White House Budget Devastates Federal Retirement

June 23, 2017

All current and retired federal employees - regardless of agency - would be negatively impacted by the changes proposed by the White House in its fiscal year 2018 budget released in late May.

The threats to the federal workforce are in multiple forms: smaller paychecks, lower pensions, layoffs, cuts to agency budgets, and an overall lack of respect for the nation’s civil service and they work they do.

Members of Congress, from both parties, were immediately critical of the administration’s budget proposal and were adamant that it would not be enacted as submitted. Congress, not the president, has the final say over government spending.

However, federal employees should be aware of the details in the budget document because it is considered a starting point in the negotiations over agency funding levels and changes to the civil service. In particular, federal employees and retirees should be concerned about congressional action on the proposed changes to retirement benefits.

 

Attacks on Retirement

The White House is pursuing five changes to federal retirement programs:

- Raising the amount that current employees have to pay toward the Federal Employees Retirement System (FERS), which is a pay cut;

- Basing future retirement benefits on the average of the highest five years of salary instead of the current three, which is more likely to result in smaller pensions;

- Eliminating the FERS supplement for employees who retire before they can start collecting Social Security at age 62;

- Eliminating the cost of living adjustments for all current and future retirees covered by FERS; and

- Reducing the cost of living adjustments for Civil Service Retirement System (CSRS) retirees.

 

NTEU has already begun the fight on Capitol Hill to prevent these changes, which would require federal employees to pay more for reduced benefits and make it harder for current retirees to keep up with rising costs. “Federal employees and retirees had a deal with the government that they planned their lives around. Now the administration wants to move the goalposts,” National President Tony Reardon said. NTEU leaders have been talking to the media about how the changes would affect their members. “It truly hurts the people who have made public service a career,” said Errick King, president of NTEU Chapter 202 (Bureau of Fiscal Service Headquarters) “They came into government with an understanding that they would make less money but would still be able to have a modest retirement that allowed them to care for their families.” Pam Sturm, president of Chapter 14 (IRS St. Louis) said many of her members are barely holding on to their middle-class standard of living as it is. “Congress already increased retirement contributions twice in recent years,” Sturm said. “Now, the administration wants to increase retirement contributions by 6 or 7 percent of current salaries, amounting to a huge pay cut for people who cannot afford it.”

 

Agency Budgets Slashed

The administration’s budget recommends dramatic cuts in funding for many NTEU-represented agencies and departments: Department of Energy, 5.6 percent; Environmental Protection Agency, 31 percent; Health and Human Services, 12.7 percent; Internal Revenue Service, 2.1 percent; Department of Agriculture, 20.5 percent. In some agencies and departments, the cuts would be so deep that RIFs or furloughs would be unavoidable. For example, it proposes a 31 percent cut in appropriations for the Food and Drug Administration with a plan to make this up with a $1 billion increase in user fees. But congressional leaders have already rejected these user fee increases, so this change would leave a $1 billion hole in the FDA’s budget. Although the president’s budget proposes level funding for the Securities and Exchange Commission, it also recommends eliminating the agency’s Reserve Fund. The budget proposes to “restructure” the Consumer Financial Protection Bureau but without additional details, it is not clear whether restructuring translates into a proposal to eliminate the agency. The administration, however, does attempt to subject CFPB to the regular appropriations process, which would jeopardize the agency’s independence. One NTEU-represented agency in line for an increase is Customs and Border Protection. The agency would get a 22 percent increase over current funding. However, there is no increase in appropriated funding to hire additional CBP Officers at the ports of entry. The administration may support the hiring of new CBP Officers through a proposed increase in user fees which, in the past, Congress has rejected.

 

Paid Parental Leave

A potential bright spot in the budget is the $25 billion for a national six-week paid parental leave policy. NTEU has confirmed that this policy, if enacted, would apply to federal employees; however, key funding details are still needed.

 

The Bottom Line

Overall, the administration’s budget is considered so divisive and unrealistic that is raises concerns about whether the White House and Congress will be able to reach a spending agreement by Oct. 1, when the new fiscal year begins. Without it, a government shutdown is possible. “This budget threatens the very fabric of our country, and fails to adequately provide for our citizens’ needs,” Reardon said. “Federal employees and retirees cannot continue to be the source of spending solutions for Congress.”

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© 2016 by National Treasury Employees Union Chapter 137, Miami, FL

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