FMA APPLAUDS HOUSE PASSAGE OF BILL MAKING NECESSARY CHANGES TO GOVERNMENT OPERATIONS - June 25, 2009

Measure will improve federal government's efficiency and viability.

Alexandria, VA - The Federal Managers Association (FMA) commends the House for passing H.R. 2647, the Fiscal Year 2010 National Defense Authorization Act, which includes language providing the government with necessary changes to strengthen the civil service. The federal employee provisions, as attached to the Defense Authorization bill through the efforts of Congressman Ike Skelton (D-Mo.), extend critical benefits to members of the federal workforce.

"The House has once again issued its support for sensible measures which seek to improve our nation's federal workforce," said FMA National President Darryl Perkinson. "FMA has fought to bring these issues to the forefront of Congress' agenda, not only for the benefit of the entire civil service, but for the benefit of the American taxpayers as well. I urge the Senate to follow the House's lead by approving similar legislation to improve the efficiency and productivity of our federal government."

Specifically, the bill affords 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 Civil Service Retirement System (CSRS) counterparts. 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 is 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 Perkinson. "Nearly all employees will be under FERS by 2014, which will undoubtedly exacerbate this problem. 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 legislation also extends locality pay parity to federal employees working in Alaska, Hawaii and the U.S. Territories. Federal employees who reside in these areas currently 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 bill 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. The Senate passed legislation ending this inequity last year.

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. I applaud the House for correcting this long standing inequity."

Also included in the bill 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. Currently, FERS employees must cash out their annuity if they leave the government before retiring. This provision would allow FERS employees to return the annuity, with interest, in order to recapture those years when reentering the civil service. 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."

The majority of these provisions were included in the House-passed version of H.R. 1256, the Family Smoking Prevention and Tobacco Control Act, but were unfortunately not included in the final legislation signed by the President. FMA encourages the Senate to include similar language in its version of the Fiscal Year 2010 Defense Authorization Act, S. 1033.