Buyouts: Can your agency afford them?

Now that the Environmental Protection Agency has authorized buyouts worth up to $25,000 (before deductions), it’s likely that other agencies facing enforced diets will follow suit.

The Trump budget calls for EPA to take a 31-percent cut and originally targeted 3,100 jobs. Now it appears that nearly 4,000 agency employees (and the programs they support) are no longer needed. Or wanted!

Other agencies projected for big budget hits (assuming Congress goes along): the State Department, looking at a 29-percent cut; Agriculture and Labor each due to take a 21 percent hit; Health and Human Services (18 percent reduction); the Army Corps of Engineers, Commerce, Education, Housing and Urban Development, Transportation; and Interior. Energy and Justice are targeted for small reductions along with NASA.

If they decide on buyouts/early outs, it’s likely that offers will be made. Generally speaking, buyouts are most cost-effective at the beginning of a new fiscal year. Getting high-salary workers off the payroll early, rather than later in the FY, also helps agencies meet goals.

Your opinion matters. Take Market Connections’ survey about how you consume media.

Advertisement

The three largest federal operations, Defense, Homeland Security and the Department of Veterans Affairs, are scheduled to grow. Most of their workforce was exempted from the hiring freeze that just ended.

Congress has given the Defense Department the authority to offer buyouts of up to $40,000. Other agencies are limited to the Clinton-era downsizing effort, which capped buyouts at a maximum before deductions for things like taxes. It is likely other agencies will press for authority to give more generous buyouts. And if workers believe that, they may hold out until it appears the new higher amount will or won’t be extended to other agencies.

Buyouts, like many things, cost more than their list prices. John J. O’Grady, president of AFGE Council 238, said that EPA gave 456 buyouts, which should have cost about $11.3 million, to employees in 2014. But the actual cost of the downsizing effort, he said, was $16.2 million because of accumulated annual leave payments of $4.9 million, along with the buyouts. If the annual leave is counted (workers would have received it if they took regular retirement down the road) then the cost of the 2014 EPA buyouts was $35,526. That’s a lot more than $25,000 and almost at the magic $40,000 limit for Defense workers.

Congress has the final say on the budgets, although its track record at getting things down — under Democrats or Republicans — is not so good. The first priority when Congress returns next week (from yet another extended break) will be to keep the government running past the April 29 shutdown date.

Meantime, if you work for one of the departments and agencies in the budget bullseye, you might want to do some career and financial planning in the event the agency dangles a buyout before you.

Nearly Useless Factoid

By David Thornton

House 2018 budget proposal lays groundwork for federal retirement cuts.

Whales have no sweat glands.

Source: Cool Cosmos