"High Three" to "High Five"?

By on September 22, 2005 in Current Events, Retirement with 1 Comment

The Federal Government is spending more money than it has taken in and some in Congress want to find ways to save money as well as spending it. While deficit spending is not a new concept for Uncle Sam, the amount of the deficit is huge.

The federal government is promising billions to help rebuild damage in the Gulf Coast areas of Louisiana, Mississippi and Alabama and a new hurricane is going to rip up parts of Texas as well.

The problem is that Uncle Sam doesn’t have that many billions of extra dollars. In order to save money, the planning has to start somewhere. Cutting back on federal spending is never popular but here are a couple of items that will be of interest to federal employees and retirees.

Parking Fees

We provided a news report earlier this week that federal employees may have to start paying for their own parking at work. According to a report from a group putting together a plan called “Operation Offset”, the federal government has about 200,000 parking spaces it gives away to federal employees or makes available at reduced rates. Charging employees for these spaces would save about $1.5 billion over ten years according to the report as well as encourage feds to carpool.

But there is more in the report that will no doubt get the attention of readers more than parking fees.

Changing Retirement Calculations for Feds

How about changing the amount of retirement payments for new retirees?

The report doesn’t say it, but paying less to retiring federal employees would certainly encourage some people to work longer and perhaps cut down on the brain drain as baby boomers are expected to start leaving government in droves over the next several years.

Here’s the plan: Currently, retirement payments are based on a “high three” average. Changing that average to the “high five” would save a lot of money. This would reportedly make the federal retirement system more closely resemble private sector retirement programs and save Uncle Sam about $5.2 billion over ten years.

Changing Health Benefits Program for New Retirees

The report also suggests changing the Federal Employee Health Benefits program for new retirees. There is not much specificity in the report. Currently, more than eighty percent of new federal retirees continue their health benefits into retirement and the government pays 72 percent of the premium.

The “Operation Offset” plan would base the health benefits for new employees on their length of service while still allowing them to participate in the program. Presumably, employees with less than 30 years of service would lose approximately two percent of the government’s contribution for every year of service under 30 years.

Changing the way for calculating health benefits would save $6.3 billion over ten years and, says the report, bring the way the government provides health benefits for retirees more in line with the private sector.

Blocking Automatic Pay Increases for Congress

But this may make you feel better: The report notes that pay increases for Members of Congress are automatic and that “amendments blocking its enactment were out of order during appropriations consideration this year.” The report suggests that Members of Congress could “temporarily forgo their pay increases” and this would save taxpayers about $24 million dollars over ten years.

Cutting Conferences for Dept. of Education

Even more money would be saved by cutting back on conferences attended by employees at the Department of Education. The report doesn’t say what the various conferences were for, but apparently Education employees spend some $6 million annually to go to them. Cutting back on this perk would save about $57 million over ten years because of the administrative costs for people to go to these events.

The report would spread the cuts around to a wide variety of spending projects–including cutting back on some of the pet projects (sometimes called “pork”) tucked away in the $286 billion transportation bill.

A wide variety of programs in federal agencies would also be cut or reduced so, if enacted, a number of federal employees would eventually be impacted as programs are scaled back or eliminated.

Keep in mind, these proposals are just in the planning stages. No doubt, readers will see numerous news items about possible cuts in various projects but the plan to change the retirement forumula for future retirees would have the most obvious impact on a wide variety of federal employees.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.