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Federalism, both as a system and as an organizing principle, provides U.S. subnational governments (states, counties and cities) with considerable autonomy from the federal government in relation to their civil service arrangements. In only one instance has the federal government intervened legislatively – that was to enforce the principle of merit-based recruitment. Negotiations, consensus and cooperation have come to characterize inter-governmental relations. Subnational governments implement new approaches to personnel and public sector management by choice, rather than by statute.

At both the national and subnational levels the impetus to create a modern civil service responsive to the demands of an expanding state came at the turn of the century.

At the national level the Pendleton Act of 1883 provided for the rationalization and centralization of institutional arrangements. A new organization, the U.S. Civil Service Commission (CSC), would organize the management of personnel and establish merit-based recruitment procedures. Although rulemaking authority in this area was originally vested in the President, the CSC gradually grew more independent and remote from the executive.

In 1977 President Carter organized the Federal Personnel Management Project to review federal personnel management. A year later the Civil Service Reform Act (CSRA) transformed existing institutional arrangements. In the reorganization that followed, the Civil Service Commission was abolished and its functions divided between two new agencies. The Office of Personnel Management (OPM) would provide advice on personnel policy and procedure, facilitate execution, and coordinate recruitment efforts. An independent Merit System Protection Board (MSPB) would take up employee complaints or appeals. (The CSRA also created the Senior Executive Service, as noted below.) 

At the subnational level, the National Civil Service League’s Model Public Personnel Administration Law of 1970 had a major impact on state and local governments. Many of these governments adopted the institutional arrangements suggested by the model as the basis for their new personnel policies and regulations. Additionally, the managerial emphasis of the CSRA had an impact on subnational personnel systems. Although not required by law, local governments in 32 states initiated reforms modeled on the innovations of the CSRA.

Policy/Strategy

At the national level, the abolition of the CSC and advent of the OPM reinforced central authority over, and involvement in, personnel policy. The Director and Deputy Director of the OPM, appointed by the President, offer advice on personnel management and coordinate the government’s personnel program. The OPM has responsibility for developing civil service policy on remuneration, conditions of employment, recruitment, and promotion.

The efforts of the Reagan administration to de-privilege the civil service effectively limited funding for CSRA directives. Nevertheless, Reagan was adept at using the additional power afforded the President under the CSRA to increase the conservative presence in the SES.

Neither the OPM, nor any other agency of the national government, determines strategy or policy at the subnational level. These are determined by state executives with input from state legislatures.

Both the Reagan and Bush administrations sought to solidify the separation between national and subnational governments by cutting program funding and leaving states, for the most part, to make up the slack. Yet, as advocates of adapting private sector management techniques for the public sector, the Reagan and Bush administrations attempted to influence civil service arrangements, as well as the delivery of goods and services, at the subnational level. While Congress succeeded in mediating the impact of these directives, the push for privatization and efficiency did influence personnel management program content and service delivery at the subnational level.

The Clinton administration has attempted to reinvent government with the National Performance Review (NPR) and the Government Performance and Results Act of 1993. These initiatives combine various aspects of the new public management with a particularly strong emphasis on managing by results. The NPR, formulated by career civil servants, recommended new institutional arrangements to ease the hiring, firing or retention of employees.

Legislation and Regulations

While reviews are common, major reforms of the federal civil service are infrequent. Incremental changes enacted by individual administrations are more typical. Watershed civil service reforms generally take the form of statutes, like the CSRA and GPRA. These rely on further legislation and regulations for implementation. Additionally, measures with a more limited purview, like the Whistleblowers Protection Act of 1989 and the False Claims Act of 1986 also take the form of legislation.

Designation. Designation of civil servants is decentralized. The corps of federal civil servants is wholly separate from the corps at the subnational level; the center has no authority over designation in the periphery. National civil servants can be seconded to congressional bodies or commissions. As for secondment between national and subnational governments, there is no standardization of rank, grade, or position to facilitate this. That said, federal civil servants do assist state and local civil servants with the implementation of federal programs, although this is not done on a formal basis.

Recruitment. The federal government determines procedures for recruiting national-level civil servants. The OPM is responsible for designing exams. Applicants for entry-level management positions must take the new "universal" exam, Administrative Careers with America. Unlike more traditional exams, the universal exam attempts to evaluate a candidate’s potential, based on assessments of reasoning and quantitative abilities, personality profile, and individual achievement.

At the subnational level, state and local governments have not been compelled to end their reliance on more traditional written exams. However, a large number, 87%, have begun to practice some form of additional validation of results.

Only thirty-six states use fully merit systems for recruitment. The other 14 use a more limited merit-based system. Recruitment has been the one area in which the federal government directly intervened. The Social Security Act Amendment of 1939 required the use of merit systems in state agencies that manage federally-assisted health, welfare, employment, security and civil defense programs. The Intergovernmental Personnel Act of 1970 offered grants to states and localities wishing to establish or refine merit-based systems. The Reagan administrative eliminated the funding for this program.

Structure and Career Management: Establishment control. At the national level, departments and agencies assess their needs and request additional FTEs. Needless to say, these are subject to the negotiations over the federal budget, which includes line items for agency FTEs. Similarly, subnational governments are responsible for assessing need and establishing positions in state and local governments.

Structure and Career Management: Appointment and mobility. The federal government is responsible for the appointment of federal civil servants. State and local appointments are not subject to the approval of the federal government.

Employment Framework. At the national level, civil servants are paid from the central budget. The amount of resources allocated per agency is also determined centrally. Negotiations between the Congress and the executive produce agreements on remuneration, the resources available and the determinants of pay. The Pay Act of 1970 made permanent the principle of comparability between public- and private-sector wages. It also established a wage ceiling: wages could not exceed those of Congress. In the 1980’s the Reagan administration and Congress agreed to pay increases which would maintain this comparability, but Reagan reduced the funds available for performance related bonuses envisaged in the CSRA. By the late 1980s senior managers were underpaid by 30% to 40% relative to private sector counterparts. Several grades were receiving the same salary due to the salary cap. Thus, a number of federal managers reacted to low pay and pay compression by leaving for better-paid jobs in the private sector.

The Federal Employment Pay Act of 1990 ameliorated some of these problems. It loosened the linkage to congressional salaries, and allowed for some comparability between the private and public sector for managers. To implement the provisions of the Act, Congress established the Federal Salary Council. Congress has also been responsible for establishing a classification system for federal civil servants. Classifications based on duties, responsibilities, and skill-level are linked to the remuneration system.

Subnational budgets are distinct from the federal budget. For the most part they use their own revenues to cover the wage bill. An exception is personnel that manage federally subsidized programs. Still, these positions remain within the pay parameters of the state or locality.

Subnational governments generally establish some form of classification system, either one for all public employees or separate classification systems by sector or employment type. Classification is generally linked to remuneration, and norms of comparability with the private sector do exist. Average salaries for state employees are actually above those in the private sector, while in local government they are just below.

Again, despite the separation between national and subnational governments, the CSRA’s promotion of merit-based remuneration schemes had an impact at the subnational level. By 1980 local governments in twenty states had begun pilot programs to experiment with merit-based pay systems.

Performance Management. The national government determines policies and procedures for performance measurement for the federal civil service. The CSRA inaugurated a new performance evaluation system that eliminated the time honored 3-category rating system (outstanding, satisfactory, unsatisfactory) and required more sophisticated arrangements for linking performance assessment to promotion. The OPM, as the standard setter, assisted agencies in devising new rating procedures and approved them prior to implementation. At that time, however, both the GAO and National Academy of Public Administration expressed doubts about the timetable for developing these rating systems and appraisals. More recently, GPRA has also emphasized assessing performance within the Managing by Results framework.

To guarantee greater mobility for senior civil servants, the CSRA established the Senior Executive Service (SES) to facilitate lateral movement and reassignment for those in grades GS-16, 17 and 18, and Executive Levels IV and V. The SES was also intended to reward those who performed well with large cash bonuses, and to allow for dismissal in the case of substandard performance without the usual civil service protections. The performance-based bonus system faltered as the Carter administration and Congress decided to restrict the number of SES members who could receive bonuses; the Reagan administration also underfunded the bonus program.

At the subnational level, states preceded the CSRA’s push to reward high-level executives with a SES placement. In 1963 California was the first of four states to initiate an executive personnel system prior to the CSRA. After 1978 ten other states were encouraged to do the same. Generally these systems cover only 1% of the state’s executive personnel. It is unclear how useful they have been in improving performance or in developing a cadre of top careerists.

The CSRA also generated a sub-national push for performance evaluation in many civil service systems. After 1978, over 30% of state and local governments implemented some form of performance evaluation for civil servants.

Training and Development. At the national level, Congress (in 1958 and 1972) mandated the development of in-service training programs to encourage the upward mobility of lower- and middle- level personnel. The Johnson administration established the Federal Executive Institute, now under the direction of the OPM, for supergrade administrators.

States and localities are responsible for their own training programs. These tend to be less developed than those in the federal system. Reliance on university programs is common.

Accountability. At the national level, the Government Accounting Office (GAO), which serves as the audit/research arm of the Congress, conducts external audits. The GAO conducts financial compliance operations and program audits. Internal audits are conducted by the Inspectors General. Formally instituted in 1978, there are now sixty IG offices in operation. The IG is charged with exposing waste, fraud and abuse and helping federal administrators to eliminate these problems. Additionally, the MSPB maintains some audit functions as the appellate arm of the civil service. It can conduct studies and review OPM rules and regulations.

At the subnational level, states and large cities are responsible for their own auditing arrangements. Some use comptrollers to conduct audits. In smaller localities, outside accounting firms are hired for financial audits.

 

This page was authored by Robin Silver with Nick Manning. It was submitted on 11/1/00.

 




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