The process for determining the amount of a pay raise for federal employees is usually a meandering, convoluted process with the results finalized in December—shortly before the next raise becomes effective in January.
2020 has been an unusual year, unfortunately, and the process of determining the federal pay raise for 2021 is unusual as well.
How the Pay Raise Process Works
There are years in which Congress will pass legislation that contains an annual federal pay increase. There are also years in which Congress does not pass legislation addressing a pay raise.
When federal appropriations bills do not address a pay raise, federal pay adjustments are governed by the Federal Employees’ Pay Comparability Act of 1990 (FEPCA) but that legislation is not necessarily the final say either.
But, the president can, and usually does, propose an alternative pay raise that ignores the FEPCA formula. If the president determines that “because of national emergency or serious economic conditions affecting the general welfare,” a pay adjustment would be inappropriate based on FEPCA, he can propose a different figure. This normally happens, if Congress has not acted, regardless of the president’s political party.
President Trump’s Alternative Pay Plan
Normally, an alternative pay plan is proposed in August. But, in 2020, President Trump transmitted his alternative pay plan for calendar year 2021 to Congress on February 10th. President Trump’s plan was to increase federal pay rates by one percent in 2021. Under this plan, there would not be an adjustment to the pay rates in locality pay rates.
Will There Be a Raise Approved by January 2021?
This year, the House has passed a temporary funding bill that will keep federal agencies funded into December. It still has to be passed by the Senate and signed by the President and it appears that will happen. That timing is not accidental. By December, the results of the national elections in November will hopefully be fully determined. There is much speculation that lawsuits contesting aspects of the election will intentionally delay knowing the final result. In any event, there will be more information available to Congress about the election results when the temporary spending bill expires.
Congress will then have to decide whether to pass an annual budget for the federal government for the rest of the fiscal year or pass another temporary budget bill and leave the decision to the next Congress. Of course, the current federal budget expires on September 30, 2020 in any event.
So, it is possible we will see a replay of events that occurred prior to a federal pay raise being applied retroactively. An event like this occurred with regard to the 2019 pay raise. In that year, an average pay raise of 1.9% was approved in February. The raise was retroactive.
For right now, the best guess is a 1% pay raise for the federal workforce as President Trump proposed early in the year. But, with all of the turmoil this year, no one can reasonably predict with strong confidence what will finally play out.