The President’s Management Agenda was released today, which provided only a few additional details to the federal workforce proposals laid out in the President’s FY19 Budget Request. Specifically, the document once again reiterated the President’s intention to implement a pay freeze for 2019 while “enhancing performance-based pay,” slowing the frequency of tenure-based step increases, and establishing a fund to reward high performers with the most essential skills. Once again, the document fails to define what the most essential skills or occupations are, or how the incentives or fund would work. The President’s Management Agenda, while referring to the FY19 Budget Request for more details (which in turn promised further details in this set of materials), continues the call to “rebalance” relationships with federal employee unions, streamline the hiring and dismissal processes, and “better align” federal retirement benefits with those offered by the private sector. The document does not, however, outline or announce any specific legislative or regulatory changes or any formal proposals.
As a reminder, the administration’s budget request proposals are outlined below, the majority of which requires additional legislation to be enacted:
Request: The budget affirms that agency managers will be encouraged to restore management prerogatives that have been ceded to federal labor unions. “Current employer-employee relations activities consume considerable management time and taxpayer resources, and may negatively impact efficiency, effectiveness, costs of operations, and employee accountability, and performance.”
DUE PROCESS RIGHTS
Request: The administration believes the use of private sector norms would be useful in addressing the “onerous” requirements to successfully remove an employee for misconduct or poor performance and notes that only one in 200 is fired, and when they are, they have a variety of avenues to appeal and challenge actions. The budget request states that federal managers are reluctant to expend the energy necessary to go through the process of dismissing the worst performers and conduct violators. At the same time more than 99 percent of employees are rated as fully successful or higher in their evaluations.
PAY AND PERFORMANCE MANAGEMENT
Request: The budget focuses on the long-term fixed costs of across-the-board pay raises, and highlights that current pay policies fail to address existing pay disparities, or to target mission- critical recruitment and retention goals. The administration therefore proposes a pay freeze for federal civilian employees for 2019. This administration believes in pay for performance. The existing federal salary structure rewards longevity over performance. The budget proposes to slow the frequency of the step increases as well, while increasing performance-based pay for workers in mission-critical areas. At the same time, the President is calling for a 2.6% pay raise for the military.
Request: The President calls for cutting federal employee retirement benefits by:
(1) significantly increasing Federal Employee Retirement System (FERS) employee contributions by about 1 percentage point each year until they equal the agency contribution rate, (2) basing future Civil Service Retirement System (CSRS) and FERS retirement benefits on the average of the high five years of salary instead of the current high three, (3) eliminating the FERS supplement which approximates the value of Social Security benefits for those who retire before age 62, (4) eliminating the annual cost of living adjustment (COLA) for the pensions of current and future FERS retirees, (5) significantly reducing the COLA for the pensions of current CSRS retirees, and future CSRS retirees, by about 0.5 percent annually, and (6) reducing the G Fund interest rate under the Thrift Savings Plan (TSP), thereby lowering the value of this TSP option.
Request: The President seeks to change the Federal Employees Health Benefits Program (FEHBP) by significantly modifying the government contribution rate by tying it to each plan’s performance rating. For many FEHBP enrollees, this will mean that the government’s overall contribution rate will be lower than it is now, requiring enrollees to pay significantly higher premiums. If an individual chooses a health plan that is not high-performing according to the Program Plan Performance Assessment overseen by the Office of Personnel Management (19 metrics), they would be forced to pay more, with the government reducing its contribution by seven to ten percent.
PAID LEAVE PROGRAM
Request: The budget states that federal employee sick and annual leave benefits are disproportionate to the private sector, and proposes converting the 10 paid federal holidays along with the earned sick and annual leave days to a general ‘paid time off’ model that would combine all leave into one paid time off category and reduce total leave days. The proposal also includes adding a short-term disability insurance policy to protect employees who experience a serious medical situation, which would require an employee contribution.
Request: The budget request recycles prior proposals that would reduce federal employee workers’ compensation benefits. These proposals would provide a single injury rate of compensation limited to approximately 66% of the injured worker’s pay, would eliminate family benefits, would seek to remove injured workers from the program at retirement age, and would establish a waiting period before beneficiaries could begin to collect needed benefits.
PUBLIC SERVICE LOAN FORGIVENESS PROGRAM
Request: The budget proposes to eliminate the Public Service Loan Forgiveness program, saving almost $46 billion over ten years. Instead, the Department of Education would design a single Income-Driven Repayment plan, which according to the budget would “simplify” repayments.
It is anticipated that Congress will not ultimately act on many of these anti-federal employee, and anti-labor initiatives, but some, in terms of compensation and employee due process rights, may develop into formal legislative proposals that could be considered. We will continue to work with our congressional allies to defeat these attacks on the federal workforce and labor organizations, and to ensure that federal workers receive a pay increase in 2019. I will keep you updated on these issues as developments occur.
Anthony M. Reardon