[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
       AGENCY MISTAKES IN FEDERAL RETIREMENT--WHO PAYS THE PRICE?
=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON THE CIVIL SERVICE

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM
                             AND OVERSIGHT
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 31, 1997

                               __________

                           Serial No. 105-80

                               __________

Printed for the use of the Committee on Government Reform and Oversight






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              COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois          TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland       ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
STEVEN SCHIFF, New Mexico            EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          PAUL E. KANJORSKI, Pennsylvania
ILEANA ROS-LEHTINEN, Florida         GARY A. CONDIT, California
JOHN M. McHUGH, New York             CAROLYN B. MALONEY, New York
STEPHEN HORN, California             THOMAS M. BARRETT, Wisconsin
JOHN L. MICA, Florida                ELEANOR HOLMES NORTON, Washington, 
THOMAS M. DAVIS, Virginia                DC
DAVID M. McINTOSH, Indiana           CHAKA FATTAH, Pennsylvania
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
JOE SCARBOROUGH, Florida             DENNIS J. KUCINICH, Ohio
JOHN B. SHADEGG, Arizona             ROD R. BLAGOJEVICH, Illinois
STEVEN C. LaTOURETTE, Ohio           DANNY K. DAVIS, Illinois
MARSHALL ``MARK'' SANFORD, South     JOHN F. TIERNEY, Massachusetts
    Carolina                         JIM TURNER, Texas
JOHN E. SUNUNU, New Hampshire        THOMAS H. ALLEN, Maine
PETE SESSIONS, Texas                 HAROLD E. FORD, Jr., Tennessee
MICHAEL PAPPAS, New Jersey                       ------
VINCE SNOWBARGER, Kansas             BERNARD SANDERS, Vermont 
BOB BARR, Georgia                        (Independent)
ROB PORTMAN, Ohio
                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
         William Moschella, Deputy Counsel and Parliamentarian
                       Judith McCoy, Chief Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

                   Subcommittee on the Civil Service

                    JOHN L. MICA, Florida, Chairman
MICHAEL PAPPAS, New Jersey           ELIJAH E. CUMMINGS, Maryland
CONSTANCE A. MORELLA, Maryland       ELEANOR HOLMES NORTON, Washington, 
CHRISTOPHER COX, California              DC
PETE SESSIONS, Texas                 HAROLD E. FORD, Jr., Tennessee

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
                   George Nesterczuk, Staff Director
                  Ned Lynch, Professional Staff Member
                          Caroline Fiel, Clerk
                   Cedric Hendricks, Minority Counsel













                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 31, 1997....................................     1
Statement of:
    Flynn, William E., Associate Director, Retirement and 
      Insurance Service, Office of Personnel Management; Sarah 
      Hall Ingram, Associate Chief Counsel, Employee Benefits/
      Exemption Organizations, Internal Revenue Service; Diane 
      Disney, Deputy Assistant Secretary, Civilian Personnel, 
      Department of Defense; and Linda Oakey-Hemphill, Agency 
      Retirement Counselor, Department of the Treasury...........    43
    White, Alan, Office of the Inspector General, Department of 
      Defense; David Mangam, Army War College; John Gabrielli, 
      Internal Revenue Service; and E. Barry Schrum, Department 
      of Energy..................................................     8
Letters, statements, etc., submitted for the record by:
    Disney, Diane, Deputy Assistant Secretary, Civilian 
      Personnel, Department of Defense, prepared statement of....    62
    Ingram, Sarah Hall, Associate Chief Counsel, Employee 
      Benefits/Exemption Organizations, Internal Revenue Service, 
      prepared statement of......................................    55
    Mica, Hon. John L., a Representative in Congress from the 
      State of Florida, prepared statement of....................     4
    Oakey-Hemphill, Linda, Agency Retirement Counselor, 
      Department of the Treasury, prepared statement of..........    66
    Schrum, E. Barry, Department of Energy, letter dated July 21, 
      1997.......................................................    31
    White, Alan, Office of the Inspector General, Department of 
      Defense, prepared statement of.............................    12














       AGENCY MISTAKES IN FEDERAL RETIREMENT--WHO PAYS THE PRICE?

                              ----------                              


                        THURSDAY, JULY 31, 1997

                  House of Representatives,
                 Subcommittee on the Civil Service,
              Committee on Government Reform and Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:05 a.m., in 
room 2154, Rayburn House Office Building, Hon. John L. Mica 
(chairman of the subcommittee) presiding.
    Present: Representatives Mica, Pappas, Morella, Cummings, 
and Ford.
    Staff present: George Nesterczuk, staff director; Ned 
Lynch, professional staff member; Caroline Fiel, clerk; and 
Cedric Hendricks, minority counsel.
    Mr. Mica. I'd like to call this meeting of the House Civil 
Service Subcommittee to order. This morning we're going to have 
a hearing related to mistaken enrollments in our Federal 
retirement programs. And the title of today's hearing is, ``Who 
Pays the Price?''
    I'd like to start with an opening statement, then I'll 
recognize other Members for their comments and we'll begin the 
hearing.
    We, in fact, have heard many complaints about Government 
agencies making errors in Social Security payments, veterans' 
benefits, tax audits, and other transactions with ordinary 
citizens.
    Today, however, we'll hear about a strange twist in this 
tale. And that is Federal employees who themselves are 
victimized by mistakes of their own agencies. Beginning some 10 
years ago, hundreds, perhaps thousands of Federal employees--
and we're trying to get a handle on that figure--but hundreds, 
in fact, maybe thousands of employees here are enrolled in the 
wrong retirement system.
    What sounds like simple administrative error has turned 
into a bureaucratic nightmare for many of these individuals. 
The consequences of these errors, in fact, can be quite severe: 
reduced retirement benefits, back taxes owed, underfunded 
Thrift Savings accounts, lost investment opportunities, and 
tons and tons of aggravation.
    Our purpose today is to hear testimony that will illustrate 
and personalize the impact of these agency mistakes. We'll also 
hear from some of the agencies that are involved. I hope that 
their experiences will contribute to a swift and satisfactory 
resolution of our employees' problems.
    This issue has festered for several years now, and the list 
of victims keeps growing. By now there's plenty of blame to go 
around for everyone. We can start with the employees in the 
agencies who made the mistakes in the first place. Then, of 
course, there's the Office of Personnel Management, the agency 
responsible for administering our Federal retirement programs. 
Why haven't they in fact intervened or found a solution to this 
problem? Does OPM think that expensive legal suits are the 
proper course, or in some cases, the only course for 
individuals to resolve this? The Federal Retirement Thrift 
Savings Board deserves credit for attempting to resolve this 
problem in 1990. But they could have saved many people 
unnecessary grief if they had pursued enrollment problems more 
aggressively.
    Of course we can't forget the Post Office and Civil Service 
Committee in the 101st Congress. Congress should receive a 
special prize for ducking this issue from the beginning. In 
fact, Congress' position on this enrollment problem was not 
just nonresponsive, it was, in fact, irresponsible.
    Here's what they said in an April 19, 1990, report: ``The 
committee believes that the right to file suit provided in 
current law is an appropriate means for participants and 
beneficiaries to seek relief if the administrative process 
proves unsatisfactory.''
    In effect, Congress threw these employees to the wolves--
and it sounds like the attorneys--and told them to sue if they 
didn't like it. But then OPM was not much better. This has been 
called an administration that ``feels your pain'' and trumpets 
its alleged ``customer-oriented'' reinvention of government. 
OPM's customers are the Federal employees whose retirements 
they hold in trust. And, unfortunately, these are the people 
that are also feeling the pain right now.
    Stripped of the formalities, this is what OPM has to say 
about the innocent victims of this administrative nightmare. 
And I quote again from one of their correspondences on this 
issue.

    Dear Federal employee: Your agency has made a mistake. 
Because of that mistake your enrollment in CSRS retirement is 
terminated. You are being placed in FERS. You now have a Social 
Security problem. So contact the Social Security administration 
to correct your records.
    You also have a tax problem. So you should contact the 
Internal Revenue Service and work it out. While you're at it, 
get in touch with the Thrift Investment Board, then check your 
agency personnel records and also straighten out your Federal 
retirement records.

    We have a copy of one of these letters that was sent out 
December 24, 1996--the end of last year--just in time for the 
holidays. I sure hope that whoever came up with the letter 
didn't get the Vice President's Golden Hammer Award for warmth 
and sensitivity.
    The retirement and insurance service at OPM has been chosen 
to be one of the administration's flagship performance-based 
organizations. If this is what they consider model performance, 
then the expression, ``I'm from the government. I'm here to 
help you,'' will remain a warning, not a promise.
    Can you imagine a private sector company sending a similar 
letter? We made one up here just for illustration purposes.

    Dear consumer: About the car you bought from us last year. 
It's a lemon. The transmission is bad and will cost you a 
bundle to fix. You have probably noticed that the engine is no 
good. We hope you can afford to maintain it. We made a mistake 
in pricing the car, so we kept the sales tax to make up the 
difference.
    Your state revenue office will be in touch to collect the 
taxes you now owe. By the way, we put the wrong plates on your 
car and messed up your registration. You may want to sort that 
out with the Motor Vehicle Bureau. It's been a pleasure, and we 
hope to see you again real soon.

    We just made that up for illustration. But it does sum up 
the type of problem that we face here. Fortunately, in a 
competitive marketplace, businesses like that would not 
survive. Businesses that send out that kind of notice would be 
laughed at. The marketplace would take care of that problem 
before government regulations could be enacted.
    Unfortunately, for our Federal employees, it will take 
legislation to fix this enrollment problem. And we're here 
today to try to come up with a better answer than the 
bureaucratic inertia these employees have had to face so far. 
I've made some light of the aspects of this issue, but the 
problems are very real.
    Our first panel today will put a human face on this 
problem. And our second panel of agency witnesses hopefully 
will provide some useful suggestions and solutions from the 
administration on how we may work together to fix this problem.
    Even if we are unable to resolve this with the 
recommendations from the panel, I hope that we in Congress can 
come up with a solution that will help the agencies out of this 
dilemma we find ourselves in today. Those are my opening 
comments. I'm very pleased to yield now to the distinguished 
gentleman and ranking member from Maryland, Mr. Cummings.
    [The prepared statement of Hon. John L. Mica follows:]



    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Cummings. Mr. Chairman, I want to thank you very much 
for holding this hearing today. It is a very important hearing. 
I will not spend my time trying to place blame here or there. I 
am interested to hear what the second panel has to say. But I 
know one thing. If we can send that little wagon up there to 
Mars and we can get pictures back, then we sure ought to be 
able to resolve this issue.
    One of the things that has consistently concerned me is 
that a lot of times we in Government forget that we as human 
beings have one life to live; this is no dress rehearsal, and 
this is the life.
    And so when we miss out, when people are deprived of things 
that they were due through no fault of their own, government 
has a responsibility to correct it if we made the mistake. And 
that's what it's all about.
    I want to be in a situation that after this hearing, by the 
end of this hearing, that we set some kind of a deadline to 
have this matter resolved. I mean to have it resolved so that 
people do not--I read the testimony and it screams at me. When 
I read the testimony last night that was going to be presented 
here today, I said, ``Something has to be corrected.''
    Now let me tell you something. We can have motion, 
commotion, and emotion, and no results. That does not do 
families any good whatsoever. It does not do these witnesses 
any good. And the people that they represent. And when I say 
the people they represent, I mean the people that are in like 
circumstances.
    And so today we need to begin--we have done all kinds of 
things in this Congress very rapidly. When we want to do 
something we do it. And I think that between both sides of 
this--and I know of our chairman's concern. But that concern, 
all of our concern has to be turned into results with a 
timetable.
    And so the agencies at some point have to come together. 
Mr. Chairman, I'm going to recommend at some point that we set 
a deadline for having this matter resolved. I mean, we can go 
on and on and on, and guess what. I'm so glad that you talked 
about the history of this, because folk could be in the same 
position next year, 5 years from now, 10 years from now, unless 
we set some type of deadlines.
    And so I'm glad you brought us together today with regard 
to this issue. It is a very important issue. And now government 
must stand up for people who have stood up for us. I get tired 
of the rap that Federal employees take when they are working, 
giving this United States of America every single thing--their 
blood, sweat, and tears--but yet and still when we make 
mistakes, they've got to wait to have them resolved.
    And so I had a written statement, but I am so upset about 
this I am speaking from my heart. And so I hope that we're able 
to resolve this, Mr. Chairman. And I agree with you. We cannot 
wait one moment. One more moment not resolving this matter is a 
moment that some child in the family of one of these witnesses 
will not get what they are due.
    When opportunities are missed--and I repeat, we have one 
life to live. This is no dress rehearsal. And this is the life. 
I want to thank the witnesses for being here today. I look 
forward to your testimony. And hopefully we'll be able to bring 
some swift and appropriate resolution to this matter.
    Mr. Mica. I thank the gentleman for his opening comments 
and yield now to the vice chairman of our panel, Mr. Pappas. 
You're recognized.
    Mr. Pappas. Thank you, Mr. Chairman. And thank you for 
calling this hearing. And I, too, had the opportunity to review 
the written testimony of some of the folks that we're going to 
hear from. And I was equally horrified.
    And, you know, one thing that struck me, we each in our 
lives have to deal with deadlines. We have reports or tasks 
that have to be done by a certain date. People that are in 
business have to meet deadlines in dealing with their 
customers. And what I saw here, again, in reading these stories 
and the descriptive memo kind of outlining this entire 
situation, appeared to be a lack of accountability from some 
who may have been dealing with these programs and dealing with 
the Federal employees, many of which have experienced 
disruption to their lives and to their financial well-being.
    So I, too, want to join my voice to those who are demanding 
accountability for what has taken place and not to just set yet 
another deadline that won't be met. Thank you, Mr. Chairman.
    Mr. Mica. Thank you. And I now recognize the gentlelady 
from Maryland, Mrs. Morella.
    Mrs. Morella. Thank you, Mr. Chairman. I do want to thank 
you for holding this morning's hearing to discuss retirement 
enrollment errors between January 1984 to January 1987.
    In May, I wrote the chairman a letter requesting that he 
hold a hearing on this matter. And I really want to thank him 
and his staff for beginning the process of figuring out how to 
remedy this complicated issue. I also wrote to OPM, and I 
haven't yet received a response.
    Many, possibly thousands of Federal employees who were 
hired between January 1984 and 1987 were erroneously placed in 
CSRS. And to this day, many of them do not know that they are 
in the wrong system and the serious financial consequences that 
await them.
    Those who have discovered the error have been deprived of 
critically important retirement benefits and tax benefits. And 
they have been subjected to tremendous strain and incurred 
tremendous legal expenses. Mr. Chairman, this situation is 
incredibly unfair. I strongly believe that these Federal 
employees are entitled to compensation for these losses, losses 
that were the direct result of their agency's actions.
    Testifying before us today is one of my constituents, Barry 
Schrum. He has been deeply affected by his agency's errors. Mr. 
Schrum was hired by the Office of the Inspector General of the 
Department of Energy in December 1994, and was placed in the 
Civil Service Retirement System, despite the fact that new 
enrollments were prohibited after December 31, 1983.
    In August 1987, he was told he had the option of electing 
to participate in the new retirement system, the Federal 
Employee Retirement System. But he chose to remain in the CSRS. 
From that time until April 1996 the OIG withheld CSRS 
contributions of 7 percent of his salary.
    In April 1996, OIG personnel determined that he had been 
improperly placed in CSRS and that his retirement 
classification would retroactively be changed to FERS. Mr. 
Schrum will tell the whole story. But I must emphasize the fact 
that Mr. Schrum and thousands of other Federal employees who 
were incorrectly classified were denied several opportunities 
to save for their retirement, and we owe it to them to remedy 
this situation.
    It is absolutely critical that we hold OPM and agencies 
responsible. Last year the Senate Appropriations Committee 
directed OPM to provide a legislative recommendation by 
January. As no action by OPM has been taken, it is past time 
for the Congress to step in.
    I look forward to today's discussion of ways to remedy this 
egregious situation.
    Thank you, Mr. Chairman.
    Mr. Mica. I thank the gentlelady and also for her 
leadership on this issue and helping to bring it before our 
panel. I would like to introduce and welcome our first panel 
this morning. Our panel is just a sampling of dozens of 
individuals we've heard from and cases resulting from these 
errors in enrollment.
    Our first panel today consists of Alan White, Office of 
Inspector General, the Department of Defense, Mission Viejo, 
CA. I think he's also going to bring us some remarks from a 
witness who couldn't be with us, Deborah Monroe.
    We have David Mangam, from the Army War College of 
Carlisle, PA; John Gabrielli, Internal Revenue Service, 
Buffalo, NY; and E. Barry Schrum, Department of Energy, 
Derwood, MD.
    I just want to advise the members of our panel that this is 
an investigations and oversight subcommittee of Congress. It is 
customary that we swear all of our witnesses in, so if you 
would stand.
    [Witnesses sworn.]
    Mr. Mica. The record will reflect the witnesses answered in 
the affirmative. Since you have not testified before this panel 
before, I might indicate that we like to have our panelists 
keep their oral comments to the subcommittee limited to 5 
minutes, if you would, and try to summarize.
    And we would be glad to take other testimony or information 
for the record. We'll be glad to do that.
    I'd like to welcome each of you; thank you for 
participating. First, for 5 minutes, Mr. Alan White, Office of 
the Inspector General, Department of Defense, Mission Viejo, 
CA; good morning and welcome, Mr. White, you're recognized.

  STATEMENTS OF ALAN WHITE, OFFICE OF THE INSPECTOR GENERAL, 
  DEPARTMENT OF DEFENSE; DAVID MANGAM, ARMY WAR COLLEGE; JOHN 
   GABRIELLI, INTERNAL REVENUE SERVICE; AND E. BARRY SCHRUM, 
                      DEPARTMENT OF ENERGY

    Mr. White. Thank you, Mr. Chairman and members of the 
subcommittee. It is my pleasure to be here today and have this 
opportunity to discuss the matter of erroneous enrollments in 
the Federal retirement systems.
    It is my belief that it is a significant problem throughout 
the Federal Government and affects literally thousands of 
Federal employees. At the request of the subcommittee I will 
provide testimony about my experience as an employee of the 
Department of Defense Inspector General.
    By way of introduction, I am currently a GS-15 working as 
the assistant special agent in charge of the Defense Criminal 
Investigative Service western field office in Mission Viejo. 
We're the criminal investigative arm of the Department of 
Defense Inspector General.
    As you requested, I will specifically address those issues 
mentioned in your letter. On August 26, 1984, I was hired by 
the Department of the Air Force as a civilian criminal 
investigator and placed into the Civil Service Retirement 
System for Federal law enforcement.
    On August 31, 1986, I accepted a position with the 
Department of Defense Inspector General, DCIS and remained in 
the CSRS. With the passage of FERS I should have been 
transferred to FERS effective January 1, 1997. The DODIG 
personnel office did not transfer me into FERS but continued to 
classify me as an employee covered by CSRS offset program. In 
April 1991 the DODIG personnel office documented a review of my 
personnel file to verify my service computation date and that I 
was in the proper retirement system. This review failed to 
detect the erroneous retirement enrollment. CSRS contributions 
of 7.5 percent of my salary continued to be withheld from my 
salary until January 1996, when the error was detected.
    The error was detected when I requested my personnel office 
to calculate the cost of my active duty military time which I 
could have purchased for CSRS credit. During that process it 
was discovered that I was in the wrong retirement system.
    As a result, on February 28 my personnel office changed me 
from CSRS to FERS. I was not notified of this change until I 
later discovered the discrepancy on my leave and earnings 
statement on a Saturday. I happened to read it at the mail box. 
I knew something was deeply wrong at that time when the amount 
had changed from $51,000 to $103.
    The personnel office did not officially notify me until 
April 3, 1996. Between April and May 1996 I had many contacts 
with my personnel office as well as OPM. Neither agency could 
provide me with any guidance on what I should do. Rather, I was 
advised that the resolution of the matter would require 
congressional or legal action.
    It was suggested that I contact my local Congressman and 
seek his intervention. OPM advised me that they were only aware 
of a few people who were impacted similarly to me. My personnel 
office advised me that I was the only one they were aware of.
    After receipt of this information I appealed to the DODIG 
personally and requested her intervention. Once she became 
aware of the problem she wrote the appropriate chairmen of the 
House and Senate subcommittees and requested their intervention 
in addressing this matter. The various responses from those 
chairmen revealed that they were aware of the problem and it 
was their hope the problem would be addressed in the 105th 
Congress.
    To protect my interests I retained legal counsel to explore 
what legal remedies were available. Consequently, on July 28, 
1997, 1 day before the statute ran out on my ability to file 
legal action, I filed a lawsuit seeking full restitution in 
U.S. District Court in Washington, DC, along with four other of 
my Federal colleagues.
    Clearly, being in the wrong retirement system has changed 
my whole life over the past 18 months. My retirement planning 
has been centered solely around CSRS. The most immediate 
concern, as a Federal law enforcement officer, is the welfare 
of my family if something should happen to me.
    For example, the survivors' benefits under FERS are less 
than half of what my family would receive under CSRS. 
Additionally, there are virtually no funds in my Thrift Savings 
account.
    My wife and I feel frustrated and bitter about how this 
entire matter has been handled and the fact that we've had to 
deplete our savings for legal and expert witness fees. The 
estimated financial impact over my lifetime has been estimated 
at over $2 million.
    My dealings with OPM, my contact with OPM has been horrid 
from the very beginning. At the onset, when I learned how many 
people were impacted, or when I asked how many people were 
impacted, they refused to tell me. However, I learned that 
there were over 341,000 people hired during that timeframe, 
between January 1, 1984 and December 31, 1986. With that large 
of a number I suspected that there were more than a few 
impacted. Unfortunately, Congress had directed OPM for the past 
2 years to study the extent of the problem and draft 
legislation. OPM has continued to ignore the issue and failed 
to responsibly address this problem. Meanwhile the clock 
continued to tick on any legal action I could take. It is 
outrageous that a Federal agency like OPM can get away with 
acting as irresponsibly as they have in addressing such a 
significant problem with so many Federal employees that are 
involved. If a private sector company failed to address a 
problem such as this, the Department of Labor and/or the 
Department of Justice would intervene on the wronged employees' 
behalf without hesitation, and has done so.
    Obviously, this same legal protection should be afforded to 
Federal employees as well. Throughout this entire ordeal, 
myself and my fellow Federal employees have been made to feel 
that we are somehow different and held in lower regard than the 
private sector.
    I can't help but believe that there are thousands of 
Federal employees affected, because I continue to receive calls 
weekly from Federal employees who are similarly impacted. It is 
absurd that Federal employees must take legal action to ensure 
a viable retirement system when this situation was created 
through no fault of their own.
    Finally, I believe that Congress should no longer wait for 
OPM to address the problem since OPM has ignored and defied the 
specific direction and will of Congress for the past 2 years. 
Congress should enact legislation that would simply allow those 
wrongly enrolled in CSRS to remain in CSRS if they so choose or 
transfer to FERS. The agency who erroneously enrolled the 
employee should bear the expense of getting that employee 
whole.
    Further, Congress should require the agency to make the 
government employee whole by depositing the necessary 
contributions on behalf of the employee at 10 percent of the 
employee's wages from the date of employment to the present 
along with the corresponding 5 percent matching funds by the 
agency plus interest.
    The option of investing for the period in question in 
either the C fund or G fund would be at the employee's 
discretion. Those impacted by this situation who elect to 
transfer to FERS Congress should provide a one time exemption 
on the amount that can be contributed to an employee's Thrift 
Savings account. Currently, the law only allows that maximum 
$9,500 be deposited. This would allow the employee's agency to 
make a one time deposit of the calculated harm determined by 
the Thrift Savings Investment Board to his or her account.
    Basically, that summarizes my testimony. But one of my 
colleagues who could not be here today----
    [The prepared statement of Mr. White follows:]


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Mica. Without objection, we're going to extend your 
time so you may read the comments----
    Mr. White. Yes, sir.
    Mr. Mica [continuing]. I understand it's relatively brief--
of Debo-rah Monroe.
    Mr. White. Yes, sir.
    Mr. Mica. You're recognized.
    Mr. White. OK. Sir. This statement is by Deborah Monroe, 
pro- gram assistant--GS-7--for the Department of Housing and 
Urban Development from Chicago, IL.

    Mr. Chairman and members of the subcommittee, first of all 
I would like to thank Congress for deeming this to be an 
important issue and making it possible for this statement to be 
read into testimony.
    I am currently a GS-7 program assistant in the multi-family 
branch in the De- partment of Housing and Urban Development HUD 
office in Chicago, Illinois. I was hired as a first time 
Federal employee in 1982 as a clerk typist (temporary) by HUD. 
My appointment ended and I was hired again in August 1983. The 
date is my service com date.
    On February 23, 1995 I was notified by my personnel office 
in writing that my retirement category had been corrected to 
FERS and Social Security. My personnel office informed me that 
this was done because I had been erroneously placed in the 
wrong retirement system, CSRS.
    I would like to reveal to Congress about the lack of 
assistance and support that I've received from my personnel 
office since 1995. I have received total callous and 
insensitivity regarding my situation.
    An article published by the Federal Times on September 16, 
1996 made me aware that I was not the only person that was 
experiencing this problem. I was told that I was the only one 
in this situation by my personnel office. I called Mr. Alan 
White, who had the article written in the Federal Times, to 
inform him that I had been dealing with this problem since 
February 1995 in vain. This is just an example of what happens 
to a person at my grade level and how I was treated.
    It took Alan White and Barry Schrum, grades 13 and 15, to 
get this matter mov- ing. I went through and spoke with the 
same people in my office as Mr. White did in his and wrote to 
everyone that he did. My results: I was told nothing could be 
done.
    No one was willing to help me. I had been an outstanding 
government employee, and this was how I was treated. My 
personnel office displayed a hostile attitude and dealt with me 
in a negative and unprofessional manner. My continuous effort 
in try- ing to resolve this matter to date has been futile.
    My personnel office had no idea on how to resolve this 
issue. I have escalated the problem all the way up to HUD 
Assistant Secretary, Marilyn Davis, to no avail. I attempted 
and was denied the opportunity for a third party to help, Mr. 
Linford Coleman, who is the Blacks in Government president.
    I have been under an enormous amount of stress and strain 
and it's been a major strain on my whole family. I am mad at 
the system and my personnel office because this entire matter 
has been laughed at by many HUD officials. I was told by the 
legal department that if I took this matter out of HUD, I would 
lose.
    I want to also express that had it not been for Mr. Alan 
White and Mr. Barry Schrum I would have lost my mind. They have 
been my rock. Because of these is- sues and the threat of 
downsizing our office I have no idea where retirement funds 
reside. And this has caused me great psychological and physical 
trauma.
    I would like, again, to thank the chairman of the committee 
for taking a concern in myself and my two very good friends, 
Mr. Alan White and Mr. Barry Schrum. I thank Congress for 
allowing my statement to be read and entered into the record. 
And I am very sorry that I could not attend.

    Mr. Mica. Thank you, Mr. White. And also thank you for 
provid- ing us with the testimony of Ms. Monroe. I'd like to 
now recognize David Mangam of the Army War College. You're 
recognized, sir.
    Mr. Mangam. Mr. Chairman, I am David Mangam, a GM-14 civil 
servant working for the Department of the Army at the U.S. Army 
War College, Carlisle Barracks, Carlisle, PA. I appreciate the 
opportunity to appear before you today on behalf of myself and 
all
the other civil servants who are in a similar situation, which 
is, recently being notified that their employing agency made a 
mistake many years ago and placed them erroneously in the wrong 
retirement program.
    I entered Federal civil service via the United States Army 
Europe on January 31, 1983, as an overseas limited appointee, 
that is, a 5-year overseas employee limitation. On January 29, 
1984, I was converted to a career condition appointment and 
according to the agency and OPM, was correctly placed in the 
Civil Service Retirement System, as there were no laws 
otherwise at that time.
    As I now understand the events, Public Law 98-369 on July 
18, 1984, retroactively changed retirement program status for 
all employees hired post-December 31, 1983. I am a retired Army 
E-7 who relinquished promotion and retirement as an E-8 in 
order to accept continued Federal employment as a civilian 
(original appointment was at grade GS-12).
    My decision to continue Federal service was heavily biased 
on the projected ability to combine my military service with 
continued Federal civil service with a goal to retire at 35 to 
40 years of total combined service. The Civil Service 
Retirement System into which I was placed offered me this 
opportunity.
    If I had been informed at the outset of civil service 
employment that I would not be able to fully incorporate my 20 
years of military service with continued Federal service and 
have the option to retire after 35 years of service, then I 
would clearly have chosen an employment path that provided me 
that similar opportunity.
    In August 1996, the local civilian personnel office 
notified me in discussions that they discovered what might be 
an error in retirement system placement. On November 7, 1996, I 
was officially notified that I was to be converted to the FERS 
retirement system.
    Effective November 24, 1996, the personnel system changed 
my retirement enrollment. I requested agency and OPM review of 
this decision on December 4, 1996. The OPM review fully 
supported the agency action. The full transition of this action 
is still in process and could take up to 257 pay periods, which 
is approximately 10 years.
    And even with that I will not be fully restored in the FERS 
system and never be equal to the full CSRS retirement I had 
been offered as part of my employment. This mistake will cost 
me more than $30,000 per year if I am to retire after 35-plus 
years of civil service.
    It will cost me an aggregate of approximately $1.6 million 
across my projected 35-plus years of retirement. Note, my 
parents are deceased at age 87 and 90, and I would expect the 
same life expectancy.
    There is no possible way that I can retire in the next 8 to 
10 years under FERS unless I can obtain a settlement to offset 
the disparity of the decision. My wife and children share this 
anxiety and uncertainty with me. It has caused great turmoil in 
our lives and family relationships.
    An additional personal cost is due to me due to increased 
stress and anxiety which has caused complications in my daily 
health. I am a type II diabetic. The rise in blood sugars 
causes extreme depression and fatigue on a daily basis, which 
requires big increases in sick leave usage. I have applied to 
the agency, OPM, the DODIG, the U.S. Merit Systems Protection 
Board for review and correction.
    I have also discussed this with the TSP board and the 
Defense Finance Accounting Services. All have upheld the action 
as in accordance with public law. The OPM reply recognized that 
it was clearly an agency error and they could not change the 
retirement coverage due to law and they have no authority over 
monetary settlement provided by my agency.
    I applied for settlement to my agency. And although they 
understood the error and supported me, they could not provide 
settlement.
    Two corrective actions are possible: Grandfathered return 
to the CSRS retirement and repositioning of all fund transfers 
and taxes correctly, reimbursement for out of pocket expenses 
or, two, make me whole in the FERS system and reimburse all 
lost interest, compound interest, military buy-in loss, 
retirement offset, IRS/OASDI loss, plus personal expenses.
    OPM has provided support only when directly challenged. 
They, through the agency, did not provide all conversion 
information and opportunities. As an example, in 1996 the IRS 
retirement contribution ceiling was $95,000 and my TSP annual 
contributions were under $4,000. Therefore, I should have been 
offered the option to contribute the difference to back 
payments to TSP.
    And, until pushed hard, they did not start even making up 
the back payment deductions for TSP. They are also not able to 
fully correct losses in TSP interest and compound interest due 
to public law. To date, they are still withholding over $30,000 
plus interest out of my previous CSRS contributions, even if 
they have made OASDI and FERS make-up payments from my initial 
total CSRS fund.
    These are direct individual contributions and not required 
for FERS or OASDI or other legal back payments and belong to 
the employee. As reported to by many staff and action 
personnel, this problem has been recognized for more than 6 
years, yet OPM policy and procedures have not fully developed, 
nor has this problem been fully brought to your committee for a 
resolution that would be equitable and fair.
    I would recommend that this committee provide full relief 
to all Federal service employees who in good faith contracted 
employment with the Federal Government, by bringing into law 
these options: To become fully vested in FERS with Government 
support for losses, or to be fully grandfathered into CSRS with 
support for all losses incurred by these transition efforts.
    Thank you for providing me the opportunity to address this 
concern to your committee.
    Mr. Mica. I thank you for your testimony and now would like 
to recognize John Gabrielli, Internal Revenue Service. You're 
recognized, sir.
    Mr. Gabrielli. I'm an employee of the Internal Revenue 
Service and a member of the National Treasury Employees Union, 
local chapter 58, from Buffalo, NY. Mr. Chairman and members of 
the subcommittee, I thank you for providing me with the 
opportunity to tell my situation regarding my retirement.
    I hope that this subcommittee will be able to provide some 
relief to me and others who have had similar problems. On 
January 10, 1983, I started with the Internal Revenue Service 
under a temporary appointment in the taxpayer service division. 
The employment was due to expire on April 15, 1983.
    I was employed through a series of temporary appointments 
until I was finally converted to a career conditional 
appointment on September 30, 1984. It was at this time that I 
was incorrectly coded as eligible for retirement benefits under 
the Civil Service Retirement System, known as CSRS.
    At the start of 1987, I received a computer-generated 
letter from the human resources division of the national office 
advising me that I was currently covered under the CSRS. The 
letter also informed me that beginning July 1, 1987, I would 
have the opportunity to transfer my enrollment to the Federal 
Employees Retirement System, known as FERS.
    The letter advised me that I would receive information on 
CSRS and FERS that would assist me in making an irrevocable 
decision concerning my retirement. Subsequently, I received 
written information and an oral presentation comparing the two 
retirement systems. I elected to remain under the CSRS.
    On April 14, 1993, I was summoned to a meeting with four 
other employees from my district. During this meeting I was 
informed that I was incorrectly placed in the CSRS and should 
have been placed under the FERS. During the meeting we were 
told that our district human resources branch was seeking 
guidance from the national office of IRS.
    A series of letters passed between the district and the 
region, all seeking equitable solutions. Thereafter, the 
assistant chief counsel indicated in a letter dated November 
15, 1993, that there was no statutory authority permitting a 
waiver from the FERS provision for me and the other employees.
    In a memorandum dated October 25, 1993, from the acting 
chief, resources management division, I was told that effective 
May 5, 1991, I would be placed under the FERS. I was advised 
that the process of adjustments to my retirement funds had 
begun. I was also advised that the IRS was seeking a 
determination from the Comptroller General whether we could 
receive a refund of our CSRS contributions that could not be 
paid into Social Security for the years which are beyond a 3-
year statute of limitations. To this date, I have not been 
informed of a final decision on this issue.
    When it became clear that I was placed under the FERS, I 
enrolled in the Thrift Savings Plan, known as TSP, on September 
13, 1993, I designated 5 percent of my income to be apportioned 
between the three funds. Later, in an attempt to make up for 
the 6 years that I should have had in the TSP, I transferred 
all moneys from the G and F funds to the C fund and started 
having 100 percent of my 5 percent plus matching funds invested 
in only the C fund.
    Despite the risks involved with this strategy, I'm seeking 
the highest return on my investments in an effort to catch up 
on all the time I missed. As of August 7, 1993, I had $13,382 
in my CSRS retirement fund. When I was switched over to the 
FERS, 0.8 percent of this amount was applied to my FERS 
retirement account.
    The IRS informed me that it could only pay 3 years 
retroactively for Social Security. The rest of the moneys that 
I contributed under the CSRS are the subject of the pending 
Comptroller General decision.
    It would only seem fair for me to get back the moneys that 
I invested, and reinvest them in my TSP account. I have yet to 
see any reimbursements.
    If I had been correctly informed in 1987, that I was 
covered under the FERS, I would have opted to place 5 percent 
of my gross wages into the TSP. Instead, believing that I was 
covered under the CSRS, I chose not to join TSP at that time.
    I have lost 6 years of contributions into the TSP, as well 
as the agency's matching contributions. In addition, I have 
missed 9 years' worth of Social Security deductions. Robert 
Tobias, president of the National Treasury Employees Union, 
sent a letter to IRS on behalf of the affected employees, 
seeking assistance and a legislative solution. David Mader, 
chief, management and administration, responded that the 
affected individuals would ``Receive full FERS and Social 
Security coverage in addition to retroactive agency automatic 
TSP contributions, agency matching benefits and lost 
earnings.''
    In the fiscal year 1996 Treasury Postal Appropriations 
bill, NTEU sought a solution. The language included in the 
legislation stated, ``OPM is directed to review the IRS problem 
and other similar circumstances and make every effort to 
resolve this issue with common sense and fairness in mind. OPM 
is instructed to correct these problems through administrative 
procedures, if possible, and if not, recommend any legislative 
action that may be required to correct this and any other 
inadvertent inequities.''
    This bill, Senate bill 1287, introduced by Senator Leahy of 
Vermont, also provided Federal employees who were erroneously 
covered by CSRS the option to elect continued coverage under 
the CSRS or transfer coverage to the FERS.
    In my view, legislation should be passed that would give me 
either the option to revert to coverage under CSRS or to remain 
in FERS with guarantees that all of my CSRS contributions plus 
matching agency contributions would be credited to my TSP 
account, together with accrued interest.
    As the events described above unfolded I relied on the 
efforts that the IRS was making on my behalf. I voiced my 
concern about possible financial harm that I would encounter 
upon retirement. These efforts included an appeal to the Merit 
Systems Protection Board, letters to Senator Alfonse D'Amato, 
and discussions with NTEU.
    I never had any direct dealings with the Office of 
Personnel Management, and am not aware of any efforts that OPM 
has made on my behalf to either correct or facilitate the 
correction of my records with the Internal Revenue Service or 
with the Social Security Administration.
    In conclusion, I feel that some form of legislation is 
needed to ensure that I and the other people in similar 
circumstances are not harmed financially in any way from a 
mistake that we had no control over. I believe that every 
effort should be made, through proper legislation to recompense 
our TSP accounts to reflect the contributions that we would 
have made had we known that we were to be covered under FERS, a 
system whose main component is the TSP.
    Thank you for the opportunity to provide this statement. 
I'd be happy to answer any questions that you have on this 
issue.
    Mr. Mica. Thank you, and I'd like to now recognize Barry 
Schrum. And he's with the Department of Energy from Derwood, 
MD. You're recognized, sir.
    Mr. Schrum. Mr. Chairman, members of the subcommittee, I'm 
pleased to be permitted the opportunity to address you 
concerning an egregious wrong which was done to me and others 
and which has already damaged me personally, both financially 
and emotionally, and has the potential, unless expeditiously 
resolved, for greater harm.
    I will provide you testimony about my enrollment in the 
wrong Federal retirement system as an employee of the 
Department of Energy, Office of the Inspector General. I was 
first hired as a first time Federal employee as a criminal 
investigator by the Inspector General on December 24, 1984, and 
was placed in the Civil Service Special Retirement code C 
system.
    As a criminal investigator I was subject to a 7.5 percent 
CSRS deduction. With the enactment of the Federal Employees 
Retirement System Act I should have been transferred to FERS 
effective January 1, 1987. I was not transferred into FERS but 
continued to be classified as an employee covered by CSRS.
    On August 13, 1987, personnel officials advised me that I 
had the option of electing to participate in FERS or remain in 
CSRS. I chose to remain in CSRS. From that date my lifestyle 
and investment planning was based on a CSRS retirement.
    A year later, on March 6, 1988, I was reassigned from the 
criminal investigator series to a program analyst series. This 
change should have required a reduction in my CSRS withholdings 
from 7.5 to 7 percent and a refund of the 5.5 percent that had 
been withheld.
    However, after the change my retirement code remained CSRS 
special code 6, and payroll continued to deduct 7.5 percent, 
although according to OPM I was not eligible for coverage under 
CSRS offset. My pay statement for pay period ending April 6, 
1991, indicated that my retirement coverage had been changed to 
the civil service offset code C.
    In April 1996, OIG personnel officials advised me that I 
had been improperly placed in the CSRS and that my retirement 
classification would be retroactively changed to FERS. I was 
officially notified of the change in a memorandum dated June 
25, 1996, from the OIG personnel office.
    I was also advised that I could retroactively adjust the 
amount that I had contributed to the Thrift Savings Plan. In an 
effort to raise the funds needed to make these retroactive 
contributions, I sold my home. I was later advised by DOE that 
I had been given incorrect information regarding my ability to 
make retroactive contributions to the TSP.
    DOE determined that adjustment to the TSP could be made 
over an 8-year period. On December 9, 1996, I made the first 
payment to my TSP. I withdrew $4,936 from savings and forwarded 
it to the Department of Energy. DOE also reminded me that in 
order to completely fund my TSP I would be required to remain 
in Federal service with no breaks for an additional 8 years and 
make the remaining seven lump sum payments.
    I would be required to provide approximately $35,000 over 8 
years in order to get TSP matching funds from the Department of 
Energy. My wife and I have completely rearranged our lives and 
financial planning in an attempt to meet these requirements.
    Between April and July 1996, I had many contacts with the 
Inspector General and Department of Energy personnel as well as 
OPM. All advised me that resolution of this matter would 
require congressional or legal action. OPM advised me that they 
were aware of only a few people who were impacted similar to 
me.
    To protect my interests I retained legal counsel in May 
1997, and my attorney filed an administrative tort claim 
seeking restitution for the financial impact of being placed in 
the wrong retirement system. And on July 28, 1997, I filed a 
lawsuit seeking full restitution in the U.S. District Court in 
Washington, DC.
    The uncertainty of my retirement and future lump sum 
payments to the TSP has created a great deal of emotional 
stress and strain on my wife and me. We are bitter and 
frustrated about this matter and how it has been handled, and 
the fact that we have had to spend a great deal of our savings 
on legal and expert witnesses. Over 2 years ago Congress tasked 
OPM to explore the extent of the problem and to draft 
legislation that would correct the problem. OPM has failed.
    OPM continues to ignore the problem and has failed to 
responsibly address the matter. I believe that Congress should 
no longer wait for OPM to address the problem. Congress should 
immediately enact legislation that would correct these wrongs 
and grant relief to innocent Government employees caught in 
this situation.
    Congress should direct each agency which erroneously 
enrolled an employee in the wrong retirement system to bear the 
expenses of getting the employee whole, to include completely 
funding the TSP, and do so immediately. For those of us who 
have retained legal counsel, I believe we are entitled to full 
restitution to the amount specified in the lawsuit.
    With respect to the subcommittee's request for review as to 
the necessary changes in the law, I am providing a copy of the 
July 21, 1997, two-page letter to my attorney, Thomas J. 
O'Rourke, from Sanford J. Parnes, counsel to the Inspector 
General.
    I ask that this letter be identified and received as an 
exhibit. Mr. Parnes asserts that the Department of Energy's 
authority to pay my claim for damages is a threshold issue that 
must be addressed prior to entering specific mediation over 
amounts potentially owed. In other words, DOE cannot even 
discuss the dollar amount of damages until he is satisfied 
there is legislative authority to pay it.
    Although I believe that this subcommittee would have 
greatly been assisted if DOE had been willing to negotiate 
specific damages, Mr. Parnes believes there is a need for 
additional legislation that expressly confers authority for 
Federal agencies to pay such damages.
    Mr. Parnes makes several related statements to indicate a 
need for Federal legislation in order to correct the problem 
that I and other Federal employees are facing as a result of 
being misclassified as CSRS rather than FERS employees.
    Thus, Mr. Parnes reports that the Department of Justice 
must preapprove payments under the Federal Torts Claim Act. And 
DOJ has said it will not approve payments under the Federal 
Torts Claim Act for these purposes.
    It seems to me that the Federal Torts Claim Act needs to be 
amended to allow injured Federal employees like myself a form 
of redress. Mr. Parnes also cites a February 1989 decision of 
the Comptroller General which states that, ``The Department of 
the Interior is without authority to make payments to 
employees' Thrift Savings Plan accounts for lost earnings on 
issues of deficient agency contributions resulting from 
administrative error because earnings on contributions are a 
form of interest not expressly provided for by interior 
appropriations, and such payments are not otherwise authorized 
under the back pay act.''
    Again, speaking as a lay person, it seems to me that this 
Comptroller General's decision points to the need for 
appropriate legislation as well as legislation amending the 
back pay act.
    Mr. Chairman, this concludes my testimony. On behalf of 
myself and my fellow Federal workers who are affected by this 
hard situation, I would like to thank you and the members of 
the subcommittee for this opportunity to appear and discuss 
this important issue.
    I would also like to thank many of the Department of Energy 
and Inspector General employees for their support throughout 
this ordeal. I look forward to answering any questions you and 
the subcommittee members may have. Thank you.
    [The letter referred to follows:]


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Mica. I thank you for your testimony. And I think we've 
heard testimony from all of our witnesses. They've literally 
been through Hell in this matter. It's embarrassing for the 
Government in bungling in such dramatic proportions to each of 
you personally.
    Mr. Schrum, did you testify--and let me get this straight--
that you were advised that you could make a lump sum payment, 
and you sold your house?
    Mr. Schrum. Yes.
    Mr. Mica. And then, after that, you were told that you 
couldn't make that payment?
    Mr. Schrum. Yes, Mr. Chairman, I was.
    Mr. Mica. So you sold your residence on advice from Federal 
personnel?
    Mr. Schrum. From my personnel office--told me that I could 
make the lump sum payment of some approximately $35,000. And 
then after I sold the house the Department of Energy's payroll 
people, personnel people came back and told me that it was 
incorrect, that I could not make such a payment.
    Mr. Mica. Unbelievable. Mr. White.
    Mr. White. Yes, sir.
    Mr. Mica. Mr. White, you called the personnel office, you 
said. Now, your situation goes back to when, 1984?
    Mr. White. Yes, sir. I was hired in August 1984. August 26, 
1984.
    Mr. Mica. And there was some review, we understand, of your 
case, of your personnel situation in 1991?
    Mr. White. Yes, sir, in April 1991.
    Mr. Mica. There was no problem identified. In 1996, you 
called your personnel officer. And what did he say?
    Mr. White. In 1996, the only way that this came about or 
was detected--and I must interject real quick, I'm glad it was 
caught----
    Mr. Mica. This is when you got a notice?
    Mr. White. I had requested that my personnel file be 
reviewed to determine how much it would cost me to pay for 
deposit for my military time. During that review, they 
detected, ``This guy's in the wrong retirement system.'' And 
they sent the appropriate standard form 50's over to finance to 
effect that change in February. I did not find out about it 
until a month later, until I received my leave and earning 
statement and I noticed the difference between the two 
balances, the former----
    Mr. Mica. Is that in 1996?
    Mr. White. Yes, sir. And that was----
    Mr. Mica. So you called your personnel office?
    Mr. White. I'm the one that initiated the contact with my 
personnel office.
    Mr. Mica. Right. And what did the personnel officer say?
    Mr. White. They were sorry. They had been meaning to 
contact me a month ago, but they had been dreading the call, 
quite frankly, ``since you've asked.'' That was the quote/
unquote comment.
    Mr. Mica. His comment was?
    Mr. White. ``I have been dreading this call for a month, 
Al.'' That was the response that I got.
    Mr. Mica. Was someone else trying to comment on their 
particular situation when I was talking to the first witness? 
No. OK. I didn't want to ignore anyone; I thought someone was 
trying to get my attention.
    Have any of you received a full accounting of funds that 
were in your CSRS account before corrections to your enrollment 
were made? Have you?
    Mr. Schrum. No, sir. I have not.
    Mr. Mica. Mr. Gabrielli.
    Mr. Gabrielli. No.
    Mr. Mica. Mr. Mangam.
    Mr. Mangam. I received a full accounting of what funds were 
there and what the distribution of those funds were made to 
date. But not all of those funds have been distributed.
    Mr. White. And I have not to this date.
    Mr. Mica. You have not. And it's my understanding that 
legislation was introduced in 1995.
    Mr. White. 1995.
    Mr. Mica. And that legislation possibly would have resolved 
this problem. And it's my understanding also that OPM opposed 
this legislation. Is that your understanding also?
    Mr. White. Yes, sir. That's what I was told.
    Mr. Mica. OK. Now, one of the purposes of this hearing is 
to find a solution. And one thing that's been recommended to me 
is that you all be placed back into the old system--CSRS. Would 
that be acceptable, Mr. White?
    Mr. White. Sir, based on the harm that I've incurred right 
now, had I been in FERS from day one, that would have been 
better for me. Had I known from day one--I mean, the 
calculations now.
    At the time that's what I wanted. But with the accounting 
or lack of accounting of my civil service trust fund right now, 
I would like to get whole in FERS. That would be my first 
option. If that were not an option--since they've already made 
the change. That's what I would prefer personally.
    Mr. Mica. Mm-hmm.
    Mr. White. Because it has been very traumatic for me. And 
for me to go back now. I would prefer that option if given that 
option.
    Mr. Mica. Each of these cases have different levels of 
trauma.
    Mr. White. Sure.
    Mr. Mica. For Mr. Schrum, I mean, to sell his house.
    Mr. White. Sure.
    Mr. Mica. And then be told you could put the money in to 
make it up and then be left in that situation is mind-boggling. 
I know each of you have different degrees of anxiety about 
this. Mr. Mangam, would this be acceptable?
    Mr. Mangam. Since that's what I originally expected out of 
this employment contract, that would be fine with me as long as 
my other costs were taken care of and things were converted.
    Mr. Mica. Mr. Gabrielli.
    Mr. Gabrielli. Again, at the time I wanted to stay in CSRS 
because I compared the two systems. But now I have invested in 
the Thrift Savings Plan. I think I would prefer to stay in 
FERS, but only with the condition that I could have my CSRS 
contributions put in there with matching funds and interest 
that would have accrued since 1987, when I would have been 
eligible to join the TSP had I known I was in the new 
retirement system.
    In my statement I indicated that I think we should have the 
option to choose between the two. I think there's going to be a 
lot of administrative nightmare to figure out all the matching 
funds. If I was to go back to CSRS they'd have to take back the 
matching funds and all the interest that generated over the 
last few years.
    I'd still like the option, you know, after it was planned 
out, how it would--the smoothest possible transition. Then I 
would make a choice at that time. But----
    Mr. Mica. Thank you. Mr. Schrum.
    Mr. Schrum. I would not want to go back. I would like to 
just remain where I am. I've already started making my 
contributions. I just would like to be made whole and remain 
where I am and not have to have this burden of worrying about 
the next 8 years of having a RIF. Because if I have 1 minute of 
break in Federal service my wife loses all my benefits.
    Mr. Mica. Well, it doesn't sound like there's a simple 
solution. And each of the individuals involved just before us, 
and the dozens, probably hundreds and maybe thousands of 
others, have made different plans or are affected differently 
as far as Social Security, Thrift Savings, their plans to enter 
FERS or other retirement arrangements. So we've got a very 
complicated situation that may require a number of legislative 
and administrative remedies.
    I will yield now to Mr. Cummings, our ranking member.
    Mr. Cummings. I want to thank all of you for being here. As 
I was sitting here I was saying to myself, I wish the agency 
people could sit where we're sitting so that we could see the 
pain on your faces.
    And it really--I could see when Mr. Schrum was testifying, 
I could see the pain on your face, Mr. White. It was very 
clear. So we're going to try to find a solution to this.
    But let me just ask you all a few questions. Mr. White, 
when you were testifying and you read the letter of Deborah 
Monroe?
    Mr. White. That is correct.
    Mr. Cummings. I take it that you all know each other. She 
referred to Mr. Schrum. Can you tell me--I take it that that's 
accurate?
    Mr. White. Yes, sir.
    Mr. Cummings. And how did you all come together?
    Mr. White. This was prompted as a result of the first 
Federal Times article that was on July 1, 1996. That's when I 
went public with this issue. I knew that I wasn't the only one. 
And I knew that there weren't only a few impacted. I suspected 
more.
    And I was told by the Federal Times that there were other 
employees. So they ran an article. So as a result of that I got 
literally hundreds of calls from all over the world, all over 
the world. My name was mentioned in there as well as my phone 
number. That's where I met Mr. Barry Schrum and Deborah Monroe.
    And the original three of us have been together 
telephonically. Today was the first time that I've ever met 
Barry Schrum, although I feel like he's a brethren. Same thing 
with Deborah Monroe. I feel like she's a sister of mine.
    I mean, we've been through Hell, quite frankly, over the 
last 18 months trying to figure out what it is we need to do to 
get this thing fixed. And I extremely feel sorry for her, 
because, as she mentioned, she's run into a number of stumbling 
blocks and has no one to help her there.
    At least some of us had some experience, Barry and I, in 
what we thought we needed to do to pursue this in the most 
logical, professional, but yet administratively correct 
process. Deborah did not.
    But we were there from day one with her. And we've gone 
through countless hours of reliving the emotional things, how 
your life is turned upside down. In things like this, it's just 
been a tremendous relationship, not necessarily that we wanted 
it to come together because of this situation, but it's just 
unfolded and evolved.
    And that's why she wanted us to read her testimony.
    Mr. Cummings. You had testified that this whole situation 
has cost $2 million. Can you give us an idea of how you came up 
with that figure?
    Mr. White. Yes. I'd be more than happy to. When asked would 
I want to transfer now, this is why I mentioned that. Had I 
been appropriately placed in FERS from day one, with the amount 
that I could have contributed, the full 10 percent plus the 
pre-tax profit, I would have gotten more each year as far as 
real income, not to mention the 5 percent matching funds.
    And had I invested in the C fund, which I'm currently 
doing, for the brief time I've been in FERS, over the lifetime, 
based on my salary as a Federal law enforcement officer--as 
you're aware, I can retire earlier. So the impact, I pay more 
up front.
    But the consequence to me, for example, just up front, is a 
difference of 30 percent in annuities under FERS versus CSRS. 
Right off the bat it's 30 percent. Now, had I been able to 
contribute fully to age 50 or even 57, collectively that's the 
combined impact pre-tax--which this amount has been confirmed 
by an industry expert that provides these type of monetary 
damages both to the Government as well as to the private 
industry. That's why this amount is very significant to me and 
why I'd prefer to stay in FERS.
    Mr. Cummings. Your dealings with OPM have not been good, 
have they?
    Mr. White. No. Not at all. My contact with them--and I've 
been around a long time. And I understand that everything 
doesn't revolve around a single individual. But I would expect 
that if a 15 had contacted you, you would take it a little bit 
serious, as a senior Federal employee, and at least address 
this issue, recognizing that not that it just affected me, but 
it affected a number of people.
    But I didn't get that. They pointed the finger at Congress. 
And it just became something that was the same old song and 
dance. I got a number of form letters back, even from President 
Clinton--it's the same form letter I got back from the Office 
of Personnel Management, the only difference was, on behalf of 
the President, we'd like to thank you.
    But the bottom line was, it was my problem, my agency 
caused it, there's nothing we can do, and we're looking at 
coverage errors; we're studying the problem.
    Mr. Cummings. How high up did you go in OPM, do you know?
    Mr. White. I went--I don't know what his grade is--but I 
went to the Chief of Retirement Policy Division, Mr. John 
Landers. Actually, his boss, too, I originally talked to at the 
recommendation of my Congressman, Congressman Ron Packard, was 
Mr. John Panagakos.
    I made him aware of the problem in April 1996. That's when 
I had the first dialog with him.
    Mr. Cummings. April 1996?
    Mr. White. Yes, sir. April 1996. And that's when I was 
advised that there was basically nothing that they could do. 
They were studying the problem. It was going to take a 
congressional fix.
    Repeatedly I asked, please, that's one thing I would like 
to know--we didn't jump from a to z on this. We went through 
the entire process from MSPB, OPM.
    Mr. Cummings. So in other words, you were trying to work 
with him?
    Mr. White. Absolutely. From start to finish. What do we 
need to get this problem fixed? We got nowhere. And, again, we 
got the standard reply form letters which not only me but my 
colleagues got back, as well, saying, ``It's not our problem. 
We're studying it.''
    I asked Mr. Landers as recently of February this year. I 
said, ``When do you think you will have legislation drafted?''
    ``I don't have any idea. We're waiting on the 
administration.''
    I said, ``Aren't you a part of the administration?''
    He said, ``Yes. But I have no idea, Mr. White.''
    I said, ``So, what you're telling me is that I have no 
recourse but to file legal action.''
    He said, ``Well, it sounds to me like that's your only 
recourse.''
    Which was rather unfortunate. But that's where I've been in 
my agency, even though they made the original wrongdoing in 
this. They relied on OPM to provide them guidance on this. And 
they have not got the same two answers twice, either.
    Nor have they even been responded to. They wrote them in 
July of last year, in 1996, and my IG never got a response back 
from them also. So I'm not the only one who is being shunned on 
this particular issue. I mean, you have a Presidential 
appointee that doesn't even get a response back. Something is 
wrong. And, of course, obviously Congresswoman Morella hasn't 
got a response, either. So that's rather indicative of how 
people are treated. So----
    Mr. Cummings. Mr. Schrum, let me ask you just a few 
questions. You testified that OPM Director King opposed Senator 
Leahy's bill, is that right?
    Mr. Schrum. Yes.
    Mr. Cummings. Were you given any reasons for that, do you 
know?
    Mr. Schrum. The only response--I have never--I have made 
numerous calls to OPM. I stay in touch with Alan. And the 
reason I know that is the documentation that he got and what we 
found out about Senator Leahy's bill. They've never even had 
the decency to respond back to me even on a telephone call.
    Mr. Cummings. Hmm.
    Mr. Schrum. My Congresswoman, she wrote the letter. And, 
obviously, they didn't think that was important, either, so 
they never responded back to her.
    Mr. Cummings. This is very painful for you, isn't it?
    Mr. Schrum. Yes, it is.
    Mr. Cummings. Mr. Gabrielli, you indicated that the 
Treasury Department told your agency, IRS, that OPM was 
unwilling to seek a legislative solution. Were you given any 
reasons for that?
    Mr. Gabrielli. No, I wasn't.
    Mr. Cummings. Hmm.
    Mr. Gabrielli. I'm not aware of any reasons.
    Mr. Cummings. I'm sorry, were you finished?
    Mr. Gabrielli. Yes.
    Mr. Cummings. Oh, I'm sorry. Let me just ask you one last 
question. Mr. Mangam, am I pronouncing that correctly?
    Mr. Mangam. That is correct.
    Mr. Cummings. You testified that the error made in your 
case will cost you more than $30,000 a year? Is that what you 
estimated?
    Mr. Mangam. That is correct.
    Mr. Cummings. How did you come up with that figure?
    Mr. Mangam. Part of my retirement will be based on bringing 
my military service into my Federal combined service 
retirement. And if I were to retire at age 55 and continue to 
work in some other endeavor, then any income I made over $8,000 
and some dollars a year would reduce my annuity by a like 
amount until I could get to zero.
    I had planned on working from 55 to 65 as a consultant or 
something else and banking, basically investing the funds 
between those years. If my annuity from the Government was to 
be reduced to almost zero for those 10 years, I would not be 
able to invest that money, although I would be getting the 
retirement of some $34,000 in FERS versus some $49,000 in CSRS. 
A little bit convoluted.
    Plus I expect to live to 90 like my parents. So, with 30 
years of real retirement on top of another 5 to 10 years of 
working, you can see how that multiplies. Thirty times $30,000 
is $900,000 alone without taking a look at the reinvestment 
opportunities for 10 years of working when I have zero annuity 
due to the Social Security offsets on the FERS retirement.
    Mr. Cummings. Well, I just want you to know that I'm hoping 
that you live to be more than 90. And I want to be here with 
you so I can say happy birthday.
    Mr. Mangam. Thank you. I hope so, too.
    Mr. Cummings. Thank you very much.
    Mr. Mica. I thank the gentleman. I hope I can be at that 
party to blow out the candles. But I'd like to recognize, now, 
the gentlelady from Maryland, Mrs. Morella.
    Mrs. Morella. Thank you, Mr. Chairman. I heard Mr. White, 
Mr. Schrum mention it. But let me just ask all of you. Have any 
of you received any assistance from, No. 1, OPM, or your own 
agency? Have any of you been able to sit down with somebody 
from that agency who told you how they could remedy, resolve 
the situation, to give you the kind of advice, counsel that you 
deserved?
    Mr. White. Mrs. Congresswoman Morella, OPM has provided 
absolutely no assistance to me.
    Mrs. Morella. Mm-hmm.
    Mr. White. Second of all, once my IG became aware of this, 
she did get involved to the extent that they could. She wrote 
letters, she followed up. But they, too, had to rely on OPM for 
guidance, which--we have been provided conflicting guidance on 
how to handle my issue, from the funds disbursement to you name 
it.
    There has been no definitive guidance at all. As of today I 
still don't know where my funds are. All I know is that some of 
my civil service funds paid my organization's responsibility 
for FICA taxes, to what extent, I don't know.
    Mrs. Morella. Mm-hmm.
    Mr. White. So, again, I think the central theme or burden 
clearly rests with OPM.
    Mrs. Morella. So you get some comfort from a representative 
from your agency----
    Mr. White. From Ms. Eleanor Hill and Don Mancuso, correct.
    Mrs. Morella [continuing]. But no figures, facts, avenue, 
program, nothing from OPM?
    Mr. White. No, ma'am.
    Mrs. Morella. Mm-hmm. Right. Mr. Mangam.
    Mr. Mangam. The local agency has been very supportive in 
trying to ferret out information and get decisions. But they've 
relied on the higher agency, being Department of Army, who has 
gone to OPM and sought answers. The answers coming back are 
basically what you've heard read into testimony.
    It's a problem. It's based in law. And go seek your own 
resolution. And they have not provided very clear-cut policy or 
procedures in rectifying any of the transition problems that 
are involved in this. As I testified, to date they have not 
provided a policy of what to do with the residual CSRS funds, 
which there is, in my case, $32,000-some out there which has 
been laying fallow since last November, not gaining interest. 
And they have said that they will never pay interest on that. 
So it's just laying there.
    That's just one small example. The local command has been 
very supportive. But above that, the support policy procedure 
is not there.
    Mrs. Morella. Mm-hmm. Mr. Gabrielli.
    Mr. Gabrielli. When the problem came to light, again, as I 
said, the Internal Revenue Service sought guidance through the 
regional office, and the region through the national office, 
and Treasury sought opinions from OPM. And also the district 
director in my district at that time had written letters on my 
behalf.
    The agency tried to do something. But ultimately it was OPM 
who came back and cited law that there was nothing in the 
provisions of law that would allow them to make any concessions 
to allow me to stay in CSRS. I never dealt with OPM directly 
myself.
    Mrs. Morella. So, basically, you got tea and sympathy from 
your agency, but no resolution.
    Mr. Gabrielli. There was a lot of hand wringing and----
    Mrs. Morella. Right. And no resolutions from OPM.
    Mr. Gabrielli. Sure.
    Mrs. Morella. And you didn't really deal with OPM, Mr. 
Gabrielli. Mr. Schrum, you stated that in 1987 you were given 
the option of switching to FERS, but no one told you that you 
were ineligible to stay in CSRS. Is that correct?
    Mr. Schrum. That is correct.
    Mrs. Morella. Absolutely ridiculous. So, after their 
initial error, they had another opportunity to see that they 
put you in the wrong system, but it took them several more 
years.
    Mr. Schrum. That is correct.
    Mrs. Morella. Correct. Absolutely unbelievable.
    Mr. Schrum. And in 1991 they again put me in the wrong 
retire- ment system when they put me in the civil service 
offset. So that was what? The third time?
    Mrs. Morella. I want to thank all of you for being here, 
because it's difficult. You've been victimized already by the 
system, and then to come and to reiterate all of that, to go 
through it all again, is pretty anguishing, and I appreciate 
it.
    Now, some of you have filed lawsuits and some of you have 
not. What do you hope to get from the lawsuits?
    Mr. White. Personally, what I hoped to get from the lawsuit 
was to be made whole. Since I had already been changed to 
FERS--and that's in response to Congressman Mica's comment. 
That's the track that I'm pursuing now. I've accepted the fact 
that's what I'm in. And I expect to get whole.
    I expect to get compensated fully. And I don't know what 
sort of restitution I would get for emotional strain and 
anguish, but I have followed this from--again, going through 
every legitimate process possible which has forced me now to 
take legal action to do that. So whatever the court decides is 
appropriate to address my particu- lar situation as well as--
there's four others of us--then so be it.
    But we've been out an extensive amount of money--legal 
fees-- to get just to this point. Not to mention expert witness 
fees. Which, you talk about outrage. That outrages me more than 
anything, that I had to spend my own money to sue to get to 
where we are today. That outrages me more than anything.
    Mrs. Morella. Have your attorneys given you any idea of how 
long the case would take?
    Mr. White. No. We had no idea. Monday--the statute ran out 
for me on Tuesday of this week. We waited until the last 
possible minute. And Monday it was filed. The 28th--this 
Monday.
    Mrs. Morella. Any of the rest of you who have attorneys 
like to comment on that? What you hope to gain from it? How 
many of you have attorneys? You also?
    Mr. Mangam. I also have an attorney. But my goal is to get 
whole, whether that is returning back into CSRS and return of 
the funds that have been--my word--absconded with, and made 
whole monetarily and put back into the CSRS. Failing that, then 
I need to protect my family and myself and my continuing life. 
And so that's my goal. And it will cost money. But I hope that 
the restitu- tion will happen. And I've been told that it can 
take 1 to 2 years.
    Mrs. Morella. One to two years. Mr. Schrum, you hired an 
at- torney?
    Mr. Schrum. Of course, my attorney is Mr. White's attorney. 
Just like Alan said, I want to be made whole.
    Mrs. Morella. Mr. Gabrielli, you did it through the union. 
Do you have an attorney?
    Mr. Gabrielli. No.
    Mrs. Morella. You didn't, did you?
    Mr. Gabrielli. No. Frankly, I don't have the means to 
pursue this through the courts. I just don't have the means.
    Mrs. Morella. That was what I was going to ask. Why did you 
not. Any other comments that you'd like to make that we haven't 
asked that you think link up to our resolution of this? You 
know, we're going to have the agencies, as you know, right 
after this panel--are going to testify.
    Mr. White. Mm-hmm.
    Mrs. Morella. Is there something you want us to ask them 
besides the fact, why did you do this, what are you going to do 
about it, look at what you've done to people's lives? This is 
your last shot.
    Mr. White. It's not so much a question as it is a 
recommendation that I think, based on the seriousness of the 
situation and the responsiveness of the Thrift Savings 
Investment Board, that they should be the one that should 
monetize the impact.
    Mrs. Morella. Mm-hmm.
    Mr. White. Look at this issue as opposed to OPM. It's clear 
it's not a high priority issue. It's something that TSP--the 
Thrift Savings Investment Board--was acutely aware of in 1991, 
made OPM aware of this. I throw that out as a recommendation 
that, I think, to follow Mr. Cummings' comment.
    If you want a time table, I think that organization would 
respond and would be able to monetize the impact very quickly 
and get you the answers you need for those who have been 
harmed.
    Because there are literally thousands who don't even know. 
And there are some right now that know that have not been 
transferred to FERS. I've received dozens of calls from fellow 
law enforcement officers that were hired in 1985 that say, ``I 
am still in CSRS, and my organization has not transferred me 
yet. What should I do?''
    You know, I've just told them to stay tuned, hopefully 
Congress can get to this. Which, leaving them in CSRS would be 
the answer for those people. But for those of us who have come 
out of the woodwork, so to speak, and have had to go through 
this----
    Mrs. Morella. You mean, some have been changed because they 
were incorrectly kept in CSRS and then changed to FERS, some 
who have been changed don't even know they have been changed?
    Mr. White. Don't even know.
    Mr. Schrum. That's right.
    Mrs. Morella. Others have not even been changed that have 
gone beyond that time limit?
    Mr. White. That's correct.
    Mr. Schrum. Right.
    Mr. White. There are many other----
    Mrs. Morella. It's a total flub-up.
    Mr. Schrum. Yes.
    Mr. White. Yes, ma'am. And there are people that are aware 
they're in the wrong system because of reading the Federal 
Times and articles in the Federal law enforcement officers 
association that know that they're in the wrong system based on 
what I have advised them, but their organization has not 
detected it yet.
    So they're in a precarious situation. What do I do? Do I 
notify them? They don't want to wait until the day they walk 
out the door to have this detected. So that's why, again, I 
applaud all of you for having these hearings. It's so timely, 
so critical.
    And if it doesn't get resolved now the problem is going to 
be so costly for the Government either through litigation or 
just downright getting people whole at some point in time. It 
needs to be fixed, and fixed now.
    Mrs. Morella. Anyone else want to make any comments? Then I 
yield back my time. Thank you, Mr. Chairman.
    Mr. Mica. I thank the gentlelady. I am going to dismiss 
this panel. But I want to thank--I think Mr. White and Mr. 
Schrum have also helped Deborah Monroe with some of her legal 
expenses.
    Mr. White. Yes, sir.
    Mr. Schrum. Yes.
    Mr. Mica. That's most admirable. And I understand NTEU has 
helped support you and also bring you here today, Mr. 
Gabrielli. And we're grateful for their cooperation so we can 
show this committee and Congress the direct effect that this 
has had on some of our employees and how it has affected them 
personally.
    And I might say also, to you, Mr. Schrum, and others that 
have been so dramatically personally affected, that the system 
does work. Sometimes it does take some time.
    Mr. Schrum. Mm-hmm.
    Mr. Mica. You've tried to work through the system. And we 
appreciate that. And through your representatives. We will find 
a solution to this problem. And sometimes it's slow and 
cumbersome. And it takes a while to get to us and get our 
attention.
    But do hang in there and have faith. And we'll try to make 
you and your retirement benefits whole. So we thank you for 
your cooperation and appreciate your being before the 
subcommittee this morning. I'd like to call our next panel. 
You're excused.
    Mr. White. Thank you.
    Mr. Mica. Our next panel this morning is William Flynn, who 
is the Associate Director of the Retirement and Insurance 
Service of the Office of Personnel Management, Sarah Hall-
Ingram, Associate Chief Counsel, the Employee Benefits/
Exemption Organizations of the Internal Revenue Service, Dr. 
Diane Disney, Deputy Assistant Secretary of Civilian Personnel, 
the Department of Defense, and Linda Oakey-Hemphill, who is an 
agency retirement counselor with the Department of the 
Treasury.
    Some of you have been with us before and know that this is 
an investigations and oversight subcommittee of Congress. We do 
swear in our witnesses. If you would please stand, and raise 
your right hands.
    [Witnesses sworn.]
    Mr. Mica. The witnesses answered in the affirmative. We're 
going to go directly first to Mr. Flynn and then we're going to 
intervene for some quick questions because our ranking member 
must leave. But Mr. Flynn, you're recognized.

STATEMENTS OF WILLIAM E. FLYNN, ASSOCIATE DIRECTOR, RETIREMENT 
 AND INSURANCE SERVICE, OFFICE OF PERSONNEL MANAGEMENT; SARAH 
    HALL INGRAM, ASSOCIATE CHIEF COUNSEL, EMPLOYEE BENEFITS/
   EXEMPTION ORGANIZATIONS, INTERNAL REVENUE SERVICE; DIANE 
    DISNEY, DEPUTY ASSISTANT SECRETARY, CIVILIAN PERSONNEL, 
    DEPARTMENT OF DEFENSE; AND LINDA OAKEY-HEMPHILL, AGENCY 
        RETIREMENT COUNSELOR, DEPARTMENT OF THE TREASURY

    Mr. Flynn. Thank you, Mr. Chairman and members of the 
subcommittee. On behalf of Jim King, the Director of OPM, we 
appreciate the opportunity to be here today to discuss the 
subject of erroneous enrollments in the Federal retirement 
systems.
    As you've pointed out, Mr. Chairman, in the Senate 
committee report attached to the Treasury, Postal Service and 
General Government Appropriations Act of 1996, OPM was directed 
to review the problem of employees who have been placed in the 
wrong retirement system.
    Now, in addition to OPM, a solution to this problem affects 
the policies and operations of the Federal Retirement Thrift 
Investment Board, the Social Security Administration, and the 
Treasury Department.
    Before our report can be issued more discussions with those 
agencies on an approach to this issue are needed. I'm hopeful 
that we'll be able to present our report, including 
recommendations for a legislative solution to the Congress in 
the near future.
    Nonetheless, at today's hearing I would like to share with 
the subcommittee our perspective on this problem as well as the 
general objectives we believe should be sought in molding a 
remedy.
    Retirement coverage errors are generally the result of 
difficulties government agencies have experienced in the still-
ongoing transition that began in 1984 from the Civil Service 
Retirement System [CSRS] to the Federal Employees Retirement 
System [FERS]. As you know, two sets of statutory transition 
rules must be applied. Both contain various exceptions to 
Social Security coverage. And one set of rules required 
retroactive amendments to coverage determinations made during a 
period of time in 1984. The statutes also created the hybrid 
retirement system known as CSRS offset.
    When agencies find a mistake in an employee's retirement 
coverage, they are required by the law to correct it currently. 
After discovery of a coverage error, the law requires that an 
employee's defined benefits coverage, including Social 
Security, be fully corrected with retroactive amendments to 
retirement records and reallocation of employee and agency 
contributions. Coverage errors that negatively affect the 
employee's defined contribution plan participation are those 
that may in fact disadvantage the employee, as you've heard 
today from the witnesses earlier. An employee's participation 
in the Thrift Savings Plan is a matter of personal choice 
affected by the employee's available income and personal 
retirement planning. Those decisions, in turn, rely on correct 
coverage determinations by the employer.
    Now, apart from the 1 percent government contribution and 
its associated earnings, which must be deposited for all 
employees covered in the Federal Employees Retirement System, 
regardless of whether or not the employee contributes; the 
total amount of the agency's make-up contribution when errors 
are discovered depends on the employee's past contributions to 
the Thrift Savings Plan and his or her future salary 
withholdings to make up for the period of the erroneous 
coverage.
    This approach to making an employee whole after retirement 
coverage error has been determined has significant gaps, again, 
as you have heard from the witnesses earlier this morning. 
First, because it relies on future salary withholdings, an 
employee whose coverage error is discovered upon separation 
does not have an opportunity at all to make up lost 
contributions. An employee who does not have income available 
for this purpose can be similarly affected. Second, if an 
employee did not participate in the Thrift Savings Plan during 
the period of the error, retroactive earnings on make-up 
contributions are calculated using the G fund as opposed to the 
other fund rates of return. And third, some highly paid 
employees may be unable to maximize their Thrift Savings 
Program benefits due to the tax code's elective deferral 
limitation that applies to such contributions.
    This is a general outline of the problem. OPM does believe 
that a comprehensive solution is desirable, one that addresses 
situations in which a long-term coverage error has been 
corrected as well as those in which the error has not yet been 
discovered.
    In addition, we believe the solution should address current 
and former employees and retirees and survivors since members 
of each group have been affected by retirement coverage errors.
    I would like to lay out for the subcommittee our major 
objectives for this remedy. OPM recognizes that some employees 
have been truly disadvantaged by being placed in the wrong 
retirement system.
    Our first and most important objective is that a remedy 
should demonstrate that the Government is committed to an 
equitable solution for these employees and their families. 
Because retirement planning is a career-long affair, a long-
term error can be truly harmful. This is the case where an 
employee misclassified as Civil Service Retirement System or 
offset must be retroactively switched to the Federal Employees 
Retirement System, but because of the error did not save for 
retirement to supplement the defined benefits of FERS and 
Social Security benefits.
    Our second major objective is to provide employees with a 
choice between corrective coverage and a benefit the employee 
reasonably expected to receive. Employees should not simply be 
forced to retain erroneous coverage following discovery of a 
long-term error. Some employees who have been misclassified as 
Civil Service Retirement System or offset may prefer a benefit 
equivalent to what they have come to expect. But an employee 
who contributed a significant amount to the Thrift Savings 
Program may feel equally strongly that retaining Federal 
Employees Retirement System coverage would be beneficial. And 
you've heard some comments to that effect, again, from the 
witnesses earlier this morning.
    Our third objective is that the options provided to 
employees should be easy to understand. Both for the people who 
must counsel employees and for the affected individuals, we 
should avoid complex rules, conditions, and exceptions.
    I trust that we can build a choice that leaves each 
individual with a clear understanding of his or her retirement 
coverage, enabling him or her to plan for their income security 
in retirement.
    In conclusion, Mr. Chairman, I expect that a proposal for a 
comprehensive remedy to the current problem will be sent to the 
Congress in the near future. In the meantime, I hope this 
information has been helpful, and I'd be glad to answer any 
questions the subcommittee may have.
    Mr. Mica. Thank you for your testimony, Mr. Flynn. We're 
going to break from our regular order. Our ranking member has 
another commitment. But I'm going to yield to him for 
questions, at first, to you.
    Mr. Cummings. Mr. Chairman, I want to thank you for your 
courtesy and thank you for yielding. And, to our witnesses, 
unfortunately I've got another matter that I've got to get to. 
And to the witnesses on the first panel., I echo the sentiments 
of our chairman. We will find a solution. I promise.
    Mr. Flynn, let me ask you something. You said something 
just a moment ago that, when you first started about finding a 
solution to the problem, and I think you said something about 
the near future?
    Mr. Flynn. Yes, sir.
    Mr. Cummings. One of our members on the other side talked a 
little bit earlier about how deadlines are met and deadlines 
are broken. And when those deadlines are broken every time 
they're broken it affects somebody's life. Here we don't even 
have a deadline. And I'm just wondering when can we expect 
resolution.
    These people and people in like circumstances I can imagine 
when they heard ``near future,'' they probably almost slid down 
in their chairs and said, ``Not again.''
    And I don't think that either side--and this is bipartisan, 
by the way--either side wants to be part of a conspiracy where 
nothing happens. You follow what I'm saying?
    Mr. Flynn. Yes, sir.
    Mr. Cummings. And so when will we be effective, can you 
give us an idea of what we're talking about date-wise?
    Mr. Flynn. I believe I can.
    Mr. Cummings. And what is blocking us from getting there? 
How long have you been working on this problem?
    Mr. Flynn. We've been working on this problem about 18 
months since the Senate appropriations committee report 
requested recommendations from us.
    Mr. Cummings. OK. Was a deadline set then?
    Mr. Flynn. We were expected to have completed that in 
January of this year, Mr. Cummings.
    Mr. Cummings. OK. So you see what I'm talking about.
    Mr. Flynn. Exactly.
    Mr. Cummings. It's now, we're about to go into August. And 
so, I guess what I want to know is, what has blocked you from 
getting to a solution and some kind of date by which we can 
expect a solution?
    Mr. Flynn. I know, Mr. Cummings, that you have to leave in 
a minute. I'll try to answer that very shortly. We fully 
expected to be able to issue a report in January 1997, earlier 
this year. There were two court cases that had a direct bearing 
on this issue that were decided that did, in fact, alter and 
influence the way in which our recommendations were going.
    We are close. I would expect that we can complete the 
consultations that we need to complete with the affected 
agencies--the Federal Retirement Thrift Investment Board, 
Social Security, and Treasury--and I'm hopeful, Mr. Cummings, 
that we can do that within the next 30 days.
    Mr. Cummings. Well, we come back here what? Early 
September?
    Mr. Mica. The 3rd.
    Mr. Cummings. Yes. So you actually have 2 or 3 extra days. 
So I hope that you do that. You said something about--when you 
were talking about your objectives--and I think you were sort 
of talking about the parameters of your trying to find a 
solution.
    Mr. Flynn. Yes, sir.
    Mr. Cummings. You said the words, something to the effect 
that you're trying to get these Federal employees who had been 
victimized--those are my words--these were yours--what funds 
that they reasonably expected to receive. Is that a difficult 
thing to calculate for you? You follow what I'm saying?
    Mr. Flynn. It is not a difficult thing to calculate with 
respect to a current employee who is currently working for the 
Federal Government. It becomes more difficult, Mr. Cummings, 
when we look at all the different types of employees that we 
have here and their current status in life.
    Mr. Cummings. Mm-hmm.
    Mr. Flynn. If I could, just very quickly, as you've heard, 
we do know of a number of employees where errors have been 
identified and where subsequently the employees have been 
placed in the correct system. Those are the individuals that we 
know about.
    We also know that there are individuals who are in the 
incorrect retirement system now and their agencies or they have 
not yet identified that. Those are current employees. We have 
separated employees, some of whom have left their 
contributions, who are waiting for either a return to Federal 
employment after a period of private employment, or who may be, 
in fact, waiting to elect a deferred annuity at age 62.
    In addition to that we have some retirees who are also 
affected by this. And in addition to that we have survivors of 
retirees who are affected. Providing those other types of 
individuals with choices, one of which might give them a 
benefit that they would have reasonably expected to receive is 
a somewhat more difficult matter, but we can get there. And we 
will.
    Mr. Cummings. Do you think that this is something that 
requires congressional action or can this be administratively 
addressed? Or do we have to have a combination of both?
    Mr. Flynn. Mr. Cummings, the solution that we are talking 
about the parameters of here would require legislative action 
and probably some administrative action as well. I do know that 
we have used in our view, and in the views of agencies, as much 
of the administrative flexibility that is available within the 
current system.
    So this is primarily going to be a legislative proposal 
that will then entail some administrative action after that.
    Mr. Cummings. There have been some estimates by, I think 
Mr. White, about how many people are affected by this. Can 
you--were those figures accurate? Did you hear his testimony?
    Mr. Flynn. Yes, I did, Mr. Cummings.
    Mr. Cummings. OK.
    Mr. Flynn. I can tell you that there is no single source of 
information on how many error situations have occurred. That is 
because there is simply no mechanism to track that. We do have 
anecdotal information from departments and agencies with whom 
we've worked on correcting these errors over the years that 
suggest different numbers for different departments and 
agencies.
    In the aggregate, let me try it this way. I can tell you on 
the basis of everything that I have seen that the overwhelming 
number of participants in the retirement systems we administer 
are in the correct system. As a proportion of the total number 
of participants, this is a small proportion of people even if 
it were, as Mr. White has indicated, several thousands of 
people.
    Having said that, however, let me also quickly emphasize 
that we understand and appreciate for individuals, whether it's 
one or whether it's a thousand times one, this is a personal, 
vexing, traumatic issue. And it's something that we must find a 
solution for, not only for the individuals that we know about, 
but for the individuals we may discover in the future.
    Mr. Cummings. Well, I'm glad you said the second part of 
that, because I was going to tell you that one, one is too 
many.
    Mr. Flynn. Yes.
    Mr. Cummings. Let me ask you just a last question. I wish I 
had more time, but I've got to go. But let me ask you this. Are 
these errors still going on? In other words, are we still 
running into problems?
    Mr. Flynn. Mr. Cummings, you will hear, I'm sure, from the 
testimony that the majority of these errors occurred during 
that transition period from 1984 to 1987.
    Mr. Cummings. Right.
    Mr. Flynn. It is true, nonetheless, that errors can yet 
still prospectively occur.
    Mr. Cummings. Mm-hmm.
    Mr. Flynn. And that's why, again, part of the parameters of 
the solution we want to devise here is something that can be 
applied 5 years, 10 years from now, whenever these types of 
situations present themselves. Hopefully they will be very 
small in number, if not nonexistent altogether, but I cannot 
say that to you with certainty.
    Mr. Cummings. One of the earlier witnesses called for a 
review of all hires during the mid-1980's in order to find all 
the remaining enrollment errors. How do you feel about that?
    Mr. Flynn. I think that you will hear both from the 
agencies and from me that that is a very significant 
administrative burden to apply what still to this day, Mr. 
Cummings, remains a relatively complex set of rules. If we can 
create this solution that enables employees to be equitably 
treated with respect to their income, security and retirement 
prospectively, then such a comprehensive folder-by-folder 
review wouldn't be immediately necessary because we could 
create mechanisms that dealt with this as they presented 
themselves in the future.
    Mr. Cummings. Let me ask you this--and I wish I could ask 
it of all the witnesses--but I want to ask you. It's a very 
simple question. Could you feel their pain as I did this 
morning?
    Mr. Flynn. Yes, sir, Mr. Cummings, I could.
    Mr. Cummings. Well, I ask all of you to do me a favor, that 
as you move toward this 30-day deadline, and as you sit there 
in the room and try to resolve that, I hope that you will think 
about the pain that you felt coming from them today, because I 
certainly felt it.
    And I hope that you'll think about that pain and multiply 
it by the fact that each one of these witnesses, there are 
whole lot of other people affected, too, but they also have 
families that are affected.
    And sometimes I think it's good for us in government--and 
that includes us in the Congress--to reverse roles and put 
ourselves in the places of people who are, in this instance, 
harmed by what we or the government has done in the past. Thank 
you very much.
    And, Mr. Chairman, thank you very much for the courtesy, 
again. I appreciate it.
    Mr. Mica. Thank you, Mr. Cummings. And thank you also for 
your suggestion of setting a deadline. And we're going to meet 
in my office on Wednesday, September 10, at 11:30, to hear from 
Mr. King or his designee, Mr. Flynn, their solution.
    So we give them not only 30 days, but a couple to spare. 
Eleven-thirty in my office. And we'll have a solution from 
them. Of course, we will finalize the solution at that time. 
I'd like to recognize now the gentlelady from Maryland, Mrs. 
Morella.
    Mrs. Morella. Thank you, Mr. Chairman. I look forward to 
being at that meeting post-Labor Day around September 10, 
knowing that OPM has been spending like 18 months, you say, 
working on the problem.
    Now, from what I understand, you do not know all of the 
Federal employees who are affected, right, Mr. Flynn?
    Mr. Flynn. That is correct, Mrs. Morella.
    Mrs. Morella. Because you're got different categories that 
you just mentioned. You've got your retirees, those who have 
been separated, those who are still actively working there who 
may not even know it. Would it not be for those people, a 
simple solution to let them just stay where they are and 
continue in the system that they happen to be in?
    Mr. Flynn. Mrs. Morella, let me try and answer that for you 
by mentioning two factors. First, it's important, I think, to 
remember that while an employee is in an active status working 
for a Federal agency the personnel operations that affect him 
or her are actually carried out on a day-to-day basis by 
personnel and payroll offices of the various departments and 
agencies worldwide.
    So it would not be unusual for the Office of Personnel 
Management not to have a name-by-name listing of all the 
employees who have been affected by these errors. I know, and I 
know that you'll hear from the agencies this morning that as 
they have identified these errors, they have identified the 
individuals so that when we arrive at a solution that everyone 
can agree to, we can then go to these individuals and work with 
them on that solution.
    With respect to the second part of your question, and that 
is, wouldn't it just be easier to leave people where they are, 
I think as you heard from the group that testified earlier, 
people's individual personal financial circumstances differ 
from one to the other. And you heard amongst the four people 
this morning preferences to stay under the Federal Employees 
Retirement System if they were given perhaps some expanded 
opportunity to do make up contributions and to receive----
    Mrs. Morella. That's because they knew that they were given 
not only the wrong advice but put into the wrong system.
    Mr. Flynn. You're absolutely correct.
    Mrs. Morella. Had they not known that--I mean, think of the 
trauma that they went through and the anguish in trying to 
rearrange. But if they didn't know that, if they are receiving 
retirement, everything seems to be fine, why go back to those 
people and kind of ignite the explosive quality of combined 
mistakes?
    Mr. Flynn. You raise a very valid question, Mrs. Morella. 
And to the degree that we can build into this solution 
something that enables employees to make choices about what 
they perceive as being in their best interests, then you might 
very well have a situation where most people discovered 
prospectively would prefer to retain the coverage that they 
were originally incorrectly placed in, though it is also true 
that some people whose coverage errors have been corrected 
already might today see that as being in their interest.
    I spent a number of years as a head teller with a bank 
before I came to work for Government. And I know from that 
experience how deeply personal information about one's finances 
and the implications of one's finances for the future are.
    One of the things that we've learned in this process of 
studying the issue is that different people do in fact come to 
this issue with very different ideas about what would be an 
appropriate remedy for them. And we want to try and develop a 
solution that is responsive to that diversity of views.
    Mrs. Morella. I guess I'm trying to understand what you're 
saying. I'm just simply saying that if they don't even know 
that they're in the wrong system and they're happy where they 
are, then why do anything more about it. Because it seems like 
you're planning to find out who they are. And are you planning 
to notify them?
    When you listen to Mr. Schrum, just as an example of all 
those thousands of others, he, in 1987, was given the option of 
switching to FERS, but no one told him that he was ineligible 
to stay in CSRS. And then even after that initial error, there 
was another opportunity to be told that he was in the wrong 
system, but it took several years for that. See what I'm 
saying?
    Mr. Flynn. Absolutely, Mrs. Morella. That is a distressing 
rendition of how an individual was provided with minimal 
guidance and assistance during that period of time. I am 
obviously not personally aware of Mr. Schrum's situation, but 
if that, in fact, is the case, we made several errors and then 
compounded it. And that should not have occurred.
    Mrs. Morella. Mm-hmm. Now, are there many who are affected 
who have not been notified? I mean, there are some affected you 
don't even know.
    Mr. Flynn. That is correct, Mrs. Morella.
    Mrs. Morella. Right. Now, those that you do know, have they 
been notified?
    Mr. Flynn. The law does require that when an individual's 
misclassified retirement coverage is identified that the 
individual be notified and that under current law corrective 
action be taken to correct the retirement records to reflect 
the correct system and to reallocate the contributions from the 
Civil Service Retirement and Disability fund to the Social 
Security Administration, and so on and so forth.
    Mrs. Morella. And nobody on the first panel indicated 
getting advice, counsel, direction, or assistance from OPM. And 
I didn't even get a response to my letter. What's happening?
    Mr. Flynn. Mrs. Morella, first with respect to your letter, 
I hope that we will be able, in our response to that letter, to 
lay out for you, as we have talked about here this morning, a 
way to address this, that represents agreement among all the 
respective agencies within the executive branch and that looks 
at this issue from a comprehensive standpoint. I apologize that 
you have not received a response to that letter as of yet.
    Mrs. Morella. No, it was simply that when I asked the 
panelists about whether they had gotten assistance from OPM----
    Mr. Flynn. Yes. Right.
    Mrs. Morella [continuing]. They all said they had gotten 
some comfort from somebody within their agency, but OPM did not 
give them help.
    Mr. Flynn. Thank you. I appreciate refreshing my memory on 
the main thrust of your question. As I mentioned earlier, we do 
rely heavily on departments and agencies to provide counsel and 
assistance to employees when they're in active status, because 
that's where they get most of the services.
    So it was heartening for me to hear that from their local 
personnel and payroll offices, these individuals received what 
assistance was available. To the degree that we at OPM, in 
responding to inquiries, telephone calls, questions, from any 
of these individuals or any others who have been similarly 
affected, have given the impression that we didn't care, that 
we didn't want to provide any assistance, I apologize. That's 
certainly not our intent.
    I think what we were trying to convey was that in the 
framework of existing law and regulation, these are the only 
activities that are possible and that we are studying this 
matter with an eye toward recommending a solution that would 
deal with this issue on a broader, more comprehensive, 
equitable basis.
    That's really the message we should have been conveying. 
Now, we have worked very hard with departments and agencies 
across government providing them materials, training aids, 
information, training. We had at our benefits officers 
conference just this past June a session on this issue, so that 
they in turn can provide the direct face-to-face assistance to 
individual employees who are affected by this. We can always do 
that better. But that's the primary avenue of that support for 
current employees.
    Mrs. Morella. We are here now to look at what remedies we 
can find for the future and I'm reminded that as we look back, 
Shakespeare once wrote, ``Things without remedy should be 
without regard. What's done is done.''
    Now we move ahead to the future and look for your 
resolution when we meet on September 10. Thank you, Mr. Flynn. 
Thank you, Mr. Chairman.
    Mr. Flynn. Thank you.
    Mr. Mica. Mr. Flynn, just a couple of quick questions, 
comment. First of all--and I hope you take this back to 
Director King--I do expect that when a member of this panel or 
I write to you that we get some response, even an interim 
response. When did you write, Mrs. Morella, May?
    Mrs. Morella. May 20.
    Mr. Mica. May 20. That's not satisfactory. I mean, even--
the last thing I did yesterday to my staff was, I said, I want 
a report tomorrow on every piece of correspondence from 
constituents that's over a week old. And my staff gives me an 
accounting. I report to my constituents. We're only here as 
temporary representatives of the people. And you, in this 
function, report to us.
    So I do expect that courtesy. We've had a good working 
relationship. And even if it's, ``We're working on it,'' the 
members of the subcommittee do deserve a response.
    Is there any dollar price tag? Now, you said this may be in 
the thousands of people. Is there any price tag to potential 
financial obligation that we may incur to correct this? Can you 
give us any guesstimate at this point?
    Mr. Flynn. That's a very difficult thing to do, Mr. 
Chairman. And I can tell you quite honestly that there is no 
single estimate of what it might cost to correct these 
situations.
    Mr. Mica. If we have several thousand, though, we're 
probably talking of tens of millions, hundreds of millions?
    Mr. Flynn. I would be hesitant, Mr. Chairman, right now to 
put a number on that. Once we have nailed down the specifics of 
the proposal that we will bring to you, we will nail down at 
the same time an estimated impact of the costs associated with 
that.
    Mr. Mica. You're probably talking a pretty significant 
amount of money.
    Mr. Flynn. Well, that's a possibility, Mr. Chairman. We 
will provide you with estimates as best we're able to when we 
do that.
    Mr. Mica. And we may be looking at some either 
opportunities to open up Thrift Savings to folks or repayment 
of Social Security or access to systems. But there are 
definitely going to be some substantial costs to bring these 
various individual situations to a corrected status. Is that 
correct?
    Mr. Flynn. We are certainly looking, Mr. Chairman, at all 
of those options. Whether or not they involve substantial costs 
or not for the individuals who have testified and for the 
others who have been similarly affected is a matter that I 
would like to spend time analyzing before I answer that one way 
or the other.
    Mr. Mica. Why did OPM oppose the legislation last year?
    Mr. Flynn. The legislation that was proposed at the time, 
Mr. Chairman, and if you would give me an opportunity, I might, 
when I get back to the office, perhaps provide a full response 
for the record. But the legislation that was proposed at the 
time, in our view, only dealt with a portion of this problem.
    And as I said earlier today, we have many different types 
of people facing many different types of situations. And we 
think that rather than attempt to deal with this piecemeal, and 
perhaps in the process create inequities between different 
groups of people, it was important to come at this from a 
comprehensive standpoint that attempts to meet the objectives 
that I've outlined earlier this morning.
    Mr. Mica. We will meet on the 10th to resolve this matter. 
Mr. Ford, you're recognized.
    Mr. Ford. Thank you, Mr. Chairman. I'll be very brief. And 
I thank all the panelists and want to apologize to the former 
panel. I'm from the State of Tennessee, and Secretary Shalala 
and Glickman and Bruce Reid from the White House were here to 
talk about the tobacco agreement, so forgive me for having to 
leave in the middle of your testimony.
    I sympathize and certainly support all that you said. And 
I'm pleased to hear the chairman and certainly the ranking 
member, and certainly pleased to hear the panelists talk in 
terms of a September 10 date to hopefully bring some resolution 
that speaks to fundamental fairness and equity issues.
    I join with all of my colleagues in wanting to see this 
resolved. But I would just ask one question. I know that, Mr. 
Flynn, you've been discussing, I guess, this problem with the 
Social Security Administration, the Thrift Investment Board, 
for some 18 months now.
    Any sense of what they've offered in terms of helping to 
bring some resolution to this problem and help make some these 
affected employees whole?
    Mr. Flynn. Well, Mr. Ford, we've talked about a number of 
things both within the Office of Personnel Management and with 
the Office of Management and Budget and other agencies that do 
have various aspects of this program to administer. I think 
that we are all in agreement on the broad overall goals.
    I think what we're doing now is coming to some conclusions 
about what specific mechanisms that may be administered by the 
various agencies may need some analysis or review in terms of 
the mechanisms used to meet those goals.
    It would be premature for me to say specifically what they 
are. But it does involve, for example, addressing the issue 
where it's possible to do so, of allowing employees perhaps to 
find a way to maximize the investment in their personal savings 
that they were unable to do so during the period of the error, 
things like that, so that when we present employees with 
choices, or former employees or retirees, they have the 
opportunity of knowing if they take action a, b, and c, this 
will be the result, if they take action d, e, and f, this will 
be the result.
    And we want to nail those down and then bring those 
together in the form of a specific proposal very shortly.
    Mr. Ford. Thank you, Mr. Chairman.
    Mr. Mica. Thank you, Mr. Ford. Now, we've heard from OPM. 
Now we'll hear from the agencies. And the first panelist from 
the agencies--we have Internal Revenue Service--Sarah Hall 
Ingram, Associate Chief Counsel of Employees Benefits/Exemption 
Organizations. Welcome, and you're recognized.
    Ms. Ingram. Thank you, Mr. Chairman and members of the 
subcommittee. My name is Sarah Hall Ingram. I'm the Associate 
Chief Counsel for Employee Benefits and Exempt Organizations at 
the Internal Revenue Service. I appreciate the opportunity to 
be here today to discuss some of the tax issues that face 
Federal employees who have been enrolled in the incorrect 
portion of the Federal retirement system.
    I've submitted a written statement for the record. And all 
I wish to do this morning is just highlight a few things.
    Mr. Mica. Without objection, that will be part of the 
record.
    Ms. Ingram. Thank you, Mr. Chairman. As is apparent from 
the previous testimony, the question of whether and how these 
erroneous enrollment mistakes should be corrected raises a 
number of important legal and policy considerations, many of 
which do not depend on the tax law. But I would like to focus 
this morning on two of the Federal tax issues that are raised 
by the situation. And this is with the IRS wearing the hat as 
tax administrator.
    Since we do not have the specific proposal that is being 
worked on before us today, my testimony will necessarily relate 
to the discussion of generally applicable principles of tax law 
that would be at play in this situation.
    The first issue relates to the FICA taxes. The Internal 
Revenue Service administers and collects the FICA taxes, which, 
as you know, are in two pieces, both the Medicare portion which 
applies to most Federal employees, and also the OASDI portion, 
commonly known as Social Security taxes, which are different 
for people in different programs.
    Under the Internal Revenue Code sections 3101 and 3111, the 
responsibility for the liability for Social Security taxes are 
split between the employer and the employee. And there is a 
mechanism under 3102 for the employer to withhold from the 
employee's wages the employee's portion of the liability and 
then remit to the Service both the employee's portion and the 
employer's portion.
    And under the normal procedures, the employer is required 
to deposit these taxes with the IRS shortly after the salary is 
paid. And there are deposit timing rules, as you know. These 
deposits do not identify the individual employees for whose 
account the payments are made.
    To report the taxes there is a two-part system. The 
employer is required to file with the IRS a quarterly return, 
which is the return 941. And then after the close of the year 
the employer provides forms W-2 both to the Social Security 
Administration and to each employee. And that is taxpayer-
specific data.
    The Federal Government, including the IRS as an employer, 
is generally subject to these same requirements for reporting 
wages and doing the information reporting. Now, if the employer 
discovers an error on the 941 that has been filed with the IRS, 
it is generally required to provide corrected information with 
its next quarterly filing of the form 941 and to include a 
941C, which flags the fact that a correction is being made and 
needs to be made.
    Likewise, if an employer discovers an error on the W-2s 
that have been issued to the employee or the Social Security 
Administration there is a procedure for the employer to issue 
corrected W-2Cs to both parties so they have the correct 
information for all purposes.
    While these correction procedures are reasonably workable 
in situations in which the error is discovered relatively 
promptly and employers and the Government are used to dealing 
both with the original forms and the corrected forms, they were 
not really designed to deal with a situation in which an error 
persists over an extended period of time. And so that is 
certainly one of the issues in play in any solution.
    We understand as an agency that receives instructions from 
OPM that, obviously, we need to issue correct W-2 information 
and if there are errors, issue corrected W-2 information, in 
part so that employees can be assured that the correct benefits 
calculations are performed by the Social Security 
Administration at the end of the day when they are in a benefit 
receipt mode.
    The Internal Revenue Service is currently working with the 
Department of Treasury and other Federal agencies and obviously 
also with OPM to analyze the more complex issues that can arise 
with the possible need to correct FICA tax liability reporting 
when there are problems over an extended period of time.
    Another aspect of the general situation you've been hearing 
about this morning relates to the limitations on employee 
contributions to the Thrift Savings Plan. As noted in my 
written testimony and as mentioned this morning by others, an 
employee who has been incorrectly assigned to the CSRS program 
would not have been allowed at that point to take advantage of 
the higher Thrift Savings Plan contribution limitations that 
were available to employees under the FERS program.
    In general, the Internal Revenue Code limits the amount 
that an employee may contribute to a tax-deferred savings plan. 
That applies to private sector plans as well as to the Thrift 
Savings Plan. The subcommittee asked the IRS whether we had a 
position on proposals to waive those limits for situations in 
which Federal employees have been misclassified because of an 
agency mistake.
    The Internal Revenue Code does not include any specific 
authorization that permits us to do an administrative waiver of 
those limitations that are established in the Code and, as I 
mentioned, apply to both the private sector as well as the 
Thrift Savings Plan.
    And we would recommend that any legislative proposal to 
provide such authority should be considered as part of an 
integrated package that would address the entire solution so 
that the appropriate legislative changes, if any, to the Code, 
can be made as part of a whole.
    Mr. Chairman, that concludes my prepared testimony, but I'd 
be pleased to respond to any questions you or the panel may 
have.
    [The prepared statement of Ms. Ingram follows:]



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    Mr. Mica. Thank you for your testimony. And now I'd like to 
recognize Dr. Diane Disney, Deputy Assistant Secretary, 
Civilian Personnel, at the Department of Defense. Welcome back. 
And you're recognized.
    Ms. Disney. Thank you, Mr. Chairman and members of the 
subcommittee. I'm pleased to be here today to describe the 
experiences of the Department of Defense in managing the issues 
related to employees who have been enrolled in the wrong 
Federal retirement system. I've submitted a written statement 
for the record and would like just to highlight some of that 
testimony.
    Mr. Mica. Without objection, that complete statement will 
be made part of the record.
    Ms. Disney. Thank you. Let me begin by noting that DOD 
truly cares about its current and past employees and is 
committed to finding and correcting errors that cause hardship.
    As previous speakers have indicated, retirement system 
determinations are very complex. Between January 1984 and 
January 1987, DOD placed approximately 170,000 new hires into 
the transitional system. Our recent search of the data records 
of the interim category hires has revealed about 3,100 records 
of employees who were hired after December 31, 1983, but placed 
in the Civil Service Retirement System.
    Most of these records were coded correctly because of prior 
Federal service. At the beginning of this fiscal year, however, 
the department had about 500 cases at the Defense Accounting 
and Finance Service for corrective action.
    These retirement system errors come to light in a variety 
of ways. Most commonly, they are discovered during an audit of 
the personnel folder. An audit is routinely done when employees 
transfer or return from overseas. Personnel files are also 
audited when former employees are rehired.
    Errors may be discovered when employees seek retirement 
credit for previous service or after they receive pre-
retirement counseling. We've also found that erroneous coding 
is uncovered by specialists after they receive the classroom 
training that we provide.
    Nearly all of the erroneous enrollments at DOD date back to 
those years between 1984 and 1987. Thus we're faced with a task 
of correcting actions that are 10 or more years old. Now 
although the correction of the actual error is fairly 
straightforward, the subsequent correction of all the 
supporting records is complex and involves several other 
agencies, including OPM, the Internal Revenue Service, the 
Social Security Administration, and the Thrift Investment 
Board.
    While we would like to make each employee whole for 
retirement coverage, doing so is often impossible under 
existing laws. The department has developed and is using a 
variety of tools to advise personnel offices of this issue and 
to get the word out to employees themselves.
    The benefits and entitlements branch of our Field Advisory 
Service, for example, has done an outstanding job in this area. 
It publishes articles addressing corrections of errors, 
coverage rules, and changes to those rules. The articles also 
serve to inform employees.
    We've developed and published a retirement plan decision 
logic tree. And while it sounds very boring and it looks 
complex, this has received very good reviews from the personnel 
community and OPM. And we've now put it on the World Wide Web 
so employees can use it themselves, as well, if they're 
concerned at what their circumstances might be.
    We've published an easy-to-use, easy-to-understand 
reference guide designed to walk personnel specialists through 
the entire process. This guide also contains sample letters 
that can be sent.
    In addition, we offer training classes to all DOD personnel 
specialists without charge. And our benefits and entitlements 
staff are available by phone, fax or e-mail 12 hours a day 
Monday through Friday.
    As you know, we are regionalizing much of our civilian 
personnel management operation. As the personnel folders are 
moved into the new regional centers, we have another 
opportunity for review. Then, too, our Defense Finance and 
Accounting Service has developed and is staffing a series of 
memoranda to its center directors, providing information on how 
to adjust civilian pay records.
    Of course, we also rely upon OPM guidance on corrective 
procedures and on litigation affecting benefits. OPM has 
already testified to its actions in this area. The solution to 
this problem is not easy.
    We can use our data base to identify employees who may have 
been encoded erroneously. We've done that. The next step is to 
continue screening individual records to discover who might 
have been enrolled erroneously. Our installation personnel 
officers are doing that. Those are the relatively easy parts.
    The hard part comes after corrections have been made. In 
order to make or keep employees whole, tax, Social Security, 
and Thrift Savings issues must be addressed. But they are 
beyond the control of DOD. We would welcome the opportunity to 
work on developing alternatives that are simple to understand, 
are simple to apply, and cause no financial hardship for 
employees or retirees.
    That concludes my prepared remarks. I thank you again for 
this opportunity to describe our experiences and would be 
pleased to answer any questions you might have.
    [The prepared statement of Ms. Disney follows:]


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    Mr. Mica. Thank you for your testimony. I will now 
recognize Linda Oakey-Hemphill, agency retirement counselor 
with the Department of the Treasury. Welcome, and you're 
recognized.
    Ms. Oakey-Hemphill. Mr. Chairman and members of the 
subcommittee, I've previously submitted written testimony. And 
with your permission, I will just provide a brief summary of 
that testimony.
    Mr. Mica. Without objection, that will be made part of the 
record. You're recognized.
    Ms. Oakey-Hemphill. Thank you. I'm pleased to appear today 
to discuss with you a matter of interest and serious concern: 
erroneous enrollment in the Federal retirement systems.
    The Department of the Treasury's Office of Personnel 
Policy, in which I work, is responsible for providing technical 
and policy guidance in the various personnel specialties and 
liaison with other agencies for the Department's 13 bureaus.
    As the Department's chief personnel expert in the area of 
retirement I have participated in initiatives directed toward 
preventing coverage errors or minimizing the negative effects 
entailed in the correction of such errors. Many of these 
initiatives which are noted in my written testimony have been 
inter-agency efforts.
    In order to determine correct retirement coverage a set of 
complex laws must be applied to an individual employee's unique 
employment history. Employees cannot be expected to be familiar 
enough with the coverage rules to discover an error and, 
therefore, are generally unaware when one has occurred.
    Additionally, there is no completely reliable way to use 
the automated personnel payroll system to identify errors. 
Consequently, many coverage errors have gone undetected for 
years. It is also not uncommon for an employee to transfer from 
agency to agency without detection of a coverage error. 
Usually, the longer an error goes uncorrected, the more severe 
the effects on the employee's financial planning and the 
greater the staff resources required to make the correction.
    Despite the good will and substantial cooperative efforts 
of key agencies involved, which are reflected in my written 
testimony, we have found the available administrative remedies 
to be insufficient for preventing coverage errors or for making 
all affected employees whole with respect to their retirement 
planning.
    I'd be happy to answer question you may have concerning my 
experiences in this area.
    [The prepared statement of Ms. Oakey-Hemphill follows:]


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    Mr. Mica. Thank you for your testimony. Dr. Disney, did I 
hear you correctly? Did you say in 1984, I guess, through this 
period you enrolled 170,000 folks?
    Ms. Disney. Yes, sir. In the transitional program.
    Mr. Mica. In the transitional program.
    Ms. Disney. That was--the 1980's, as you know, was a period 
of considerable hiring in the department.
    Mr. Mica. Right. And we heard that there--I had one report 
that in the Air Force they may have enrolled as many as 1,000 
people a month in that wrong system. Is that an accurate 
estimate?
    Ms. Disney. That I have no information on.
    Mr. Mica. If they had a 5 percent error rate, and we did 
170,000 folks, we're looking at 8,500 folks possibly improperly 
enrolled.
    Ms. Disney. We have looked very carefully in our records 
and have found a maximum of 3,100 where we believe there could 
possibly be an error.
    Mr. Mica. So you have 3,100 just in DOD?
    Ms. Disney. No, sir. We don't have 3,100.
    Mr. Mica. Possible.
    Ms. Disney. That's the outside. And I have reason to 
believe that most of those were properly coded. We know we have 
500 cases. We know that. So if the ratio holds, we would 
probably end up with 1,000. We're trying everything we can to 
identify everybody who was misclassified.
    Mr. Mica. So, in DOD we have an estimate of about 1,000?
    Ms. Disney. Yes, sir.
    Mr. Mica. Ms. Oakey-Hemphill, how long have you been 
working on this inter-agency task force to resolve this 
problem?
    Ms. Oakey-Hemphill. I have been working with other agencies 
for literally years to try to either prevent errors or to 
minimize problems associated with them.
    Mr. Mica. How long?
    Ms. Oakey-Hemphill. Well, basically, when I started this 
job back in 1983 we were preparing for the Social Security Act 
changes, the implementation in 1984.
    Mr. Mica. But working with them trying to correct the wrong 
enrollment since when?
    Ms. Oakey-Hemphill. Well, I guess the bulk of my efforts 
have really been since maybe 1992 or 1993 just in terms of 
internally in Treasury. Much more activity because many more 
errors started to surface around that time.
    Mr. Mica. How many errors do you think in Treasury?
    Ms. Oakey-Hemphill. There's almost no way of estimating.
    Mr. Mica. How many have you uncovered so far?
    Ms. Oakey-Hemphill. Well, from the period 1994--calendar 
year 1994--through the present, there were approximately 600 
errors corrected. And these are errors of all types. But that--
that required intervention by our payroll system, that weren't 
just automatically processed through the payroll system.
    So 600 errors that had gone on for more than a year during 
the last 3 to 4 years.
    Mr. Mica. Ms. Hall Ingram, you said basically it's going to 
take a legislative solution to go back and correct some of the 
IRS problems. Is that correct?
    Ms. Ingram. I think that's probably accurate. In terms of 
which ones will be necessary to change legislatively, that will 
depend on which package looks to be the best fit for the 
variety of problems. Whether one would suggest changing the 
$9,500 limitation, for example, would depend on whether that 
turned out to be a necessary part of the solution.
    Mr. Mica. If a private sector hadn't properly set aside 
some of these funds for Social Security and some of the other 
accounts, they probably would have been noticed by IRS and 
probably would have been threatened by IRS and had their 
account seized, probably their property. Have you ever thought 
of maybe putting a lean on the Capitol building to resolve this 
matter?
    Ms. Ingram. I think that the issue of what happens in the 
private sector is an interesting one and is certainly part of 
what we're looking at.
    Mr. Mica. You have a handle.
    Ms. Ingram. Pardon?
    Mr. Mica. You have a handle. I've seen a couple of your 
threatening letters. But you don't have that same handle with 
the agencies or the Federal Government, I guess not.
    Ms. Ingram. For purposes of Social Security taxes we have 
generally the same requirements and the same procedures. And we 
do approach Federal and State government employers in much the 
same manner we would approach a private sector employer.
    In the private sector one of the things that it's important 
to remember is that the retirement plan regime and the Social 
Security regimes are decoupled in the private sector for the 
most part.
    Mr. Mica. Mm-hmm.
    Ms. Ingram. And so solutions to Social Security problems in 
the private sector are generally handled with one set of rules 
and procedures. And solutions for errors in covering employees 
or making employees whole who have been omitted from plans or 
programs is done under a separate regime.
    It would appear to be somewhat more complicated in the 
Federal sector. And that's one of the things that has to be put 
together--all those different pieces.
    Mr. Mica. Now I take it that you or someone from your 
agency has been working with OPM to come up with suggestions 
for a solution to your particular element and problems, is that 
correct?
    Ms. Ingram. Right. Both as a Federal--employer of employees 
who have such issues, we've obviously been working with 
Treasury in keeping people informed about what issues we're 
seeing and the people affected. Also as a regulator in the area 
of Social Security rules and also in pension plan or retirement 
plan rules, we've also been flagging issues and trying to 
provide analysis that could be used.
    Mr. Mica. Have you submitted written recommendation to OPM 
to resolve some of the problems in your specific area? And if 
so, when?
    Ms. Ingram. The IRS, itself, has not submitted a specific 
legislative proposal. We've submitted analyses of some possible 
options through the Treasury Department. And I understand that 
those have been shared. The issue of legislative change 
obviously ultimately has to come out of the Office of Tax 
Policy for us.
    And they are involved in those discussions both as to the 
Thrift Savings Plan rule about the cap on contributions. And, 
also, as to the Social Security, we have looked at whether 
there are administrative ways within our power to deal with 
both of those issues. And we have shared our concerns about our 
inability to deal with them and why. And we've shared those, 
yes.
    Mr. Mica. But you're saying your determination is you 
cannot deal with it administratively to resolve some of these 
situations?
    Ms. Ingram. Our flexibility is severely limited.
    Mr. Mica. Limited.
    Ms. Ingram. Yes.
    Mr. Mica. Ms. Oakey-Hemphill, have you all prepared any 
written recommendations to OPM to resolve the matter from your 
perspective? I take it you work with them constantly?
    Ms. Oakey-Hemphill. Yes.
    Mr. Mica. Or are you just working on trying to find 
individual solutions to individual problems?
    Ms. Oakey-Hemphill. Well, both, rather.
    Mr. Mica. Have you submitted a written plan, a 
recommendation?
    Ms. Oakey-Hemphill. Not specific recommendations on how to 
fix the errors. There are so many different kinds of errors. 
And the solutions for different employees present themselves 
differently. I think Mr. Flynn suggested personal preferences 
largely figure into these. So no, we have not. Though from time 
to time we have discussed informally with staff just what kind 
of shape a fix would take.
    Mr. Mica. Well, every time, Mr. Flynn, you resolve one of 
these or reach some accommodation, administrative solution, 
whatever, aren't you setting a precedent? Are you considering a 
freeze until some overall solution is developed or legislative 
solution?
    Mr. Flynn. I think, Mr. Chairman, if a freeze were 
available to us administratively, it would be something that we 
would want to consider. Our view of the situation is that the 
law is fairly specific. When an error is discovered, it must be 
corrected retroactively at the point in time that it's 
discovered. So I don't think that option has been available to 
us as we have worked on the development of a broader solution.
    Mr. Mica. How many lawsuits are pending, or have there 
been? Are you aware, Mr. Flynn?
    Mr. Flynn. Mr. Chairman, I am aware of several, but I do 
not have a full accounting of lawsuits which may be pending in 
individual agencies.
    Mr. Mica. Is there also a class action suit brought?
    Mr. Flynn. Not that I'm aware of, sir.
    Mr. Mica. No? Not yet? I don't have any further questions 
at this time. Mrs. Morella.
    Mrs. Morella. Thank you. DOD, Dr. Disney, appears to be 
more aware and responsive to this problem than other agencies. 
And yet you expect there are still at least 500 people out 
there who don't know. And, of course, this is troubling.
    Ms. Disney. Those individuals know, but we have not been 
able to resolve their circumstances.
    Mrs. Morella. But they do know?
    Ms. Disney. Yes, ma'am.
    Mrs. Morella. Mm-hmm. Which is also troubling. Right. Have 
other agencies followed your example of outreach in trying to 
identify errors? Do you work with the other agencies? Is there 
communication?
    Ms. Disney. We try to work very hard with individual 
agencies in part through the inter-agency advisory group, which 
OPM sponsors, and where we meet biweekly. We also make the 
other agencies aware of all the material that we're putting out 
on the web that is, we think, useful for others. We have made 
deliberate efforts to share the reference guide that we have 
developed.
    As to what is actually happening in individual agencies, 
I'm not in a position to say.
    Mrs. Morella. Mm-hmm. It would be nice at those meetings if 
they responded also so that you had a discussion about what 
that they have done, that it is working, that you have some 
idea of who is following and they have some idea of what other 
agencies are doing, also.
    Has, I guess to all of you, has OPM been helpful both 
technically and in offering guidance? I'll ask all of you.
    Ms. Ingram. OPM provides us with guidelines and regulations 
and procedures that we try to follow so that all the Federal 
agencies are following the same procedures. And in that manner 
we get a great deal of guidance out of OPM. We recognize, 
partly because we administer a piece of this puzzle ourselves, 
that there are some tough issues that have been under 
discussion and under analysis, issues that belong to a number 
of different agencies, whether it's IRS or SSA or whoever.
    And we've been interacting with OPM to get our share of 
those issues identified and analyzed. So we welcome the 
opportunity to get this package put together and get a solution 
done that integrates those pieces since no one of us holds all 
the pieces of the puzzle.
    Mrs. Morella. An addendum to the question too is, is there 
another--any information or advice you could offer where OPM 
could be more helpful?
    Ms. Ingram. I think the commitment that you've heard this 
morning and that we've heard previously to get the pieces put 
together, whether they're the tax questions or the benefits 
side of the questions or whatever, and get that resolved, is 
exactly what we need from an agency point of view. And we 
welcome this putting together of all these pieces into a 
proposal. So I think that is, from our perspective, the right 
direction.
    Mrs. Morella. Dr. Disney, do you want to comment on OPM?
    Ms. Disney. Yes. I'm very pleased that we have a definite 
time table on which to move forward because this is an 
extraordinarily complex issue that causes great anguish to 
individuals and their families. And having a target to shoot 
for, I think, helps focus all of our attention.
    Mrs. Morella. Dr. Hemphill, would you like to comment on 
OPM's role, if any, and have they been helpful and what you 
might suggest?
    Ms. Oakey-Hemphill. I've always found OPM staff to be 
extremely supportive. We've worked together on a lot of 
projects. And I've never had to ask twice. They are very, very 
supportive. And we look forward to working cooperatively with 
OPM and the other agencies involved in the future.
    We've expressed our eagerness to do so. And we're very glad 
that the level of interest in this problem that's been 
expressed here today is surfacing and there's going to be 
action.
    Mrs. Morella. You've all given very nice answers. I 
understand. But we're talking about whether there really is 
that kind of help that you needed. I guess I understand where 
you're coming from.
    Do any of you maintain records to ensure the consistency of 
settlements so that employees in similar situations would be 
treated equally? I guess I could start with Ms. Ingram.
    Ms. Ingram. I don't have in hand today. We're pulling the 
information together.
    Mrs. Morella. Yes.
    Ms. Ingram. And I can provide it to the committee later----
    Mrs. Morella. OK.
    Ms. Ingram [continuing]. Exactly how many historical 
corrections have been made or what--you used the term 
``settlements''--have been effected. So I really can't give you 
information about that. Certainly, our efforts both on the IRS 
side of the house in the personnel office and also on the legal 
side of the house of the IRS has been to try to have consistent 
treatment and integrated answers.
    So, but if you wish to have the data, I would need to go 
back and get that and submit it to the committee.
    Mrs. Morella. Mm-hmm. If you could do that it would be 
appreciated.
    Ms. Ingram. OK.
    Mrs. Morella. Dr. Disney? Whether you've maintained any 
record.
    Ms. Disney. We maintain personnel records and payroll 
records on all of our decisions and try very hard to ensure 
that there is consistency of treatment of all of the 
individuals.
    There are two separate sides. The personnel side of the 
house and the payroll side of the house. And I cannot speak 
today for all of the payroll records. But I can certainly 
determine the answer to your question from that perspective and 
provide that later.
    Mrs. Morella. All right. Splendid. That would be great. Ms. 
Hemphill.
    Ms. Oakey-Hemphill. By settlements, do you mean court 
settlements for people who have sued or do you mean just the 
corrections of the errors themselves?
    Mrs. Morella. Actually both.
    Ms. Oakey-Hemphill. As far as court settlements are 
concerned I have no data at all to be able to offer you.
    Mrs. Morella. Right.
    Ms. Oakey-Hemphill. And I'm not sure that I could provide a 
comprehensive or complete----
    Mrs. Morella. OK.
    Ms. Oakey-Hemphill. I suspect that we have had very few, if 
any.
    Mrs. Morella. Right.
    Ms. Oakey-Hemphill. As far as the corrections of these 
errors are concerned, depending upon the type of the error, 
going back and correcting the error is pretty much a cut and 
dried thing. There are only so many things that you can do and 
so many choices that you can offer to the employees.
    Administratively, our hands are tied. We can't get creative 
with them. If we do we're stepping outside our boundaries. So, 
in terms of having to keep records on how we've corrected 
things, I think we would pretty much know that if we had done 
something properly, how we had done it. Who we have corrected 
and identifying people whose records were corrected, that could 
pose some difficulties because of payroll system changes and a 
variety of other factors. A length of time, that sort of thing.
    Mrs. Morella. It sort of sounds as though you need some 
legislation or you need something to give you more authority to 
be able to settle these claims, something coming from Congress 
through OPM. Is that correct?
    Ms. Ingram. Yes.
    Ms. Oakey-Hemphill. Potentially, yes.
    Mrs. Morella. I mean, your hands are tied to a great 
degree.
    Ms. Disney. We have situations where we have identified 
that there was an erroneous placement. And we've identified the 
amount of money involved. We cannot apply all of that money to 
a correction. Therefore, that money must be held in escrow 
until some further court case or legislation comes about.
    Mrs. Morella. OK. Great. Well, I think you've answered my 
questions. Thank you very much for appearing here today. And 
thank you, Mr. Chairman.
    Mr. Mica. Mr. Ford, you're recognized.
    Mr. Ford. Thank you, Mr. Chairman. Very briefly. I thank 
Mrs. Morella. She really sort of exhausted many of the 
questions. And I thank the panelists. And I look forward to 
September 10. I'm pleased that there is a bipartisan 
cooperation on the committee.
    And I'm hoping that we'll be able to make whole and restore 
the benefits for not only the four panelists we had earlier but 
certainly the affected families and loved ones who have been 
harmed and impacted by what seems to be an egregious oversight.
    So thank you, Mr. Chairman.
    Mr. Mica. Thank you, Mr. Ford and thank you, Mrs. Morella. 
I'd like to thank our panelists for their participation today. 
We've heard a story of a real nightmare for some of our Federal 
employees affected by this problem. Our goal is to find a 
solution and try to expedite decisionmaking to resolve these 
issues.
    I'm concerned about what I've learned about this period of 
the change in system and enrollment. I guess I learned 
yesterday, and I don't have all the details, that they may 
freeze the District enrollment or change that. I hope we don't 
see a similar disaster occur now with making changes in the 
District retirement plan.
    Hopefully, we can learn by this mistake and we won't repeat 
it again. But we will meet on September 10th, and we will find 
a solution. And I look forward to working with each of our 
panelists and others.
    The record will be left open for 2 weeks. There may be 
additional questions that we'll submit to this panel. If 
there's no further business to come before the subcommittee, at 
this time the committee is adjourned. Thank you.
    [Whereupon, at 11:45 a.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]



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