Summary: The President's budget would limit the 1995 pay raise for federal workers to 1.6 percent, a further compromise of efforts to make government salaries competitive with private sector pay. Given the challenges involved in reducing the deficit, federal employees may again have to make sacrifices, such as the proposed pay limitation. At the same time, however, the pay comparability issue could harm efforts to recruit and retain quality employees. GAO supports the move to a smaller, more efficient government wherever possible. But unless staff cuts are based on well-considered planning and good communications, critical skills could be lost and the productivity of remaining workers could be harmed. The budget's proposal to charge agencies the full government share of accruing costs of the Civil Service Retirement System does not affect the deficit, but is an important step toward identifying the full costs of government programs. The proposed higher agency contributions are probably not needed to ensure that the retirement system honors its commitments to workers and retirees. Rather, the objective is to properly recognize accruing costs and charge them to agency programs.
