LEGISLATIVE EMPLOYEES AND MEMBERS OF CONGRESS Title III, cited as the "Federal Legislative Salary Act of 1963," in section 302, increases salaries of legislative employees in appropriate relationship to classified increases, as was provided in our committee pay bill (H.R. 9531, 87th Congress) last year. Section 303 provides increases, comparable with increases for executive branch officers, for the officers of the agencies in the legislative branch (including the top officials in the U.S. General Accounting Office, the Library of Congress, and the Government Printing Office) and for the officers of the U.S. House of Representatives. Section 304 fixes the Speaker's salary at $50,500 and the salaries of Senators, Representatives, and the Resident Commissioner from Puerto Rico at $35,000. The Randall panel recommends $60,000 and $35,000, respectively. The Randall panel also recommends that the allowances of the Speaker and the Vice President be increased from $10,000 and $15,000, the amount of the salaries of Members "deductible for income tax purposes to offset their living expenses" be increased from $3,000 to $5,000, and that per diem in lieu of subsistence for Members in official travel status be increased from a maximum of $16 (or $30) to $50. No such provisions are in the proposed bill. Section 305 requires that any person appointed to the staff of a Member of Congress must render actual service in the Member's Washington or district office. JUDICIAL EMPLOYEES AND FEDERAL JUDGES Title IV, cited as the "Federal Judicial Salary Act of 1963," increases salaries of employees in the judicial branch generally in proportion to classified salary increases provided by title I. Section 403 increases the salary of the Chief Justice of the Supreme Court from $35,500 to $50,500, and salaries of the Associate Justices from $35,000 to $50,000. The Randall panel recommends $60,500 and $60,000 for these respective offices. Circuit judges' salaries would be increased from $25,500 to $40,500, and other Federal judges would be granted comparable increases. APPOINTMENT AND SERVICE LIMITATIONS; EFFECTIVE DATE Title V, section 501, prohibits nepotism in certain appointments to positions in the Government unless full disclosure of the relationship is made a matter of public record. Section 503 makes the proposed new salaries effective the first pay period which begins on or after January 1, 1964. Mr. MACY. My discussion will focus on the bills now before the committee, the two I have just referred to, introduced by Mr. Udall and Mr. Broyhill. These bills would provide a comprehensive revision of statutory salaries in the executive, legislative, and judicial branches of the Government. I commend Mr. Udall and Mr. Broyhill for their action in preparing and introducing this broad proposal. I wish to assure you that they have the active support of the Civil Service Commission. Today, Mr. Chairman, I would like to pick up a particular thread from my earlier testimony before the committee on August 13, in support of the adjustment of statutory salary schedules recommended by the President. Several committee members suggested at that time that the top rates of career schedules and top executive salaries are now so interrelated that action on the proposed statutory schedules could not be thoughtfully considered before a proposal for adjustment of top executive rates was introduced. This was a most reasonable view, considering, for example, that the salary proposed for grade GS-18 was $25,500 and the present salary for the Secretary of a Cabinet department is $25,000. This interrelationship was recognized in the President's proposal by provision for a $20,000 limit on the salary rates actually payable under the recommended career schedules, with the limitation to remain in effect until top executive salaries were adjusted. The constructive bills now before you include both the President's recommendations for carrying out the comparability policy of statutory salary systems and broad proposals on top executive, legislative, and judicial pay. They thus supply in concrete form the missing feature identified by committee members when I appeared here in August. There is little to add to my earlier statement on the President's recommendations for increasing salary rates of the four statutory salary systems covered by the Federal Salary Reform Act of 1962. The recommendations would be made effective by title I of H.R. 8716. The salary adjustments proposed are called for by, and are in strict accordance with, existing statutory requirements. They would carry out the salary policy prescribed by the act that Federal salary rates shall be comparable with private enterprise salary rates for the same levels of work. They are based on an authoritative Bureau of Labor Statistics survey of salaries paid by private firms. They should be enacted, both in fairness to Federal employees and in the interest of competent staffing of the Federal civil service. Title II covers salaries of the highest executives of the Government under the President, including the Vice President; Secretaries, Under Secretaries, and Assistant Secretaries of departments; heads and assistant heads of independent agencies; chairmen and members of commissions and board; and Chiefs of major bureaus. I might add as an insert, Mr. Chairman, this covers approximately 400 positions under this title. Rates proposed range from $40,000 for level I down to $27,500 for level VI. Positions to be paid in levels I, II, and III are listed in the bill itself; positions would be placed in levels IV, V. and VI by the President. I emphasize again, Mr. Chairman, the statement made by Mr. Gordon that the administration endorses the executive salary provisions and levels in title II of these bills. In reality, the proposed salaries are probably not as large as they should be to recognize fairly the responsibilities of these national offices today. Proposed rates are somewhat less than those recommended by the President's Advisory Panel on Federal Salary Systems, the Randall committee, following extensive development and study of information on executive compensation in other public and private organizations. The salary proposed for a Cabinet member is also lower than the $50,000 or more favored by a majority of nearly 400 leaders in 'American life polled by the National Civil Service League, on which Mr. Gladieux testified before your committee sometime ago. Nevertheless, the salaries proposed represent a vast improvement over present conditions. They would substantially relieve the compensation disadvantage of the Federal executive among American executives generally. In addition, they would permit the statutory salary schedules of career systems to be adjusted as required by the statutory comparability policy without conflict between their top rates and salaries of the top executive echelons. In this connection, they not only allow the adjustment now proposed in the schedules of the Classification Act and the three related systems: they also make an allowance for future career-schedule increases without the necessity for reopening top executive salaries. As recommended by the President's Advisory Panel, the salary for level V should constitute the ceiling which top career salaries may approach but not exceed. The $30,000 salary for level V would provide an initial $4,500 gap between this ceiling and the GS-18 rate of $25,500. I agree with the President's Advisory Panel on Federal Salary Systems that the higher ranges of Federal executive compensation cannot be and need not be fixed at rates comparable with the higher ranges of executive compensation in business and industry. Rates proposed in H.R. 8716 and 8717 are entirely consistent with this viewthey are far below business and industry executive compensation levels. If the committee feels any need for data on this point, I shall be glad to furnish later, for the committee's use and for the record, information on executive compensation in private firms. Fairness to the individuals in the Federal service and the good of the service itself, however, requires that Federal executive salaries maintain an equitable relationship with salaries in other public service fields in the United States. This is not now the case. During the 7 years since the last general adjustment in 1956, Federal executive pay has remained stationary, while pay rates in State and local governments, in colleges and universities, and in foundations, have been moving ahead with the advancing levels in the total national economy. To illustrate State and local government executive levels, as the result of a Civil Service Commission staff study we know of more than 1,000 positions with compensation of $25,000 or more. Over onefourth of these, 276, pay $30,000 or more. The $25,000 or over positions are distributed geographically among 39 States, leaving only 11 that do not include at least one public agency paying a rate higher than that of Federal Cabinet officers. The study made by the Commission did not result in 100-percent coverage when it was made last spring. Although it attempted to cover all State governments, it did not reach into many localities with a population below 350,000. Even since the study, more positions have crossed the $25,000 line. A recent newspaper article, for example, mentioned the $30,000 salary that Kentucky has established for the had of the university. Incidentally, this means that there are currently ta least 40 States in which public service positions paying $25,000 or more are found. Today, a salary of $30,000 for the head of a college or university is no longer a rarity. According to a 1962 report of the National Education Association, 81 presidents and 31 vice presidents receive $25,000 or more annually. Another 1962 report, of the Office of Education of the Department of Health, Education, and Welfare, shows these average or mean salaries in the larger universities and colleges: Statistics furnished by the Internal Revenue Service, in May 1963, indicate the level of salaries of the principal executives in tax-exempt foundations. Executive titles vary among organizations, but among the 17 large foundations for which salaries were reported there are 8 presidents, with an average salary of $38,050; 12 vice presidents, average salary $29,500; and 12 directors and trustees, average salary $28,652. Thus, the two principal reasons for adjusting Federal executive compensation levels at this time are: 1. To permit the sound, statutory principle of comparability between Federal and private enterprise pay to operate effectively for career salary systems, and 2. To provide reasonably equitable compensation for the Govern ment's executive officers. These are compelling reasons. Adjustment of top Federal salaries as proposed in H.R. 8716 and H.R. 8717 would complete the reform of Federal salary systems that began so auspiciously with enactment of the Federal Salary Reform Act of 1962. Executive pay improvements proposed in the bill, coupled with application of the comparability principle at career levels, would establish an effective, equitable, and up-to-date salary structure for the Federal service. Thank you very much, Mr. Chairman. The CHAIRMAN. Are there any questions? Mr. GROSS. Mr. Chairman. The CHAIRMAN. Mr. Gross. Mr. GROSS. Mr. Macy, you have used the salaries paid to university heads, presidents of universities. Mr. MACY. Yes, sir. Mr. GROSS. Where do they derive their income? Mr. MACY. Where do the universities derive their income? Mr. MACY. There are two types of universities I have cited here, private institutions that derive their income from tuition, gifts, endowments, campaigns among friends; and public institutions, that derive their income from tuition and tax revenues provided by the States. Mr. GROSS. You have left out one of the most important, Mr. Macy, and that is the hundreds of millions of dollars today being spent by the Federal Government on universities, and I am sure you know this. For instance, our Manpower Utilization Subcommittee has found that 75 cents out of every dollar expended by the Massachusetts Institute of Technology comes from the Federal Government. Mr. MACY. It is true that many universities, particularly a small number of larger universities in the technical field, receive funds from the Federal Government, but I don't feel that is relevant to my refer ence. Mr. GROSS. I wonder if we could get from the Budget Bureau-I doubt your Department has it—a breakdown of all of moneys, millions and hundreds of millions of dollars being spent by NASA, by the Atomic Energy Commission, by the U.S. Arms Control and Disarmament Agency, by Defense Department, by the Agency for International Development, NASA; could you provide us with the figures of all of the contracts held by these agencies and the amount that has been expended, not held by the agencies, but held by the universities, heads of the colleges? Mr. STAATS. Contracts or grants. Some are in the forms of contracts and others in the form of grants. Mr. GROSS. Yes, sir; and the Peace Corps. I don't want to pass up the Peace Corps. Contracts with universities and colleges. Mr. STAATS. Did you say for the current fiscal or last fiscal year? Mr. GROSS. Give it to us for the last 3 years, something like that. Mr. STAATS. This information is available. Mr. GROSS. And I hope you will send a copy of it to my friend, Mr. Macy, for his edification, since he has used the university presidents as a criteria for this kind of pay increase legislation. Mr. MACY. Mr. Gross, I feel your argument is quite irrelevant as far as the salary levels of university officials are concerned. Mr. GROSS. You feel that it is entirely irrelevant if an institution such as MIT, 75 cents out of every dollar expended there comes from the Federal Government? Mr. MACY. I am not talking about MIT. I don't want to cite any particular institution. I think this would be inappropriate. What I am saying is that the levels I have cited for chief executives of educational institutions, it seems to me, are independent of the nature of their income. Mr. GROSS. You feel that this has no bearing whatever upon the salaries they pay, the fact that they hold these fat Government contracts? Mr. MACY. I don't feel this influences the salaries that the Board of Trustees or Regents determine is appropriate for these officials. Mr. GROSS. Let me ask you, Mr. Macy, about the salaries in levels IV, V, and VI proposed increases. Mr. MACY. Yes, sir. Mr. GROSS. First of all, how many people do you estimate are in these three brackets, IV, V, and VI? Mr. MACY. I estimated there were 400 in all six, not counting positions in the Foreign Service, and I believe that approximately 100 of them are in levels I, II, and III. This would mean that approximately 300 positions would be in the others. Mr. GROSS. Are these salaries fixed by the President? Mr. MACY. Under the proposal in title II, the positions placed in levels IV, V, and VI would be determined and placed there by the President. Mr. GROSS. So he could pay how much, all the way from $27,500 to $33,000? Mr. MACY. The legislation, Mr. Gross, starting on page 35 specifies in subsections (d), (e), (f), and (g) the general character of the positions that the President would be able to place in those levels. So that the degree of discretion would be bound by those descriptions in the statute. For example, in subsection (e), at the bottom of page 35, on line 20, the text of the bill reads: Officers and positions which the President is authorized to place in level IV include assistant secretaries of executive and military departments, members of regulatory boards and commissions, deputy heads of large agencies, heads of certain agencies and bureaus, and such other offices and positions, the duties and responsibilities of which he deems appropriate for this level. So that within the criteria cited in that section for level IV, and in the following sections for V and VI, the President would place these positions. |