- The Washington Times - Monday, June 23, 2003

Thanks to record low inflation and fears of deflation, retired federal workers, military personnel and people getting Social Security are seeing their January 2004 cost of living adjustment melt before their very eyes.

This time last month — just halfway through the complex COLA countdown — retirees were due a 1.8 percent raise next year. But after the May Consumer Price Index (which measures living costs) came out last week, the projected 2004 COLA had shrunk to 1.6 percent.

The final amount of the January, 2004 COLA for retirees will be based on the increase in living costs (as measured by the CPI) from the third quarter of this year over the third quarter (July, August, September) of last year. It is possible, indeed likely, that living costs will go up and that will boost the value of the COLA.

But for now lower prices for key items points to one of the lowest retiree raises in many years.

Unfortunately for federal retirees, low COLAs don’t guarantee that their health insurance premiums for 2004 will not increase, as they have each year. Generally speaking, low inflation is good for retirees, but when it produces a minimal inflation adjustment and health premiums continue to skyrocket it’s a hardship.

Postal workers

Up to 8,000 postal clerks are likely to be offered the chance to take early retirement between now and October.

The new early retirement program (ReShaping VERAs, outlined here last week) make it possible for the largest federal agency to “rebalance” its work force by permitting selected workers in the clerk (as opposed to letter carrier) craft to take retirement well before age 55. VERAs in government lingo stand for voluntary early retirement authority.

Unlike regular VERAs, the new reshaping authority — which came with the creation of the Department of Homeland Security — doesn’t require layoffs or downgradings, both of which the USPS has pledged not to do via union contract.

But they do make it possible for the Postal Service, which is being hammered by the public use of e-mail as opposed to regular first-class mail, to rebalance its work force. It needs 16,000 fewer clerks and more high-tech employees. Hence the long-awaited early outs.

Back to school

The Bush administration is encouraging federal agencies to send workers back to school (with Uncle Sam paying the tuition) to get higher degrees in skills the agency needs.

It’s part of a new “flexibility” program being pushed by the Office of Personnel Management. Under the plan, workers who are sent back to school for higher education would have to agree to work for the agency for a fixed period of time.

Just how binding that promise would be (in the past it hasn’t been enforced) is yet to be determined.

Flexible spending account

Remember, you have until Friday to sign up for inclusion in this year’s FSA program.

It begins July 1 in many agencies, but some will delay it until August or September and at least one — Government Printing Office — won’t get going until January.

Under the FSA program, you can put $250 to $3,000 in a medical (or $5,000 in a dependent care) FSA account via payroll deduction. The money is pretax so it will cut your take-home pay and your taxes. Unspent money in the account at the end of the year is forfeited. So plan your likely expenditures carefully.

Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or [email protected]

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