Leaked White House Policy Budget Could Be Bad News

Oct 25, 2017

budget

Federal employee advocates say proposals outlined in leaked White House policy budget could have an impact on the government’s ability to attract workers. The proposal contained a wish list on federal employee compensation including a pay freeze for federal employees in FY2019. It also included ideas to eliminate the defined benefit program available through FERS and stop new hires from using FEHBP after they retire.

Some officials also advocated slowing seniority-based pay increases by 50%, eliminating the mandatory 25% floor for employee contributions to FEHBP premiums “to encourage greater competition…and to reduce costs,” and bringing federal paid leave benefits “in line with private sector norms”.

If these policies, along with other budget cuts to federal retirement programs proposed in the FY2018 budget are formally enacted by Congress, they would save over $300 billion over the next 10 years.

Legislative director for National Active and Retired Federal Employees Association, Jessica Klement said proposals are “nothing new” but they would “de-incentivize federal work”. “Essentially what you’re doing is you’re getting attrition without having to actually attrition legislation. The best and brightest would leave public service…. The government would go from being the employer of choice to the employer of last resort. Arbitrarily decreasing federal benefits just encourages a race to the bottom for our country,” she said.

David Kettl is a professor and former dean of the University of Maryland School of Public Policy and he said even though many of the proposals wouldn’t apply to current federal employees they could push people to leave government anyway. “The combination of a salary freeze, an end of defined benefit retirement for new hires and reductions in bonuses would all have a very major impact on federal employees. Conservatives have had these items in their sight for a long time. It’s a reasonable guess that at least some Senior Trump staffers mean to push those items forward—hard.”

He went on to say that the impact may be greatest felt in the recruitment of new federal employees. “Many students are already turning away from the federal government. There’s a sense that there are few jobs and that the hiring process is too hard to navigate. If there’s a sense that the Trump administration aims at cutting pay and benefits, it would make it even harder for the government to recruit new workers—at precisely the time Boomers will be retiring.”

Tony Reardon, national president of National Treasury Employees Union said the union will fight these budget proposals if they become official. “NTEU has a long history of opposing these recycled policies to cut the pay and benefits of federal employees, and our position on such proposals has not changed. Federal employees are nonpartisan civic servants who want and deserve a fair wage, a secure retirement, and adequate resources to carry out the work of the American people at their agencies.”

Klement said if lawmakers want to bring the government more in line with private sector employment, they should also look to increase pay. “If you really want to bring federal compensation reforms, you’ll have to start paying federal employees a lot more money. You have [members of the Sr. Executive Service] overseeing hundreds, if not thousands of employees—they’re basically Fortune 500 executives—and yet their salary is capped at $170,000 per year. And if you want to bring pay in line with the private sector, you’ll probably have to reform the General Schedule itself.”

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