What is the role of the Federal Salary Council and the President’s Pay Agent in setting 2026 federal raises?
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Executive summary
The Federal Salary Council (FSC) recommended a 3.3% across‑the‑board base General Schedule (GS) increase for 2026 based on the Employment Cost Index, and it proposed changes to locality pay areas and special rates [1]. The President’s Pay Agent — the OPM Director, OMB Director and Labor Secretary — reviews those recommendations, issues the annual locality‑pay report and forwards final locality decisions for the President’s action and any executive order or alternative pay plan [2] [3].
1. Who the Federal Salary Council is and what it actually recommends
The Federal Salary Council is a statutorily required advisory body whose nine members are appointed by the President to analyze pay comparability and to recommend locality boundaries, salary survey coverage, and the level of comparability payments that should be made under the locality pay program; its 2026 submission used the Employment Cost Index to propose a 3.3% base GS increase and recommended new or altered locality areas and special rates [4] [1].
2. What the President’s Pay Agent is and how it interacts with the FSC
By executive order the President designates three officials — the Secretaries/Directors of Labor, OMB and OPM — to serve as the President’s Pay Agent; that body receives the FSC’s recommendations, considers them, publishes an annual report on locality pay, and makes final recommendations upward to the President, effectively serving as the bridge between the technical council and presidential action [2] [3].
3. How the technical inputs translate into the President’s pay plan
The FSC bases its topline recommendation on statutory formula components such as the Employment Cost Index; for 2026 the Council calculated the ECI rose 3.8% and therefore recommended a 3.3% base GS increase (ECI less 0.5 percentage point), along with locality adjustments and special‑rate proposals [1]. The Pay Agent evaluates those technical proposals and can accept, modify or decline them before a President issues an alternative pay plan or executive order that sets the actual January effective rates [2] [3].
4. Where the President, OPM and agencies add discretion — law enforcement and special rates
Separate from base GS increases, the President can direct OPM to use special rate authorities to boost pay for selected occupations. For 2026, the Administration’s alternative pay plan directed OPM to provide an additional roughly 2.8% via special rates to certain federal law enforcement categories (bringing some law‑enforcement pay to about 3.8%), a step that is implemented through OPM consultations with agencies after the President’s direction [5] [6].
5. Limits of the advisory process and where politics enters
The FSC’s work is technical and statutory; the Pay Agent’s report is the administrative next step — but neither guarantees final pay. Presidents routinely submit “alternative pay plans” that diverge from FEPCA formulas, and Congress can act separately to pass different adjustments (the FAIR Act and other bills have proposed a 4.3% average for 2026). Past practice shows political and budget priorities, not only the FSC’s formulas, determine final outcomes [3] [7] [8].
6. Practical timeline and implementation mechanics
Statute and practice require annual FSC recommendations and Pay Agent action ahead of the end‑of‑year executive order or alternative pay letter; special rate tables and final pay tables are generally released by OPM in late calendar year for a tentative effective date in January [1] [9] [6]. The President must submit an alternative pay plan to Congress by Sept. 1; OPM then consults with agencies to apply any special rates [5] [6].
7. Competing viewpoints: technical fairness vs. fiscal policy
The FSC and many technical advocates argue for raises tied to private‑sector metrics (the Council cites a pay disparity near 24–27% in recent reports), pushing for formulas that would close that gap [1] [10]. By contrast, presidential alternative plans and some budget authors have emphasized fiscal restraint and selective targeting (e.g., small base increases but higher special rates for law enforcement), shifting the debate from formulaic parity to political prioritization [11] [7].
8. What this means for federal employees and lawmakers now
The FSC supplies the technical case for a 3.3% base increase and locality adjustments; the Pay Agent vets and narrows or approves locality proposals and forwards them for presidential action [1] [2]. Final pay results for 2026 depend on the President’s alternative pay plan, any Pay Agent alterations, and possible congressional legislation — available sources document all three levers in active use for 2026 [5] [7] [8].
Limitations: available sources do not mention internal deliberations of the Pay Agent beyond published reports and do not provide a verbatim final executive order for 2026 in the provided documents; where multiple policy proposals exist, I cite both the FSC technical recommendation and the President’s alternative plan so readers can see the separation between technical advice and political decision [1] [5].