2015 Budget: What the president's proposal means for feds

Mar 05, 2014

President Obama released his FY2015 budget proposal on Tuesday. It includes, among other provisions that impact federal employees, a one percent raise for feds and efforts to improve employee training. Post columnist Joe Davidson discussed how the budget proposal could impact federal workers and what to expect from the budget process.

Welcome to our Washington Post chat about federal employees and President Obama's 2015 budget proposal. Eric Yoder and I will answer questions from 11 a.m. until about noon. Thank you for joining us.

Any clues as to whether the president will propose changes to CSRS, CSRS-Offset, or FERS retirement provisions/benefits?

The president's budget does not include changes to federal retirement programs.

How serious do you think Obama is about the proposals on a raise and training? While either or both would be welcome after so many parched years, it doesn't seem likely that Congress would let them pass.

Obama is serious and his budget is an indication of that. If Congress does nothing, his proposed 1% pay raise will take effect by default. It's unlikely Dems on the Hill would vote for anything less and it's unlikely Republicans would vote for anything more. I don't think the training programs will cost much money.

Why should we even pay attention to the president's budget. We all know it doesn't pass in anything like this form - if it passes at all...

That's often true, but as I wrote in today's paper and in answer to another question, if Congress does nothing the pay raise proposed by Obama will take effect by default.

In the good old days, when agencies wanted to trim staff, they offered buyouts so that people near retirement could leave early. Now they accomplish attrition by just making everyone's life so miserable that all the young people leave. In the end, agencies end up with almost all their employees close to retirement with no younger employees learning the ropes. Whether they know it or not, agencies are encouraging their best young employees to leave when their policy should be just the opposite.

Several agencies have offered early-outs and buy-outs in recent years. I don't know how many are currently.

Several new locality pay areas have been held up in recent years. Will these new locality areas be implemented?

The budget doesn't say anything one way or the other about adding localities. That's not meaningful, though, since that isn't determined through the budget process.

Basically, an outside advisory group mainly of union officials and compensation experts does the legwork on this issue. For the last several years, they have recommended adding 12 more localities, the largest cities in that group being St. Louis, Las Vegas, Tucson. Adding those localities would benefit employees working in those areas by increasing the GS pay rates.

 

Last year a higher level entity agreed with the idea but the needed rules to carry it out (defining the boundaries, etc.) never were put out--and they still haven't been, not even in proposed form.

The other issue could be that with a 1 percent raise, it would be hard to divide it into across the board and locality components, as was done commonly in the past with larger raises. This year's similar 1 percent increase was paid across the board, for example, with no locality component. If that is done again, I'm not sure how having the new localities in place, on paper, would make a difference. But dividing 1 percent into separate components is slicing the pie awfully thin.

Why does the president's proposed pay raise take effect by default?

Here is info from Eric Yoder:

Under a 1990 law, pay raises for white-collar federal employees are to have two components. The first is an across-the-board raise based on the employment cost index, a measure of wage levels outside the government, designed to keep federal employees generally apace with private sector trends. The second is locality pay, designed to bring federal salaries up to the levels of comparable jobs by region, as determined by an advisory group.

That law was designed to put raises largely on automatic pilot. However, it never has worked as envisioned, largely because no President or Congress has been willing to devote the money needed to close the indicated pay gaps.

In practice, raises typically are negotiated each year in the budget process, with the White House proposal as the starting point. That proposal commonly is linked, if only loosely, to the employment cost index component.

In many years Congress boosted that number slightly to make federal raises match increases for uniformed military personnel, dividing the available money between across the board and locality portions.

 

More recently, President Obama in late 2010 proposed keeping salary rates frozen for 2011 and 2012 and Congress agreed. For 2013, he proposed a 0.5 percent raise but ultimately accepted a third year of the freeze. For 2014, he proposed a 1 percent raise and that figure took effect under a provision allowing the President's plan to take effect by default if no law setting a different figure is enacted.

I know the republicans are planning a counter budget proposal - or something. Can you help me understand what that will be and whether it has any significance?

I think House Republicans will offer their own budget proposal in the near future. It has significance in that it shows the priorities and values of the Republican Party in a divided government. 

A budget that overall attempts to reduce the government debt and cut taxes makes President Obama sound like a Republican. What income brackets would benefit most from these tax cuts? How would this budget affect income inequality?

I don't have the answers to these questions. We focus on issues that more directly affect federal employees.

The "headlines" include this: " The Budget proposes a series of FECA reforms that will generate Government-wide savings of more than $340 million over 10 years.” Would you briefly discuss proposed compensation reforms (other than the proposed 1% pay raise) Thank you

The FECA thing has been kicking around for many, many years. Basically, the issue is that in general, FECA benefits are more valuable than disability retirement benefits, in part because of the tax treatment. The idea is that once a FECA beneficiary hits retirement age, it's no longer reasonable to consider that person an employee who just happens to be currently unable to work because of injury or illness, but rather this is someone who is a former employee and is never coming back--a retiree. Therefore, let's give that person a disability retirement annuity instead.

The budget doesn't say at what age this would happen, but a Senate postal reorganization bill that passed committee recently sets it at the Social Security full benefits retirement age, currently 66. Under both the White House budget and that bill, those who already above that age would be exempt.

The other FECA-related provisions also are long-running ideas, such as imposing a waiting period before benefits begin (which already is done in some cases), requiring offsets if the employee wins a judgment against a third party for liability for the injury, and similar administrative tweaks.

As Joe said, there are no other compensation reforms proposed--no recommended increases in retirement contributions, for example. That's not to say that those ideas won't be raised by others, though, as the process moves along. First thing to watch will be the House budget resolution by Rep. Ryan.

If the president's budget was passed as is, which agencies can expect a hard time in the coming years? And do you think that's going to line up with what Congress wants? I feel like every year certain agencies are targeted fpr cuts and have the rif talk with employees, but then Congress restores a lot of them.

Take a look at the Federal Eye reporting on agency budgets at this link: http://www.washingtonpost.com/blogs/federal-eye/

I can't say what Congress will do about each agency.

We are down about 40% in professional staff, and 70% in the entry level staff from about 5 years ago. We are hanging on with the sluggish economy (our workload follows the economy), but we have a hard time getting hiring authority to replace individuals. For every 4 or 5 we lose every year, we hire 1 or 2 at best. I don't believe we'll ever get back to where we need to be when the economy comes back, because there seems to be so much hatred of us. And it really burns my butt to see other agencies giving away the crazy awards, the ipods, and the lavish conference trips. Really? We've never seen that around here; the best most of us have ever gotten is a couple hundred in a bonus, and that was years ago now. Thankfully, I'm the second income in our family, and I've given myself permission to quit when I can't stand it anymore. I'm surprised that even the 1 or 2 a year even want to come work for the Feds.

I think this reflects the low morale among federal employees we've found all across the government.

Would you also discuss: The 2015 budget proposes that beginning in 2016: domestic partners of Federal employees and new retirees would be eligible for health benefits…” My retirement date could be in 2016. I know about the change in choices to "spouse +1" in 2016 and the addition of domestice partners to coverage. Anything else? Thanks again

This is also something the White House proposed last year. The administration argues that domestic partner coverage is increasingly the norm in the private sector and that the government should keep up with the times, so to speak, to remain a competitive employer.

They haven't defined what exactly they mean by domestic partner, although most likely they'd base it on the same standards applying for certain other benefits, such as eligibility to use sick leave to care for a family member.

They also haven't defined whether they mean same-sex, opposite-sex or both, although last year in testimony an administration official said the intent would be to cover both.

The logic behind covering only those who retire after some future date, and not current retirees, is that someone already retired did not factor that benefit into a decision regarding whether to join the government or stay with it once already employed--thus, the issue of competitiveness of the government as an employer does not apply.

This would require legislation, which didn't get approved last year.

The other FEHB proposals also are repeats, including authority to add certain new types of plan designs, and to allow plans to charge higher premiums for those who use tobacco and/or don't participate in wellness programs. These also made basically no progress last year.

One idea raised last year, the self plus one option, was approved last year, though, although it won't be available until 2016.

how would the President's proposal help federal hiring? I know lots of agencies currently have hiring freezes.

I think the amount of hiring will vary among agencies. There is more budget certainty because of the budget agreement last year, so that should allow some agencies more freedom in making hiring decisions. This is what the budget says about hiring: "Enabling Agencies to Hire the Best Talent from All Segments of Society. The Administration is committed to working with labor groups to improve hiring outcomes by ex­ploring flexible approaches to recruit and retain individuals with high-demand talents and skills. Beginning in 2015, the Administration will launch demonstration projects to identify prom­ising practices in recruiting, hiring, onboarding, and deploying talent across agencies. The goal of these projects is to increase diversity, reduce skills gaps, and improve organizational outcomes…."

Does it seem probable or likely that Congress doesn't pass this budget?

I doubt Congress will pass the budget in its entire proposed form. Congress often has basically ignored presidential budgets, and not just with Pres. Obama. 

I knew that our government was corrupt when they finally included locality pay for feds, they defined parts of West Virginia as part of the DC local area. So my pay is partially defined by what a house costs in West Virginia. Really? This is like saying that FBI agents working in Manhattan can choose to live in Scranton PA and commute from there. These locality pay "regions" are just drawn to save the government money, not to actually be fair.

On the other hand, feds living in West Virginia get a boost by having their pay partially determined by the cost of labor in D.C. But you raise a point worth further examination.

"The Administration is committed to working with labor groups to improve hiring outcomes by ex­ploring flexible approaches to recruit and retain individuals with high-demand talents and skills.' <-- What do you think this might mean? Is it just good-sounding words or are there concrete improvements on the horizon to make sure good people get into fed jobs?

Labor-management forums are already set up in many agencies, with varying degrees of success. I think labor groups will have to be vigilante to make sure these are more than just good sounding words.

Is there anything in the budget to increase the retiree benefits? My annuity payment has nudged up a bit this year, on paper, but my health insurance premium went up too, so net effect is something like $20 a month more. Can retirees hope to get anything out of this budget?

This is a case of the dog that didn't bark in the night time (if you've read your Sherlock Holmes that will mean more).

The budget does not propose improving federal retirement benefits but there would be no reason to have such an expectation. Most significantly, it does not recommend using the "chained CPI" for future COLAs, which would slow down future increases on the order of a half-percentage point per year. Last year's White House budget included that idea, and many Republicans have also raised it in the past. Technically speaking, the new budget proposal remains open to making that change but no one expects that to happen.

The budget also makes no recommendations for changes to basic provisions such as retirement contribution rates for current employees, eligibility to continue health insurance in retirement, and so on. As Holmes said, that was the curious incident.

And sorry the cost of of a house etc all went up after the Feds moved in. So the cost of living did go up substantially. Summit Point, WV so property values sky rocket in last decade. Feds have to live somewhere and moving further out is the only way to get decent schools and low crime rate.

To clarify on the locality pay issue: locality rates are not based on cost of living, they are based on what BLS determines to be comparable salaries for comparable positions in a local labor market. That more or less tracks with cost of living, but not necessarily.

The reason parts of West Virginia are included in the DC locality (and why parts of Pennsylvania are included in the New York locality) is that the boundary lines of localities are based in part on commuting patterns. That's been the practice all along since that system was created around 20 years ago. Thus, the DC area encompasses a wide swath (it also reaches into the southern Pa. area around Gettysburg) because a high enough percentage of people commute from those areas. As Joe said, this is something worth looking at, to determine if it's valid to determine pay based on an individual choice like that, of where to live and how far you are willing to commute.

Thank you for joining Eric Yoder and me during this Washington Post chat on federal employee issues and President Obama's budget. We're signing off for now.

In This Chat
Joe Davidson
Joe Davidson is the Federal Diary columnist at The Washington Post.
Eric Yoder
Eric Yoder is an an award-winning writer and covers the federal government for the Washington Post.
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