It’s An Election Year: Health Benefits for Some New Retirees May Change; Future of Some Agencies on the Line

It’s an election year. Here are several proposals that have been made that would impact the civil service structure and the benefits of some current federal employees.

It’s another election year. Federal employees don’t run for an elected office to keep their jobs but the implications are important.

How will the money in the federal budget be spent? With any luck, the 2007 budget will be approved before the start of the new fiscal year. That is unlikely as the budget is the focal point for the politics in reelection campaigns.

Federal spending has skyrocketed in the past several years. Congressmen and those hoping to reach that position are already telling the voters how they would make changes when they get to Washington next year.

The implications for you in all of this?

Closely watch proposals regarding your pay and benefits. They may become a target for change. Likewise, the bureaucratic system in which you work may also be subject to change as the politicians curry for votes.

Some readers will recall a proposal made last year to change the federal retirement plan from a “high three” rule to a “high five” rule. That didn’t happen. But once the proposal is raised, the issue is on the table for consideration.

Here are a couple of new proposals that could impact the federal government’s civil service structure in the near future if they were to become law. These proposals are part of the “Renewed Contract With America” proposed by the Republican Study Committee.

Base Federal Retirees’ Health Benefits on Length of Service

Under the current system, federal retirees are generally allowed to continue receiving benefits from the Federal Employees Health Benefits (FEHB) program if they have participated in the program during their last five years of service and are eligible to receive an immediate annuity.

This is a good deal. Most private companies, even those that offer health benefits, do not give their retirees this option. Retirees are older, they need more health care and they use the insurance more than the younger members of the workforce. Not surprisingly, more than 80 percent of new federal retirees elect to continue their health benefits.

This proposal would reduce health benefits for new retirees who had relatively short federal careers, although it would preserve their right to participate in the FEHB program.

According to the budget alternative proposed by the Republican Study Committee (RSC) this month, changing the FEHB in this way “could make the government’s mix of compensation fairer and more efficient by improving the link between length of service and deferred compensation, and would also help bring federal benefits closer to those of private companies.”

This proposal was previously included in the RSC’s “Operation Offset” in 2005.

Eliminate the Merit Systems Protection Board (MSPB)

The Merit Systems Protection Board (MSPB) was established in 1978 as an independent, quasi-judicial agency in the Executive Branch that oversees federal merit systems.

The Board’s mission is to ensure that federal employees are protected against abuses by agency management, to ensure that Executive Branch agencies make employment decisions in accordance with the merit systems principles, and to ensure that federal merit systems are kept free of prohibited personnel practices.

Many of the appeals by federal employees were handled by the Appeals Review Board within the Civil Service Commission (now the Office of Personnel Management) prior to the passage of the Civil Service Reform Act of 1978.

The Republican Study Committee states that the MSPB’s mission “could easily be administered by the Office of Personnel Management or the Department of Labor. This budget proposes the elimination of all budget authority for the MSPB.”

Eliminate the Federal Labor Relations Authority (FLRA)

Like the MSPB, the Federal Labor Relations Authority (FLRA) was established in 1978. The job of this agency is to provide leadership in establishing policies and guidance relating to federal-sector labor-management relations and with resolving disputes under and ensuring compliance with the Federal Service Labor-Management Relations Statute.

Many of the FLRA’s functions were performed by the Department of Labor prior to the Civil Service Reform Act of 1978. And, says the RSC, the job currently performed by the FLRA “could be administered by the Office of Personnel Management or the Department of Labor” and getting rid of the agency would save money as “there is no need for a separate expenditure.”

Eliminate the Office of Government Ethics

The Office of Government Ethics (OGE) was established in 1978 and exercises leadership in the Executive Branch to prevent conflicts of interest on the part of government employees, and to resolve those conflicts of interest that do occur.

At one time, the Civil Service Commission was responsible for government ethics with a very small office.

According to the RSC, the job now being performed by OGE “can be performed by the Department of Justice and does not need a separate agency.”

The RSC budget proposes the elimination of all budget authority for the Office of Government Ethics.

Potential Savings

According to the RSC, eliminating these three agencies would save considerable money. In 2007, the savings from eliminating the MSPB would be about $36 million; from eliminating the FLRA, about $33 million; and from eliminating OGE, about $11 million.

Will these changes occur in the executive branch? Probably not. The potential savings are not that significant in the overall federal budget.

But remember that it is an election year. Saving money by eliminating programs or agencies that may lack popular support of the taxpayers can be a good argument in an election. You could probably ask the vast majority of Americans if they think these proposals are a good idea and most would agree that they are. A few million dollars is a lot of money; the proposals would not impact anyone outside of the federal government. And, in an election year, that may be persuasive to a majority in Congress.

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. Follow Ralph on Twitter: @RalphSmith47