FMA APPLAUDS APPROVAL OF CONFERENCE REPORT CONTAINING MEASURES STRENGTHENING THE CIVIL SERVICE - October 7, 2009

FMA’s sustained efforts reap major dividends for taxpayers and federal employees alike

Alexandria, VA - The Federal Managers Association (FMA) commends the conferees of the Fiscal Year 2010 National Defense Authorization Act (H.R. 2647) for approving measures providing the government with necessary changes to strengthen the civil service. Several of the provisions in the bill align with FMA’s mission of advocating for a more efficient and effective federal government.

“The Federal Managers Association applauds the conferees’ decision to support these good government initiatives which will undoubtedly improve the federal government’s ability to effectively administer the programs on which the American public depends,” exclaimed FMA National President Darryl Perkinson. “The sensible and practical provisions, many of which were contained in the original House version of the bill, will strengthen the civil service while providing immeasurable benefits to American taxpayers. I am extremely hopeful this bill will reach the President’s desk and be signed into law in the near future.”

Specifically, the legislation 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. Under the bill, those who retire before January 1, 2014 will receive fifty percent of their unused sick leave credited towards their annuity. After the four year phase-in, FERS employees will receive full credit for unused sick leave. FMA played a critical role in crafting legislation to this end with Congressman Jim Moran (D-Va.), and the issue sits atop the Association’s legislative agenda.

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 in lost productivity. As nearly all federal employees will serve under FERS by 2014, the legislation addresses this dilemma before it spirals out of control.

“The absence of a sick leave credit for FERS employees has proved extremely detrimental to managers’ efforts to promote an efficient and effective workforce, as evidenced by OPM’s calculation of productivity losses incurred each year due to sick leave abuse,” commented Perkinson. “I commend the conferees for following in the footsteps of the House by recognizing the need to place a value on sick leave. Federal managers and American taxpayers alike stand to benefit greatly through passage of this provision.”

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 the sick leave benefit. The Civil Service Commission (the predecessor to OPM) estimated that half of all federal employees retired with zero sick leave. The Commission’s report also showed that prior to 1969, retiring employees used an average of forty sick leave days in their last year of employment. It is evident that history is repeating itself within FERS, and this bill turns the tide on this alarming situation.

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 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 legislation 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.

“For far too long, Congress has denied federal employees who reside outside the continental United States the retirement benefits they have rightly earned solely on the basis of their geographic location,” Perkinson stated. “Managers serving the government in Alaska and Hawaii now have one more tool with which to recruit and retain mission-critical, experienced federal employees to carry out their agencies’ missions. FMA has worked with legislators to establish equity between these individuals and those who live in the contiguous U.S., and we applaud Congress’ efforts to correct this longstanding disparity.”

Another important provision in the bill enables federal retirees to return to government service on a part-time basis without having to take a reduction in compensation. Currently, federal employees who serve the nation after retirement are penalized for returning to work in the form of a pay reduction to offset their federal retirement annuity. This requirement prevents highly skilled individuals from rejoining the workforce during critical and challenging times when the government and the public need them the most.

In order to prevent misuse of this new option, the bill caps the number 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 annuity occurs.

“This proposal 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 decade,” said 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 serve the country in the future.”

Also included in the legislation 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.

“On behalf of all managers and supervisors in the civil service, I wholeheartedly thank the Members of Congress who labored tirelessly to promote the interests of not only the 700,000 civilian employees who serve the Department of Defense, but also the entire federal workforce,” Perkinson concluded. “FMA remains committed to working with Congress to ensure the interests of civil servants remain a priority.”