FMA URGES SENATE PASSAGE OF AMENDMENT STRENGTHENING THE STATE OF THE CIVIL SERVICE - June 4, 2009

Measure provides needed changes to improve the efficiency and viability of the federal government and its operations.

Alexandria, VA - The Federal Managers Association (FMA) urges the Senate to approve an amendment (S.AMDT. 1256) to H.R. 1256, the Family Smoking Prevention and Tobacco Control Act, which would provide the government with necessary changes to strengthen the civil service. The amendment, introduced by Senators Lieberman (I-Conn.), Akaka (D-Haw.), Collins (R-Me.) and Voinovich (R-Ohio) would extend critical benefits to members of the federal workforce.

"The provisions included in this bill have been at the forefront of FMA's agenda for years. I encourage the Senate to take the necessary proactive steps to improve our nation's workforce," asserted FMA National President Darryl Perkinson. "These are good government initiatives with immeasurable benefits to the American taxpayers."

Specifically, the amendment would afford employees under the Federal Employees Retirement System (FERS) a credit for unused sick leave at the time of retirement, a benefit currently enjoyed by their counterparts in the Civil Service Retirement System (CSRS). This issue sits atop FMA's agenda and the Association worked hand-in-hand with Congressman Jim Moran (D-Va.) in crafting this legislation.

The disparity between FERS and CSRS employees continues to be a growing problem for managers striving to bring the best out of their employees. In fact, in a recent survey of the federal workforce, 85 percent of CSRS employees said they conserved as much sick leave as possible while 75 percent of FERS employees said they would use as much sick leave as possible during their last years of service. As such, it is not surprising the Office of Personnel Management (OPM) currently estimates this problem costs taxpayers $68 million a year.

"The cost of sick leave used by federal employees continues to rise, and the loss of productivity becomes more apparent as there is no incentive for FERS employees to conserve sick leave," commented President Perkinson. "By placing a value on sick leave, FERS employees are encouraged to use their leave responsibly."

Prior to 1969, CSRS employees received no credit for sick leave. It was only after data showed the use of sick leave rose dramatically nearing the time of retirement that Congress created a sick leave benefit. The Civil Service Commission (the predecessor to OPM) estimated that half of all retiring federal employees had zero sick leave. The Commission's report also showed that prior to 1969, retiring employees used an average of 40 sick leave days in their last year of employment. It is evident that history is repeating itself.

The amendment would also extend locality pay parity to federal employees working in Alaska, Hawaii and the U.S. Territories. Federal employees who reside in these areas receive a tax-free non-foreign area cost of living adjustment (COLA) in their pay; however, the federal government fails to credit this COLA towards basic pay for retirement purposes, and residents outside the contiguous United States do not receive the locality pay benefit most federal employees enjoy. The amendment would phase-out the COLA and phase-in locality pay over a period of three years, combined with an annuity buy-in aimed at stabilizing the current retirement eligible workforce.

In regards to the locality pay extension, Perkinson commented, "The current situation has a devastating effect on the retirement benefits rightly earned by these hardworking civil servants. Federal employees who reside outside the continental United States are denied these payments solely because they live in these areas. The Senate has approved this fix in the past and it is time we finally correct this long standing inequity."

Another important provision the amendment establishes would allow federal retirees to return to government service on a part-time basis without taking a reduction in compensation. Currently, federal employees who strive to continue to serve the nation after retirement are penalized for returning to work in the form of a pay reduction to offset federal retirement annuity. The amendment would cap the amount of hours reemployed annuitants are eligible to work without a reduction in salary while also establishing strict oversight guidelines. Reemployment would be limited to 520 hours in the first six months following retirement, and 1,040 hours in any 12 month period. Reemployed annuitants would be able to contribute a total of 3,120 hours of service before any offset to their annuity occurs.

"This amendment will mitigate the loss of federal employees to retirement and ensure that the government can continue to function effectively. As a nation, we will soon experience a human capital crisis as nearly half the federal workforce, or 900,000 employees, will be eligible to retire in the next ten years," stated Perkinson. "Now, more than ever, we need experienced individuals to help our nation tackle the challenges before us. These workers have the skills and abilities to guide us through this time and mentor those who will continue to serve the country."

Also included in the amendment is a provision allowing FERS employees who leave the federal government the option to redeposit their previously cashed-out annuity if they return to government service. This means that for purposes of determining annuity benefits, these employees will not lose credit for previous years of service when returning to the federal workforce. A redeposit benefit is already available to CSRS employees who began working for the government prior to 1984, and this provision provides FERS employees the same opportunity.

"As the baby boomers begin to leave the government in record numbers, we need to ensure their expertise will not be lost with them," Perkinson continued. "FMA is supportive of this provision which could fill mission-critical positions with those who already have a working knowledge of our government."

Additionally, the amendment contains several other provisions relating to the Thrift Savings Plan which the Senate must adopt. Under the proposal, new employees would be automatically enrolled in the TSP upon employment with the government. The amendment would also create a Roth IRA option within the TSP for federal employees, which the Federal Managers Association fully supports.

"The Thrift Savings Plan is one of the most efficiently administered retirement funds in the country, and these provisions will encourage and reward federal employees for their participation in this important benefit," Perkinson concluded.

The amendment would align the Senate legislation with the House-passed version of H.R. 1256.