REPORT ON RECRUITMENT, RETENTION AND OPERATIONAL PROBLEMS FACING THE NEW YORK OFFICE OF THE FEDERAL BUREAU OF INVESTIGATION CAUSED BY THE HIGH COST OF LIVING, AND A PLAN FOR REMEDIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00530R000701770001-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 41
• Document Creation Date: December 23, 2016
• Document Release Date: October 26, 2012
• Sequence Number: 1
• Publication Date: February 1, 1988
• Content Type: REPORT

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Report on on Recruitment, Retention and Operational
Problems Facing the New York Office of the
Federal Bureau of Investigation Caused by the
High Cost of Living, and a Plan for Remedies
Federal Bureau of Investigation
Office of Personnel Management
February 1988
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TABLE OF CONTENTS
I.
EXECUTIVE SUMMARY
1
II.
ANALYSIS OF THE COST OF LIVING AND RELATED
FACTORS IN THE GREATER NEW YORK
AREA
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A. Background
5
B. Cost of Living
7
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C. Housing Costs
10
D. Salaries
13
E. Personal Impact
14
III.
IMPACT OF COST OF LIVING ON FBI
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STAFFING/OPERATIONS
15
A. Background
16
B. Staffing
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C. Operational Impact
18
D. Cost
21
IV.
PLAN FOR REMEDIES
22
A. Introduction
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B. Recommendations
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1. Mobility and Retention Allowances
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2. Special Rates
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C. Other Options
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APPENDIX
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I. EXECUTIVE SUMMARY
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Section 502 of the Intelligence Authorization Act of
1988 required the Director of the Federal Bureau of Investigation
(FBI) and the Director of the Office of Personnel Management
(OPM) to prepare a study on the effect on recruitment, retention
and operations of employees of the New York Office of the FBI
C) caused by the unusual living expenses associated with such
employment, and to set forth a plan for remedying those problems.
(See Appendix A.)
The FBI's problems in recruitment, retention, and
operations caused by the unusual living expenses of the New York
area were recognized by the Senate Select Committee on
C> Intelligence in its report "Meeting the Espionage Challenge: A
review of the United States Counterintelligence Security
Program," (S. Rept. 99-522, October 3, 1986) which noted the FBI
"confronts unusual personnel management problems" in
New York City. These problems have arisen because the high cost
of living has discouraged FBI Agents from seeking assignments or
pursuing full careers in New York City. Within its report, the
Committee expressed concern over the resulting effect upon the
FBI's efforts in countering the activities of the large hostile
foreign intelligence presence in New York. The Committee further
noted that "action is needed to improve benefits and incentives
in New York and [the Committee] is prepared to develop
legislation that may be needed for this purpose."
The Senate, in its original action on the Authorization
Act, had proposed immediate enactment of a cost-of-living
allowance for the FBI in New York. However, because of the
administration's opposition to singling out the FBI for special
treatment, and with the understanding that OPM already had
0 sufficient statutory authority to deal with the FBI's staffing
problems, the conferees agreed to drop the Senate proposal and
require a FBI-OPM study and recommendations.
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The need for added incentives to work in New York will
be made clear in this study. Virtually all Agents are directly
transferred into the New York area from other parts of the
country. Due to the rise in housing costs in recent years, an
ever increasing number of these Agents have been forced to live
further and further from the New York Office. As a result, many
Agents are living south of Trenton, New Jersey, in eastern
Pennsylvania, and east of New Haven, Connecticut.
C) As a result of the high housing costs and the lengthy
commutes, the ability of the FBI to accomplish its mandated
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mission is adversely affected, especially in the area of foreign
counterintelligence, which is the largest New York investigative
program. Since Fiscal Year (FY) 1984, the office has
experienced a sharp increase in the rate of Agent resignation,
from 11 Agent resignations (or a 1.17 percent annual resignation
rate) in FY 1984 to a high of 38 Agents (or a 3.45 percent annual
resignation rate) in FY 1987, more than triple the rate from FY
1984 to FY 1987. This resignation rate has substantially out-
distanced the FBI-wide Agent resignation rate of 2.17 percent for
FY 1987. The New York resignation rate does not include nine
Special Agents who refused to report to New York after being
transferred there in calendar year 1987. These resignation rates
made the New York Office, which has more than twice the number of
Special Agents as the next largest field office, extremely
difficult to staff. Additionally, in FY 1987, 11.66 percent of
the New York support personnel resigned. While this resignation
rate has declined somewhat over the last few years, it still
remains a significant problem. As of February 1, 1988, the New
York Office had 112 vacancies for Special Agents, and 60
vacancies in the support staff due primarily to cost-of-living
problems.
This high resignation rate extracts tangible costs from
the FBI. Each employee who resigns represents a substantial
amount of money previously spent by the FBI on recruitment,
training, and transfers. Furthermore, each employee who resigns
must be replaced, requiring future expenditures. The total costs
represented by those employees resigning in 1987, using current
figures, are in excess of six million dollars.
The FBI and OPM agree that the FBI faces serious
problems in the staffing and operation of its New York Office.
These problems are caused by a combination of factors including
the high cost of living as well as the lack of affordable housing
in the New York area. While both agencies realize that these
factors detrimentally affect all Government employees in the
New York area both agencies also agree with the congressional
recognition that the FBI has certain personnel requirements (most
notably the policy of directed transfers into the New York area
from lower cost areas) which impose burdens in excess of those
imposed by most other Federal employers in New York.
It is the position of the FBI and OW that the most
effective way of addressing the staffing and operational problems
in the New York Office is through a two-part plan for remedies,
combining new legislation with existing authority. For those
employees subject to directed transfer, primarily Special Agents,
C) OW and the FBI recommend the establishment of mobility and
retention allowances. The mobility allowance would provide a
lump-sum payment upon initial assignment to the New York Office
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to help defray the immediate and substantial expense of
relocation, particularly housing, and the retention allowance
would provide an incentive for remaining in the New York Office.
This mobility and retention allowance would be similar to a
provision in the administration's Civil Service Simplification
Act which would authorize Governmentwide recruitment and
retention bonuses to resolve demonstrated staffing problems.
However, in recognition of the FBI's immediate and pressing need
for a solution to its staffing problems in New York and to test
the hypothesis, both agencies are willing to conduct this
allowance program as a demonstration project. Because the FBI
(along with most other members of the Intelligence Community) has
been excluded from OPM's existing demonstration project
authority, this recommendation can only be instituted through new
legislation. Proposed language for this legislation is being
submitted with this report. (See Appendix B.)
For dealing with staffing problems of support
employees, the FBI and OPM recognize that the special pay rates
authority under current law should prove an adequate solution.
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II. ANALYSIS OF COST OF LIVING AND RELATED
FACTORS IN THE GREATER NEW YORK CITY AREA
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A. Background
Section 502 of the Intelligence Authorization Act of
1988 directed the FBI and OPM to conduct a study to determine the
effects of the unusual living expenses associated with employment
in New York on the recruitment, retention and operations of
employees of the FBI's New York Office and to report back to the
Congress with a plan for remedying those problems identified by
the study.
The Senate, in its original action on the Authorization
Act, had proposed immediate enactment of a cost-of-living
allowance for the FBI in New York. However, because of the
administration's opposition to singling out the FBI for special
o treatment, and with the understanding that OPM already had
sufficient statutory authority to deal with the FBI's staffing
problems, the conferees agreed to drop the Senate proposal and
require a FBI-OPM study and recommendations.
_In the Conference Report on Section 502 of the
Intelligence Authorization Act, the conferees noted that they had
been advised by the FBI that, because of unusual living expenses
in New York, it was having a difficult time staffing that office
with Special Agents. Some Agents resigned rather than accept
assignment to New York; and those Agents who were assigned to New
York routinely attempt to leave at the earliest opportunity. The
conferees noted that what distinguishes the situation of the FBI
() from that of other Federal agencies in New York is the FBI's
requirement that Agents be transferred in and out of New York in
accordance with established policy and that this personnel policy
"impose[s] burdens in excess of those imposed by other Federal
employment in the New York area." At the same time, the conferees
also recognized the administration's concern that solutions,
o "minimize inequities in the treatment of all Federal employees in
the New York area," and its intention to develop solutions "within
the context of existing authorities."
This section of the study serves to demonstrate that
Special Agents assigned to New York face an immediate and
significant loss in purchasing power that lowers their standard
o of living in comparison to their peers in other FBI field
offices. As discussed in Section III of this report, the cost of
living and noncompetitive pay scale result in high turnover rates
and a constant effort to recruit qualified personnel.
To illustrate the disparity in living costs, the
o average living and housing costs in New York are compared with
those costs in Albany, New York; Birmingham, Alabama;
Indianapolis, Indiana; Minneapolis, Minnesota; Omaha, Nebraska;
Baltimore, Maryland; Miami, Florida; Newark, New Jersey; and
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Philadelphia, Pennsylvania. The first five offices are used for
comparison because they each had at least three Special Agents
under transfer to New York as of December, 1987, and because
employees relocating from smaller cities generally suffer greater
hardships than those incurred by employees relocating from a
substantially larger office. The latter four offices are among
the twelve largest field offices of the FBI and, therefore, are
among the offices to which Agents receive directed rotational
transfers after approximately three years of service. Current
FBI policy envisions that all Special Agents will spend a
substantial part of their careers in one of these 12 field
offices, of which the New York Office is by far the largest,
employing more than twice as many Agents and support staff as the
second largest office.
The cost of living can be measured by examining a
variety of factors on a national as well as regional basis. For
the purposes of this study the FBI has used the fourth quarter
statistics for 1986, provided by the American Chamber of Commerce
Research Association (ACCRA), a nationally recognized research
group, which publishes a quarterly survey of living costs in a
number of American cities. It includes in its survey an analysis
of the cost of a variety of items including housing, health care,
groceries, utilities, and transportation. ACCRA first calculates
an average cost of living on a national basis. The component
cities are then measured against this national standard to
provide an index of relative costs in various regions. Component
costs, such as housing, are also averaged nationally and then
indexed regionally. For the ACCRA data used in this study, the
national average is set at 100 percent.
Additionally, information from the Economic Research
Institute, Newport Beach, California, has been analyzed. The
Economic Research Institute uses ACCRA statistics in conjunction
with other economic indicators to construct a model that measures
the relative purchasing power of sums of money among cities. Its
model is used by corporate relocation managers to determine
proper compensation levels for corporate transferees.
Finally, the Coldwell Banker Residential Real Estate
Company, one of the largest real estate companies in the Nation,
annually compiles a comparison of real estate costs throughout
the United States. Coldwell Banker measures the cost of similar
homes located in various markets in each state. The 1987 Home
Price Comparison Index, which was consulted for purposes of this
study, used December 1986 figures.
As the statistics and details can be overwhelming (and to
avoid belaboring an issue that has previously been acknowledged)
this concise review of the situation in the New York area has
been prepared.
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B. Cost of Living
As shown in the following graph, ACCRA has determined
C) that the average living cost in New York is 37.20 percent above
the national average. ,The graph also illustrates the relationship
to the national average of the other cities selected for
comparison purposes. New York's cost of living is substantially
above those listed cities as well.
0
Not depicted in the graph is Boston, one of the 12
largest FBI field offices, and whose cost of living, according to
ACCRA, is higher than New York's. For some of the other cities
where large FBI offices are located--San Francisco and
Los Angeles (the third largest field office) in particular--no
ACCRA statistics are available; the two California cities are,
however, generally known through a variety of other surveys and
measures to have living costs that are comparable to those in New
York. These other large field offices do not have the
significant Agent staffing problems that New York is
experiencing, despite their known high cost of living.
140%
Average U.S. Housing Costs Compared to
the National Average of 100%
0 135%-
130%-
125%-
12O%-
115%-
110%
105%--
* 100%
95%
90%
National Average
No" 1 0 tt * In
S, 0 to
0 3 00. 0
0 0 0 o T
0,0t pot C4
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The following table compares the average cost of living
for the selected small- to medium-sized cities with New York and
selected large office cities. That comparison shows the change
in average living costs that will be experienced by an Agent who
is transferred to New York or to another large office. For
example, an Agent transferred from Indianapolis to New York will
experience a 40.29 percent increase in living costs. If the
Agent had been transferred to Baltimore, on the other hand,
living costs would have increased only 7.57 percent.
Comparison of the Percentage of Increase/Decrease
in the Average Cost of Living Faced by an Agent
in Moving from One City to Another
From:
AL*
BH*
IP*
MP*
OM*
To:
111.2
99.7
97.8
103.7
98.0
0
Baltimore
105.20
-5.40
5.52
7.57
1.45
7.35
Newark
127.30
14.48
27.68
30.16
22.76
29.90
Philadelphia
118.06
6.17
18.42
20.72
13.85
20.47
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New York
137.20
23.38
37.61
40.29
32.30
40.00
Boston
152.20
36.87
52.66
55.62
46.77
55.82
0
*AL - Albany
BH - Birmingham
IP - Indianapolis
MP - Minneapolis
ON - Omaha
The following graph, derived from a model created by
the Economic Research Institute, illustrates the additional
compensation that would have to be paid to allow an Agent who has
a salary of $38,750 (total salary plus overtime compensation for
an Agent at a FY 1987 GS 12, step 1 classification level) to
maintain the same purchasing power in New York which the Agent
had in another city. For example, an Agent transferred from
Albany, New York, to New York City, whose New York tax liability
remains constant, would need an additional $8,331, or a 21.5
percent increase, in income to maintain the same standard of
living which he or she enjoyed in Albany. An Agent transferred
from Omaha would need $15,072, or a 38.9 percent increase in
income to maintain a life style similar to what he or she had in
Omaha.
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Purchasing Power
$60,000
$50,000-
$12,763
$13,785
$10,206
$8,331
$15 072
$40,000
$38,750
$38,750
$38,750
$38,750
$38,750
$30,000?
0
$20,000
0
$10,000?
$0
0 Albany
Birmingham Indianapolis Minneapolis Omaha
? 1987
GS 12, Step 1 salary including overtime compensation of $38,750.
0
? Additional compensation needed to maintain purchasing power if transferred
to New York City.
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C) C. Housing Costs
Housing is the largest component of most family
budgets. The following graph, derived from figures for the
fourth quarter, 1986, illustrates the ACCRA average cost of
housing for each of the cities previously mentioned. Again, the
average cost of housing in New York City is higher than the other
C) listed cities and, according to ACCRA, is one of the highest in
the Nation. The average cost of housing is represented in this
graph as 100 percent.
0
Average U.S. Living Costs Compared to
the National Average of 100%
200%
180%-
160%-
140%-
0
120%_
100%
80%
0
140
o?
0,4 6"4
4 co*.
oc, .o ? 4'4
IP
* National Average
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The Coldwell Banker 1987 Home Price Comparison Index
o for the listed cities is provided in Appendix C. From a review
of that comparison index, it is clear that New York City is by
far the most expensive area listed. Similar Coldwell Banker data
agrees that the average monthly principal, interest and tax
payments, as well as rental costs are higher for New York City
than for the same cities listed in Appendix C.
o The next chart shows the relationship between relative
prices for homes in the areas where Special Agents currently
reside and the approximate distance of those homes from
Manhattan. Home prices are based on a survey conducted by the
FBI of various members of the New York City area real estate
profession. The illustration depicts a series of rings, showing
O radial distances rather than actual road miles. The relationship
between commuting time and distance from New York is not always
proportionate. In the New York City area, heavily trafficked
areas and indirect routes add a great deal of time and actual
distance to what appears to be a short commute. Thus, a home in
the 60-mile ring could be 80 highway miles from New York City.
It is apparent that given the price of homes in the
New York City metropolitan area and the current salary levels for
Special Agents, many new Agents transferred to New York must live
beyond reasonable commuting distances to find suitable housing.
As the map indicates, an Agent transferred to New York now must
locate 51-60 miles away to find housing that averages $170,000.
C) Most newly transferred Agents cannot afford to purchase housing
at this cost and are therefore forced to rent, locate further
from the city, or accept housing they would not otherwise
consider. It is possible that increasing home prices will force
Agents to purchase homes even further from New York, and that in
the future the New York Office will be forced operationally to
o deal with a work force much less able to respond rapidly to
situations requiring immediate attention.
It is also important to note that in other high-cost
cities--including Boston, San Francisco, and Los Angeles, where
the FBI maintains large field offices--the cost of housing, even
where very high by national standards, does not have as
detrimental an impact on the FBI's ability to retain Special
Agents as it has in New York.
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Average Housing Costs
in the New York Area
0
0
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Housing Costs
0-10 Mi. $275,000
11-20 Mi. 255,555
21-30 Mi. 255,000
31-40 Mi. 190,000
?
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Housing Costs
41-50 Mi.
202,500
51-60 Mi.
170,000
61-70 Mi.
150,000
71+ Mi.
87,500
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D. Salaries
FBI Special Agent salaries have not kept pace with
local law enforcement agencies in the New York City area. The
following graph shows the salary status in 1986 of the FBI Agent
compared to starting salaries for New York Police Department
,(NYPD) officers and NYPD 3rd grade (entry level) detectives. It
is noted that the police department does not require college
degrees for either position and NYPD salaries are lower than some
police departments in the New York City area, including Nassau
County, Suffolk County and Port Authority Police Department.
This disparity in salaries, as illustrated by the
graph, has impacted negatively on the FBI in three areas:
morale, operations, and recruitment. The morale of an FBI Agent
in New York is seriously affected by the realization that the
starting salary of his detective counterpart, who is not required
to have a coller degree, is considerably more than his salary.
Low morale inevitably affects performance which, in turn, has an
adverse impact on FBI operations. Additionally, the FBI has, in
previous years, successfully recruited local New York City police
officers and detectives. In the last five years, however, there
have been virtually no recruitments from these agencies.
STARTING SALARIES
0,000
35,000
0,000
axo
20,000
15,000
10,000
1 5,000
The Status of the FBI
1986
FBI AGENT
NYPD OFFICER
1-1 NYPD DETECTIVE
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E. Personal Impact
The high cost of living in New York also has intangible
consequences that impact on FBI personnel. Long commutes,
transportation costs and constant financial strain cause high
stress to employees and their families. In December, 1987,
employees of the New York Office were asked to prepare statements
outlining their personal experiences related to their employment
in New York as affected by the high cost of living. Employees
surveyed reported that in order to meet financial obligations,
they were forced to borrow from relatives and to reduce or
eliminate health and life insurance coverage. They complained of
being unable to start families or to provide for future school
expenses of their children. Many reported that their mortgage
notes were adjustable, and they were just "getting by" because
their payments were, at present, at the low end of the adjustable
scale. They were in general, living paycheck to paycheck and
often felt that they were at the brink of financial disaster.
All of this has an impact on the FBI's staffing and
operations in New York, a matter which is discussed in the next
section. What the FBI cannot measure, however, is the inevitable
impact that personal and family stress has on the performance of
its employees.
To summarize, it is clear that New York is a high-cost
area, with the biggest problem being affordable housing within
reasonable commuting distance. While employees of all Federal
agencies are similarly affected by these high costs, most
agencies don't fill the majority of their core jobs (Special
Agents) through directed reassignments from generally low-cost
areas of the country as does the FBI.
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III. IMPACT OF COST OF LIVING ON FBI
STAFFING/OPERATIONS
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A. Background
The New York Office is the largest of the FBI's 59
field divisions and exceeds the combined staffing level of the
next two largest divisions, Washington, DX., and Los Angeles,
California, by approximately 200 Agents. As the largest Federal
law enforcement agency, and the Federal law enforcement agency
with the broadest jurisdiction, the entire spectrum of Federal
law enforcement throughout the United States is often connected
directly to the work performed by the New York Office. This
impact is particularly true in the area of foreign counter-
intelligence.
Because of the factors mentioned previously, the FBI
has difficulty in getting Agents to transfer willingly to
New York, in getting Agents to stay in New York, and in having
the Agents fully productive while there. These problems impact
on staffing, operations, cost, and general morale within the
office.
B. Staffing
The New York Office has consistently been the most
difficult office to staff and the least desirable large office in
terms of assignment preference. This can be illustrated by
considering the number of Agents requesting permanent service in
New York compared to the total staffing level of the office.
While the FBI does not rely exclusively on its office of
preference list as a means for ensuring the staffing of its
offices, if it were to do so, New York could only meet
approximately 30 percent of its Special Agent staffing needs. By
comparison .in Detroit, the next least desirable large office in
terms of the office of preference list, 57 percent of the Agent
staffing needs could be met.
Primarily because of the problems associated with the
high living and housing costs, New York is constantly under the
established target staffing level for both Agent and support
personnel. As of February 1, 1988, the New York Office was 112
Agents below its authorized complement of 1212 Agents, and was 60
support employees below its authorized complement of 802. Since
FY 1984, the office has experienced a sharp increase in the rate
of Agent resignations, from 11 Agent resignations (or a 1.17
percent annual resignation rate) in FY 1984 to a high of 38
Agents (or a 3.45 percent annual resignation rate) in FY 1987,
more than triple the rate from FY 1984 to FY 1987. This
resignation rate has substantially out-distanced the FBI-wide
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Agent resignation rate of 2.17 percent
resignation rate does not include nine
to report to
New York after being transferred there
for FY 1987. The New York
Special Agents who refused
in calendar year 1987.
These resignations have a severe negative impact on the
experience level in the New York Office. In the FBI, a Special
Agent reaches the journeyman level after seven years of work
experience. At that point, the Agent is experienced and capable
of investigating the most complex matters handled by the FBI. As
of December 14, 1987, more than 56 percent of the Agents in New
York had not had seven years of experience, and more than four-
fifths of these, or 46.4 percent of the Agents in the New York
Office, had five years or less in the FBI. Only 19 percent of
the Agents in New York had completed a full ten years as Special
Agents.
Likewise, the New York Office traditionally has a high
resignation rate among its support staff. In FY 1987 the rate
was 11.66, with an average annual resignation rate of 12.11
percent over the past ten years.
To determine the reasons for this high resignation
rate, the FBI file containing the reports of exit and separation
interviews of support employees for the period October 1, 1985,
through September, 1986 (FY 1986), was reviewed. Additionally,
each employee who voluntarily resigned during FY 1986 was sent a
questionnaire regarding the reasons for leaving the FBI. These
two sources of data, reports of the exit and separation
interviews and the survey, showed that of the 113 support
employees who entered on duty during FY 1986, twenty-seven of
these employees, or 23.9 percent, resigned without fulfilling
their one-year obligations. It is important to note that support
personnel positions (essentially everyone who is not an Agent)
cover a wide variety of occupations, each with its own staffing
problems. While their reasons for leaving are varied, the survey
results indicated that one of the primary reasons support
employees leave the FBI is low salary.
Not only does New York have a high resignation rate,
but Agents also seek transfers out of the New York Office in
increasing numbers. Within the past three years only four Agents
received office of preference transfers into New York, while in
FY 1987 alone, 58 Agents received office of preference transfers
out of New York. There are currently no Agents on the office of
preference list eligible for transfer into New York; however,
there are approximately 300 Agents in the New York Office seeking
office of preference transfers from New York to other "top
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twelve" offices. Many more seek transfers to small- to medium-
sized offices. Additionally, increasing numbers of Agents in
New York seek early acceptance into the Career Development
Program which usually involves a transfer to FBI Headquarters in
Washington, D.C. Office of preference transfers, career
development transfers, and resignations combined have created an
immense staffing problem which has an adverse impact on FBI
operations in New York and throughout the FBI.
Traditionally, first office Agents have not been
returned to the office from which they were recruited. The FBI
has always considered it important for Agents to receive a
national perspective of law enforcement which otherwise will not
be achieved if an Agent remains in his/her area of recruitment.
It is also considered beneficial for Agents to gain an overall
understanding of the variety of investigative responsibilities of
the Bureau. An assignment to a small- to medium-sized office
allows an Agent more opportunity to participate in a greater
variety of priority work including white-collar crime, organized
crime, and personal and property crime. In the past, the
occasional assignment of first office Agents directly to a major
field office often resulted in their becoming specialized in one
area of work only, thereafter depriving them of the training
necessary to readily perform other duties.
Nevertheless, in spite of the desirability of giving
all Agents a chance to experience the variety of work in a small-
to medium-sized office, the FBI at times transfers new Agents
directly to major field offices. Staffing requirements have
necessitated that an increasing number of Agents be sent directly
to New York from New Agents' Training. This necessary exception
to the transfer policy lowers the average experience level of
Agents entering New York.
C. Operational Impact
Investigations conducted by the New York Office are
among the most complex and sophisticated in the FBI. The Foreign
Counterintelligence Program is the largest program in the New
York Office. Its effectiveness is critical to the success of the
FBI's overall Foreign Counterintelligence Program, and therefore,
to the protection of national security. In the foreign
counterintelligence area, Soviet and Soviet-bloc Intelligence
Services staff their New York posts with their best and most
experienced officers. In general, the Special Agents facing this
elite group have significantly lower experience levels. Foreign
counterintelligence investigations are long-term efforts. It
takes several years for any Agent to build up the requisite
expertise in, and knowledge of, counterintelligence
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operations, methods, and techniques. Under current conditions in
New York, Agents who have acquired this knowledge and experience
seek transfers at a time when they are of the most value to
counterintelligence investigations.
The New York Office was responsible for many well-known
successes in organized crime matters, such as the "Pizza
Connection" case and the "Commission" case, largely because it
had a corps of relatively experienced Special Agent personnel
working on those cases. The experience possessed by those Agents
involved a knowledge of the various organized crime figures,
including the ability to recognize them by nicknames and
appearances, and a thorough working knowledge of their
relationships with other organized crime figures, as well as a
knowledge of their particular criminal specialities. That
experience also involved a knowledge of the Mafia family
hierarchies and internal alliances. This type of expertise led
to a more effective investigative strategy against organized
crime and gave the Agents the ability to recognize significant
investigative developments within ongoing investigations. Many
Special Agents who have developed an expertise in these organized
crime matters have been transferred through the Career
Development Program, have received office of preference
transfers, or have resigned. As a result, New York is
continually losing its institutional knowledge in this, as well
as in other criminal investigative areas.
In addition to being the home base of the five largest
and most powerful Mafia families in the United States with more
than 9,000 members and associates, New York is also the financial
capital of the world, and, as result, it is the financial crime
capital of the world. These financial crime cases, as well as
the public corruption cases handled by the New York Office, are
among the most complex and difficult found anywhere.
An important factor which impacts on operations in
New York is the lengthy and time-consuming commutes to the
Manhattan Office. A commute of as much as three to four hours
each day is faced by some Special Agent personnel. Often,
because of these long commutes, tasks that could be performed by
one team of Special Agents, such as surveillance, must be
performed by two teams. For example, an Agent who resides in
Pennsylvania and who is to perform a surveillance on a hostile
intelligence service officer residing in an area north of the
metropolitan area, must leave his residence before 5 a.m. to
ensure that he/she is on location to begin the surveillance
before the intelligence officer leaves to go about his daily
routine at approximately 7:30 or 8:00 a.m. Experience has shown
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that the intelligence officer will continue his routine
throughout the day and often into the evening. The Agent who has
been up and on the road since before 5 a.m. will have to be
replaced in the afternoon to maintain an effective and continuous
surveillance.
The inability to fill the support positions in the
New York Office and the inexperience of the majority of on-board
support personnel create two serious problems. First, important
functions either are not performed or are performed on a delayed
basis. Second, Special Agents are frequently required to perform
many routine, but essential support functions, such as indices
searches, records checks, and expedited typing. Support
functions in the counterintelligence field (where most of the
support vacanies now exist) which require highly specialized
skill and expertise are performed by Special Agents whose
investigative skills could be better utilized in other
capacities.
The extremely high cost of living may also have an
operational impact in the area of national security. An
underpaid employee assigned to work foreign counterintelligence
matters in New York City, who has serious financial problems, can
be a prime target for recruitment by a hostile intelligence
service. Unfortunately, this vulnerability does not restrict
itself to employees working in the foreign counterintelligence
field. An organized crime family or terrorist group might
attempt to exploit these same vulnerabilities. The FBI by no
means impugns the integrity of its many loyal and dedicated
employees, but unfortunately, recent, well-publicized events have
proven that extreme financial burdens and stressful circumstances
can be factors in unlawful and sometimes treasonable acts.
The FBI is no longer primarily a reactive organization.
The nature of FBI investigations has become increasingly complex
and lengthy. White-collar crime investigations, including
political corruption cases, may take years to research, document,
and prosecute. Organized crime and foreign counterintelligence
investigations may necessitate years of background investigations
to develop assets, study the movements of subjects, and pursue
investigations through court-authorized technical means. It is
very difficult to maintain continuity in an investigation of that
magnitude over an extended period of time when the majority of
the Agents in New York City are seeking to relocate due to the
financial burdens faced. Although all information received is
meticulously documented and recorded in case files, there is
always the intangible thread of understanding that weaves itself
through the investigation, which is possessed only by case Agents
who have developed, researched, and investigated a case from its
inception.
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D. Cost
The resignation rate of New York Office employees
extracts a financial cost from the FBI. Each employee who
resigns represents a substantial amount of money previously spent
by the FBI on recruitment, training, and transfers. Furthermore,
each employee who resigns must be replaced, requiring future
expenditures.
In FY 1987, 38 Agents assigned to New York resigned.
Using current figures, those 38 resigning Agents represent prior
expenditures of $2,217,414. Additionally, replacement costs will
double the direct cost to the Government, resulting in a total
expenditure of $4,434,828. (See Appendix D). Furthermore, in
calendar year 1987, nine Special Agents resigned, or failed to
report, upon receiving transfer orders to New York. These Agents
represent a prior expenditure of $339,660. Replacement costs
will be the same, resulting in a total cost of $679,320.
In FY 1987, 83 support employees resigned. Average
lost preinvestigative costs associated with each New York support
employee resignation, using the current figures, is $13,429
making a total cost of $1,114,607. To replace these employees
will require an equal outlay, doubling the cost to $2,229,214.
These costs, of course, do not measure the value of the
loss to the FBI in terms of Agent and support experience, which
is impossible to quantify.
Agent transfers out of New York create another cost to
the FBI. New York has the largest percentage of Agents who
receive transfers out of New York to an office of their
preference. This Office of Preference program, generally based
upon senority, provides an accelerated ranking for those assigned
to New York for a extended period of time. This accelerated
ranking is provided to New York Agents to offset the hardship of
the assignment. The average relocation costs associated with
transfers out of the New York metropolitan area are consistently
higher than those from any other major field office.
It is noted that while the FBI does not lose the value
of the transferred employee as it does of the resigned employee,
it nonetheless does incur extremely high costs as a result of the
transfer. Sufficient monetary incentives might encourage some of
these Agents otherwise seeking transfers out of New York to
remain, thereby stabilizing the office experience level and
reducing costs of the Government. If the FBI could reduce
support employee and Agent turnover and Agent transfers out of
the New York Office the savings to the Government would help
offset the cost of the proposed remedy recommended in Section IV.
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IV. PLAN FOR REMEDIES
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A. Introduction
New York is a high-cost area with unusual living
expenses--particularly those connected with housing--that combine
to adversely affect recruitment and retention of Federal
employees there. Organizations specializing in assessing
relocation problems for private companies report that relocation
resistance, because of housing costs, is increasing, and that the
New York metropolitan area is the location most frequently
resisted (even though other areas have as high, or higher, costs
of living). The unavailability of affordable housing comparable
to what they had in previous locations, within reasonable
commuting distance, is the reason most often cited by employees
who balk at relocation. This combination of overall living costs
and location of acceptable housing makes the impact of relocation
of employees to New York among the worst, if not the worst, of
any city in the country.
This high cost of living and housing in New York
affects all Federal employees in New York, not just the employees
of the FBI. At the same time, it is acknowledged that the impact
of these factors on employees and agencies is not uniform. There
are features of the FBI's personnel policies and practices and
operational considerations, primarily directed geographical
reassignments for core staff (Special Agents), that are not
common among most other agencies and create special problems in
staffing the New York Office of the FBI.
In the final analysis, it appears that the combination
of overall living costs, housing costs, and the distance to
affordable housing from the worksite, creates problems for FBI
employees whose assignment to New York is directed by FBI
management, usually from one of the lower-cost areas where the
FBI maintains its smaller field offices. This, we believe,
creates a special set of circumstances impacting in part on
national security and is of significant magnitude to warrant an
innovative solution.
OPM's existing special pay rate authority does not
satisfactorily address the recruitment and retention problems
faced by the FBI in New York for its Special Agents, where
directed assignments in and out of the city occur on a regular
basis. Special pay rates are, by law, basic pay and, as such,
become a retained rate of pay for the employee when assigned by
the agency to another geographic area. Because of this and the
FBI's mandatory mobility policy for all of its Special Agents,
special pay rates do not provide an acceptable solution for this
set of circumstances and may, in fact, create an incentive to
leave New York.
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The majority of the FBI's staffing difficulties for
most support employees in New York, however, can be addressed
through use of the existing special rates authority (some support
employees are already covered by special rates), particularly now
that the authority has been enlarged under recent congressional
action to take account of factors in addition to private sector
pay competition.
B. Recommendations
1. Mobility and Retention Allowances
After consultation, the FBI and OW have agreed that
mobility and retention allowances, as set forth in a
demonstration project, are mutually acceptable to both agencies.
This plan, which would require legislation and apply only to
employees subject to mandatory mobility requirements, i.e.,
directed transfer, would encourage mobility by the payment of a
lump sum allowance upon transfer to the FBI's New York Office,
and encourage retention there by payment of retention allowances
through the payroll system. This option would be tested on a
demonstration basis, in a manner similar to demonstration
projects that fall under OPM's existing authority, but with the
modifications described below.
As envisioned by both agencies, a two-part allowance
would be paid to employees transferred to New York under the
mandatory transfer program. A lump sum would be paid at the time
the employee is actually transferred to New York, upon the
employee's written agreement to a specified term of service in
New York.* For all employees in New York subject to a mobility
requirement, an additional allowance would be paid, on a bi-
weekly basis through the payroll system. (The amounts of these
allowances would have to be determined.) These allowances would
not become part of the employee's basic pay and would cease when
the employee is reassigned out of New York.
This plan is designed specifically to deal with the
problems created by the mobility requirement for Agents and a
small number of support personnel. These mobility and retention
allowances would be similar to a provision in the
administration's Civil Service Simplification Act, which would
authorize Governmentwide recruitment and retention bonuses to
resolve demonstrated staffing problems. However, OW and the FBI
recognize the immediate and pressing need of the FBI for this
0 * The terms of the service contract could be waived or amended
upon a management-directed transfer out of New York.
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personnel management tool in its New York Office, and would be
willing to accept a demonstration project to test this concept.
It is expected that the cost of the demonstration project would
be covered through a reprogramming request submitted to the
appropriate committees of Congress.
The FBI is not covered by OPM's existing demonstration
authority, so special legislation would be needed to authorize
this project. Proposed language for this legislation is
submitted with this report. OPM understands the FBI's concerns
that certain procedural features of OPM's existing authority are
troublesome in light of the FBI's security requirements, and
would support a demonstration project that places limitations on
public discussion and that could be terminated before the end of
its five-year life span only by agreement of the FBI and OPM or
Congress. If Congress authorizes a demonstration project, the
role of OPM would involve participation in the design and
evaluation of the project, with the FBI maintaining its control
over classified information. This recommendation follows the
intent of Congress as expressed in its exclusion of the FBI from
Chapter 47 of Title 5, United States Code, (U.S.C.), that
contains existing demonstration project authority from which the
FBI is exempted.
2. Special Rates
Under Title 5, U.S.C., Section 5303, OPM is authorized
to establish higher rates of basic pay for one or more
occupations in one or more locations where the pay rates in
private enterprise are so substantially above the regular pay
schedules that they significantly handicap the Government's
ability to recruit or retain well-qualified individuals. This
basic authority has been expanded under the FY 1988 Continuing
Resolution to include consideration of competition from state or
local governments or other Executive branch agencies, as well as
remote or undesirable worksites or working conditions.
The implementation of special rates in New York
requires no new legislation, and would make use of the existing
special rate authority to increase rates of basic pay for
appropriate groups of support personnel in New York.
C. Other Options
In order to resolve those problems facing the employees
in the FBI's New York Office, OPM and the FBI considered a number
of other possible options. These options were ultimately
dismissed outright as not practical or were set aside in favor of
the jointly agreed position discussed above.
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Initially, the FBI's preferred option was removal of
the FBI from that part of Title 5, U.S.C., which pertains to the
General Schedule pay and classification systems. Such removal
would place the FBI in a similar position to most of the civilian
members of the Intelligence Community. This option would have
granted the Director of the FBI the latitude to set pay levels in
order to address those recruiting, retention and operational
problems associated with employment in the New York Office or in
any area of the country where similar problems exist. The FBI
understands OPM's concern that such action would tend to cause
further fragmentation of the Federal personnel system.
The FBI also favored a cost-of-living allowance for its
New York employees, patterned after the cost-of-living allowance
currently given in areas outside the continental United States.
However, OPM did not like this option for two reasons: first,
pay adjustments should be linked to staffing needs rather than
cost of living measurements; and second, since all Federal
employees in New York are subject to the same cost of living,
there is no justification for singling out one agency for a cost
of living allowance.
The FBI and OW considered other options including the
reclassification of FBI employees, relocation of the New York
Office, and the changing of FBI staffing policy for the New York
Office. Changes in the staffing policies for New York and the
reclassification of employees have already been implemented on a
small scale by the Director of the FBI with limited success but
do not have the potential to provide sufficient relief to impact
significantly on cost of living and attendant problems. The
proposal for relocating the New York Office outside Manhattan was
rejected as operationally unsound.
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11 9930 CONGRESSIONAL RECORD ? HOUSE November 10, 1987
TITLE V?ENHANCED COUNTERINTEL-
LIGENCE AND SECURITY CAPABILI- ?
TIES
FBI NEW YORK nELD DIVISION EMPLOYMENT PLAN
Sec. 502. (a) The Director of the Federal
Bureau of Investigation and the Director of
the Office of Personnel Management shall
conduct a study to ascertain the effect on re-
cruitment, retention and -operations of em-
ployees of the New York Field Division of
the Federal Bureau of Investigation caused
by the usual living expenses associated with
such employmenL
Ib) No later than 60 days after the enact-
ment of this Act,. the Director of the Federal
Bureau of Investigation and the Director of
the Office of Personnel Management shall
submit to the Congress a report setting forth
the results of the study described in subsec-
? lion (a) and a plan for remedying problems
identified by the study, including, as appro-
priate. additional compensation or other
means of defraying the costs of employment
in the New York Field Division.
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11 9932 CONGRESSIONAL RECORD ? HOUSE November 10, 1987
TITLE V?ENHANCED COUNTERINTELL/GENCE
AND SECURITY CAPABILITIES
SECTION 802
Section 502 of the conference report di-
rects the Director of the Federal Bureau of
Investigation and the Director of the Office
of Personnel Management to conduct a
study to ascertain the effect on recruitment,
retention and operations of employees in
the New York Field Division of the Federal
Bureau of Investigation causedby the high
cost of living in the New York area. The sec-
tion further provides that 60 days after en-
actment, the two Directors must submit to
Congress a report setting forth the results
of the study and a plan for remedying prob-
lems identified by the study. Including, as
appropriate, additional compensation or
other means of defraying the costs of em-
ployment with the FBI in the New York
Field Division.
Section 402 of the Senate amendment pro-
vided permanent authority to the Director
of the Federal Bureau of Investigation to
pay additional compensation to the employ-
ees of the FBI's New York Field Division In
order to defray unusual living expenses as-
sociated with such employment. The House
bill contained no comparable provision.
The Intelligence Committees have been
advised for some time by the FBI that due
to the high costs of living in the New York
area. the FBI has a difficult time recruiting
agents for such assignments, which impose
a considerable financial burden on agents
and their families Under the current pay
structure. Agents who are assigned to the
New York office routinely attempt to leave
at the earliest opportunity.
From the standpoint of the effectiveness
of the FBI's Foreign Counterintelligence
Program. the New York Field Division is
critically important. To have employees as-
signed to this division against their wishes,
at a considerable financial sacrifice, and to
have them take the first opportunity to
leave for the same reason, inevitably under-
mines the effectiveness of the New York
office in terms of its counterintelligence re-
sponsibilities.
What distinguishes the circumstances of
FBI employees in the New York area is that
many FBI employees are transferred in and
out of the New York area as a routine
matter. The great majority are not recruit-
ed in New York and undergo significant
hardship in terms of housing, commuting
and overall living expenses by transferring
Into the New York metropolitan area. Most
other Federal employees in the New York
area are not required as a condition of em-
ployment to move to the New York areate-
cause they were already living in the area
when they joined the Federal service. Fur-
ther, the conferees wish to emphasize that
the FBI, especially in its counterintelligence
activities, possesses personnel requirements
which differ from other Federal agencies
and which impose burdens in excess of
those imposed by other Federal employ-
ment in the New York area
The conferees are conscious of the fact
that legislating a special compensation sup-
plement for FBI employees in the New York
area would cause dissatisfaction and invite
comparison with other Federal employment.
Although the conferees are convinced that
circumstances of .FBI recruitment, assign-
ment and operations are generally more on-
erous than those of other Federal employ-
ees in the New York area, the conferees
were mindful of the Administration's con-
cern to minimize inequities in the treatment
of all Federal employees in the New York
area. The conferees, however, are of the
strong belief that some appropriate meas-
ures can and should be taken to relieve the
high cost of living for Federal employees in
the New York area but most parUcularly for
those of the EEL
The conferees had considered a short-
term demonstration project in order to
study the effect that an additional cost-of-
living allowance would have on the situation
of FBI employees in the New York Field Di-
vision. The intent of the allowance would
have been to equalize the financial burden
of living in the New York area with those
which may occur in other areas of the coun-
try. The Administration opposed this ap-
proach and represented to the conferees
that the Director of the Office of Personnel
Management had sufficient .legislative au-
thority to make adjustments for the em-
ployees of the New York Field Division. The
conferees were further told that the Admin-
istration was willing to undertake a study to
consider ways in which to employ such au-
thority and that there was a recognition
within the Administration of the unique
and significant burden imposed on many
New York Field Division employees of the
EEL Accordingly, the conferees agreed to
require such a study with appropriate rec-
ommendations. It is the expectation of the
conferees that the results of the study will
bear out the conferees' conclusions about
the uniqueness of the FBI working condi-
tions in New York and the appropriateness
of providing some recompense for these con-
ditions of employment.
The conferees believe that Administration
officials have promised a good faith effort
to come up with a solution to the New York
Field Division problem within the context
of existing authorities and as a result of co-
operation between OPM. FBI and the
Office of Management and Budget. The
conferees put the Administration on notice
that ? failure to address the problems iden-
tified by the intelligence committees will
lead to further legislative action by the Con-
The conferees expect that any FY 88 FBI
funds used- to implement any findings or
recommendations of the study will be the
subject of a reprogramming request aubmit-
ted to the appropriate committees of the
Congress.
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APPENDIX B
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Demonstration Project on Mobility and Retention
for FBI New York Field Division
Sec. . Notwithstanding any other provision of law, the
Director of the Federal Bureau of Investigation and the Director
of the Office of Personnel Management shall conduct a
demonstration project to ascertain the effects on the
recruitment, retention of personnel, and field operations in the
New York Field Division of the Federal Bureau of Investigation of
providing allowances--
(1) in lump sums to personnel upon directed assignment
to the New York Field Division from another
geographical location, and who enter into an
agreement to complete a specified period of
service, not to exceed 3 years, in the New York
Field Division; and
(2) in periodic payments to New York Field Division
employees who are subject by policy and practice
to directed transfer or reassignment.
Such demonstration project shall commence not later than ninety
days after the date of enactment of this Act and shall terminate
five years after such date, unless extended by law.
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APPENDIX C
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Alabama
Birmingham
COLDWELL BANKER 1987 HOME PRICE COMPARISON
SINGLE FAMILY HOME
2000 Square Feet, 7 Rooms. 3 Bedrooms,
2 Baths, Family Room, 2-Car Garage
Assumes Mortgage 20% Down Payment, 30 Years
Indiana
0 Indianapolis
0
0
Minnesota
Minneapolis
Nebraska
Omaha
Connecticut
Greenwich
Hartford
Stamford
New Jersey
Bergen County
Essex County
Morris County
Somerset County
New York City Area
Nassau County
Long Island, N.
Long Island, S.
Rockland County
Suffolk County
Long Island. N.
Long Island, S.
Westchester Cty
Maryland
Baltimore
Florida
Ft. Lauderdale
Miami
0 Pennsylvania
Philadelphia
0
Price
$95,000
$90,000
$140,000
$88,000
$520,000
$183,000
$325,000
$320,000
$228,000
$235,000
$278,000
$300,000
$200,000
$215,000
$225,000
$190,000
$300,000
$145,000
$128,000
$125,500
$162,000
20% Monthly
Down Annual PIT Monthly
Payment Taxes payment Rent
$19.000 $410 $701 $700
$18,000 $900 $707 $800
$28,000 $2,100 $1,158 $1,100
$17,600 $2,500 $826 $600
$104.000
$36,000
$65,000
$64,000
$45,000
$47,000
$55,600
$60,000
$40,000
$43,000
$45,000
$38,000
$60,000
$2,500
$1,500
$3,000
$4,700
$2,700
$3,000
$3,500
$3,800'
$3,400
$3,500
$3,500
$3,400
$3,500
$3,859 $2.000
$1,410 $ 900
$2,532 $1,350
$2,638 $2,000
$1,826 $1,500
$1,000 $1,400
$2,243 $1,500
$2,423
$1,687
$1,801
$1,871
$1,671
$2,398
$29,100 $1,628 $1,157
$25,600 $1,116 $992
$25,100 $2,066 $1,053
$32,400 $2,027 $1,306
$1,400
$1,200
$1,500
$1,300
$1,200
$2,000
$1,100
$900
$1,100
$1,200
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APPENDIX D
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Declassified in Part - Sanitized Copy Approved for Release 2013/10/24: CIA-RDP90-00530R000701770001-4
ESTIMATED COSTS OF SPECIAL AGENT RESIGNATIONS
Average preemployment cost
per hire $ 9,464
Training Costs (Agent) $17,143
Relocation Costs:
First Office $11,133
Second Office $20,613
Total Average Cost per
Agent Assigned to New York $58,353
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