(c) The table of contents of chapter 73, title 38, United States Code, is amended by striking out

"4103. Appointments and compensation."

and inserting in lieu thereof:

"4103. Office of the Chief Medical Director.".

SEC. 132. Section 4107 of title 38, United States Code, relating to grades and pay scales for certain positions within the Department of Medicine and Surgery of the Veterans' Administration, is amended to read as follows:

"4107. Grades and pay scales

"(a) The per annum fuli pay scale or ranges for positions provided in section 4103 of this title, other than Chief Medical Director and Deputy Chief Medical Director, shall be as follows:

"(b) (1) The grades and per annum full-pay ranges for positions provided in paragraph (1) of section 4104 of this title shall be as follows:

"(2) No person may hold the director grade unless he is serving as a director of a hospital, domiciliary, center, or outpatient clinic (independent). No person may hold the executive grade unless he holds the position of chief of staff at a hospital, center, or outpatient clinic (independent), or the position of clinic director at an outpatient clinic, or comparable position."

PART D-EMPLOYEES SUBJECT TO THE FOREIGN SERVICE ACT

FOREIGN SERVICE OFFICERS

SEC. 141. The fourth sentence of section 412 of the Foreign Service Act of 1946, as amended (22 U.S.C. 867), is amended to read as follows:

"On the first day of the first pay period which begins on or after January 1, 1964, the per annum salaries of Foreign Service officers within each of the other classes shall be as follows:

FOREIGN SERVICE STAFF OFFICERS AND EMPLOYEES

SEC. 142. Subsection (a) of section 415 of such Act is amended to read as follows:

"(a) There shall be ten classes of Foreign Service staff officers and employees, referred to hereafter as staff officers and employees, and on the first day of the first pay period which begins on or after January 1, 1964, the per annum salaries of such staff officers and employees within each class shall be as follows:

SEC. 143. Foreign Service officers, Reserve officers and Foreign Service staff officers and employees who are entitled to receive basic compensation immediately prior to the effective date of this title at one of the rates provided by section 412 or 415 of the Foreign Service Act of 1946, shall receive basic compensation on and after the effective date of this Part at the rate of their class determined to be appropriate by the Secretary of State.

PART E-MISCELLANEOUS PROVISIONS

CONVERSION RULES-EMPLOYEES RECEIVING SPECIAL RATES

SEC. 151. Section 504 of the Federal Salary Reform Act of 1962 (76 Stat. 842) is amended by inserting after subsection (c) thereof a new subsection to read as follows:

"(d) The rate of basic compensation, established under this section, and received by any officer or employee immediately prior to the effective date of a statutory increase in the compensation schedules of the salary systems specified in subsection (a) shall be initially adjusted on the effective date of such new compensation schedules in accordance with conversion rules and regulations prescribed by the President or by such agency or agencies as he may designate.

REVISION OF SALARY LIMITATIONS FOR CERTAIN POSITIONS

SEC. 152. That part of section 201(f) of the National Aeronautics and Space Act of 1958 (72 Stat. 428; 42 U.S.C. 2471 (f)), fixing a limit of $19,000 on the compensation of seven persons in the National Aeronautics and Space Council is amended by striking out the words "compensated at the rate of not more than $19,000 a year," and inserting in lieu thereof "compensated at not to exceed the highest rate of grade 18 of the General Schedule of the Classification Act of 1949, as amended,”.

CEILING PROVISION

SEC. 153. Notwithstanding any other provision of this Act, except as provided herein, the rates of basic compensation in excess of $20,000 per annum provided in this Act shall become effective on the effective date of legislation adjusting the compensation of heads of executive departments and other Federal officials and until such effective date the rate of basic compensation of each officer and employee subject to this Act shall not exceed $20,000; Provided, That no rate of basic, gross, or total annual compensation or salary shall be reduced by reason of the enactment of this Act.

EFFECTIVE DATE

SEC. 154. Except as otherwise expressly provided, this Act shall become effective on the first day of the first pay period which begins on or after January 1, 1964.

32-884 0-64- 2

REPORT OF THE ADVISORY PANEL ON FEDERAL

SALARY SYSTEMS

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET, Washington, D.C., June 12, 1963.

THE PRESIDENT,
The White House,
Washington, D.C.

DEAR MR. PRESIDENT: I have the honor to present to you the final report of the Advisory Panel on Federal Salary Systems. In your letter of January 29, 1963, you referred to the report of the Senate Post Office and Civil Service Committee on the Federal Salary Reform Act of 1962 (Public Law 87-793) and asked us to consider three subjects: (1) appropriate levels for executive salaries; (2) the relationship between executive salaries and those payable to career employees; and (3) the relationship between executive salaries and those paid to Members of the Congress and the judiciary. The pertinent part of the Senate committee's report reads as follows:

The administration was aware of the fact that salaries it proposed for top career positions would raise the pay of a number of civil servants to a level above that paid to their chiefs in Cabinet, subcabinet, and similar positions. In his message of February 20, 1962, relative to salary reform the President recognized that the salary level of these top executives has been quite properly related with the salary level of Congress, and that in his opinion both were inadequate. He indicated that representatives of the executive branch stand ready to cooperate with the Congress in determining what executive and congressional pay scales would be appropriate.

Consequently the committee urges the President to recommend for consideration at the next session of Congress appropriate increases in Federal executive salaries at all levels. Such a recommendation should include salaries for all ranks up through the level of heads of executive departments. In addition, it should include proposals for a rational relationship between executive salaries under the Executive Pay Act for those under other Federal schedules.

In its earlier work the panel, in the main, limited itself to the review of proposals prepared in the executive branch and already before the administration in concrete form. Our present effort differs substantially in that we are now charged with the responsibility of developing our own proposals to you on the three specific subjects listed above. We present our conclusions and recommendations as an impartial expression of judgments as to need, equity, and appropriate relationships among executive, legislative, and judicial pay scales.

We have been deeply impressed by the vast growth in the problems and responsibilities of the Federal Government during the years since the end of World War II. No other period in our history has produced a parallel increase in demands upon Federal officers for the kinds of experience and ability now needed to plan, legislate, and administer programs and activities at home, abroad, and in outer space, and to provide for prompt adjudication of matters referred to our courts.

We are engaged in an intensive effort to obtain better and more efficient ordering of national affairs in a world of change.

There stands out in boldest relief the need for excellence in all three branches of our Government. That excellence will neither be obtained quickly, nor will it be retained for adequate periods, until we compensate our top officers on a basis commensurate with the complex and difficult roles assigned to them. The panel, therefore, recommends early enactment of comprehensive legislation which will (1) establish appropriate levels for executive salaries, and (2) relate those salaries both to the salaries of career employees and to the salaries of the Members of Congress and the judiciary.

The panel has had the advice and assistance of the Director of the Bureau of the Budget, the Chairman of the U.S. Civil Service Commission, and staff members of both agencies working together to prepare analytical and comparative materials for our consideration. We acknowledge their contributions to our deliberations.

THE PRINCIPLE OF COMPARABILITY

On April 29, 1963, you transmitted to the Congress the first annual comparison of Federal civilian career salaries with those paid in private enterprise. In your message of transmittal, you reaffirmed your support of the provisions of the 1962 Salary Reform Act which adopted the principle of comparability between pay for Government jobs and the average pay for private enterprise work at the same levels. We express our hope that the Congress will take prompt and favorable action on your recommendations to establish full comparability up to grade GS-15 and to approach as near to full comparability as is feasible for grades GS-16-18.

Without favorable action on these matters by the Congress, career pay will not keep pace with the changes which occur in private industry, and the executive and legislative branches will both be faced. with recurrent demands for pay adjustments which are not based upon reliable statistical comparisons.

We believed a year ago that the compensation of appointive officers in the executive branch does not need to be, and probably cannot be, fixed in terms of comparability with private enterprise. No data have been presented to us which have caused us to change our minds. We now hold the same view with respect to the Members of Congress and the Federal judiciary.

We affirm our belief that it would be difficult, if not impossible, to find positions in the private sectors of out economy which are reasonably comparable with the top offices in our Government. Obviously, no direct comparisons are possible between our legislators and judges and executives in business and industry. So far as the executive branch is concerned, we believe that any proposal for comparable pay between top appointive officers and business executives runs into difficulties which cannot be set aside. In the first place, the opportunity to serve and the prestige which accompanies high office cannot be measured in terms of the dollar value of a salary. Second, executive salary scales in business and industry extend across a wider spectrum both in terms of dollars paid and responsibilities assigned to principal officers than it would be feasible to establish in the Federal Government. To make only 1 comparison, the 1961 median

salary for the top executive in 1,157 corporations (subdivided into 7 categories: manufacturing, retail trade, banks, rail and air transportation, gas and electric utilities, mining, and life insurance) ranged from $91,000 per annum in manufacturing firms to $53,000 per annum for life insurance companies. We know of no objective means of comparing presidents of concerns in any of these categories with a Cabinet officer or a major agency head. Certainly the Cabinet officer, and numerous other Federal officers, have duties and responsibilities equal to or greater than any to be found in private enterprise. In summary, we have come to the following conclusions:

1. The Federal Salary Reform Act adopted a manifestly sound principle in establishing comparability with private enterprise as the general standard for career pay scales.

2. The establishment of comparability pay rates for the career service (without concurrent upward adjustment of executive pay) has further aggravated inequitable compression in top pay throughout the Federal Government.

3. The higher ranges of executive pay should be fixed well above the levels of career pay, but need not, and cannot, be fixed meaningfully at rates comparable with the higher ranges of executive compensation in business and industry.

4. Some kinds of positions now included in the Executive Pay Act or paid at rates established under special statutes, should be transferred to the Classification Act salary structure.

5. The lower ranges of executive pay for appointive positions, including the rates now established for certain offices by numerous special statutes, can justifiably be overlapped by the top pay for some nonappointive, professional, or career-type positions, but there should be a thoroughgoing administrative review of all positions in the overlapping zone in order to insure the propriety of the ranking. For example, some career bureau chiefs and their deputies and some specialized professional or staff positions have responsibilities equal to or greater than those of a number of appointive positions paid either under the existing Executive Pay Act or at executive pay rates established in special pieces of substantive legislation.

6. A new executive, legislative, and judicial salary structure, as recommended in a subsequent section of this report, will establish rational relationships (a) between executive and career salaries, without detriment to the principle of comparability, and (b) among executive, legislative, and judicial salaries.

PRINCIPLES FOR FIXING THE EXECUTIVE SALARY LEVEL

In the light of the conclusions just stated, our first task was to decide upon principles for fixing the executive salary level.

Looking at the career salary structure on the one hand, and at the executive salary structure on the other, logic and equity of treatment for individuals under both systems support the first basic principle which we recommend for fixing the executive salary level. This principle has two elements: (1) establishing a sound progression from top career salaries to successively higher executive pay levels, and (2) setting of executive pay levels at such intervals that they will reflect on a uniform and rational basis the differences in importance and responsibility among the several classes of positions paid at executive rates.