No Proposed Change to Federal Retirement, Pay Systems in Budget Proposal

By on April 15, 2011 in Pay & Benefits, Retirement with 34 Comments

Before the president’s speech this week, there was speculation that he would adopt the recommendations of the deficit recommendation commission. The commission made its recommendations late last year and, among other things, recommended changes to the federal retirement system and the federal employee health insurance system as part of reducing the federal government’s massive spending deficit.

But that did not happen.

Some of the recommendations in the new budget proposal are, like most documents of this type, designed to sound good but will not result in any substantial savings as the large federal bureaucracy will continue to operate without regard to what may be in a document that is quickly forgotten. Other recommendations could result in the federal government saving money, especially if a program is eliminated and the functions, administrative costs and employees are not quietly transferred to new organizations with the same or different job assignments.

There are references to the recommendations of the deficit commission but no wholesale adoption of its recommendations and, specifically, the most recent budget recommendations did not contain recommendations to substantially alter the federal retirement system.

Throughout the document are proposals that would impact the federal workforce in some way. Here are a few of the examples.

The new budget recommendation states: “the Administration is pursuing an aggressive Government-wide effort to curb non-essential administrative spending.” It gives examples of how the federal government can curb administrative costs, such as unnecessary travel by federal employees not that “Over the past five years, spending on certain of these activities has grown substantially.” Perhaps to the relief of those who enjoy traveling at government expense, there are no specific recommendations for cutting travel–just examples of how the Department of Education is using web-based conferencing to eliminate some travel and GSA plans to save $10 million in fiscal year 2012 by using advanced technology and consolidating conferences.

Axing the Christopher Columbus Fellowship Foundation and Harry Truman Scholarship Foundation

It is a safe bet that most Americans and most federal employees are not familiar with the Christopher Columbus Fellowship Foundation. It has nine employees with an average salary of of $68,903.

The new budget request says that: “The Administration proposes no additional Federal funding for the Christopher Columbus Fellowship Foundation, which will continue to operate until its existing funds are expended.”

And, by the way, “The Foundation has not consistently demonstrated clear outcomes from its awards and has high overhead costs. No Administration has proposed funding for the Christopher Columbus Fellowship Foundation since the creation of the Foundation almost two decades ago.”

The Truman Scholarship Foundation has an average salary of $117,786 and employs four people. It “will continue to operate on interest income from its trust fund and will be able to meet its statutory requirements without additional appropriated funding. Until 2009, the Truman Foundation had operated without new appropriations since it was originally endowed in the 1970s. No additional funds have been proposed for the Truman Foundation in any President’s Budget since 1978.”

Reforming the FECA

The Federal Employees Compensation Act has come under criticism for years and decades and has not been substantially changed since 1974.

One proposed change: A federal employee who is eligible to retire would use the federal retirement system rather than using the federal disability system into retirement.

Proposed changes to the program include:

  • convert prospectively retirement-age beneficiaries to a retirement annuity-level benefit,
  • impose a uniform up-front waiting period for benefits for all beneficiaries,
  • streamline claims processing,
  • permit DOL to recapture compensation costs from responsible third parties,
  • authorize DOL to cross-match FECA records with Social Security records to reduce improper payments.

These changes would allegedly save the government about $10 million in the coming fiscal year.

Buyout of Some Farm Service Agency Positions at a Cost of $16.8 Million

The Farm Service Agency has about 14,000 positions. The functions of the organization have changed but the staffing has not changed, according the budget report and the agency still employs people for jobs that are no longer needed. So, “As a result, FSA has reviewed this and other agency priorities, looked at whether current staff allocations are appropriate, and determined that buying out approximately 500 positions would result in a more efficient organization.”

The buyout of the employee jobs no longer needed would cost about $16.8 million but allegedly save the agency about $27 million in fiscal year 2012.

Here is a list of federal programs that are proposed for changes, including possible termination.

Programs Proposed for Termination, Reduction or Other Savings

  • Adolescent Family Life Program, Department of Health and Human Services.
  • Agricultural, Forestry, and Fishing Program, Department of Health and Human Services
  • Brownfields Economic Development Initiative, Department of Housing and Urban Development
  • Bureau of Labor Statistics – International Labor Comparison Program, Department of Labor
  • C-17 Transport Aircraft Production, Department of Defense
  • Career Pathways Innovation Fund, Department of Labor
  • Children and Families Services’ Job Demonstration Program, Department of Health and Human Services
  • Children’s Hospital Graduate Medical Education Payment Program, Department of Health and Human Services
  • Christopher Columbus Fellowship Foundation
  • Coal Tax Preferences (4 Terminations), Department of Energy
  • Commodity Storage Payments, Department of Agriculture
  • Deep Underground Science and Engineering Laboratory, National Science Foundation
  • Diesel Emissions Reduction Grant Program, Environmental Protection Agency
  • Economic Action Program, Department of Agriculture
  • Education Research Centers, Department of Health and Human Services
  • Election Reform Grants, Election Assistance Commission
  • Emergency Operations Center Grant Program, Department of Homeland Security
  • EP-X Manned Airborne Intelligence, Surveillance, and Reconnaissance Aircraft, Department of Defense
  • Expeditionary Fighting Vehicle, Department of Defense
  • Farm Service Agency Loan Program – Direct Conservation Loans, Department of Agriculture
  • Farm Service Agency Loan Program – Guaranteed Farm Operating Subsidized Loans, Department of Agriculture
  • Forest Resources Information and Analysis, Department of Agriculture
  • Geothermal Payments to Counties, Department of the Interior
  • Graduate STEM Fellows in K-12 Education, National Science Foundation
  • Harry S. Truman Scholarship Foundation
  • Health Care Services Grant Program, Department of Agriculture
  • Health Resources and Services Administration (3 Terminations), Department of Health and Human Services
  • High Energy Cost Grants, Department of Agriculture
  • Inter-City Bus Security Grant Program, Department of Homeland Security
  • International Forestry, Department of Agriculture
  • Joint Strike Fighter Alternate Engine, Department of Defense
  • LANSCE Refurbishment, Department of Energy
  • Leveraging Educational Assistance Partnership Program, Department of Education
  • Local Government Climate Change Grants, Environmental Protection Agency
  • Management of National Forest Lands for Subsistence Uses, Department of Agriculture
  • Mobile Enforcement Team, Department of Justice
  • Multifamily Housing and Community Facilities Loan Guarantees, Department of Agriculture6
  • Multifamily Housing Revitalization Demonstration Program, Department of Agriculture
  • National Biological Information Infrastructure, Department of the Interior
  • National STEM Distributed Learning (Digital Library), National Science Foundation
  • National Wildlife Refuge Fund, Department of the Interior
  • Non-Line of Sight Launch System, Department of Defense
  • Oil and Gas Company Tax Preferences (8 Terminations), Department of Energy
  • Oil and Gas Research and Development Program, Department of Energy
  • Park Partnership Project Grants, Department of the Interior
  • Preventive Health and Health Services Block Grant, Department of Health and Human Services
  • Public Broadcasting Grants, Department of Agriculture
  • Public Telecommunications Facilities Grants, Department of Commerce
  • Research Initiation Grants to Broaden Participation in Biology, National Science Foundation
  • Resource Conservation and Development Program, Department of Agriculture
  • Revenue Forgone from Reduced Rate Mail, Postal Service
  • Rural Community Facilities, Department of Health and Human Services
  • Rural Fire Assistance, Department of the Interior
  • Rural Housing Service – Small Loan and Grant Programs, Department of Agriculture
  • Save America’s Treasures and Preserve America, Department of the Interior
  • Self-Help and Assisted Homeownership Opportunity Program (SHOP), Department of Housing and Urban Development
  • SM-2 Block IIIB Missile, Department of Defense
  • Small Categorical Grants (3 Terminations), Department of Health and Human Services
  • Small Community Health Grants (2 Terminations), Department of Health and Human Services
  • Small Department of Education Programs (12 Terminations), Department of Education
  • State Health Access Grants, Department of Health and Human Services
  • Surface Launched Advanced Medium Range Air-to-Air Missile Program, Department of Defense
  • Synchrotron Radiation Center, National Science Foundation
  • Targeted Airshed Grants, Environmental Protection Agency
  • Targeted Water Infrastructure Grants, Environmental Protection Agency
  • Telecommunications Development Fund, Federal Communications Commission
  • Trade Adjustment Assistance for Firms, Department of Commerce
  • Transitional Jobs Demonstration, Department of Labor
  • University Community Fund, Department of Housing and Urban Development
  • Unrestricted Abandoned Mine Lands Payments, Department of the Interior
  • Valles Caldera, Department of Agriculture
  • Voting Access for Individuals with Disabilities Grants, Department of Health and Human Services
  • Water and Wastewater Treatment Projects, Corps of Engineers
  • Water Resources Research Act Program, Department of the Interior
  • Watershed and Flood Prevention Program, Department of Agriculture
  • Watershed Rehabilitation Program, Department of Agriculture

So, while some in the federal community will breathe a sigh of relief at the lack of wholesale changes to the federal pay and benefits program, there are other changes that will impact federal employees. Also, keep in mind that this is essentially another proposal in a process that will take months to complete and there will be many proposed changes along the way.

We will keep our readers advised on the most significant changes that are proposed along the way.

© 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.

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