White House proposes deep cuts to federal benefits

With the release of the fiscal year 2020 budget request, the administration renewed its pushes to cut federal retirement benefits and pay, move away from the general schedule and transfer workforce functions away from the government's central personnel agency.

The White House's latest budget proposed similar cuts to the FY 2019 version, targeting retirement benefits and freezing federal pay.

Proposed retirement cuts include eliminating cost-of-living adjustments for Federal Employee Retirement System retirees, eliminating the special retirement supplement, recalculating the pension formula from the average of an employee's three highest salary years to the five highest, increasing employee retirement contributions by one percent per year and reducing the G Fund interest rate.

The administration expects these changes to reduce spending by about $5.4 billion in fiscal year 2020 and -- combined with cuts to the Federal Employee Health Benefits Program -- almost $179 billion over 10 years.

Bill Valdez, president of the Senior Executives Association, said the proposed cuts and pay freeze would make it harder for government to recruit and retain employees and limit agencies' abilities to carry out their mission.

"On the heels of the longest government shutdown in history, which deeply damaged the government's brand as an employer, this budget sends all the wrong signals to Americans considering jobs serving their country in federal public service," he said.

Tony Reardon, president of the National Treasury Employees Union, called the budget "essentially a blueprint for how to ruin the civil service."

"Clearly the administration learned nothing from the disastrous 35-day shutdown," he said.

As part of its reorganization proposal, the budget lists this series of benefits cuts under the General Services Administration, rather than the Office of Personnel Management.

In the budget, the White House again proposes an OPM overhaul that includes moving OPM's background investigation work to the Department of Defense, policy and strategic function to the White House and transferring "all remaining functions" to the General Services Administration.

Those functions include human resources solutions, retirement services, healthcare and insurance, Office of Inspector General, and merit system accountability and compliance organizations. The Trump administration is looking to push on planning and initial implementation of the OPM-GSA merger in 2019.

Many of the White House's workforce and structural proposals were shot down on the Hill last year, and some of the proposals, particularly those that cut the workforce and benefits, will be more difficult to pass a divided Congress.

The proposed civilian pay freeze for fiscal year 2019 was overturned, and Congress passed a 1.9 percent raise. However, President Donald Trump has yet to issue an executive order to implement the increase. The White House also proposed a $1 billion workforce fund for managers to award workers outside of the typical pay structure, but it was not included in Congress's fiscal year 2019 appropriations.

The proposed merger of OPM and GSA didn't gain much traction in the legislative branch, but that could change.

Robert Shea, a former Office of Management and Budget executive who is now a principal with Grant Thornton, said he was "feeling optimistic that they will get congressional approval" for the merger. "There doesn't appear to be the backlash that I might have expected," he said.