Alternative Pay Plan Coming—and Why Government Shutdown is an Annual Event

What is the next step before the “big reveal” of the federal employee pay raise? Why are we facing another government shutdown?

The annual federal pay raise continues to go down the same path. What role does FEPCA play in the next raise? What is the alternative pay plan?

The big difference for the 2024 federal pay raise could be another government shutdown that has the potential to extend into 2024.

What About FEPCA?

FEPCA stands for the Federal Employees Pay Comparability Act.

FEPCA established a two-part annual pay adjustment for General Schedule (GS) government employees. Under FEPCA, there is an across-the-board pay adjustment and a locality pay adjustment. Locality pay varies by pay locality. Because of locality pay, a federal employee’s salary will vary depending on geographic location.

FEPCA also established an automatic formula for determining the annual pay raise for federal employees. Part of the reason for confusion about an annual federal employee pay raise is that the FEPCA formula is routinely ignored. It will be ignored again in 2024.

If you are a new federal employee, you may hear comments such as, “If FEPCA is followed this year, we will get a 25% pay raise.” That may be true but it is not relevant. Federal employees have never received a pay raise like that since the passage of FEPCA, and it will not be implemented to provide a huge pay raise next year either.

President’s Alternative Pay Plan

Instead of implementing the FEPCA formula, the president can, and often does, propose an alternative pay raise that ignores the FEPCA formula. There is little doubt that this will happen again in 2023.

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 always happens regardless of the president’s political party. This is the letter President Biden issued last year.

The alternative pay plan is almost always released late in the year. It is typically released in August and often in the last week of August. Update: President Biden issued the alternative pay plan on August 31, 2023. For details, see Biden Issues Alternative Pay Letter for 2024 Federal Pay Raise.

What has happened most often in the last several years is that Congress does not pass legislation on the amount of any federal employee pay raise for the next year. When that happens, the president then sets the amount of the raise through an alternative pay plan, usually in late August. 

Of course, if Congress does not like the amount of the raise in the alternative pay plan, it can still pass new legislation determining the final amount. This is most likely to happen during an election year. With an election coming up, the thought process is likely to be that giving a raise = (hopefully) getting more votes for a candidate running for Congress.

As always, the annual pay raise is subject to political whims and actions!

Why Does the Government Shut Down?

As is often the case, there is also the possibility of another partial government shutdown. If that happens, it could be resolved quickly or it could go on for some time.

A federal government “shutdown” did not exist before 1980. Now, it is an annual political event routinely used to scare the other party and convince the public that one party is to blame.

But, before 1980, if money had not been appropriated, government employees still went to work, and still got paid (usually a little late until funds were approved), and the situation was resolved without all the political drama we have invented since 1980.

The man who invented the shutdown? Benjamin Civiletti. Civiletti was the attorney general for President Jimmy Carter.

The legal basis for the newly discovered legal requirement was “discovered” in an 1870 law —the Antideficiency Act of 1870.

Civiletti made his reputation by concluding the federal government was operating outside the law when he revealed the true meaning of the law. This problem had escaped the attention of America’s legal experts for more than a century.

As a result, we now go through the same threats and deal with the impacts created by the shutdown annually.

Will There Be a Government Shutdown This Year?

As often happens, the government now appears to be on track to possibly trigger a government shutdown. The 12 appropriations bills funding government operations before the start of the new fiscal year have not been passed.

In June 2023, the Fiscal Responsibility Act was signed. It lifted the ceiling on the federal debt and set limits on annual appropriated spending for the next fiscal year.

The Senate Appropriations Committee has passed all 12 appropriations bills. The House bills include provisions on topics such as abortion and healthcare for transgendered people. Passing these bills in the Senate, narrowly controlled by Democrats, will generate a political dispute. Of course, the president must also sign the bills. As he generally supports liberal political positions, this could trigger a veto if it did pass in Congress.

While a government shutdown is not necessarily going to happen this year, it is still a possibility and that will impact federal employees if it occurs.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47