Retention Allowances

Federal agencies use retention allowances as salary supplements to retain essential workers. As of September 1994, 354 of the 2.1 million civilian employees in the executive branch were receiving retention allowances. The cost of these allowances totaled $2.8 million annually. Five agencies--the Departments of Defense (DOD), Energy, and Agriculture; the Export-Import Bank; and the Securities and Exchange Commission (SEC)--awarded 94 percent of these retention allowances. GAO found that Eximbank awarded allowances to nearly 22 percent of its employees in fiscal year (FY) 1994; other agencies gave allowances to 0.3 percent or fewer of their employees. The average allowances at the five agencies during FY 1991 through 1994 was about $7,800 per employee. Eximbank did not appear to comply with the requirement that it determine that prospective recipients would be likely to leave the agency if they did not receive allowances. The retention allowance plans for DOD, Eximbank, and SEC did not include criteria for determining the amounts of the allowances. Without a documented agencywide rationale, lower-level managers lacked guidance for decisions on individual allowances. Moreover, Office of Personnel Management regulations do not require that allowances be reviewed or recertified in writing when there are significant increases to employees' basic pay during the year.

GAO found that: (1) 354 civilian employees received retention allowances as of September 30, 1994; (2) although the Department of Health and Human Services did not report its allowance data, 20 of its employees received allowances during fiscal year (FY) 1994; (3) retention allowances totalled $2.8 million annually and averaged $7,789 annually per employee; (4) the Export-Import Bank (Eximbank) awarded allowances to 21.7 percent of its employees in FY 1994, while the other agencies awarded allowances to 0.3 percent or fewer of its employees; (5) Eximbank did not determine whether prospective recipients would have left their positions if they did not receive retention allowances; (6) the criteria the Department of Defense, Eximbank, and Securities and Exchange Commission (SEC) used to determine the amount of employee allowances could not be determined; (7) OPM regulations do not require agencies to review or recertify retention allowances affected by pay increases; and (8) OPM has developed regulations and conducted longitudinal studies of Federal Employees Pay Comparability Act (FEPCA) actions at selected agencies.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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