Buyouts seem simple.
You need to cut payroll costs or downsize. So you look at old Joe, a dedicated, highly paid, longtime worker. He could retire but shows no sign of moving on. You want to give him a friendly nudge but not push him off the cliff.
So you offer him a buyout. Say, a maximum of $25,000 before taxes and deductions. Even though that's only worth $14,000 to $16,000 after taxes (depending on his home state and retirement plan), it is enough to send him off with a smile. He agrees to retire by a date certain. Bingo, everybody is happy.
He's gone, his space is vacant and you can replace him (if necessary) with somebody a lot younger--and maybe 30 percent cheaper. And you don't have to fire a more recent hire who is likely to be a minority or woman.
Many retirement-age federal workers have vowed to hang on until a buyout comes their way. Make me an offer, they say, and I'm outta here. From their viewpoint, it's a simple, win-win situation.
But buyouts, especially in government, are not so simple.
They cost money even though the government prints and collects it. Some politicians believe buyouts are unnecessary. Shut them off, they say, and the 200,000 retirement-age federal workers will stop hanging around.
But as long as buyouts are a possibility, some people will never leave.
Also, different agencies have different rules. Most pay a maximum of $25,000 (before deductions). But the Agriculture Department program runs on a sliding scale, and the value of a buyout this year is much less than $25,000.
Most agencies have to eliminate a slot when they offer a buyout. But the departments of Defense and Veterans Affairs are exempt from that rule.
Most agencies must reimburse the Civil Service Retirement Fund the equivalent of 15 percent of the buyout-taker's annual salary. But the VA must repay the fund 26 percent of the salary for each buyout-taker.
Most retirement-age workers assume that once their agency gets buyout authority, an offer is forthcoming. In fact, it is up to agencies to decide who gets a buyout, how long they have to decide and even where workers must be employed to receive an offer.
In recent years, agencies have limited buyouts to the Chicago area, where most Railroad Retirement Board workers are, and to Windy City employees of the Treasury Department's Financial Management Service. The Interior Department had a buyout program for workers at its VIP lodges in Colorado, and the Department of Health and Human Services had a buyout limited to workers in a tiny town in Louisiana.
In the first Monday Morning Quarterback column of the year, a leadoff letter writer asks a question that shows how confusing buyouts can be:
"Just before Christmas your column listed a dozen or so federal departments that have the authority to offer employees buyouts worth up to $25,000 as an inducement to get people to quit or retire. But I'm sure that list didn't cover my employer, the Interior Department, although I have heard that Interior Department workers were paid buyouts. What's the story?"
-- Living in Hope
The Dec. 21 Federal Diary reported that the Railroad Retirement Board had joined the list of agencies with buyout authority. The Chicago-based board and the VA got buyout approval from Congress hours before it adjourned.
The column also listed agencies with current buyout authority. They are Defense, the National Aeronautics and Space Administration, Agriculture, the Energy Department, the Nuclear Regulatory Commission, the Architect of the Capitol, the Government Printing Office, the Bonneville Power Administration (an Interior agency), the Internal Revenue Service, the General Services Administration and two small operations of Treasury. These are the only agencies that currently have the legal authority to offer buyouts.
Since the start of the Clinton administration, more than 130,000 federal workers have been paid buyouts. Most went to Defense civilians who were of retirement age. During that period, more than 300,000 federal jobs were eliminated. Many functions were transferred to contractors.
From March 30, 1994, to March 31, 1995, all federal agencies had the authority to offer buyouts. The government-wide buyout window was opened again from Oct. 1, 1996, to Dec. 30, 1997. Currently, there is no government-wide buyout authority.
In the past, Congress also approved agency-specific buyouts that were limited to specific parts of the country. Interior, for instance, was allowed to offer buyouts to some of its Denver-based workers in National Park Service jobs a couple of years back.
The CIA, Smithsonian Institution, General Accounting Office and Agency for International Development also had limited buyouts. In one of the most targeted buyout operations, Health and Human Services got congressional approval to offer buyouts to workers at its Gillis W. Long Hansen's Disease Center in Carville, La., two years ago.
Mike Causey's e-mail address is firstname.lastname@example.org