<p>ALEXANDRIA, Va.-NCUA employees have to learn to take their lumps. For the first time, NCUA gave employees a lump sum of a portion of their pay raises up front in March and spread the remainder out through the rest of the year. NCUA Executive Director Len Skiles said that he is pleased with the new manner in which salary raises were handled within the agency this year, and is considering recommending the board make the same decision for FY 2003. Skiles said that the system really helps the agency save money because the salary raises are not compounded. For example, if someone making $100,000 receives a $5,000 pay increase, normally that hypothetical person's salary would come to $105,000. But, under the system the NCUA Board adopted at budget time last year, that person could receive a lump sum of $2,500 and the remaining $2,500 would be applied to their salary. Therefore, next year that person's pay raise would be based on $102,500 salary, rather than $105,000. Obviously, however, NCUA employees are making less money than they would with normal pay increases because their pay increases and retirement benefits will be based on a lower salary. Sherry Turpenoff, NCUA's director of Human Resources, said that she feels employees are generally happy at the agency. "Some people are happy and some people aren't no matter what you do.but I don't think it's a huge sore point," she said. She added that she had not heard of any specific complaints personally. For FY 2002, locality pay increases, or the cost of labor in a particular region, increased an average of 1.01%. This amount is based on data from the Bureau of Labor Statistics and analyzed by a group put together by the president that determines what 95% of the labor rate in an area is, which, in turn, is added to the base pay rate for government employees in a given area. NCUA has little to no control over this. The merit lump sum pay averaged a 2.25% increase and the actual salary increases averaged 1.24% for the entire agency. See chart on this page to see what NCUA executives will make in 2002 factoring in locality and merit raises. At one time in not-too-distant memory, NCUA's salaries and benefits lagged well behind those of the other financial institutions regulators. Now, thanks to the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989, NCUA's package is comparable to the other FIRREA agencies. Using this system, the agency has slowed the progression of salaries in aggregate by $1.9 million just in this year. The program also prevents salary compression, where everyone's salaries begin catching up with the top officials within the payband. When salaries and benefits account for 75% of the agency's budget, Skiles said, that is the first place to look for controlling costs. Skiles said that the agency is in the middle of a mid-year review, but he guessed that the agency was not over budget. Historically, NCUA's actual spending has come in well below budget. [email protected]</p>