Ryan budget seeks higher retirement contributions by federal employees

Ryan budget seeks higher retirement contributions by federal employees

Posted by Eric Yoder on March 12, 2013 at 12:03 pm

The federal workforce would be reduced by attrition and employees would pay more toward their retirement benefits under the budget plan unveiled Tuesday by House Budget Committee Chairman Paul Ryan (R-Wis.).

“The federal government’s responsibilities require a strong federal workforce. Federal workers deserve to be compensated equitably for their important work, but their pay levels, pay increases and fringe benefits should be reformed to better align with those of their private-sector counterparts,” the plan says.

“The federal workforce is composed of some of the best-educated and most dedicated people in America. This workforce is integral to a well-functioning government. However, taxpayers must also receive an excellent value for their dollars,” it adds.

The plan refers in several places to a 2012 Congressional Budget Office report that concluded that on average, federal employee compensation is 16 percent above that of comparable private-sector workers. In that study, most of the advantage involved benefits; federal employees were found to be ahead in salary by 2 percent on average. Also, CBO found substantial variation within that average, with a larger pay gap in favor of less-educated federal workers, but a pay gap in favor of the private sector for those who are more educated. Other studies, most of them focusing just on pay, have reached widely varying conclusions on pay comparability.

The Ryan plan — which is scheduled for a committee vote Wednesday — for the government fiscal year that begins in October calls for “greater contributions” by employees toward their retirement benefits, with the government share decreasing in tandem. A committee spokesman said in an e-mail that the budget envisions requiring equal contributions from both sides, meaning an increase in the employee share of about 5.5 percentage points.

Last year, in carrying out a similar recommendation, the House voted to require a 5 percentage point increase, phased in over five years. The Senate did not take up that bill.

The plan calls for a total of $132 billion in savings over 10 years from federal compensation, an amount exceeding what was projected from a 5 percentage point increase. It does not specify where the additional savings should be found.

However, it makes reference to the Simpson-Bowles Commission, which suggested several potential changes to the retirement benefit payout formula along with changing the cost-sharing arrangement in health insurance in a way that over time could shift more of the costs onto the enrollee.

The Ryan plan also repeats a proposal from his past budgets — which later passed the full House but not the Senate — to reduce the workforce by 10 percent by attrition, through 2015.

“The reforms called for in this budget aim to slow the federal government’s unsustainable growth, and reflect the growing frustration of workers across the country at the privileged rules enjoyed by government employees. It reduces the public-sector bureaucracy, not through layoffs, but via a gradual, sensible attrition policy,” the plan says.

Many federal agencies either have imposed general hiring freezes or have said they expect to do so in response to the budgetary sequestration that took effect this month.

Prior Ryan budgets also called for keeping federal salary rates frozen for several more years. The latest plan does not specifically recommend a pay freeze, but it says, “Immune from the effects of the recession, federal employees have received regular salary bumps regardless of productivity or economic realities.”

However, federal salary rates were not increased in 2011 or 2012, and that freeze would be extended through calendar year 2013 by separate budget measures now before Congress to wrap up funding for the current fiscal year.

The plan further calls for more means-testing in Medicare, which many federal retirees elect in addition to their federal health insurance, and for recommendations from both the White House and Congress to shore up Social Security, which now covers nearly nine-tenths of federal workers.

It also would require congressional committees to point out ineffective or duplicative programs under their jurisdiction, along with targeting improper payments and certain other spending.

The counterpart Senate committee is due to release its plan later this week.


Author: Michael J. Mikulka

President, AFGE Local 704, representing over 900 bargaining unit employees working at the U.S. EPA Region 5 Offices in Chicago, Grosse Ile, MI and Westlake, OH.

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