SECTION 32 - PERSONNEL COMPENSATION, BENEFITS, AND RELATED COSTS

Oct 12, 2026

Section 32 provides budget guidance for estimating and justifying federal personnel compensation, benefits, and related costs in agency budget requests. It explains how to calculate pay costs using provisional pay raise estimates, establish hourly rates and within-grade increase offsets, and handle vacancies and potential savings from staffing actions. It also covers awards spending estimates, overtime justification, severance pay and retirement cost effects, and special areas such as agency vetting and Uniformed Services health care.

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CategoryGeneral

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Pages8

Reading Time3 min

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32.1 Personnel compensation estimation

32.2 Agency benefit payments under the Federal Employees' Compensation Act

32.3 Federal employee retirement costs

32.4 Unemployment compensation

32.5 Personnel vetting

32.6 Uniformed Services health care

32.7 Related guidance in Circular A-11

Summary of Changes

SECTION 32—PERSONNEL COMPENSATION, BENEFITS, AND RELATED COSTS Table of Contents 32.1 How should I estimate personnel compensation in my budget request? 32.2 How do I treat agency benefit payments under the Federal Employees' Compensation Act? 32.3 How do I budget for Federal employee retirement costs? 32.4 How do I budget for unemployment compensation? 32.5 How do I budget for personnel vetting? 32.6 How do I budget for Uniformed Services health care? 32.7 Are there other places in Circular A–11 where I can find related guidance? Summary of Changes Updates provisional FERS contribution rates for FY 2027 (section 32.3) . Updates guidance on personnel vetting (section 32.5) . 32.1 How should I estimate personnel compensation in my budget request? Personnel compensation (a) Pay scales. For the purpose of planning agency budget requests for the FY 2027 Budget, agencies should consult with their OMB representative on the provisional estimate for the civilian and military pay raise for January 2027. In making their final estimates for the FY 2027 Budget, agencies should anticipate revising pay raise amounts after the President makes a pay raise decision. Your OMB representative will provide additional guidance during Budget season. The pay guidance above will apply to the statutory pay systems (General Schedule, Foreign Service, and Veterans Health Administration), the Executive Schedule, the Senior Executive Service (SES), and wage grade employees. You should be prepared to provide supporting detail on calculating pay costs, including separate identification of the wage base reflected in the submission. For compensation costs, you must explicitly justify any increases in average compensation for the budget year. (b) Awards and recognition. In FY 2027 budget requests, agencies must provide the following information on agency-wide salary and awards spending: (1) an estimate ofFY 2026 salary spending, excluding salary spending for Senior Executive Service (SES), Senior Level (SL), and Scientific or Professional (ST) positions, (2) an estimate of FY 2026 awards spending as a percent of FY 2026 non-SES/SL/ST salary spending, and (3) the amount requested for FY 2027 non-SES/SL/ST salary spending. Agencies should include an awards budget in the FY 2027 budget request at a level which best meets agency objectives and supports the recruitment and retention of high performing employees. Agencies should be prepared to supply additional information on planned and actual expenditures upon request by OMB. Awards spending is defined as the sum of: (1) individual performance awards for non-SES/SL/ST employees (Nature of Action 840) and,(2) individual contribution awards (e.g., special act awards) for nonSES/SL/ST employees (Nature of Action 849) . (c) Hourly rates. For all employees (as defined in 5 U.S.C. 5504(b)), use hourly rates of compensation determined by dividing the annual rate of basic pay by 2,087, in accordance with section 15203(a) of the Consolidated Omnibus Budget Reconciliation Act of 1985 (Public Law 99–272) . (d) Within-grade increases. Offset the net cost, if any, of within-grade salary increases (i.e., costs after turnover, downgrades, and other grade or step reducing events are taken into account) by savings due to greater productivity and efficiency. (e) Vacancies. For vacancies expected to be filled in the budget year, use the entrance salary for the vacancies involved. (f) Savings in personnel compensation. Give full consideration to savings in personnel compensation due to personnel reductions, delay in filling vacant positions, leave without pay, lag in recruitment for new positions, filling vacancies at lower rates of pay, part-time employment, and grade reduction actions. Identify terminal leave payments, including those for SES, as offsets against such savings. (g) Positions above grade GS/GM–15. Reflect these positions, including SES, only to the extent that positions have

FAQs

How should agencies estimate personnel compensation for a budget request?

Agencies should consult their OMB representative for the provisional January 2027 pay raise estimate, anticipate revisions after a Presidential decision, and provide supporting detail for calculating pay costs and justifying increases in average compensation for the budget year.

How are hourly compensation rates calculated?

For all employees, use hourly rates determined by dividing the annual rate of basic pay by 2,087, consistent with the cited statutory basis.

What guidance applies to overtime and premium pay estimates?

Agencies must fully justify increases in premium pay, and for overtime estimates they should analyze whether overtime is used prudently and efficiently, explore reasonable alternatives like improved scheduling, and ensure approval, monitoring, and audit procedures prevent overtime abuses.

Oct 12, 2026

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