The federal employee pay freeze would be extended by three more years, meaning that basic pay rates would not increase until 2016, under the budget plan unveiled Tuesday by the House Budget Committee.
In addition, the budget seeks to increase employee contributions to their retirement plans, cut the workforce by 10 percent — about 200,000 positions — by 2015 through attrition, and cut funds under the control of the House committee that oversees federal employee benefits.
Under a 2010 law, federal pay rates did not increase in 2011 or 2012, although those who are promoted or who move up the pay scale due to longevity continue to receive raises. President Obama has proposed a 0.5 percent general raise effective in January 2013. The House last month passed a bill calling for no raises until at least 2014, although the Senate last week rejected an amendment containing a one-year extension as a means to pay for other programs.
The House measure also “asks federal employees to make a more equitable contribution to their retirement plans,” although it does not specify a figure. That follows a long line of proposals targeting the disparity between what federal employees contribute toward their retirement plans and what the government contributes.
Federal organized labor was quick to condemn Ryan’s plan.
American Federation of Government Employees President John Gage and Colleen M. Kelley, president of the National Treasury Employees Union, cited the $60 billion the freeze on basic pay rates will generate over 10 years and the increase in retirement contributions new employees will have to pay starting next year that will generate an additional $15 billion.
“It is almost as though the authors of this budget don’t know, don’t understand or don’t care about the key role federal employees play in helping keep our nation safe,” Kelley said.
A law enacted in February already mandates an increase in retirement contributions, but only affects those hired after this year and who have fewer than five years of prior federal service.
The budget plan further would order six House committees to achieve savings in programs under their jurisdiction, in order to avoid across-the-board cuts that could otherwise occur under last year’s debt ceiling deal. For the Oversight and Government Reform Committee, the plan suggests “making pensions for federal workers more like those for workers in the private sector.” It is seeking savings of $2.2 billion over two years, $30.1 billion over five years and $78.9 billion over 10 years.
Oversight Committee Chairman Rep. Darrell Issa (R-Calif.) recently said in a message to the Budget Committee that his panel would “continue to pursue enactment of legislation requiring federal employees to pay a greater share of their defined benefit portion and eliminating the supplemental payment provided to employees who voluntarily retire before they are eligible for Social Security.” He also said the government “should eventually adopt a defined contribution-only system, similar to those plans to which most private sector employers have already converted to for new hires.”
He added, however, that the committee does not support “a permanent freeze on civilian pay” and that federal pay should be reformed to make salaries better reflect the labor market and individual performance.
In a separate statement, Democratic members of the committee said that broad-based workforce reductions “historically have resulted in increased government spending in the form of increased backlogs, reduction or termination of agency services, or increased contracting costs.”
That statement opposed increasing employee contributions to retirement, ending the supplemental payment and moving to a defined contribution-only system for new employees. “We are troubled by the very real possibility that targeting federal employees in this way will undermine the government’s ability to attract and retain the best and brightest to serve the public in these challenging times,” the committee Democrats said.