President Trump’s 2020 budget proposal plans to use alterations to federal employee healthcare and retirements to ensure a $5 billion deficit decrease in the coming year, according to documents released by the Office of Management and Budget March 11.
If enacted, the proposed White House budget would eliminate cost-of-living adjustments for federal employees that started work under the Federal Employees Retirement System, which began in 1987, and reduce those same adjustments for employees under the Civil Service Retirement System by 0.5 percent.
Cost-of-living adjustments provide both federal employees and retirees with additional income on top of the standard pay set for their grade if they live in expensive parts of the country.
The budget would also eliminate the Special Retirement Supplement, which provides additional funds for those employees that retire before age 62, when Social Security kicks in. This is especially relevant for positions like law enforcement personnel, who have a mandatory retirement age that is earlier than 62.
The plan would also reduce the interest rate on the Thrift Savings Plan’s G Fund, while increasing employee contributions to their retirement to 50 percent of the total cost in one percent-a-year increments and basing retirement calculations on the highest five years of an employee’s pay rather that the current three-year model.
“For anyone still looking for proof that this administration is hostile to its frontline federal workforce, look no further than the FY2020 budget proposal,” said National Treasury Employees Union National President Tony Reardon in a statement. “It would deprive federal employees of the resources they need to do their jobs, slash their retirement benefits, reduce their take-home pay and generally make their lives — and the lives of the taxpayers they serve — more difficult.”
The budget would also modify the government contribution to the Federal Employee Health Benefits program such that it begins to reduce the deficit starting on 2022 by $134 million.
According to Senior Executive Service President Bill Valdez, while the budget correctly identifies some of the impediments to a better-functioning executive branch, targeting health and retirement benefits is not the answer.
“Even as the budget proposal suggests that our national and homeland security requires additional staffing in the military and along our borders, the budget reiterates penny-wise and pound-foolish proposals to enact federal pay freezes and benefit and retirement cuts, thus implicitly assuring applicants interested in those posts that working for the federal government would mean enduring instability and ceaseless attacks surrounding even their most basic compensation,” said Valdez in a statement.
Rather than being listed in their usual place under Office of Personnel Management funding, the changes to retirement and health insurance were placed under the authority of the General Services Administration, a doubling down of the Trump administration’s intent to break apart OPM and place its functions under different agencies.
“Particularly revealing in the budget is that these cuts appear under the authority of the General Services Administration, instead of the Office of Personnel Management, which currently administers these programs. It is clear the administration intends to proceed with eliminating OPM and roll these programs into GSA without proper congressional oversight or approval,” said National Active and Retired Federal Employees Association National President Ken Thomas in a statement.
“NARFE strongly objects to the Executive Branch unilaterally reorganizing federal agencies without input from stakeholders and Congress.”
According to former OMB official Robert Shea, there are elements of the plan to break up OPM’s current operations across GSA, the Executive Office of the President and Department of Defense that will require appropriations and authorizing language to move forward.
In an interview with Federal Times, Shea said that the parts of the OPM reorganization that could be done without congressional approval are somewhat up for debate but still possible for the administration to move forward on.
“There are elements of the organization funded with working capital funds — so HR solutions is one of those units,” said Shea.
Some experts also note that the functions of OPM and the agencies receiving its broken-up parts aren’t exactly in line.
“I am concerned about the level of serious consideration to change management planning related to the administration’s agency reorganization proposals. For example, characterizing the U.S. Office of Personnel Management’s functions as simply transferrable to the General Services Administration is easier said than done and ignores OPM’s central statutory role in the federal merit system,” said Valdez. "Simply moving boxes on an org chart and superior technology are no saviors for inadequate planning and a people-focused change strategy.”
The budget also includes provisions for a less controversial migration: moving the Department of Agriculture, Department of Interior and GSA to the new, cloud-based employee management system, NewPay.