Republicans gearing up for major changes to federal pay and benefits

Republican lawmakers and the White House are determined to make major changes to the federal pay and benefits. President Donald Trump’s 2018 budget proposal may offer the first details of what federal employee groups and Democratic lawmakers have feared over the last several years.

Jacqueline Simon, policy director at the American Federation of Government Employees, told House lawmakers Thursday that the President’s 2018 budget proposal may include changes to the way retirement annuities are calculated, and it may also potentially ask that Federal Employee Retirement System (FERS) participants contribute more toward their defined benefit plans.

According to a Democratic aide, the President’s budget “will propose items that are fundamentally anti-federal employee, including proposing drastic changes to the retirement system that will impose steep costs on active employees and retirees.”

An Office of Management and Budget spokesman said the President’s budget will be released Tuesday and exact details will be known then.

Advertisement

Several local lawmakers said they were unaware of the proposals or didn’t know the details.

The President’s budget is merely a proposal, and congressional appropriations committees will review and offer their suggestions.

This comes on the heels of discussions in the House Oversight and Government Reform Committee, which took its first step Thursday toward navigating the rough waters of the federal compensation system.

“We are going to have civil service reform,” said Government Operations Subcommittee Chairman Mark Meadows (R-N.C.), who led the full committee hearing May 18 while Chairman Jason Chaffetz (R-Utah) recovers from surgery. “The testimony that all of you have here today will play a factor in that.”

Yet as Meadows recognized, the witnesses had vastly different opinions about the state of the federal compensation system, the studies that different entities have produced on the topic and what the results mean.

He asked the Congressional Budget Office, which most recently updated its study on federal compensation and how it compares to the private sector, to conduct a new review on the topic. The new study should include other aspects of federal compensation that organizations like the Heritage Foundation and American Enterprise Institute say were left out of CBO’s original review.

“I’d like to use this hearing to not only get at the facts, but also get an action plan where we can work in a bipartisan way to make sure that people are fairly compensated, but also to make sure that there’s an incentive there to not only attract new federal workers but also to make sure that the very thing that we’re working for does not become a disincentive,” Meadows said. “What I’ve heard over and over and over again is that you have people who work very hard and you have those who don’t, and yet the compensation doesn’t seem to be commensurate with that.”

Know what to do with your Thrift Savings Plan the next time the stock market crashes? Senior Correspondent Mike Causey tells you how to avoid buying high and selling low.

The witnesses and lawmakers rehashed familiar arguments:

Some say federal employees are overpaid and over-compensated. The civil service system, they say, favors employees with the longest tenure but not the highest performance, and agencies simply lack the tools they need to get rid of those poor performers.

“[They] get paid better, [have] better pensions, cheaper health care, better overall benefit package, sick leave, all those kinds of things,” said Rep. Jim Jordan (R-Ohio). “And you can’t fire them. And 99.1 percent of them get an A-, an A or an A+ on their performance [evaluation]? Wow. That’s amazing.”

Jordan referenced a 2013 Government Accountability Office study, which found that 99 percent of permanent, non-senior executive service employees received a rating of “fully successful” on their performance evaluations.

Reporter Nicole Ogrysko discusses this story on Federal Drive with Tom Temin

Yet others say government should offer generous benefits, and it shouldn’t stoop to the private sector’s level. Even still, some agencies have difficulty recruiting top-tier IT, cybersecurity and medical professionals.

“What we offer our federal employees is a model and a standard, that we ought to be thinking about how we can get the private sector to raise its standards up to that level,” said Rep. John Sarbanes (D-Md.)

Rachel Greszler, a research fellow in economics, budget and entitlements for the Heritage Foundation, argued that the compensation gap between the federal and private sectors may be larger. The CBO study, she said, didn’t measure the childcare and transportation benefits and student loan repayment options that some federal employees earn.

“Those are things that are incentives for people to work for us,” Cummings said. “We need to be racing to the top.”

Overall, CBO found that government  spends about 17 percent more compensating federal employees  compared to their counterparts in the private sector.

In total, federal employees with a high school diploma or less earn on average 53 percent more than their counterparts in the private sector, while federal workers with a bachelor’s degrees received 21 percent more in compensation.

In contrast, total compensation costs for employees with a professional degree or doctorate were 18 percent lower than workers in the private sector, CBO said.

And others, such as GAO, say the debate over federal compensation misses other key aspects of the “civil service reform” conversation.

“Pay is not the only thing,” said Robert Goldenkoff, director of strategic issues at GAO. “Even if we could assume for the moment that we could come up with the ideal pay system, it still does no good if your on-boarding processes are inadequate, if you don’t make effective use of their talents, if you don’t aggressively recruit them, if once they do come on board you don’t develop them [and] they’re not given effective supervision. It’s also a matter of work-life balance programs, and it needs to be tailored to individual labor markets. It needs to be tailored to individual occupations. We’re just not doing that effectively right now.”

Meadows said he would try to keep the hearing non-political, and suggested that other committee members make visits to federal agencies, as he’s done over the past few years.

But the rest of the committee didn’t often follow suit.

Instead, many members delved into other questions on official time, the Affordable Care Act and the committee’s priorities in general. Cummings spoke of arguments over the witness list for the hearing.

“These hearings can many times be construed as taking one direction or another and I have committed, not only to my colleagues to my right, to make sure that we get it right for the federal workforce,” Meadows said.