August 2007: In late July, SEC management announced for the second consecutive year that its pay for performance budget would be substantially smaller than in the past, this time resulting in an average step increase of only approximately 1.3 steps per employee for the 2007 contribution year. In August, SEC managers informed disappointed employees of their actual merit pay step increases. NTEU will soon file a national merit pay grievance asserting that the SEC relied upon arbitrary and subjective factors in making its 2007 merit pay determinations, and that it improperly forced the distribution of merit step increases to keep them within an artificially restricted budget. In addition, NTEU is commencing efforts to lobby Congress for increased merit pay funding, in an effort to prevent a repeat performance next year.

The SEC’s funding reduction for two consecutive years has had an adverse impact upon the efficacy of the merit pay system. In previous years, the SEC included in its budget a 3% increase over current compensation levels to fund the merit pay process. This amount permitted management to distribute an average of approximately two steps per employee, which at least yielded a spread across the possible merit pay categories. Now, insufficient funding has joined the myriad other problems that have burdened the merit pay system from the start, including the absence of transparency and written performance standards, resulting in a pay for performance system that has drifted further and further away from its goal of motivating and rewarding improved performance by agency employees.

As part of the national grievance process, NTEU will aggressively seek aggregate merit pay distribution information from the SEC, broken down by office, division and type of employee. Providing this type of information to employees was required by the Federal Service Impasses Panel in its October 2006 decision on the SEC’s compensation package, and it also was recommended by the Governmental Accountability Office (GAO) in a recent report on pay for performance systems that was highly critical of the SEC’s merit pay process. In addition, NTEU also will seek information from the SEC on the preliminary recommendations on ratings that supervisors provided to the compensation committees, so that employees will be able to see management’s initial recommendations and the rationale for any changes made by the committees. According to the GAO, the SEC stated that it would provide this information to its employees. “The merit pay system will continue to lack fundamental fairness and transparency as long as distribution and rating information is not provided to SEC employees each year,” noted Chapter 293 President Greg Gilman.

During a recent briefing regarding the 2007 merit pay distributions, NTEU was told by senior SEC officials that the budget provided by Congress for FY 2008 made it impossible for the agency to provide more than a 2% increase over current compensation levels, resulting in reduced merit pay awards.

However, the agency does not appear to have actively pursued a larger amount during the budget process for FY 2008. For that reason, in addition to pursuing the national merit pay grievance, NTEU also will implement the additional strategy of actively lobbying Congress during the SEC’s budget process this year, seeking a return to a 3% increase for FY 2009 (which will affect the funding for the merit pay process next summer).

Kurt Vorndran will be leading the charge on Capitol Hill to return the SEC to a fair and workable merit pay budget. Vorndran, an experienced legislative representative at NTEU who was instrumental in the union’s successful lobbying effort to win pay parity for SEC employees in 2001, recently remarked that he is optimistic that the current Congress is “much friendlier to the federal employee legislative issues advocated by NTEU than it has been in the past few years.” He also noted that, “Our ability to achieve this on Capitol Hill is going to depend on the strength of Chapter 293. Congress knows how many SEC employees we’re speaking for. Ultimately, our success depends a great deal on how much support we receive from the employees themselves.”

Finally, NTEU will continue to work with SEC management in a joint labor-management committee formed for the purpose of improving the performance management process through the development of new performance standards and procedures at the SEC. This committee is next scheduled to meet in September.

Chapter 293 Works will keep you informed regarding all of these efforts over the coming year. In addition, please check our website for regular updates.