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Federal Diary Live

With Stephen Barr
Washington Post Staff Writer
Wednesday, July 9, 2003; 12:00 PM

The Post's Stephen Barr is the author of The Federal Diary, which runs Sunday through Friday in the Metro section. Steve has been a reporter and editor at The Post since 1979, including stints as Federal Page editor, congressional editor and a staff writer covering the federal bureaucracy. He takes the column live to answer your questions Wednesdays at noon ET.

The transcript follows.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.


Stephen Barr: Thanks for joining this discussion today. This afternoon, the House holds a hearing on premium conversion--a tax break provided employees but not retirees. Congress also is moving forward with appropriations bills, and it seems likely that some agencies will face tight budgets. Also in play is whether Congress will accept the White House plan to set up a $500 million "human capital performance fund" that would allow some employees to qualify for higher raises. We'll know more as the month goes along and Congress tries to set its table before the August vacation break. Again, thanks to all for joining this discussion.


Beverly, Mass.: Any sense when this mess with TSP access will be cleared up? Now, it's even worse than the last two weeks -- not only do you not have Web access to your account, you can never get through on the telephone. The line is always busy.

washingtonpost.com: Applications Accepted This Month for TSP 'Catch-Up' Contributions (Post, July 8)

Stephen Barr: I do not. The TSP spokesman has said that improvements are being made, but he has offered no timeline on how long it will take to chase down and quash the computer bug that has disrupted the launch of the new record-keeping system.


Silver Spring, Md.: Yet another question on the bungled changeover at the TSP Web site. The lack of any accountability is infuriating. I'm one of those people whose loan application got bounced because of the transition to the new system in June. I immediately express mailed a new loan application to TSP per the instructions on the Web site (yes, I got through!) over two weeks ago, but still have heard nothing. When I check on the Web site, it indicates that no application is pending. Is TSP suddenly swamped with loan applications? They seem unable to handle what should be a simple task, and even more frustrating, the telephone line is continually tied up and they do not respond to individual email requests. What's going on over there?

Stephen Barr: TSP officials said they ran stress tests on the new system, but, when going live, suddenly encountered a glitch that causes "loops" in the system and slows it down. As part of the new system, loan options changed, and I suspect TSP wanted folks to be aware of those changes. But I hear many complaints daily from folks who are angered over the handling of their loans, to the point that some claim to have missed out on home closures. But, like you, I'm not certain I understand all of the problems facing TSP now.


Fairfax, Va.: Why isn't it in the best interests of Federal & Military employees to have a 401K Plan that is administered by a private institution such Merrill Lynch or Smith Barney, etc.? Right now, the TSP is in abysmal shape. You cannot easily get into the system either by phone or via the computer, we have limited choices on where we can put our money and we have little or no recourse if the system were to crash; or, if we are unable to access our account (for whatever reason) -- such instances would be an aberration or an anomaly if we were dealing with a privately administered institution whose maintenance of the Federal 401K account would depend on its ability to deliver. Unless and until the TSP is privately administered, Federal Employees (who are depending in large part on this 401K for retirement) will not be able to realize the full potential of such an account -- and could even suffer negative financial consequences. We need help now.

Stephen Barr: That's a tough question. The index funds offered by TSP are, in fact, run by Barclays in San Francisco. So TSP has contracted out the hard work--which is ensuring that the funds match the market trends. I also assume that TSP policy officials could not be contracted out, in part because you would not want more than $100 billion of federal employee money used to sway markets or vulnerable to political influence. On the other hand, perhaps some TSP operations could be turned over to a mutual fund to administer. TSP relies on the National Finance Center in New Orleans, a part of the Agriculture Department, to maintain TSP accounts and operate the record-keeping system. The finance center seems to be a fine organization, so I don't know if employees would gain much by privatizing more of the TSP. An open question, though, and a good one.


Alexandria, Va.: I was just wondering if anyone had ever looked in the option of proposing the following:

My wife, when she retires from her public school job, has the option of, instead of being paid immediately for her saved leave (and therefore being taxed -- federal, state, social security, Medicare -- on the money received), of instead having that money go directly into her TSA account, hence being taxed only when she starts taking it out (and never being taxed 7.4 percent for social security and Medicare as she removes it from her retirement account).

Has anyone proposed legislation to allow people leaving federal service to do the same thing - instead of being paid cash for our accumulated annual leave when we retire or resign, let us roll that money into our TSP accounts if we so choose? One perhaps good effect of this would be to lessen the practice of many feds putting off their retirement until January 2 just to make sure the annual leave payment comes in a lower income tax year, thus thereby spreading retirements throughout the year better, rather than a peak during the holidays. Also giving people a reason not to have to stick around longer might actually save money since they'd sooner be replaced with lower paid people or contractors, offsetting any potential tax losses to the government.

Stephen Barr: I've not heard anyone propose allowing employees to invest their lump sum from leave time into the TSP. That would take legislation by Congress. More and more, I hear from employees who just go on vacation and collect a few paychecks before the final retirement bash. An interesting idea, though. Thanks for the suggestion.


Rockville, Md.: I have two questions:

If a new Medicare agency is created, and workers are transferred from the existing government Medicare agency, would they retain civil service protections or would these be wiped out?

Are there any sources of data on the number of federal workers who are expected to retire over the next five or ten years, by agency? The figure I've often heard is 50 percent over the next five years, but I am looking for more detail by agency, or even subagency.

Stephen Barr: As I understand the pending legislation, the House and Senate would add new organizations to the existing Medicare agency to administer the new prescription drug program and new fee-for-service plans. The proposals are different in structure and size, and the House proposal would change some civil service law, mainly in the area of hiring. All in all, it seems the number of federal employees administering Medicare would grow, not decrease.

As for your second question, agencies are supposed to be developing workforce data that shows the impact of retirements and possible retirements. Might check around your agency for the data. You might also contact the Partnership for Public Service, at 202 775 9111. This is a nonprofit that collects workforce data and could probably point you in the right direction.


San Diego, Calif.: The G-fund returned only .2 percent in June. This in spite of interest rates rising. I believe the TSP valued share prices at $10 on June 16th and the G fund rose to $10.02 at the end of the month. A .2 percent rise.

What happened to the interest that accrued form June 1-15

Stephen Barr: Not sure what went on here, but the return was probably influenced by the G Fund's monthly interest rate. It dropped to 3.5 percent in June--the lowest in the fund's history. It perks up to 3.625 in July, though. Welcome to our uneven economy!


Alexandria, Va.: Any idea why Defense always seems to be late on getting news programs to their employees? FSA is delayed, TSP Catch-up is delayed, etc., none of which seem like rocket science changes to payroll systems.

Stephen Barr: Defense is a big agency and it takes time to reconfigure the automated payroll systems. You're right, though. The Pentagon could do a better job of communicating with its employees, and TSP and OPM also could be more clear on agency participation, etc.


Colorado Springs, Colo.: Is A-76 symmetric? That is to say, if a contractor is doing a job and a civilian thinks that he can do it better, can the civilian compete for the contractor's job? If A-76 isn't symmetric doesn't this mean that contractors will eventually get all of the competed jobs? Even if they don't win the first or second competition, they will eventually win on the third/fourth/fifth try.

Stephen Barr: I'm no A76 expert, so if any of you watching this forum are, please weigh in on this query.

It's my understanding that the revised A76 rules, recently published by OMB, will improve employee chances of keeping work in-house. But federal unions think the playing field remains tilted toward contractors. Regardless, the rules call for agencies to train employees into how to set up "most efficient organizations" to compete for the work and hang onto their jobs. Some agencies are even hiring contractors to help employees bid against contractors.


Arlington, Va.: What are the chances for premium conversion for retirees this year?

Stephen Barr: Don't know. Rep. Tom Davis and Sen. John Warner are sponsoring the bills, and they are drawing some bipartisan support and wield power on the Hill. But changing the tax code can be a daunting task. There's a hearing today, which may offer us a better sense of their strategy.


Alexandria, Va.: What's the latest guess on next year's pay raise? Are we still expecting civilian-military parity to continue?

Stephen Barr: My guess is that the across-the-board raise will end up in the 3 to 4 percent range. But the Bush White House wants 2 percent for the civil service and 4.1 percent for the military and argues that the two raises should not be linked. Players to watch: Rep. Steny Hoyer in the House and Sen. Paul Sarbanes in the Senate. Both are big advocates of pay parity raises and will be working on the inside for federal employees. We'll know more later this month, I suspect, as appropriators go about their work.


Warren, Mich.: Once again, we hear the typical management mantra as relayed in your Sunday article. Mr. Walker's plan -- "traditional pay plan -- an annual raise regardless of job performance." I think the true personnel policy should be stated whenever these crazy statements are made. Don't you think management should have to do their job per the personnel policy? Thanks.

washingtonpost.com: GAO Chief Aims to Raise The Bar on Pay Raises (Post, July 6)

Stephen Barr: A good point. Current civil service law calls for pay raises that reflect equal pay for equal work and take performance into account. But all the critics, including David Walker at GAO, think the system is broken, and I tend to agree. The rub, of course, is creating an evaluation system that is fair to all employees and infusing cash into the system. People do respond when big bucks are at stake; unfortunately, cash-strapped agencies won't have the money to make such systems credible, I fear.


Arlington, Va.: To the poster of the "tough question" from Fairfax about privatizing the TSP administration. They should note that the current mess was largely CAUSED by privatization -- or contracting out -- of the Web system to a consulting firm. The inflexibilities of the contracting process and lack of direct management and oversight led to a several-year delay in the implementation of the new system. Had TSP hired proper federal employees to design and build the new system, it likely would have been done sooner, more reliability and for less money.

The idea that private companies always (or even usually) do better than public employees at the buisness of government should be subjected to evaluation based on the hard facts.

Stephen Barr: Good point. Thanks much.


Alexandria, Va.: What's the Congressional schedule on the new DoD personnel system changes? Everyone I talk to is hoping they hurry up and extend paybanding and performance based pay to the rest of us rather than just letting the R&D labs have those benefits.

Stephen Barr: House and Senate negotiators are meeting on how to craft a compromise. The goal is to get a bill signed into law by October 1. We can assume that the Pentagon won't roll it out until the start of 2004, and perhaps, on a phased basis. Good to hear some enthusiasm for pay banding.


Woodbridge, Va.:. Are federal employees who retire under the FERS system required to forfeit their accrued sick leave? Those who leave under CSRS or with CSRS conversion credit may add such amounts to career longevity for pension computations. This option apparently is not available to FERS-only retirees, nor is lump-sum reimbursement, but I cannot locate regulatory guidance confirming it.

Stephen Barr: You're right on all counts. I don't know where the rules are published, but OPM has some retirement handbooks on it website (www.opm.gov) and I would think (hope) the rules are explained there. If not, give a call to the OPM communications office, 202 606 2402, and ask where to locate them.


Vienna, Va.: While it can be argued that Federal employees should be thankful for what they DO get in Metro subsidies, why are there no plans for an increase in the current ceiling ($100) to deal with the recent fare increases? The object, of course, is to get as many people out of private cars as possible. Not only will the latest fare increases put some people BACK in their cars, but the lack of the Federal transit subsidy to keep up with the fare increase will put even MORE people back into their cars. I suspect the argument is simply the Federal budget currently will not allow for it, but I think a way will HAVE to be found for it regardless of the budget.

Stephen Barr: Good point. I've always assumed that the subsidies are indexed and will move up in certain years. But there are budget constraints and political jousts over the transit subsidy. Labor Department employees, for example, tell me they are stuck at $65 because the Bush appointees want to use the subsidy as a bargaining chip with the local AFGE union.


Vicksburg, Miss.: Your answer to Warren, Mich. reflects the general misunderstanding of performance based personnel systems that persists in the federal workforce. Funding the raises isn't a problem. Agencies use the approximately 2.4 percent of payroll that would have gone to within grade increases, promotions, and quality step increases to fund the performance based pay raises. System is working well in the DoD personnel demonstration projects. High performers get larger raises, lower performers (usually the ones crying to keep the present GS seniority system) get lower raises, and bad performers get none.

Stephen Barr: I'll concede that the pay-for-performance system works for the Defense labs, which have a highly educated workforce. It's also work at the National Institute of Standards and Technology, where employees can get a performance raise and the regular January raise.

But scaling up these experiments is fraught with funding issues, I think. In the DoD case, we're talking about 746,000 white-collar employees in a variety of locations and jobs. While Defense plans to break the "pay pools" down to clumps of 25 to 500 employees, I find it hard to believe the Pentagon can guarantee that all the pay pools are adequately funded and that meaningful raises are given that truly distinguish among employees. Otherwise, it seems we're just using the same pay approach under a different name. Having said all that, I hope I'm wrong.


Silver Spring, Md.: To comment on your answer to another reader -- it is outrageous that FERS people cannot accrue sick leave for length-of-service purposes, but even MORE outrageous that FERS people cannot convert to CSRS, even though CSRS people have been given two open seasons to convert to FERS.
This is an issue that sorely needs to be dealt with, and to my knowledge, has not, either by Congress or the White House.

Stephen Barr: FERS helps to shore up Social Security. I don't expect any changes along the lines you suggest because of that.


Vienna, Va.: While I an a civilian Federal worker and I know my views on this subject will probably be in the minority among my colleagues, I have to support the White House view that Federal civil and military pay should not be linked, even if we lose out on the extra 2 percent.
It is absolutely critical right now that we keep as many people in military service as we can. After all, military service is voluntary, and we have critically important military commitments in the Middle East and elsewhere. You don't encourage people to stay in military service -- especially with all the sacrifices they have to make -- by giving them a lousy 2 percent. That is an insult to them. So if I have to give up MY extra 2 percent so THEY can have THEIRS, I say so be it.

Stephen Barr: Thanks for that perspective. But it can be a hard sell. Think of the CIA agent killed in Afghanistan, or the FBI agent who puts his life on the line, or the CDC researcher who may be exposed trying to figure out a bio-terror attack. To be sure, not all federal employees live a life of danger (except for the rush-hour commute). But until an administration offers a pay reform plan, I can see why parity appeals to members of Congress.


Huntingtown, Md.: Not to be sarcastic, but when will Federal employees realize that the perks such as transit subsidies, child care subsidies, etc., are just what they are -- subsidies. They are not meant to cover the total cost for transportation and child care. And, most individuals who work for private industry DO NOT get subsidies. As a taxpayer I say spend your salary appropriately -- stop living beyond your means and pay your own transportation fees.

Stephen Barr: Actually, many private-sector employees receive such subsidies. Companies participate in the Metrocheck program, and many offer flexible spending accounts, which let pretax dollars be used to pay for child care. Given the problems that the civil service and military have in recruiting, I would argue these few perks are well worth the cost.


Arlington, Va.: For what it is worth, after the first week glitches, I have had no problem accessing my TSP account balances, have done it 6-8 times in the past couple of weeks (not always during working hours).

Stephen Barr: At last, a positive report on the TSP. Trust me, though. My mail bag is full of folks who are frustrated by the new system because they have not been able to conduct an online transaction. Write us back next Wednesday and let us know how it's going, please.

Once again, we've run out of time for today's discussion. I appreciate all of the participation and the time that people take to read the transcript. If you would prefer to have certain topics discussed or special guests invited, please send me an email at BarrS@washpost.com and offer a suggestion. See you at noon next Wednesday.


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