eProcurement self approval version 9.1

I'm trying to setup self-approval and skip prior steps for the requester.  It will not skip the prior step unless the dollar amount is within the approval step's dollar threshold.  For example, the step 2 approver is the requester and can approve up to $1000.00 and the step 1 approver can approve up to $500.00.  If the requisition is for less than $1000.00, the step 1 approver is not being skipped.  Is this the way it's suppose to work, or am I not configuring correctly?

Thanks