Federal Employee Pay and the Budget Process

By on May 11, 2015 in Current Events, Pay & Benefits with 80 Comments

There have been a myriad of budget proposals in recent years, and many of them have specific items that would impact the federal workforce in some way.

Congress recently agreed to a budget proposal for FY 2016 that generally spares federal workers from workforce cuts through attrition or higher contributions towards their retirement programs, ideas that have been pitched in past proposals. The proposal that passed, however, includes about $496 billion in cuts to non-defense agencies (over a 10-year period) beginning in 2017.

But the budget proposal that passed was a compromise of sorts between a couple of extremes discussed along the way. With differing opinions from politicians in Washington, the final product is often a compromise blending elements of both sides of these opposing viewpoints.

Here’s a quick summary of a couple of the budget proposals discussed along the way to the version ultimately approved by Congress.

The 2016 House GOP budget proposal didn’t get into a great deal of specifics with regards to cuts for the federal workforce, but it did allude to sticking with recommendations that came out of the National Commission on Fiscal Responsibility and Reform. Also known as the Deficit Commission, the recommendations from this committee included at the time freezing federal salaries and switching to a high-5 system for calculating retirement benefits. See Deficit Commission Recommends Freezing Federal Salaries, Changing Retirement Calculations.

One idea that came from the Republican side, however, was a proposal that would effectively cut the interest rates paid by the G Fund. If this proposal were to ever be implemented, it would lower the G Fund’s interest rate to one closer to that of a traditional money market fund.

Another budget proposal for 2016 came from the other side of the political aisle. It was put out by the Congressional Progressive Caucus, a group consisting of one United States Senator and seventy five members of the House of Representatives. The group says that it “seeks to give voice to the needs and aspirations of all Americans and to build a more just and humane society” and that it promotes a “strong, progressive agenda.”

This proposal, known as “The People’s Budget,” promised more by way of benefits for workers on a national scale, such as encouraging the adoption of 6 weeks of paid leave for federal workers, pushed for higher minimum wages and ended state-based right to work, and it promised to increase taxes on the wealthy to help fund the variety of new initiatives. A copy of the full proposal is included at the end of this post.

But the one item from this budget proposal likely to be of most interest to federal employees is the inclusion of a 4% pay raise for the federal workforce. On this subject, the budget outline stated:

[A 4% federal pay raise] increases agencies’ budgets within discretionary funding to provide a 4 percent pay increase to dedicated civil servants who work on behalf of the American people every single day. Years of austerity through furloughs and pay freezes have made the federal government a less attractive place to work and federal wage growth continues to lag behind the private sector. The People’s Budget ensures that the federal government will be able to compete for the best and the brightest candidates.

Even this figure is a compromise of sorts among those pushing for a higher raise for the federal workforce. Numbers that have been floated in recent pay increase proposals have been AFGE’s suggestion of 4%, Senator Brian Schatz’s (D-HI) proposed 3.3% in 2014, and Rep. Gerry Connolly’s (D-VA) and Senator Brian Schatz’s (D-HI) 2015 proposal of 3.8%.

So the 4% figure is on the high end of these, but then again there seems to be no agreement on any one number. And as readers are no doubt well aware, the actual pay increases that have been implemented in the past few years were well under many of the figures being suggested by various groups and lawmakers. (See, for example, Feds Doing Their “Fair Share” With 1% Pay Raise for 2015)

FedSmith.com users have said in the past that they think a 4% raise is fair among the many varying pay increase proposals that have been pitched. As for the latest number, the president has proposed a 1.3% pay increase for 2016.

The bottom line

The most important thing in all of these budget debates to keep in mind is that none of this is final. The budget proposal that passed Congress is only a spending outline. As noted in this article, “The proposal is a non-binding blueprint; it simply sets spending outlines for the coming year. Lawmakers will begin the process of nailing down specific spending bills in the coming weeks.”

The People’s Budget

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

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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