The Office of Personnel Management has recommended that the White House support modifications in a Senate proposal to make one of every seven federal workers eligible for early retirement between July and December.
OPM suggested to the Domestic Policy Council -- which will come up with a recommendation for the president -- that the early-out be limited to a three-month period and apply only to workers with 25 years of service or persons who are age 50 with 20 years of service.
OPM's proposal would benefit far fewer workers than the early-out bill introduced by Sens. William V. Roth Jr. (R-Del.) and Ted Stevens (R-Alaska). Their plan would make it possible for up to 400,000 federal workers -- twice the number now eligible to retire -- to quit this year and draw immediate pensions.
In most cases, the earliest a federal worker can retire is at age 55 after 30 years' service.
The Roth-Stevens bill would allow immediate retirement to anyone with 25 years' service; at age 50 with 20 years' service; at age 55 with 15 years' service or at age 57 after five years' service. Pensions would be reduced 2 percent for each year the retiree was under age 62.
The Roth-Stevens plan has drawn rave reviews from many rank-and-file federal workers. Roth, chairman of the Senate Governmental Affairs Committee, and Stevens, ranking majority member of the committee, say the intent is to minimize major layoffs of younger workers who would be hardest hit by upcoming budget cuts. Some agencies already have announced plans for reductions in force this year. Thousands of layoffs are possible during the next few years as increasingly deep budget cuts kick in each fiscal year because of the Gramm-Rudman-Hollings balanced budget act. This year agencies had to cut about 4 percent. Starting in October they could be required to cut their budgets 20 percent for fiscal 1987.
Federal union officials generally oppose the Roth-Stevens early retirement bill because it would prohibit agencies from hiring replacements for employes who retire. This would cripple many services, the unions say. It would also cut into their membership.
The Roth-Stevens bill won't go anywhere without White House approval. And the Domestic Policy Council -- which will formulate the president's position -- will rely heavily on OPM's opinion.
On April 18, OPM Director Constance Horner sent the council a six-page option paper. She noted that the administration has cut nondefense federal employment and is committed to further cuts. But Horner, who opposes reductions in force as being costly and disruptive, said the bipartisan Gramm-Rudman- Hollings act provides a "politically hospitable climate" that could speed up the federal job-cutting process.
OPM warned that the early-retirement bill -- coupled with tax reform proposals eliminating certain tax benefits for federal retirees -- could prompt a mass exodus of the government's best and brightest and that it would prevent the government from replacing most of them.
After stating the pros and cons of each option, OPM recommended that the president support an amended version of the Roth-Stevens bill limiting the early retirement period to three months (instead of six) and restricting the eligibility to employes who are age 50 with 20 years of service or to workers of any age with 25 years' service.
OPM also recommended that the White House negotiate language that would give the government more flexibility to replace key workers who take advantage of the early-out.