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U.S. tries, but fails, to discover how U.N. calculates its expensive salaries

After nearly a year of studying the generous salaries the United Nations pays its professional and managerial employees, the U.S. Government Accountability Office (GAO) says that it still doesn’t know exactly how that U.N. pay is calculated, but that the U.N. staffers make considerably more than their U.S. civil service counterparts.

The nonpartisan watchdog arm of Congress estimates that U.N. salaries, which are theoretically supposed to rise roughly in tandem with U.S. federal civil servants, are as much as 30 percent higher than their U.S. equivalents, depending on the assumptions used to calculate the ratio. That is without a variety of allowances, extra vacation time and other perks that U.N. civil servants enjoy -- not to mention that their salaries, unlike their U.S. counterparts, are tax free.

The U.N. itself claims that the differential is considerably lower. But the GAO study also declared that the U.N. body charged with the calculation, the International Civil Service Commission (ICSC) “has not provided a comprehensive explanation to member states about its process,” and  “does not clearly state all of its assumptions when reporting the margin in its annual reports,” which run to 120 or so pages.

“The process in which the U.N. decides how to pay itself is incredibly opaque."

- Brett Schaefer, of the Heritage Foundation

The U.N.’s response to that charge is that the issue of compensation is “constantly evolving,” and that understanding its calculations requires “review and consideration” over “a span of years…in order to have a full understanding of the underlying process and rationale of the decisions.”

In fact, says Brett Schaefer, an expert on U.N. finances at the conservative Heritage Foundation, “The process in which the U.N. decides how to pay itself is incredibly opaque.  The fact that after a year of study it is still not clear to outsiders speaks volumes about what kind of problem it is, and why it needs to be solved.”

Schaefer has argued that the pay difference is even higher than the GAO calculates, and could be as much as 44 percent higher than equivalent U.S. civil servants earn in Washington D.C.

The dense, 73-page GAO study, released without much fanfare late last month, is part of a complicated game that increasingly austerity-minded Western nations, including the U.S., have been playing with the stolid U.N. bureaucracy in a bid to rein in U.N. spending while continuing support for the global institution. Getting a proper handle on pay scales may be one of the most important parts of the strategy. 

Whether the donor countries succeed is an open question. But the issue is also an especially sensitive one for the Obama administration, which has declared a pay freeze for U.S. civil servants for three years as a symbol of fiscal austerity.

On the one hand, the administration does not want to be tarred for allowing the U.N. to get away with practices it does not allow at home. On the other, it is clearly committed to greater support for the U.N. as part of its multilateral agenda.

Even so, the administration’s Ambassador to the U.N. for management and reform, Joseph Torsella, has called U.N. pay scales “seriously distorted,” and a major cause of U.N. budgetary inflation, which has seen the budget of the U.N. Secretariat climb from about $3.75 billion in 2006-2007 to an anticipated $5.4 billion starting next year. 

Torsella led a charge for the GAO study last January to shed light on a supposedly “objective” process by which a U.N.-appointed agency, the International Civil Service Commission, or ICSC, decides how U.N. officials should be rewarded. 

Roughly 75 percent of the U.N. Secretariat’s regular budget is for civil servant pay, meaning that in 2014-2015, the pay stubs could be worth about  $4 billion -- and the U.S., which pays 22 percent of that budget, would be on the hook for about $890 million.

In January, Torsella declared that “the entire UN system is now a $36 billion enterprise, larger than the individual GDPs of half its member states.” While the amount that the U.S. pays for the various parts of the U.N. system may vary, it is among the top donors in almost every case. Says Schaefer:  “The implications for the U.S. taxpayer are significant.”

In fact, for the past two years, the Obama administration has not published the total amount of support it pays to all U.N. organizations annually -- a requirement mandated by a congressional statute that has expired. In 2010, the last year of the statutory reporting period, the administration gave the U.N. about $7.7 billion.

One element of the multibillion-dollar spending problem is that the pay of all U.N. bureaucracies is tied to the same common salaries system, meaning that changes in the salary scale have a huge ripple effect extending well beyond the familiar bureaucracy in New York, and making agile management of U.N. costs and personnel a vastly cumbersome undertaking.

Trying to gauge the measure of the ripples is one of the aims of the GAO study, which meant taking on notions extending all the way back to the League of Nations, established on the principle that international civil servants should be paid at a level equal to the best-paid national civil service in the world, that of the U.S.

But for decades, that notion has also been tweaked by the U.N., so that equal pay evolved into more-than-equal pay, culminating in the idea that U.N. salaries could average as much as 115 percent of U.S. equivalent civil service pay over any five-year period.

One of the key sliding elements in the scale is a so-called “post adjustment” -- local cost of living multiplier -- that boosts salaries at various U.N. posts anywhere from 26 percent to nearly 120 percent, and is calculated every 12 months.

In New York City, where the great majority of top-level U.N. Secretariat employees work, the post adjustment is now 68 percent of salary. A previous post adjustment in 2011 hiked the New York multiplier from 61.3 percent of salary to 65.7 percent.

Through a major diplomatic effort on Torsella’s part,  the U.S. was able to delay the most recent hike in that post adjustment delayed by all of three months, to which the ICSC objected vehemently. 

How the ICSC calculates that cost-of-living differential is another area of numbing complication -- and potentially heavy impact. No fewer than six steps are involved in the calculation, and some of them seemed, to the GAO anyway, as singular. In its calculation of the cost-of-living index for Washington D.C., as opposed to New York, for example, the GAO study notes that the U.N. uses a different measure than the U.S. itself does, despite the fact that the two systems are supposed to be closely tied together.

The U.S. system, according to the report, factors in the so-called cost of labor -- meaning what equivalent wages are paid in the respective markets. The U.N. approach uses cost of living figures instead. Applying the U.S. method to U.N. pay scales shows that they then are far outside the approved 115 percent average margin that even the U.N.’s permissive scale allows.

The GAO, however, immediately backed away from its own conclusions about the issue as “outside the scope of our review,” noting that “reasonable alternate scenarios would change the results.”

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The GAO study does not come close to analyzing the full expense of other perks that the U.N. showers on itself, which include temporary rental subsidies of up to 80 percent for employees who change postings; huge education grants for college-age children; high per-diem expense allowances for traveling bureaucrats; up to nine months of paid sick leave after three years of services; leave; and annual 30-day paid vacations that are nearly twice as long as their U.S. counterparts.

Instead, that information is supposed to be contained in a forthcoming report.

The cost containment war of maneuver, in other words, is far from over.

George Russell is editor-at-large of Fox News and can be found on Twitter @GeorgeRussellhttp://global.fncstatic.com/static/v/all/img/external-link.png.

Click here for more stories by George Russell.