	Most Recent Legislative Developments

The "Foreign Service Overseas Pay Equity Act of 2008," H.R. 3202 , as amended, would eliminate, over three years, the pay difference between those Foreign Service personnel serving in Washington, D.C. and those serving abroad who are not eligible for a locality pay adjustment. This bill was referred to both the House Committee on Foreign Affairs (HCFA) and the House Committee on Oversight and Government Reform (HOGR). On July 16, 2008, HCFA favorably reported the bill by voice vote. On August 1, 2008, an identical companion bill was introduced in the Senate, S. 3426 , and referred to the Senate Committee on Foreign Relations (SFRC). Introduction

At a time when 55% of U.S. Foreign Service personnel are serving at a hardship and/or danger post, the 110 th Congress, in its closing days, may choose whether and how to address an issue that both the Department of State and the Foreign Service consider to be a high priority personnel issue—the elimination of a 20.89% pay difference between service in the Washington, D.C. and service abroad for the vast majority of the members of the Foreign Service below the Senior Foreign Service level. While opponents question the need for a change in the compensation system because of the other allowances and benefits that Foreign Service often get when serving abroad, proponents for the elimination of the pay difference contend that the disparity has negative implications on the morale of the Foreign Service, considerations about overseas assignments, and possibly eventually on retention. Legislative Background in the 109th and 110th Congresses

During the 109 th Congress, Republican and Democratic leadership of both the House Committee on International Relations and the Senate Committee on Foreign Relations worked to resolve this pay differential issue by developing a proposal called the Foreign Service Compensation Reform. This proposal—developed through negotiations among the House and Senate committees, the Administration, and AFSA—would have (1) placed the Foreign Service compensation system on a pay-for-performance (PFP) basis with pay adjustments made only on the basis of performance and not longevity, and (2) eliminated the current pay difference by creating a new worldwide pay structure at the Washington, D.C., salary level over two years. H.R. On July 16, 2008, the Senate Appropriations Committee reported its FY2009 State Department/Foreign Operations and related programs appropriations legislation, S. 3288 . This bill provided sufficient funding levels to meet the Administration's request. 3202 , as amended, which, without providing for a performance-based pay system, would eliminate the pay disparity over three years. On September 23, 2008, the SFRC considered and reported S. 3426 without amendments. While the Administration is seeking changes to the personnel system to make it performance-based, Foreign Service personnel believe that its personnel system is already a performance-based system. Why Change the Compensation System? Administration Perspective: To Correct the Pay Difference and Move Another Element of the Federal Service to a Full Pay-for-Performance Personnel System

The George W. Bush Administration, in its FY2009 budget, requested $35.9 million for the Department of State to fund the first step of transition to a performance-based system and a global rate of pay for Foreign Service personnel at grades of 01 and below. 3202, as amended, and S. 3426

		Foreign Service Overseas Pay Equity Act of 2008

Both H.R. 3.
Proponents of revisions in the Foreign Service compensation system point out that as increasing numbers of Foreign Service personnel are going to posts of increased hardship and danger, Foreign Service personnel serving abroad receive 20.89% less than their colleagues who are posted in Washington, D.C. due to the loss of locality pay when serving abroad. These proponents of revision maintain that this difference negatively impacts morale and assignment considerations, and eventually retention also. Both the 109th and 110th Congresses have considered proposals to eliminate this pay difference.
The American Foreign Service Association (AFSA) has been working for several years with congressional supporters to change the compensation system. Since FY2007, the George W. Bush Administration has requested funds to create a new performance-based compensation system for the Foreign Service and eliminate the pay differential. For FY2009, the Administration requested $34.7 million for the first stage of a transition to pay equity. The Senate Appropriations Committee provided sufficient funding to meet the Administration's request in its appropriations bill, S. 3288, reported on July 18, 2008.
The "Foreign Service Overseas Pay Equity Act of 2008," H.R. 3202, as amended, would eliminate the pay differences over three years. This bill was referred to both the House Committee on Foreign Affairs (HCFA) and the House Committee on Oversight and Government Reform (HOGR). HCFA reported the bill on July 16, 2008. An identical bill was introduced in the Senate, S. 3426, on August 1, 2008, and was referred to the Senate Committee on Foreign Relations (SFRC). The SFRC reported the bill, without amendments, on September 23, 2008.
The major difference between the Administration's proposal and the current legislation is that the Administration, while proposing to eliminate the pay difference over two years, also seeks to develop a new performance-based worldwide compensation system for the Foreign Service. H.R. 3202 and S. 3426 would eliminate the pay differences over three years without reference to developing a new performance-based system. AFSA states that the Foreign Service personnel system is already performance-based, and the pay adjustment proposals eliminate an unintended inequity. Others with concerns about the legislation, however, state this is basically a pay increase for the Foreign Service and question whether increases are needed because of the benefits and allowances Foreign Service personnel generally receive when posted abroad. This report discusses (1) the legislative background leading to a proposal to change the compensation system, (2) the current Foreign Service personnel system and why the Foreign Service views it as already performance-based, (3) an examination of why the Foreign Service and the Administration are both requesting that Congress change the compensation system, (4) an examination of H.R. 3202 and S. 3426, the "Foreign Service Overseas Pay Equity Act of 2008," and (5) some issues that Congress might be asked to consider. This report may be updated.