Proposed Changes to Federal HR: From Worst Case to Possible

Many people expected a Hillary Clinton victory. Changes for federal employee pay and benefits may have been unlikely but now may have a greater chance of success. Here is a summary of possible proposals for change.

A few weeks ago, FedSmith published Worst Case Scenario: Proposed Cuts to Federal Pay and Benefits. The article referenced a series of recommendations on federal HR (human resources) from the Heritage Foundation that would impact the federal workforce if implemented.

The National Active and Retired Federal Employees Association (NARFE) commented at that time:

[T]he proposals (from the Heritage Foundation) will be ignored because Congress will not be doing very much business between now and the election, and only dealing with must-pass initiatives during the lame duck session. The report may have an influence on legislative proposals introduced in the next Congress. Whether those proposals have any chance of passage may depend on what happens in November.

Here is an update.

Did Federal Employees Expect Hillary Clinton to Win the Election?

Readers (most of them anyway) have read that Donald Trump is the president-elect and will assume office in January 2017. NARFE’s comment above may have assumed Hillary Clinton would likely win the election.  That did seem likely as the Real Clear Politics average of polls consistently showed Clinton in the lead. The national press appeared to follow this same narrative. Many Americans probably assumed the election outcome was assured.

While a survey of FedSmith readers a few days before the election showed Trump was likely to win, another survey of 1,085 federal employees reported by Government Executive showed Clinton winning over Trump by a large margin. A majority of respondents in the Government Executive survey were Democrats (34%) while independents were 32% and Republicans were 25%. The FedSmith survey of over 2,100 people was primarily of independent voters (37%). Republicans were 34% of respondents and Democrats were 27%. Among the more than 500 comments in the survey article were numerous comments about election polls and the likely winner.

Will The Heritage Foundation Have a Role in a Trump Administration?

Yes, the Heritage Foundation will have a role in forming the Trump administration. Here is a comment in an article from CNN:

“Sources close to the (Trump transition) operation say…the conservative Heritage Foundation (has) had a strong role in shaping the transition….

“John Yoo, a Berkeley Law professor and scholar at the conservative American Enterprise Institute, got a warm reception from the crowd by cracking about the closeness. ‘I’m surprised there are so many people here because I thought everyone at Heritage was working over at transition headquarters,’ Yoo said on the panel about Trump’s win. ‘I asked the taxi cab driver to take me to Trump transition headquarters and he dropped me off here, instead.’ “

So, NARFE, federal employee unions, and, no doubt, many federal employees expected business as usual after the election. In January, the Clinton administration would presumably assume power and effectively run a third term of the Obama administration.

Revisiting the Heritage Report and Proposed Changes to Federal HR

Since the Heritage Foundation is influential in forming a new administration, we can assume the Heritage Report entitled Blueprint for Reform: A Comprehensive Policy Agenda for a New Administration in 2017 will be influential. Those who ignored it when released should take a second, serious look.

Proposed Changes to Federal Pay and Benefits

The Federal Salary Council, consisting primarily of federal employee union representatives, has concluded federal employees are underpaid by an average of 35%.

A Heritage Foundation study (and other organizations) found federal employees are paid 22 percent higher wages, on average, than similar private-sector employees. The Heritage study concluded higher wages for the federal workforce are possible “because the federal government operates outside of market forces that keep wages in line with productivity; it does not have to compete for taxpayer dollars and has significant advantages in its ability to finance deficits.”

Will the Trump administration be more amenable to the salary conclusions of the unions that campaigned long and hard for Hillary Clinton, or by the Heritage Foundation representatives helping to form a new government? My advice is  to read the Heritage Foundation report more closely. These are some of its recommendations:

  • Eliminate automatic awarding of within-grade increases
  • Combine vacation and sick leave into one plan. This would result in 16 days for workers with fewer than three years of service and up to 27 days for federal employees who have worked longer time periods.
  • Alternatively,  maintain separate vacation and sick leave accounts but restrict the total leave available. Reduce current vacation allowance from 13 days, 20 days, or 26 days (depending on years of service) to 10 days, 15 days, and 20 days. Reduce sick leave days from 13 days to 10 with the ability to roll sick leave over from year to year.
  • Remove the government subsidy for health insurance benefits after retirement for new federal employees.
  • Transition to a new retirement system. No changes to retirement for federal employees with 25 years or more of federal service.
  • Vested employees (with between 5 and 25 years of service would have several options:
    • Option A: Remain in the FERS system and continue to receive both FERS and TSP benefits but pay a higher share of FERS costs.
    • Option B: Maintain a frozen FERS benefit with no further FERS contributions but receive an additional 3 percentage points of matching TSP contributions, for a total government-provided contribution of up to 8 percent (4 percent automatic plus up to 4 percent matching), compared to the current 5 percent max.
    • Option C: Receive a lump-sum benefit payment equal to 75 percent of the present value of accrued FERS benefits, no future FERS benefit, and higher TSP contributions (an additional 3 percent matching, up to 8 percent total).
  • Federal employees with fewer than five years of service would no longer receive FERS contributions. They would receive a lump sum benefit of contributions they have made to FERS and receive an additional 3 percentage points in automatic TSP contributions. This would make them eligible to receive up to 8 percent in total government contributions.
  • New hires and employees with fewer than five years of service would be placed into a new retirement system.

Proposed Changes for Firing Federal Workers

  • First, the probationary period should be extended from one year to three years.
  • Second, allow employees to appeal their dismissal through one forum instead of up to three different forums.
  • Third, lower the standard on the burden of proof necessary to fire a federal employee. Change the requirement of proving that dismissing an employee will improve an agency’s performance. Instead, show it is reasonable to assume firing the employee will improve an agency’s performance.

Putting Proposed Changes into Perspective

Now that you have read some of the proposals that will unsettle many readers, put the proposals into perspective.

John Grobe is a highly-respected expert in the federal human resources arena. Here is timely advice from Mr. Grobe:

“Several years ago, in an editorial, the Federal Times said: ‘Congress rarely moves quickly or makes…significant policy changes that take immediate and full effect.’  So, don’t panic, don’t lose sleep, and be confident that if changes come, there will be ample time to react and make decisions on what you will do.”

Most significant changes will require Congressional approval. Getting a law passed by Congress is not easy. Few proposals emerge from Congress unscathed, if they emerge at all.

Numerous proposals to drastically change the pay and benefits for the federal workforce have been made in the past. Most proposed changes were never implemented. When significant changes do occur, such as reforming the federal retirement system, they were discussed far in advance. When the change did occur, current federal employees had an opportunity to remain in CSRS or move into FERS.

If there are major changes such as those that have been proposed, they will not happen overnight. Federal employees will learn through news sites, such as FedSmith, of proposals that are made. Changes to proposals, should they advance and have a probable chance of implementation, will likely be followed and discussed. There will be time to make significant career decisions or prepare for the impact of changes that are made.

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