President for his exceptional efforts to reach out to FMA and other management groups and include us in the decision-making process.

With respect to the 1995 pay question, FMA supports the payment of both the national and locality pay adjustments called for by FEPCA. As many will recall, FEPCA was enacted in response to a crisis in Federal pay which developed as a result of consistent use of presidential authority to set alternative and lower pay adjustments. The 1993 Annual Report of the President's Pay Agent found Federal white collar pay trailing comparable non-Federal pay by a minimum of 21.2 percent and by as much as 37.4 percent. Before locality pay began this year, Federal workers had been waiting since 1978 for their government to honor its commitment to provide comparable pay for comparable_work. Finally, FEPCA moved in the right direction toward addressing inadequate Federal pay.

Now is not the time to derail the long-awaited process of closing the gap between Federal and non-Federal pay. We are in the process of reducing the size of the Federal workforce by 252,000 positions. To borrow a phrase from David Osborne's book "Reinventing Government," we are moving from a government that steers more and rows less. Reducing Federal pay is inconsistent with the goal of producing a smaller, more highly skilled and efficient government. In order to attract and retain the individuals who will lead this Nation in the next century, the government must offer competitive salaries.

The proposal put forth by AFGE, NTEU, and NFFE, to cut contracting out by 3 percent to fund national and locality pay adjustments next year is good idea. I understand it may already be too late to make this trade-off for 1995. However, the Administration has made its intentions very clear on the issue of future pay adjustments for Federal workers. I urge the Subcommittee to explore the option of reducing contracting-out as a long term solution to keeping locality pay on track. FMA would be willing to work with the Subcommittee on looking into this option.

I would like to thank you, Madam Chairwoman for all that you and the Subcommittee have done to keep locality pay on track. I recognize and appreciate the constraints under which you must operate. If we are forced to live with the cuts contained in the proposed fiscal year 1995 budget, then FMA strongly supports keeping locality pay on track. In supporting locality pay, however, FMA believes that some provision must be made to insure that workers in New York, Los Angeles and San Francisco receive a pay adjustment in 1995. As you know, workers in these areas are not getting a pay raise this year because the 2.2 percent national pay adjustment was eliminated and their locality pay adjustments do not exceed the 8 percent interim geographic adjustments extended to them shortly after the enactment of FEPCA. Clearly, the 1990 pay reform law did not intend for workers in these high cost areas to go without a pay raise in 1994. FMA would not support a scenario which would require workers in New York, Los Angeles, and San Francisco to go another year with out a pay raise.

Included with our written testimony are letters from FMA chapter presidents in areas currently receiving interim geographic adjustments detailing the effects of this year's setback in closing the Federal pay gap on the workers they manage.

Our second concern relates to how the President's fiscal year 1995 Budget plan deals with the extension of buy-out authority to non-DOD civilian personnel. I would like to briefly state that FMA strongly supports the House-passed passed version of H.R. 3345 and comments the subcommittee, the full committee and the Administration for their hard effort in pushing for a government-wide buy-out program. FMA continues to urge members of the other body to recede to the House position on H.R. 3345 and allow meaningful buy-out authority to be extended immediately so that agencies may avoid RIFs this year.

Madam Chairwoman, this concludes my prepared remarks. At this time I would be happy to answer any questions you may have.

Effects of fiscal year 1995 budget proposals on Federal employee pay: