CAUSEY: Workers courted with election-year raise

By Mike Causey | Tuesday, July 15, 2008

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Despite lots of legislative timeouts, Congress has not forgotten an important bloc of voters - millions of federal workers and their families.

Many members of Congress - Republicans as well as Democrats - are well aware of the concentrations of feds in their districts and states, and the importance of pay raises.

President Bush proposed a 2.9 percent pay increase for white-collar feds and 3.4 percent for military personnel. Mr. Hoyer counts 55,000 feds in his district. And that doesn't include retirees or military personnel.

In addition to being a huge voting bloc in this area, the federal/military family could tip the balance in a close election in places you would expect - such as New Hawaii, which have sizable numbers of active and retired civil servants and military personnel.

The House already has passed the 3.9 percent raise, as has a Senate Appropriations subcommittee.

That raise - if it clears a few more hurdles - would be worth more in the Washington area thanks to the addition of a locality pay amount. Adjustments for locality pay - which won't be known until much later this year - also would boost the value of the 3.9 percent base pay increase in high-wage areas such as Chicago.

The good news for feds this year is that the preoccupation with the November election has kept Congress from acting on a variety of plans (some of which would have an impact on future pensions) that would save the government money. The bad news is that things like the so-called "evil twins" of Social Security won't be dealt with this year. The twins are a major concern for federal workers under the old Civil Service Retirement System. One, the offset formula, can wipe out the Social Security spousal benefit due a CSRS retiree. The other, the windfall formula, can reduce by thousands of dollars the Social Security benefit a CSRS retiree had been expecting.

Postal downsizing

Because of a revenue shortfall - the popularity of e-mail over so-called snail mail - and high fuel costs, the U.S. Postal Service hopes to shed several million pounds. The idea is to offer early retirement (in some cases to people as young as 48) to as many as 40,000 clerks, letter carriers and other craft employees.

Most of the people who would qualify for the early outs are under the old Civil Service Retirement System, or CSRS. For them, normal retirement is at age 55 with 30 years of federal service; at 60 with 20 years of service or at 62 with five years of service. Benefits are based on the employee's highest three-year average salary and time in government.

During an early out, workers can retire at age 50 with 20 years of service or at any age with 25 years of federal or military service. Qualifying for an immediate (as opposed to a delayed) annuity means the retirees get to keep their health insurance (for themselves and survivors) for life.

Officials have no solid indication how many postal workers will take early outs. They probably could have met the target easily if they had offered buyouts to accompany the early outs. But for a variety of reasons, including cost, buyouts will not be part of the package. Buyouts were set up during the Clinton administration and are for a maximum of $25,000 before deductions. After taxes, etc., the typical buyout-taker gets between $16,000 and $18,000 based on their tax bracket and state and local taxes.

A number of federal agencies are offering buyouts and early outs, but unlike the 1990s when entire departments were involved, the current buyout/early out action is on a very limited basis. In most cases the actions - which must be approved by the Office of Personnel Management - involve reorganization, realignment, mission change or lack of funds. And they are often limited to specific geographic areas, to selected occupations and sometimes to certain grades.

For the typical fed eagerly awaiting a buyout or early out, the odds of getting one are about the same as being hit by lightning. That is, it happens but usually to somebody else.

• Mike Causey, senior editor at Federal News Radio AM 1050, can be reached at 202/895-5132 or mcausey@federalnewsradio.com.

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