RSC Budget Echoes Recent Proposals to Cut Federal Employees’ Pay, Benefits

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By on April 26, 2018 in Pay & Benefits with 0 Comments

Close up of the lower right corner of a $100 bill imprinted over an American flag

The Republican Study Committee (RSC) has released its annual budget proposal for fiscal year 2019. The proposal, called A Framework for Unified Conservatism, echoes many of the recent proposals that have been put forth by the Trump administration and other legislative proposals to make reductions to federal employees’ pay and benefits.

A clear goal of the budget proposal is on cutting spending which it says it does by more than $12.4 trillion over 10 years. While the federal workforce is only a small part of the proposed spending reductions, it outlines a philosophy of needing to cut spending in nearly all parts of the federal government’s budget in an effort to stop the rapidly increasing national debt.

“Curbing spending is the only way to control our deficits and ballooning debt. Without resolute action now, we run the risk of an unstoppable debt spiral and ultimately a sovereign debt crisis. History warns us that countries that bankrupt themselves aren’t around very long,” said Budget and Spending Task Force Chairman Tom McClintock (R-CA). “The RSC budget points the way back to solvency and prosperity, but every day we delay, our choices become harder. One thing is clear: inaction is not an option.”

What follows are highlights from the RSC budget blueprint that are of most relevance to the federal workforce.

Pay/Benefits Cuts

Reduce the Annual Across-the-Board Adjustment for Federal Civilian Employees Pay

The budget describes the skyrocketing debt of the federal government as a “fiscal state of emergency” and one which can be used to limit automatic pay increases given to federal employees under the Federal Employees Pay Comparability Act of 1990.

The RSC budget says the president can limit the size of the increase if he determines that a national emergency exists. The proposal says the nation’s growing debt warrants such an emergency:

If the president determines that a national emergency exists, he can limit the size of the increase. President Obama signed legislation blocking pay increases in 2011, 2012, and 2013. However, with the national debt increasing above $21 trillion, and projected to skyrocket to almost $34 trillion over the next decade, a fiscal state of emergency exists. Beginning in FY 2019, the annual across-the-board increase for federal workers should be reduced by half a percentage point below the expected automatic increases. (emphasis added)

As for justification for this pay reduction, the budget says that unlike most Americans, federal workers get an automatic pay increase every year and that as the Congressional Budget Office has noted, federal employees are paid, on average, 17% more than their private sector counterparts.

Limiting Bonuses

The RSC budget proposes setting “reasonable limits” on the bonuses paid to the federal workforce but offers no additional details quantifying what it said would be “reasonable.”

It expressed support in this section for Congressman Mark Sanford’s (R-SC) Federal Employee Bonus Disclosure Act which would make all federal employee bonuses publicly available and would require reports to Congress of the bonuses awarded by agencies.

Pension Plan Reforms

The RSC budget also supports reforms to federal employee pension plans that were outlined in the White House’s 2019 budget proposal. Among these are the following:

  • Pension calculation would be based on a high-five instead of a high-three
  • The share of employee contributions to FERS should be increased over time, to more closely align with the private sector
  • The cost of living adjustment (COLA) for FERS and CSRS should be reduced or eliminated
  • Eliminate the Special Retirement Supplement (SRS)
  • The interest rate on the G Fund would be reduced to more accurately reflect the yield on a short term T-bill rate

The RSC budget also would require all federal workers to contribute more towards their retirement as opposed to just newly hired federal employees. It notes that the Middle Class Tax Relief and Job Creation Act of 2012 mandated increased contributions for newly hired federal workers but that this should be spread to existing federal employees as well to “equalize the treatment for all federal workers.”

FEHB Reforms

The RSC budget notes that federal employees covered under the Federal Employees Health Benefits Program (FEHB) pay for about 30% of their premiums while the government pays the remaining 70%. However, it says, “Because this ratio does not change with the higher-priced coverage options, federal employees have the incentive to choose the more expensive plans on the taxpayer’s dime.”

To remedy this, it suggests to change to a premium support system in which the government would offer a standard federal contribution towards the purchase of health insurance and employees would be responsible for paying the rest. “This option would encourage employees to purchase plans with the appropriate amount of coverage that fits their needs,” according to the proposal.

It also says that the government should reduce how much it pays for premiums to more closely align with the private sector, but offers no specifics as to what percentage this should be, only that it would presumably be less than the 70% figure it highlighted.

Make it Easier to Fire Federal Employees

The RSC budget proposes building on recent legislation signed into law for the Department of Veterans Affairs that makes it much easier for the VA secretary to remove, demote or suspend VA employees for poor performance.

The proposal would make federal employees “at-will” employees, as Congressional staff currently are.

This idea has been put forth in legislation that was introduced not long ago by Congressman Todd Rokita (R-IN). Among other things, the bill would allow federal employees to be removed or suspended “without notice or right to appeal, from service by the head of the agency at which such employee is employed for good cause, bad cause, or no cause at all.” See Legislation Introduced to Make Federal Employees ‘At-Will’ Employees for details.

Utilize the Holman Rule

The RSC budget says that Congress should make use of the recently reinstated Holman Rule to eliminate unnecessary executive branch positions. This is what the budget said about using this rule:

The Holman Rule allows amendments to appropriations bill in the House to reduce amounts of money covered by the bill, reduce the number of federal employees, and reduce the compensation or salary of federal employees.

If used correctly, the Holman Rule could be a powerful tool for conservatives in the House of Representatives to work with the Trump administration to reshape the federal bureaucracy so that it is more accountable and responsive to the American people.

The president and federal agencies should work cooperatively with the House to identify executive branch positions that are unneeded and the appropriations bills considered by the House should include Holman provisions to restrict, limit, and eliminate these positions.

Reduce the Size of the Federal Workforce

The budget proposes cutting the overall size of the federal workforce through attrition. It would limit new hires to one employee for every three who leaves the workforce. The president would have flexibility to adjust federal employment in case of a national emergency.

Federal Unions

Prohibit Automatic Collection of Union Dues

Provisions of the RSC budget would limit the power of federal employee unions as well. It suggests eliminating automatic deductions of union dues for federal workers.

“The federal government acts as the dues collector for unionized federal workers by deducting union dues from an employee’s paycheck and then remitting dues to the union. If a worker wants to join a union, then the union should collect its dues from the worker, not force the taxpayers to do it,” reads the RSC budget.

Eliminate the Use of Official Time

The RSC budget states:

In 2012, taxpayers paid federal workers over $157 million not to do their jobs. Instead, workers were doing union work during their official time. Ending the federal government’s sanction of union activity at federal expense, as proposed by Representative Jody Hice’s Federal Employee Accountability Act, will make the federal workforce more effective and efficient.

Hice’s legislation would target official time by cutting any future annuity payments for a federal employee using most of his time working on behalf of a union. See Federal Employee Unions and the Official Time Reform Act for details.

2019 RSC Budget

A copy of the full budget proposal is included below.

FY 2019 RSC Budget Proposal by FedSmith Inc. on Scribd

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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.

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