Memorandum U.S. Department of Office of the Secretary Office of Inspector General
In response to a request from Congressman Frank Wolf of Virginia and Congressman Donald Manzullo of Illinois, the Office of Inspector General conducted a review of pay parity within the Federal Aviation Administration's (FAA) Air Traffic line of business. We received similar requests from Representatives Tierney, Crane, Sununu, Thornberry, Calvert, LaTourette, Crowley, Lewis, Moran, LoBiondo, Davis, Morella, and Armey; and Senators Mikulski, Warner, and Inhofe. This report presents the information we are providing to those Members. Objectives and Scope The objectives of our audit were to (1) evaluate the extent of potential pay disparity in regards to managers, supervisors, and specialists (MSS) within FAA's Air Traffic line of business; and (2) assess the impact that limiting the MSS pay system to air traffic facilities has had on the staffing, management, and oversight of the Air Traffic Control System. We conducted our review between November 2000 and April 2001. Exhibit D contains the methodology we used in conducting this audit. Exhibit E lists the activities we visited or contacted during the audit. Background In 1996, FAA was exempted from most Federal personnel rules and regulations and provided with an opportunity to develop new human resources systems unique to the needs of the agency and its workforces. Key to this reform was the ability for FAA to create new performance-based compensation plans directly linking pay to performance. n 1998, with the authority granted under personnel reform, FAA negotiated a new collective bargaining agreement with the National Air Traffic Controllers Association (NATCA). Part of that agreement included a new pay system outside the Federal General Schedule for FAA's 15,000 bargaining unit controllers. The new pay system reclassified each Air Traffic Control facility into new Air Traffic Control grades with corresponding pay bands based on numerous factors including the level of air traffic and complexity of operations at each location. Under the new pay system, most controllers' salaries increased substantially. For example, before the October 1998 agreement, controllers at the top three levels of Air Traffic facilities had a base salary range of $66,100 to $86,000. As of January 2001, those controllers had a base salary range of $81,700 to $126,400. Recognizing that managers, supervisors, and specialists needed to be paid equitably to the controllers they supervise, the Air Traffic division began designing a comparable pay system for supervisory and staff positions within the Air Traffic line of business. The Air Traffic MSS pay system was designed like the NATCA pay system and based salaries for managers, supervisors, and specialists at field facilities on the level of their assigned facility. As designed, salaries for managers, supervisors, and specialists at regional locations were based on the highest level facility in their region. Salaries for managers, supervisors, and specialists at headquarters were based on the highest level facility in the Nation. The system was intended to reinforce the existing Air Traffic career progression of promotion from lower level facilities to higher level facilities and from air traffic control facilities to higher management positions. The system also linked pay bands to the duties, responsibilities, and relative importance of each position to Air Traffic's missions. Managers, supervisors, and specialists at field facilities are responsible for the day-to-day operations of the Air Traffic Control (ATC) System. Managers and supervisors at headquarters and regional locations provide management, direction, and oversight of the ATC System. Specialists at headquarters and regional locations provide overall system support, including evaluating system efficiency and safety. Like the NATCA pay system, pay increases associated with the MSS pay system were to be implemented in three annual increments beginning on October 1, 1998. The Air Traffic MSS pay system was never formally approved by FAA; however, on October 1, 1998, the Administrator agreed to implement the MSS pay system for field facilities but not for regional and headquarters locations. Summary We found that FAA's decision to limit MSS pay to field facilities1 has created pay inequities within the Air Traffic line of business. At each location visited, we found numerous instances of employees assigned to similar positions but receiving significantly different pay. For example, staff specialists at field facilities reviewed had base salaries ranging from $103,000 to $121,000 while staff specialists assigned to similar positions in the regional office had base salaries ranging from $79,000 to $105,000 (an average of 25 percent less). The inequities were further compounded by FAA policies that allowed employees transferring into headquarters and regional positions from field facilities to retain their higher salaries. However, employees transferring from headquarters and regional locations to field facilities were not permitted to receive the same MSS pay increases as employees who were already assigned to field locations on October 1, 1998. We also found that differences in pay were not based on individuals' experience or qualifications, and were not a reflection of the duties and responsibilities of the position held. As a result, we found that compensation for Air Traffic managers, supervisors, and specialists is not linked to position duties, responsibilities, or importance to FAA's missions. FAA's proposed corrective actions address some aspects of the pay inequities but do not address the larger root problem of reestablishing a link between pay, position, and performance - key tenets of FAA's personnel reform efforts. As a results-oriented organization, FAA must identify those positions that are critical to achieving FAA's long-term missions and assign pay bands that reflect their importance to the agency. Conversely, FAA must also identify those positions that do not require the same level of experience and knowledge and assign pay bands appropriate to those duties and responsibilities as well. Lastly, FAA must identify and correct those cases where prior policies have allowed individuals to earn salaries that exceed the duties and responsibilities of the positions they hold, and implement policies for ensuring that employee salaries are within the pay bands assigned to their positions. We are recommending that FAA evaluate all MSS positions and ensure that position pay bands are aligned with the position's duties, responsibilities, and importance to FAA's missions.
Results in Brief FAA Limited MSS Pay to Air Traffic Managers, Supervisors, and Specialists Assigned to Field Facilities. On October 1, 1998, FAA implemented the MSS pay system for managers, supervisors, and specialists assigned to field facilities but not for personnel assigned to similar positions in regional or headquarters locations. As a result of that decision, personnel assigned to field facilities on October 1, 1998, received the first of three annual pay increases. Managers, supervisors, and specialists assigned to headquarters and regional offices did not receive similar increases. In explaining the decision not to extend MSS pay to regional and headquarters positions, the FAA Administrator cited concerns over equity for employees in similar positions in other lines of business, and the need for corresponding efficiency improvements similar to the productivity gains included in the agreement with NATCA. However, it is important to note that the largest identified cost saving of the NATCA agreement is associated with reductions in the number of supervisory and staff positions in field facilities. Those positions are part of the MSS workforce not the NATCA bargaining unit. Other productivity gains included in the NATCA agreement are based on relaxing certain union work rules in order to allow FAA greater flexibility in managing day-to-day operations at field facilities. Those union work rules do not apply to managers, supervisors, and specialists. In addition, the work rule changes included in the NATCA agreement were negotiated primarily to reduce certain premium pay expenses (such as overtime), which managers and supervisors do not generally earn. Accordingly, productivity gains similar to those included in the agreement with NATCA would not produce cost savings among the MSS workforce. FAA has not identified the nature or type of productivity gains that it envisions being implemented within the MSS workforce to improve efficiency and reduce costs. As shown in the following chart, at the time of our review 15,185 bargaining unit controllers were included in the NATCA pay system; 4,154 managers, supervisors, and specialists at field facilities were included in the MSS pay system; and 575 managers, supervisors, and specialists at regional and headquarters locations were not included in the MSS pay system. FAA projects that the NATCA pay system will require approximately $900 million in additional payroll funding over the 5-year life of the agreement, and that MSS pay for field facilities will require an additional $217 million for the same period. In 1998, FAA estimated that providing MSS pay for regional and headquarters locations would require approximately $14 million in additional payroll funding over a 3-year period. FAA has not updated that estimate since then. FAA's Decision to Limit MSS Pa}, Has Created Pat' Inequities Within the Air Traffic Line of Business. We found that FAA's decision not to implement MSS pay at regional and headquarters locations has created inequities in the compensation of managers, supervisors, and specialists within the Air Traffic line of business. At FAA headquarters, three regional offices, and four field facilities visited, we found numerous instances of employees assigned to similar positions but receiving significantly different pay. For example, as shown in the following chart, staff specialists at one field facility reviewed had base salaries2 ranging from $103,000 to $121,000 while staff specialists assigned to similar positions in the regional office, and who did not receive MSS increases, had base salaries ranging from $79,000 to $105,000 (an average of 25 percent less). Limiting MSS Pay to Field Facilities Created Pay Inequities
We also found that the pay inequities were further compounded by FAA movement rules that allowed personnel transferring from field facilities to regional and headquarters positions to retain their higher pay. For example, although the staff specialists within one branch at a regional office we visited (shown below) perform the same work and have similar positions, duties, and responsibilities, their base salaries ranged from approximately $83,000 to about $126,000, a difference of nearly $43,000 in some cases, or over 50 percent.
The differences in base salaries do not reflect an individual's qualifications or experience. For example, at one regional office reviewed, we found one staff specialist (with over 8 years staff experience and 2� years prior supervisory experience) who was making $27,000 less than a coworker who transferred into that position from a field facility in fiscal year (FY) 2000 and had no prior staff or supervisory experience. The difference in their salaries is based solely on where the individual was assigned on October I, 1998.
We also found that differences in pay were not a reflection of the duties or responsibilities of the position the individual held. For example, the Air Traffic Division Manager of one of FAA's largest and busiest regions had a base salary less than that of 80 employees reporting to him, even though his position is considered the second highest position in the organization's career progression ladder. Those employees that had a higher salary than the Air Traffic Division Manager included facility managers, assistant facility managers, branch managers, and first line supervisors. One of those 80 employees was a manager of a low activity visual flight rule (VFR) control tower. Although this individual was only responsible for supervising 12 controllers, his base salary was $141,300 - nearly as much as the FAA Administrator.
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Pay Is Not Linked to Position Duties and Responsibilities
Regional Division- Manager
- $129,660
VFR Low Activity- Tower Manager
- $141,300
As a results-oriented organization, FAA needs to ensure that compensation is linked to position responsibilities, duties, and performance, and that pay bands reinforce the agency's career progression. FAA must also identify and correct those cases where policies have allowed individuals to earn salaries that exceed the duties and responsibilities of the positions they hold, and implement policies for ensuring that salaries are within the pay bands for the assigned positions.
Proposed Changes Will Address Some Inequities But Will Not Link Pay to Position Duties, Responsibilities, and Importance to FAA's Missions. FAA is proposing to resolve some of the pay inequity issues by imposing pay caps on regional and headquarters positions. Under the proposal, employees from field facilities could only receive salaries within the pay band designated for the regional or headquarters position they accept. For example, if a staff specialist from a field facility moved to a staff specialist position at a regional office, his or her base salary could be lowered from as much as $126,300 to $111,900 (top of the pay band for that position) - a $14,400 cut in pay.
According to Air Traffic division managers, capping the pay for headquarters and regional office positions will discourage facility personnel from moving into those positions, and could lead to critical shortages in filling key regional and headquarters positions with experienced, qualified personnel. Many of those positions are critical to FAA's long-term missions such as reducing operational errors, runway incursions, and delays.
FAA Needs to Evaluate the Duties, Responsibilities, and Importance of Each MSS Position and Ensure that Pay Bands Are Aligned Accordingly. Some regional and headquarters positions require skilled Air Traffic managers, supervisors, and specialists with experience at the busiest and most complex facilities. For example, regional office specialists and managers are key players in managing the National Airspace Redesign project, which is revamping air routes across the country to provide maximum capacity enhancements. Those efforts are key to mid-term solutions for reducing delays. However, to attract and retain personnel with those qualifications, salaries for key regional and headquarters positions must be at least comparable to salaries for similar positions in field facilities.
On the other hand, some regional and headquarters positions may not require individuals with as much air traffic control experience and could be filled with managers from lower level facilities or with controllers from the bargaining unit. In fact, some regional and headquarters positions may not require air traffic control experience at all. A 1999 classification study of controller positions concluded that some headquarters and regional positions could be filled with subject matter experts in other areas such as budget or labor relations. In such cases, those positions could be filled with personnel with lower salary levels.
Under FAA's proposed changes, differences in position duties and responsibilities are not considered because the proposed pay cap is across-the-board for all regional and headquarters positions regardless of their duties, responsibilities and importance to FAA's long-term missions.
In our opinion, FAA needs to evaluate all MSS positions and ensure that position pay bands are appropriate to each position's duties, responsibilities, and importance to FAA's missions. As a results-oriented organization, FAA must identify those positions that are critical to achieving FAA's long-term missions and assign pay bands that reflect their importance to the agency. Conversely, FAA must also identify those positions that do not require the same level of experience and knowledge, and assign pay bands appropriate to those duties and responsibilities as well.
Lastly, FAA must identify and correct those cases where prior policies have allowed individuals to earn salaries that exceed the duties and responsibilities of the positions they hold, and implement policies for ensuring that employee salaries are within the pay bands assigned to their positions.
Recommendations
Our recommendations include:
FAA Comments and OIG Response
On June 7, 2001, we met with representatives from FAA's Human Resources Division to obtain their comments on our report.3 FAA agreed that there are differences in pay for employees assigned to the same types of positions, and that FAA movement rules have produced some unintended consequences.
However, FAA maintains that its decision regarding the pay systems for regional office and headquarters employees in the Air Traffic line of business was the correct one. According to FAA, it is more appropriate to place Air Traffic regional and headquarters positions in the same pay system as other regional office and headquarters employees, rather than to align them to the pay of controllers in field facilities performing operational duties.
We agree that some Air Traffic regional and headquarters positions, such as budget or labor relations, are properly aligned with similar regional and headquarters positions from other lines of business. However, FAA has not adequately explained why the many Air Traffic headquarters and regional positions that require skilled controllers with experience at the busiest and most complex facilities, and are critical to the agency's long-term missions, should not be paid comparably to positions assigned to the day-to-day operations of the ATC System. More fundamentally, FAA's argument is inconsistent with the fact that widespread disparity remains among people who do the same job.
We have requested that FAA provide formal written comments to our report and recommendations within 30 calendar days.
Notes:
1For purposes of this report, we define field facilities as FAA towers, terminal radar approach controls, and enroute centers. We define regional and headquarters locations as FAA's nine regional offices; the FAA Academy in Oklahoma City, Oklahoma; and FAA headquarters in Washington, D.C.
2 In this report, salaries listed were as of December 2000, and include base salary and locality pay. Salaries compared include the same locality pay.
3 FAA's Human Resources Division has primary responsibility for the agency's Human Resource Management policy and activities.
For the complete OIG report on 2152 pay disparity go to www.oig.dot.gov/audits.htm. It is a PDF file and you'll need acrobat reader to read it.