In September, NTEU Chapter 293 entered into an agreement with the SEC concerning compensation issues. Under the terms of this agreement:

• Commencing January 1, 2010, the Commission will lift the caps upon maximum salaries for SEC grades to provide pay scale comparability with other FIRREA agencies;

• The SEC has committed the resources to complete the new Merit Pay system by January 2010;

• During the transition to the new system, SEC employees will be provided a supplemental “equivalent share” pay raise of 1.125% in January 2010; and

• SEC employees will receive an additional pay raise under the Merit Pay system later in 2010 for a second rating period ending September 30.

The SEC’s agreement to raise the maximum salaries for SEC grades is an important victory for agency employees. Currently, the agency’s maximum salaries for each grade continue to be significantly lower than those of other FIRREA agencies. To rectify this, each year going forward when Merit Pay distributions occur, the SEC will now increase the maximum salaries for each grade in an amount that is equal to the largest Merit Pay distribution that year for that grade. What this means for employees is that, when you are maxed out at the top salary for your grade, you will now receive a salary raise, rather than receiving a one-time “lump sum” cash payment in lieu of a raise.

A permanent salary increase is much better than a one-time cash payment, because employees will continue to receive that money each year going forward as part of their salaries. Over time, this will make it possible for SEC employees’ salaries to move closer to the salaries of more competitive FIRREA agencies. It will also increase the “high three” calculations for employees when they retire, substantially increasing the payments that they receive under the retirement system.

The SEC’s commitment to work with the Union to get the new Merit Pay system in place by January is also important. Agency delays in the implementation of a new, fairer and more transparent performance pay system have gone on for too long. This fall and into the winter, the SEC and the Union will be devoting substantial time and effort to putting the new system in place. The scores of employees from across the country who have already volunteered to work on the standards for their positions in the new system are now being called upon to perform this important work.

As part of this process, and to make the budgeting mechanism for Merit Pay more rational, the parties have agreed to shift the rating cycle so that it tracks the federal government’s fiscal year. Currently, the rating cycle runs from May 1 to April 30, with Merit Pay raises occurring four months later, in late August or early September. Under the new system, the rating period will run from October 1 through September 30, with raises occurring two months later, in November.

To make this shift, the agency has agreed to provide two smaller ratings periods during 2010. The first will run through January 2010. All employees who receive an “acceptable” rating for this period will receive an additional equivalent share pay raise of 1.125% in January. For those who are at the top salary for their grade, this 1.125% raise will be the first to increase their salary caps and permit an actual raise rather than a one-time lump sum payment. This raise will be in addition to the annual federal employee salary increase in January, the amount of which still has not been determined by Congress (NTEU is continuing to push for 2.9%).

The second rating period will then run through September 30, 2010. Employees will be rated under the new system and receive a pay raise for that period in November 2010. Going forward after that, the Merit Pay process will track the agency’s fiscal year, with ratings periods running from October 1 through September 30.

NTEU was extremely disappointed that OMB’s budget for FY 2009 for the SEC only included a 1.5% increase to the performance pay budget, and that the SEC refused to increase this amount during the budget process. Admittedly, the agency has faced unique challenges this year. However, a real investment in human capital will clearly be an important cornerstone to the SEC’s ability to meet its goal of attracting and retaining the best and the brightest – which is surely one of the most important components of the agency’s future success.

The new agreement on compensation issues signed yesterday represents a step in the right direction, and a significant shift from the failed policies of past management at the SEC. Chapter 293 will continue to keep you informed as we move forward. Thank you to the dues paying members of the Union, without whom there would be nobody advocating for compensation improvements at the SEC.