L -, *fw United States General Accounting Office Briefing Report to the Ranking GAO Minority Member, Subcommittee on Federal Services, Post Office, and Civil Service, Committee on Governmental Affairs, U.S. Senate 04$oberl990 PAY AND BENEFITS Data on Energy EknployeesWho Retired or Resigned in Fiscal Ye= 1989 United States General Accounting Office Washington, D.C. 20548 General Government IXvision B-241560 October 25, 1990 The Honorable Ted Stevens Ranking Minority Member Subcommittee on Federal Services, Post Office, and Civil Service Committee on Governmental Affairs United States Senate Dear Senator Stevens: At your request, we obtained information on former Department of Energy (LKIE) employees at grade 13 and above who retired or resigned during fiscal year 1989. Specifically, you wanted to know if employees were leaving DOE to take jobs with government contractors or grantees and earning salaries higher than their government pay. We briefed your office on the responses to a questionnaire we developed for the purpose of responding to your request and agreed to summarize the briefing in a report. Questions are continually being raised about the federal government’s ability to hire and retain a high-quality workforce. Numerous GAO and other studies have concluded that noncompetitive federal salaries con- tribute to federal recruitment and retention problems. For example, reports by the White 1Iouse Science Council (1983), the President’s Blue Ribbon Commission on Defense Management (1986), and the President’s Commissions on Compensation of Career Federal Executives and on Fed- eral Pay (1988) all concludtd that the inadequacy of federal compensa- tion seriously affects the government’s ability to attract and retain a high-quality workforce In a June 1988 report, Civil Service 2000, the Hudson Institute conchided that this problem was expected to worsen over the next decadt,. Similarly, in 1989 we reported that (1) to recruit and retain a quality workforce, the federal government must pay competitive salaries and benefits and (2) thfl cxompetition from the private sector was hurting the federal government’s ability to maintain the quality it needs to be effec- tive. In addition, t hc 1989 report by the President’s pay advisors cau- tioned that the fedora1 government’s continued ability to recruit and retain qualified employees is dependent upon pay comparability adjust- ments. In August 1H9(I, the pay advisors reported a comparability gap ranging from aboul 2:! pthrccnt at GS-1 to over 39 percent at GS-15. Page 1 GAO/GGDSl-l4BE Pay and Benefits E241569 number, 186 responded to the questionnaire for a response rate of 76 percent. To test the validity of some of the salary data provided by respondents, we randomly selected 5 (about 10 percent) of the 43 respondents who reported higher salaries and judgmentally selected 3 additional respon- dents who reported salary increases of $45,000 or more. We sent verifi- cation letters to the personnel offices in those cases where the respondent gave us the name of his or her employer and to the indi- vidual respondent when the name of the employer was not available. We also asked the personnel offices to send us information on employee benefits. In analyzing the information on benefits, we focused on costs to the employer/employee and generally did not make a value or level of benefits analysis. Finally, we were able to interview the supervisors of I4 of the DOE employees who reported receiving higher pay to determine what kind of performers they were and what effect their leaving had on the organization. We did our work from April 1990 to September 1990 in accordance with generally accepted government auditing standards. As agreed with your office, we did not obtain written comments from DOE.We did, however, discuss the contents of the report with a DOEpersonnel office official who agreed with the facts presented. The responses to our questionnaire by 186 of the 246 grade 13 and Results above former employees who left DOEin fiscal year 1989 showed that: . 98 employees retired and 88 resigned (see p. 8); l 91 of the 127 who were employed after leaving federal service were employed by government contractors or grantees (see p. 11); l 78 of the 91 said that either their work was funded by contracts or grants or they were uncertain if this was the case (see p. 11); . 58 of 77 (1 of the 78 did not answer) said they were doing the same type of work as they had done at DOE(see p. 16); l 43 of the 78 said their pay was higher than their government pay (see PP. 12); l 28 of the 43 were in scientific/technical positions at DOEand 15 were in administrative/managerial positions (see p. 12); 0 31 of the 39 who reported the amount of the increase, received up to $15,000 more, with an average of $8,258 (see p. 13); and Page 3 GAO/GGDSl-14BE Pay and Benefits B241569 The major contributors to this briefing report are listed in appendix II. If you or your staff have any questions about the report, please call me on 275-5074. Sincerely yours, Bernard L. Ungar Director, Federal Human Resource Management Issues Page 5 GAO/GGDol-14BR Pay and Beneflts contents Figure 1.7: Former DOE Employees: Number of Hours an 14 Which Weekly Pay Is Based Figure 1.8: Comparison of Former Employees’ New Duties 15 and Responsibilities With Their Last Position at DOE Figure 1.9: Comparison of Former Employees’ New Type 16 of Work With Their Work at DOE Figure I. 10: Factors Having a Major Impact on Decision to 17 Leave Figure I. 11: Extent That Benefits Were Cited as Being 19 Better Than Those Provided by DOE Abbreviations DOE Department of Energy MSPB Merit Systems Protection Board page 7 GAO/GGDSl-14BR Pa, and Benefits Appemlix I Analyses of DOE Employees Who Retired and Re&md During Ned Year 1989 Of the 186 former DOE employees who responded to our questionnaire, Is DOE Losing 106 left during their first 20 years of federal service. Most of these 106 Experienced employees resigned, and they did so during their first 10 years of fed- Employees? eraJ service. Of the 61 employees who retired or resigned during their first 10 years, 85 percent had at least 2 years of experience when they left DOE. Resignees accounted for 93 percent of those who left DOE during the first 10 years of service and 62 percent of the 45 employees who left during the second 10 years of service. After 20 years of service, retirees accounted for almost all separations. Figure 1.2: DOE Employees Who Retired and Resigned-Years of Service 65 Numbor of Employees 60 55 50 45 r 40 35 30 25 20 15 10 low 11-20 21.30 over 30 LOSS vnm of Smvice Resigned Redred page 9 GAO/GGDSI-14RR Pay and Benefits Appendix I Analyses of DOE Employees Who Retired and Resi@d During Fiscal Year 1989 Of the 127 respondents who said they were employed after leaving DOE, Did Employers of Most 91 (72 percent) said their employers received funding in the form of fed- Former DOE eral contracts or grants. Of these 91,71 said their work was federally Employees Receive funded at least in part and 7 said they were not sure. For the purposes of further analysis, we included all 78 of these former employees as Federal Contracts or having their private employment federally funded. We did this because Grants? the possibility existed that since they were employed by federal contrac- tors, their work also was federally funded. Figure 1.4:Former DOE Employees Employed by a Federal Contractor/ Number of Employees Grantee 130 120 110 100 10 0 B. Page II GAO/GGDSl-14BR Pay and Benefits Appendix I Analyses of DOE Employees Who Retired and Resigned muiug Piscal Year 1999 Of the 43 former DOE employees who reported an increase in pay, 39 told How Much of a Pay us the amount of the increase. Almost 80 percent (31) received an Increase Did Former increase of $15,000 or less, an average of $8,258 per employee. Of those DOE Employees reporting a pay increase, 27 (60 percent) said that had a very major effect in their deciding to leave DOE. Receive? In verifying the amount of the salary increases for eight employees, we were able to verify two but found that one understated the increase by $4,500, and two overstated it by $1,500 and $10,500. We did not attempt to resolve these discrepancies because the verified amounts still represented increases over the former employees’ DOE salaries. In the remaining three cases, the employee’s personnel office or the employee did not respond to our request for verification of salary increases of $5,000, $45,000, and $130.000. Figure 1.6:Pay Increases of Former DOE Employees 30 Percentage of Employees -- Note. Computailons are based on 39 responses Although 43 respondents reported higher pay, 4 did not provide an amount The above amounts do not reflect the results of ourverif~cat~on of respondents’ salary InformatIon PaE!e 13 GAO/GGDSl-14BR Pay and Benefits Appendix I Analyses of DOE Employees Who Retired and R‘sdgned During FiBcal Year 1989 Most former employees had less responsibility in their new jobs than How Do Former they had at M3E. While this applied primarily to the employees who Employees’ Duties and received the same or less pay, 33 percent of the employees who received higher pay also reported they had less responsibility. Responsibilities Compare With Those Of the 42 employees receiving higher pay who responded to this ques- of Their Last Position tion, 17 (41 percent) had greater responsibilities and 11 (26 percent) had the same responsibilities as they had at DOE. at DOE? Figure 1.8:Comparison of Former Employees’ New Duties and 80 Percanfage of Employees Responsibilities With Their Last Position at DOE 70 50 50 40 30 20 10 0 0 Employees Receiving Higher Pay Employees Receiving Same or Less Pay Note. Computations for employees rece~wng (1) higher pay and (2) same or less pay are based on 42 and 35 responses. respectively Page 15 GAO/GGDSl-14BR Pay and Benefits Appendix I Analyses of DOE Employees Who Retired and Resigned Durhg Fiscal Year 1989 The reason former DOE employees cited most frequently as having a Why Did DOE major impact on their decision to retire or resign was to increase their Employees Retire or opportunity for advancement. Overall, of the 78 employees who left and Resign During Fiscal whose work was then funded by a federal contract or grant, 30 (38 per- cent) said this reason had a major impact on their decision. It was also Year 1989? the more prevalent reason among resignees as slightly more than 58 per- cent of the resignees compared with 7 percent of the retirees said the opportunity for advancement had a major impact on their decision to leave DOE. The next two most frequently cited reasons having a major impact were the desires to increase salaries and change personal career plans. Overall, 37 percent said these two reasons had a major impact on their decisions to leave DOE. In addition to the reasons shown in figure 1.10, several employees also offered other reasons that affected their decisions to leave DOE. The reasons cited most frequently involved problems they had with agency management and policies and with their role in the agency. Figure 1.10: Factors Having a Major Impact on Decision to Leave Note. The percentages were computed based on how many of the 78 former employees clted each factor as having a major effect on their decnon to leave DOE, not on the 69 to 72 employees who cited ridlwdual factors as having at least some effect. Page 17 GAO/GGD-91.14BR Pay and Benefits Appendix I Analyses of DOE Employees who Retired and Resigned During Fiscal Year 1989 Figure 1.11: Extent That Benefits Were Cited as Being Better Than Those 60 Percentage of Employosr Provided by DOE 50 40 30 20 10 0 El 40 Hours or More Less Than 40 Hours Note The percentages were computed based on the 52 and 17 employees working 40 hours or more or less than 40 hours respectively who cited each benefit as being better than the same benefit provided by the federal government Page 19 GAO/GGD-91.14BR Pay and Benefits Ordering Information The first five copies of each GAO report are free. Addil copies are $2 each. Orders address, the Superintendent of 100 or more copies to be mailed to a single address discounted 25 percent. U.S. General Accounting Office P. 0. Box 6015 Gaithersburg, MD 20877 i Appendix II Major Contributors to This Report Larry H. Endy, Assistant Director, Federal Human Resource General Government Management Issues Division, Washington, James J. Grace, Evaluator-in-Charge D.C. Stuart M. Kaufman, Social Science Analyst (966431) Page 20 GAO/GGDL)l-14BE Pay and Benefits Appendix I Analyses of DOE Employees Who R&red and Resigned During Fiscal Year 1999 More than half of the 52 former DOE employees who worked 40 hours a Are Benefits in week or more said that health benefits were better in private industry Private Industry than they were at DOE. Following that, the benefits cited most frequently Better Than the by these employees included company bonus programs, life insurance, and thrift savings plans. Not many of the 17 employees who worked less Benefits in the Federal than 40 hours a week cited any of the benefits as being better than they Government? were at DOE. However, the benefits cited most frequently closely paral- leled benefits cited by those working 40 or more hours a week. None of these employees said annual and sick leave or thrift savings plans were better than at LIOE. In reviewing some of the employers’ benefit programs, we noted that one company paid 100 percent of employees’ health insurance premiums and 72 percent of dependents’ premiums. Another employer paid the entire premium for two pre-paid health care plans and for a dental and optical plan. In another instance, where life insurance was cited as a better benefit, the company paid the entire premium. In the case of retirement plans, advantages included lower employee contributions; the ability to deduct contributions from gross pay, thereby deferring tax- able income; the ability to retire at age 50 with 5 years of service; and the formula used for computing retirement benefits. For one of the employees who cited a thrift savings plan as better, we noted that employees could contribute up to 20 percent of their income versus 10 percent under the Federal Employees Retirement System and 5 percent under the Civil Service Retirement System. Annual leave was cited as being better in one instance where all employees received 5 weeks of vacation regardless of length of service. Page 18 GAO/GGDSl-14BR Pay and Benefits Appendiy I Andysee of DOE Employees Who Retired and Resigned Dlwhg Fiscal Year 1999 Most employees were doing the same type of work in their new jobs as Are Employees Doing they had done at WE. Almost 66 percent of the retirees and 81 percent the SameType of of the resignees reported that they were doing the same general type of Work in Their New work that they did at DOE. Jobs as They Did at DOE? Figure 1.9:Comparison of Former Employees’ New Type of Work With Their 90 PNmn,age0, Emp,ws Work at DOE 80 70 60 60 40 30 20 10 0 El Same Type Work Different Type Work Note Computations for employees who retred and resigned are based an 29 and 48 responses, respectively Page 16 GAO/GGDSl-14BR Pay and Benefit8 Appendix I Analyses of DOE Employees Who Retired end Res*ed During Ffscal Year 1999 Most former DOE employees whose work was federally funded were paid Are Former DOE baaed on a 40-hour work week. Of the 69 employees who reported their Employees Paid Based hours, 48 (70 percent) said their pay was based on a 40-hour work week. on a 40-Hour Work This was more applicable to resignees than it was to retirees. Slightly more than 85 percent of the resignees and 46 percent of the retirees Week? reported their pay was based on a 40-hour work week. Figure 1.7:Former DOE Employees: Number of Hours on Which Weekly Pay Nmber of Employees Is Based 70 60 50 40 Less Than 40 Hours More Than 40 Hours 40 Hours Note Computatms are based on 69 responses Page 14 GAO/GGBSl-14RR Pay and Benefits Appendix I Andysee of DOE Bmployeee Who Retired and Resigned Durbg Fiscal Year 1989 Of the 78 former DOE employees whose work was funded or may have How Did the Former been funded under a government contract or grant, 43 said they DOE Employees’ received higher pay after leaving DOE. Higher pay was more prevalent Nonfederal Pay among employees who had resigned as compared to retired former employees. Of the 43 employees reporting higher pay, 37 were resignees Compare With Their and 6 were retirees. Also, 28 of the 43 were in scientific/technical posi- DOE Pay? tions at DOE and 15 were in administrative/managerial positions. To get an indication of whether the employees who left DOE and who were receiving higher pay were good performers and thus a loss to their DOE units, we contacted the DOE supervisors for 14 of them. Their per- formance was cited as “very good” by 12 supervisors and “good” by 2 of the supervisors. Twelve of the 14 supervisors also considered the loss of these employees as detrimental to WE. For the remaining 2 employees, one supervisor said the employee was not in the newly cre- ated position long enough for the loss to have an impact on DOE, and the other supervisor said the employee’s work was picked up by another employee. Figure 1.5:Pay of Former DOE Employees 50 Numberof Employees 45 40 35 30 25 20 Resigned Both Relirees And Reslgnees u Higher Than DOE Lower Than DOE About The Same As DOE Page 12 GAO/GGDSl-14BR Pay and Benefits AppemUx I Analyses of DOE Employees Who Retired and Res&md Lhw& Fknl Year 1989 Were Most Former employed after separating from DOE. As one would expect, this was most DOE Employees prevalent among the 88 resignees, of whom 96 percent were employed. Interestingly, however, almost one-half (44 percent) of the 98 retirees Employed After were employed. Leaving Federal Service? Figure 1.3: Subsequent Employment Status of DOE Employees Who Retired Percenfago of Employees and Resigned 100 so so 70 50 50 40 30 20 10 0 u Employed Ufl.Wlpl~d Page 10 GAO/GGDSl-14BR Pay and Benefits Analyses of DOE Employees Who Ret&&dand ResignedDuring F’iscalYear 1989 During fiscal year 1989,246 DOE employees either retired or resigned. How Many DOE The breakout between retirees and resignees was almost the same, with Employees Retired 120 employees retiring and 126 resigning. A similar proportion existed and ResignedDuring among those retirees and resignees who responded to our questionnaire. Of the 186 respondents, 98 retired and 88 resigned. Fiscal Year 1989? Figure 1.1: DOE Employees Who Retired and Resigned During FY 1999 140 Number of Employees 120 100 80 00 40 20 0 Page 8 GAO/GGDSl-14BR Pay and Benefits Contents 411 Letter 1 Appendix I 8 Analyses of DOE How Many DOE Employees Retired and Resigned During 8 Fiscal Year 1989? Employees Who Is DOE Losing Experienced Employees? 9 Retired and Resigned Were Most Former DOE Employees Employed After 10 Leaving Federal Service? During Fiscal Year Did Employers of Most Former DOE Employees Receive 11 1989 Federal Contracts or Grants? How Did the Former DOE Employees’ Nonfederal Pay 12 Compare With Their DOE Pay? How Much of a Pay Increase Did Former DOE Employees 13 Receive? Are Former DOE Employees Paid Based on a 40-Hour 14 Work Week? How Do Former Employees’ Duties and Responsibilities 15 Compare With Those of Their Last Position at DOE? Are Employees Doing the Same Type of Work in Their 16 New Jobs as They Did at DOE? Why Did DOE Employees Retire or Resign During Fiscal 17 Year 1989? Are Benefits in Private Industry Better Than the Benefits 18 in the Federal Government? Appendix II 20 Major Contributors to This Report Figures Figure I. 1: DOE Employees Who Retired and Resigned 8 During FY 1989 Figure 1.2: DOE Employees Who Retired and Resigned- 9 Years of Service Figure 1.3: Subsequent Employment Status of DOE 10 Employees Who Retired and Resigned Figure 1.4: Former DOE Employees Employed by a 11 Federal Contractor/Grantee Figure 1.5: Pay of Former DOE Employees 12 Figure 1.6: Pay Increases of Former DOE Employees 13 Page 6 GAO/GGDSl-14BR Pay and Benefits FM41660 l 17 of the 43 who received higher pay said their duties and responsibili- ties were greater than they were at DOE, 25 said they were the same or less, and 1 did not answer the question (see p. 15). Respondents also indicated that many of their benefits were better in the private sector and most frequently cited health and life insurance, bonus programs, and thrift savings plans (see pp. 18-19). Respondents gave many reasons for leaving DOE. Of the 70 who said they left to increase their opportunities for advancement, 30 said this had a major effect on their decision. This was the reason most fre- quently cited as having a major effect; the next two most frequent rea- sons, cited by 29 employees, were to increase salaries and to change personal career plans (see p. 17). Responding employees who retired and resigned during fiscal year 1989 were experienced and, according to those supervisors we contacted, were good performers. Approximately 67 percent of the 186 employees left with over 10 years of experience. Of the 61 employees who left during the first 10 years, 85 percent had at least 2 years of experience (see p. 9). As far as performance was concerned, the 14 DOE supervisors we contacted said that 12 of the former employees were “very good” performers, and 2 were “good” performers (see p. 12). In discussing the responses to our questionnaire, a DOE personnel office official expressed the opinion that more than 43 of the 78 former employees would have reported higher salaries had they been working full rather than part time after leaving WE. We have no basis for agreeing or disagreeing with this assertion. We note, however, that 19 of the 35 former employees, who reported receiving the same or less pay, worked 40 hours or more a week. Appendix I contains more detailed information on the responses by the former DOE employees. As arranged with your office, we plan no further distribution of this document until 30 days after the date of issuance unless you publicly announce its contents earlier. At that time, we will send copies to the Secretary of Energy and other interested parties and make copies avail- able to others upon request. Page 4 GAO/GGDSl-14BR Pay and Benefits B-241666 The U.S. Merit Systems Protection Board (MSPB) recently issued three reports that continue to demonstrate the extent of this problem. In the first report, MSPB found that 9 percent of the employees-6 percent at uoE-left the federal workforce during calendar year 1987.’ Of those who left, 25 percent retired, 58 percent resigned, and 17 percent sepa- rated for other reasons. The turnover rate was 25 percent among employees during their first year of service. This rate decreased to 4 percent for employees with 16 to 20 years of service. After 20 years of service, the rate increased again, reaching 22 percent for employees with 30 or more years of service, a time when most employees become eligible for retirement. In its next two reports, MSPB found that compensation is an important factor in employees’ decisions to leave the federal workforce. For Senior Executive Service members, the single most often cited reason for leaving was the ceiling on salaries. For white-collar employees who resigned, 28 percent cited compensation and advancement as the most important reasons for leaving the federal workforce. In contrast, for white-collar employees who retired, 20 percent said concern about changes in the retirement system was the single most important reason for retiring. The next most important reason, cited by 18 percent, was a desire to pursue nonwork interests. Only 11 percent said compensation and advancement were factors in retiring. As of September 30, 1989, DOE’s estimated employment was almost 17,000 employees. In addition, DOE had about 132,000 contractor employees at its laboratories and plants throughout the country. Our objective was to determine if employees at grade 13 and above were Objective, Scope,and leaving DOE to take jobs with government contractors or grantees and Methodology earning salaries higher than their government pay. To accomplish this objective, we obtained from LIOEa listing of the 246 employees at these grades who retired or resigned during fiscal year 1989. Because DOE did not have any post-employment information on these employees, we developed and sent a questionnaire to all 246 employees. Of this ‘Who Is LeavingThe FederalGovernment?An Analysis of EmployeeTurnover, the US. Merit Sys- tem FTotectionBoard(Aug. 1989). ‘The SeniorExecutive Service:Viewsof FormerFederalExecutives,the U.S.Merit SystemsProtec- ti0n Ikmd (ht 1989);and Why Are EmployeesLeavingthe FederalGovernment?Resultsof an Exit Survey,the U.S.Merit SystemsProtectionBoard(May 1990). Page 2 GAO/GGDsl-14BR Pay and Benefits
Pay and Benefits: Data on Energy Employees Who Retired or Resigned in Fiscal Year 1989
Published by the Government Accountability Office on 1990-10-25.
Below is a raw (and likely hideous) rendition of the original report. (PDF)