[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]




 
                  LAW ENFORCEMENT RETIREMENT COVERAGE

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON THE CIVIL SERVICE

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 9, 1999

                               __________

                           Serial No. 106-120

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
64-649 CC                   WASHINGTON : 2000




                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH, Idaho                   (Independent)
DAVID VITTER, Louisiana


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                      Carla J. Martin, Chief Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

                   Subcommittee on the Civil Service

                   JOE SCARBOROUGH, Florida, Chairman
ASA HUTCHINSON, Arkansas             ELIJAH E. CUMMINGS, Maryland
CONSTANCE A. MORELLA, Maryland       ELEANOR HOLMES NORTON, Washington, 
JOHN L. MICA, Florida                    DC
DAN MILLER, Florida                  THOMAS H. ALLEN, Maine

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
                   George Nesterczuk, Staff Director
                          Garry Ewing, Counsel
                         John Cardarelli, Clerk
            Tania Shand, Minority Professional Staff Member
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 9, 1999................................     1
Statement of:
    Bryant, Hon. Ed, a Representative in Congress from the State 
      of Tennessee...............................................    13
    Davis, Hon. Thomas M., a Representative in Congress from the 
      State of Virginia..........................................     6
    Filner, Hon. Bob, a Representative in Congress from the State 
      of California..............................................    40
    Flynn, William E., Associate Director, Retirement and 
      Insurance Services, Office of Personnel Management; Kay 
      Frances Dolan, Deputy Assistant Secretary for Human 
      Resources, Department of the Treasury; and John Vail, 
      Deputy Assistant Attorney General for Management, 
      Department of Justice......................................    60
    Kelley, Colleen M., national president, National Treasury 
      Employees Union; Peter J. Ferrara, chief economist, 
      Americans for Tax Reform; and Gilbert G. Gallegos, national 
      president, Fraternal Order of Police.......................    95
    Mink, Hon. Patsy T., a Representative in Congress from the 
      State of Hawaii............................................    50
    Traficant, Hon. James A., a Representative in Congress from 
      the State of Ohio..........................................    46
Letters, statements, et cetera, submitted for the record by:
    Bryant, Hon. Ed, a Representative in Congress from the State 
      of Tennessee, prepared statement of........................    15
    Davis, Hon. Thomas M., a Representative in Congress from the 
      State of Virginia, prepared statement of...................     9
    Dolan, Kay Frances, Deputy Assistant Secretary for Human 
      Resources, Department of the Treasury, prepared statement 
      of.........................................................    77
    Ferrara, Peter J., chief economist, Americans for Tax Reform, 
      prepared statement of......................................   168
    Filner, Hon. Bob, a Representative in Congress from the State 
      of California, prepared statement of.......................    42
    Flynn, William E., Associate Director, Retirement and 
      Insurance Services, Office of Personnel Management, 
      prepared statement of......................................    63
    Gallegos, Gilbert G., national president, Fraternal Order of 
      Police, prepared statement of..............................   155
    Kelley, Colleen M., national president, National Treasury 
      Employees Union:
        Prepared statement of....................................   135
        Various statements.......................................    97
    Mink, Hon. Patsy T., a Representative in Congress from the 
      State of Hawaii, prepared statement of.....................    52
    Scarborough, Hon. Joe, a Representative in Congress from the 
      State of Florida, prepared statement of....................     3
    Traficant, Hon. James A., a Representative in Congress from 
      the State of Ohio, prepared statement of...................    47
    Vail, John, Deputy Assistant Attorney General for Management, 
      Department of Justice, prepared statement of...............    82

 
                  LAW ENFORCEMENT RETIREMENT COVERAGE

                              ----------                              


                      THURSDAY, SEPTEMBER 9, 1999

                  House of Representatives,
                 Subcommittee on the Civil Service,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2154, Rayburn House Office Building, Hon. Joe Scarborough 
(chairman of the subcommittee) presiding.
    Present: Representatives Scarborough, Cummings, and Norton.
    Staff present: George Nesterczuk, staff director; Garry 
Ewing, counsel; John Cardarelli, clerk; Ned Lynch, senior 
research director; Jennifer Hemingway, policy director; Tania 
Shand, minority professional staff member; and Earley Green, 
minority staff assistant.
    Mr. Scarborough. Good morning, ladies and gentlemen. I 
would like to call this hearing to order. Our purpose today is 
to delve into the details of one of the more sensitive subjects 
in our committee's jurisdiction--the Federal retirement 
benefit. The Federal Government is among the world's most 
generous employers in providing retirement benefits for 
employees who complete careers in public service. That benefit 
comes from annual cost of living adjustments that are unmatched 
in the private sector, and Federal employees are eligible to 
continue their health and life insurance coverage during 
retirement, with the government continuing to pay the 
employer's share of the expense.
    Select groups of Federal employees qualify for even more 
generous retirement benefits. Because of the physical and 
mental strain associated with occupations classified as Federal 
law enforcement officers, firefighters, air traffic 
controllers, and nuclear materials couriers, these employees 
are eligible for enhanced benefits after as little as 20 years 
of service. Because these positions demand a young and vigorous 
work force, they carry a mandatory retirement age.
    In crafting these benefits, a careful balance needs to be 
maintained between mandatory attrition and timely recruitment, 
between loss of experience and proper training of replacement 
workers, between safety requirements and program costs. The 
Federal retirement system is expensive in its generosity and 
totally unfunded in its asset base. The enhanced retirement for 
special occupations is even more expensive and much more of a 
liability on future taxpayers. It is our fiduciary 
responsibility to our citizens to make sure that these benefits 
are properly assigned and extra costs fully warranted.
    During every session of Congress, the committee is deluged 
with requests to increase or otherwise improve on this 
generosity. This session of Congress is no exception. Some of 
the bills before us today, while well intentioned, contain 
provisions that work at cross purposes with agency missions. 
For example, forcing experienced employees into mandatory 
retirement, while Federal agencies complain of difficulties 
recruiting qualified professionals into public service, may not 
be wise public policy. And, of course, increasing the costs of 
retirement to agencies already at their spending caps simply 
makes it more difficult for them to perform their mission. Some 
might have to reduce other employment to fund this added 
benefit. We really must proceed cautiously.
    I want to thank our witnesses today, and hope that the 
evidence compiled for today's hearing provides the foundation 
for a thorough examination of the many issues involved in the 
complex management of the retirement system for the Federal 
work force. Most importantly, we want to come up with something 
that is fair to the employees of these very difficult positions 
and is also something that we can afford as the Federal 
Government.
    And with that, I would like to turn it over to the 
distinguished ranking member from Maryland, Mr. Cummings.
    [The prepared statement of Hon. Joe Scarborough follows:]

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    Mr. Cummings. Thank you, Mr. Chairman. The purpose of this 
morning's hearing is to examine the classification of certain 
Federal employees as law enforcement officers and their 
resulting entitlement to special retirement benefits. This 
issue is important to me because it affects the law enforcement 
community.
    Earlier this year I introduced H.R. 1769, the Federal 
Employees Benefits Equity Act of 1999. My legislation 
eliminates certain inequities under the Civil Service 
Retirement System and the Federal Employees Retirement System 
with respect to computation of retirement benefits for law 
enforcement officers, firefighters, air traffic controllers and 
others.
    The legislation also provides an enhanced annuity to 
employees who, after 20 years of qualifying service regardless 
of age, are forced to retire due to involuntary separation or 
for disability. The measure also provides for a refund of the 
additional 0.5 percent retirement contribution with interest 
when employees in this occupation retire or die before 
obtaining eligibility for the enhanced annuity.
    Federal officers in varying degrees and capacities uphold 
the Constitution and protect the public welfare. Over the years 
there has been much debate and controversy on which types of 
Federal employees should be classified as law enforcement 
officers, and, as such, should receive enhanced pay and 
requirement benefits.
    In 1988 the Anti-Drug Abuse Act established a national 
advisory commission on law enforcement which studied the pay, 
benefits and other issues relating to the recruitment and 
retention of employees defined as law enforcement under Federal 
retirement laws.
    The commission's report which was released in April 1990 
made several recommendations for interim pay enhancements for 
law enforcement officers and suggested that the Office of 
Personnel Management conduct a further study on the need for a 
new pay system for Federal law enforcement. The commission's 
report did note, however, that the statute defining Federal law 
enforcement officers was broad, encompassing both traditional 
positions within the field and less traditional positions not 
generally considered part of the law enforcement community.
    As recommended by the commission, the Federal Employees Pay 
and Comparability Act of 1990 enhance law enforcement pay and 
directed OPM to conduct a study of pay and job evaluation for 
the Federal law enforcement officers. OPM, along with a 45 
member advisory committee drawing from law enforcement agencies 
and employee groups, produced a report entitled, ``A Plan to 
Establish a New Pay and Job Evaluation System for Federal Law 
Enforcement Officers'' in September 1993.
    Two months later, the Committee on Post Office and Civil 
Service held a subcommittee hearing on the report and its 
findings. At that hearing, Ms. Barbara Fisk stated that OPM 
determined at the outset that the definition of law enforcement 
officer used in the FEPCA provisions based on retirement law 
needed to be examined because it covered employees whose 
primary duties included such diverse jobs as health care, 
accounting and cooking, but excluded employees whose primary 
duties include maintaining law and order and protecting 
property and the civil rights of individuals. OPM's fact-
finding mission confirmed OPM's belief that the coverage issue 
had to be reconciled.
    It is evident from the witnesses scheduled to testify today 
that the coverage issue has not been reconciled. There seems to 
be questions of both whether the definition of law enforcement 
officer should be expanded to include additional categories of 
Federal employees or whether it should be narrowed.
    Finally, determining the definition of a law enforcement 
officer is clearly a very complex and controversial issue. This 
hearing is an opportunity for us to revisit this issue and find 
permanent solutions to the concerns that have been raised in 
the past and that are still lingering today. I want to thank 
our witnesses for being here and I look forward to your 
testimony.
    Mr. Scarborough. Thank you, Mr. Cummings. We certainly 
appreciate your work on this important issue and the bill that 
you have offered.
    I want to get to our first panel, which is a group of 
colleagues that care deeply about the issues before us today 
and have introduced bills that provide the background of this 
very important hearing. Let's start with the Honorable Tom 
Davis of Virginia who has introduced H.R. 583, which is a bill 
to provide law enforcement retirement coverage for assistant 
U.S. attorneys.
    We also have the Honorable Ed Bryant of Tennessee. He is a 
former U.S. attorney and is cosponsor of H.R. 583 and is 
testifying today also on behalf of the National Association of 
Assistant U.S. Attorneys; the Honorable Bob Filner of 
California introduced H.R. 1228, a bill which would extend 
Federal law enforcement retirement coverage to several 
additional employment classifications, including immigration 
inspectors, Customs inspectors, Internal Revenue Service 
officers; the Honorable Jim Traficant of Ohio, sponsor of H.R. 
424, a bill which would raise the mandatory retirement age of 
the U.S. Capitol Police from age 57 to age 60; and the 
Honorable Patsy Mink of Hawaii who introduced H.R. 1748, a bill 
that would raise the mandatory retirement age of all Federal 
law enforcement officers to the age of 60.
    I would like to welcome all distinguished Members and thank 
you for coming by today. Why don't we start with you, Mr. 
Davis?

STATEMENT OF HON. THOMAS M. DAVIS, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF VIRGINIA

    Mr. Davis of Virginia. Thank you very much for holding this 
hearing. I will put my full statement in the record and I will 
abbreviate it.
    Mr. Scarborough. Without objection, so ordered.
    Mr. Davis. Let me say that I think law enforcement benefits 
should be extended to individuals who choose a career that 
places the safety and welfare of themselves and their families 
in jeopardy. I think that was the original intent of the law, 
and that is what we are trying to do by putting assistant U.S. 
attorneys under that, so that individuals who are tasked to 
uphold the laws of our country are the same individuals who are 
receiving the law enforcement benefits.
    On a daily basis, assistant U.S. attorneys fight to enforce 
our code of Federal laws and are increasingly called upon to 
enforce a wider range of criminal laws, to bolster the efforts 
of State and local governments in the fight against crime, and 
as we Federalize more and more crimes, we are finding they are 
tasked to do more with less. They carry their jobs on a daily 
basis without a lot of fanfare, but they have to prosecute 
criminals who are represented by defense attorneys who are 
getting hundreds of dollars an hour, who are much better paid 
than themselves, and they opt to stay in government and wear 
the white hat instead of going out on the other side where they 
could make much more money simply to be on the right side. But 
it becomes much more difficult when the pay differentials 
increase and increase.
    Providing the full benefits I think would be a career 
enhancement that would keep more people in the Federal service 
for a longer period of time. Right now the average period is 10 
years. The hours are long and the pay is low. AUSAs have placed 
themselves and their families in harm's way by prosecuting 
criminals.
    I refer to a specific case, of which there are many in my 
testimony that I will not review with you here, but there are 
cases where the assistant U.S. attorneys are threatened by 
criminal elements and put their lives and their families at 
risk and sometimes need extra protection just for sitting out 
there and doing their jobs.
    Under the Code, the duties of law enforcement officers are 
defined as primarily the investigation, apprehension, or 
detention of violators of Federal law.
    If we were to use the broader definition of the original 
criteria behind creating enhanced retirement benefits, I think 
the assistant U.S. attorneys should be eligible for this 
additional benefit and should have been for a long time. When 
the enhanced retirement benefit was first created in 1948, it 
applied to those occupations that require great mental or 
physical stamina. Certainly the well-documented demands of the 
assistant U.S. attorneys' workload and schedule apply to that. 
As the recent class action suit filed by the AUSAs against the 
Department of Justice shows, these prosecutors are routinely 
called upon to put in significant amounts of overtime. DOJ 
illegally describes overtime as a necessary requirement of the 
job and assistant U.S. attorneys are fighting crime and 
sacrificing time with their families, putting them sometimes in 
jeopardy, and they receive very little tangible recognition for 
their work.
    Let's touch briefly on the overtime issue that faces AUSAs 
as it affects or, more pertinently, does not affect their 
enhanced requirement benefit. Assistant U.S. attorneys are 
currently involved in a class action lawsuit against the DOJ. 
DOJ does not pay its attorneys overtime, as required by the 
Federal Employees Pay Act. For years, DOJ as the enforcer of 
this law in other agencies has knowingly violated the law by 
denying them overtime pay. To add insult to injury, the DOJ 
requires its attorneys to keep two sets of books, one that 
reflects a 40 hour work week, and one that shows the actual 
number of hours that are worked. The latter set of books is 
given to Congress for appropriations purposes. It is also 
provided to Federal courts and judges when requesting that fees 
be paid. The DOJ does not deny this overtime benefit to any 
other law enforcement division under its jurisdiction. It is a 
reasonable compensation that assistant U.S. attorneys are 
entitled to by law, and certainly their counterparts, the 
defense attorneys, are getting paid by the hour, as they sit 
there through these lengthy criminal cases, instead of a flat 
fee.
    I do not believe that the law enforcement retirement 
benefit should have any impact on the overtime benefit or the 
resolution of that, but the law enforcement officers receive 
overtime for much the same reason that they receive their 
enhanced benefit: They face an unusually high level of stress 
and danger in performing their jobs.
    Since I introduced this legislation on February 4, we have 
been contacted by assistant U.S. attorneys across the country 
who have shared their harrowing experiences fighting crime and 
the very real threats that have caused them to change their 
life-style. We have shared this with some of the committee in 
our prepared testimony. The legislation has garnered 
significant support in this Congress. The number of inquiries 
that I have received about this in the brief period between the 
105th Congress and the 106th Congress shows that they are 
widely recognized as an essential part of our Federal crime-
fighting cadre. And we have 36 cosponsors. Some of them are 
former assistant U.S. attorneys, and you are going to hear from 
a very distinguished one, Ed Bryant, who is going to be 
testifying here today, who can testify firsthand what they 
face.
    I am not going to attempt to move the legislation forward 
until reasonable, fair offsets are found. And I think the 
mandatory retirement is a good question when you get into this 
intellectual exercise, and I will be flexible in terms of 
working with you on that. But they ought to be compensated 
better or we will lose a good cadre of people that are up 
against the top-notch defense attorneys in some of these cases, 
and we get outgunned. I think this is an important step to 
keeping us on the front levels of law enforcement and keeping 
the best people we can find to go into the courtroom and 
prosecute criminals. Thank you.
    Mr. Scarborough. I thank you, Congressman Davis. You are 
right. This is a very important issue. You have received a lot 
of inquiries. I know that I certainly have.
    [The prepared statement of Hon. Thomas M. Davis follows:]

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    Mr. Scarborough. The genesis of this hearing is when a 
group of assistant U.S. attorneys came to my office and brought 
it up. It is an issue that needs to be addressed. It is 
critical to us.
    Representing the group that first talked to me about it 
today is Congressman Ed Bryant who was a former U.S. attorney.

STATEMENT OF HON. ED BRYANT, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF TENNESSEE

    Mr. Bryant. Thank you, Mr. Chairman. I thank you and the 
members of your subcommittee for holding this hearing today, 
and I am pleased to testify on behalf of the National 
Association of Assistant U.S. Attorneys in support of H.R. 583, 
the Assistant U.S. Attorneys Retirement Benefit Equity Act of 
1999.
    As a former U.S. attorney from the western district of 
Tennessee, I have firsthand experience and knowledge about 
AUSAs and the integral role they play in Federal law 
enforcement. I had 29 working for me at that time.
    Currently there are more than 4,700 AUSAs who work in 93 
separate offices throughout the country. These AUSAs are the 
U.S. attorneys' principal support for ensuring that laws are 
faithfully executed. In today's environment of sophisticated 
white collar crime, domestic and foreign terrorism, 
international narcotics trafficking, espionage, government 
program fraud, organized crime and labor racketeering, the role 
of the AUSA has evolved to include substantial investigative 
duties. AUSAs control and direct the most crucial investigative 
tool in the criminal justice system--the grand jury. AUSAs 
oversee and participate in the investigative activities of the 
Federal law enforcement officers working on major prosecutions 
and review and approve complex search warrants and applications 
for wiretaps. In multi-agency cases, the AUSA functions as a 
supervisor of agents' activities, particularly challenging 
since there is no line authority from the AUSA to an agent.
    Civil AUSAs defend lawsuits brought against Federal agents 
in connection with their performance of their law enforcement 
duties. Prisoner litigation is an additional aspect of the 
civil AUSAs' practice. Civil AUSAs represent the government in 
suits brought by those who wish to obstruct government 
operations. AUSAs have been threatened in this context, had 
false liens filed against their property and have had false 
Form 1099s filed with the IRS.
    The increasing complexity of Federal investigations and the 
resulting criminal and civil litigation has spawned a 
relatively new phenomenon--the career AUSA. Unfortunately, as 
more and more AUSAs seek careers within DOJ, the Department has 
not reacted to provide the professional benefits deemed routine 
in the highly stressful law enforcement community. As you know, 
under the current retirement system, Federal law enforcement 
agents are eligible to retire at 50 percent of their ``high-
three'' salaries at age 50 with 20 years of service. Currently 
AUSAs are the only employees in the criminal justice system who 
do not receive this law enforcement retirement which recognizes 
the stressful occupations associated with fighting crime and 
the physical and mental challenges which wear down body and 
mind at an accelerated pace.
    Originally authorized in 1948, Federal law enforcement 
retirement benefits were intended to liberalize retirement 
provisions in order to enable agents and investigators to 
retire at age 50 while still physically fit. In enacting that 
legislation, Congress recognized the stressful, sometimes 
dangerous work performed by the law enforcement officers, as 
well as the need for career investigators in the Federal 
Government. At that time there were no career AUSAs and 
therefore there was no reason for their inclusion in the 
statute.
    Back in those days the U.S. attorneys and the assistants 
all left every time there was a change of administration, but 
since that time circumstances have changed significantly. Only 
during the 1980's did the AUSAs begin to remain employed by the 
Department until retirement on any regular basis.
    In the last 2 decades, the position of the AUSA has evolved 
from being largely political, where it was routine for all 
AUSAs to resign upon the appointment of a new U.S. attorney. 
Then the newly employed attorneys inherited entire caseloads of 
ongoing prosecutions, and this disruption badly damaged the 
continuity of the investigations and prosecutions, both civil 
and criminal. So it was important to have this continuity, and 
this is a good thing that we are going to, with more and more 
of our AUSAs becoming career oriented.
    Congress has recognized the importance of maintaining an 
experienced force of career AUSAs. In 1990, the Civil Service 
Due Process Amendments extended the procedural protections of 
the Civil Service Reform Act to the AUSAs. No longer constantly 
in jeopardy of being replaced for practical reasons, more and 
more of our AUSAs are remaining with the DOJ for their career, 
thus ensuring the government is getting the best 
representation.
    I have got a couple of more pages, but let me skip through 
this because I have my full statement in there. I do want to 
say, given the increasing complexity of the legislation dealing 
with offenses against the United States, and the increasing 
sophistication of the law breakers--and my colleague, Mr. 
Davis, alluded to this and their ability to hire the best and 
pay them at tremendous rates per hour to represent them--our 
own U.S. DOJ requires the services of experienced, seasoned 
AUSAs to protect the interests of the American people to be 
able to compete on a level playing field. The work is demanding 
and stressful and fraught with danger.
    I too know of cases when I was a U.S. attorney where 
assistants were under physical threat and death threats. I know 
that they face threats and strain of mind and body to a degree 
equal to and in some instances exceeding that faced by others 
traditionally included in the Federal law enforcement 
retirement system.
    The time has come for Congress to recognize AUSAs for what 
they are, an essential part of the front line defenders of 
safety and justice in America. The AUSA should no longer be the 
only member of the Federal criminal justice system denied law 
enforcement retirement. And I thank the Chair for listening.
    Mr. Scarborough. Thank you, Congressman Bryant.
    [The prepared statement of Hon. Ed Bryant follows:]

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    Mr. Scarborough. Congressman Filner.

STATEMENT OF HON. BOB FILNER, A REPRESENTATIVE IN CONGRESS FROM 
                    THE STATE OF CALIFORNIA

    Mr. Filner. Thank you. I want to start off with an ironic 
kind of note that drives me as I put forward this legislation. 
I am sure that you have visited the National Law Enforcement 
Memorial in Judiciary Square, which was established in 1991 to 
honor Federal, State, and local law enforcement officials. When 
they die, their names are inscribed on this memorial. Many of 
the people I am trying to talk about in my bill who do not have 
law enforcement status in life, if they get killed in action 
doing their work as inspectors, for example, their names are 
inscribed on the law enforcement memorial. So in death, they 
get the status that I think they ought to have while working to 
protect us.
    I hope you keep that irony in mind as we proceed on this 
legislation because I am honored to be in the presence of 
valiant men and women who put their lives on the line to ensure 
our Nation's safety. Most are not recognized as law enforcement 
officers, like Inspector Robert Labrada who put his life on the 
line 2 years ago when a desperate marijuana smuggler opened 
fire on him and his partner, Inspector Lira, at the United 
States-Mexico border. Both men were seriously injured and 
hospitalized. Fortunately, they survived the gun battle, unlike 
the gunmen. If they had not, these valiant inspectors' names 
would have been put on the wall of that memorial.
    I think it is a cruel and inhumane irony that this 
situation exists. It does not make sense. How can we not afford 
law enforcement status for these men and women? They daily 
encounter dangerous and life-threatening situations. I 
represent a neighborhood in San Diego, the home to the busiest 
border crossing in the world, the San Ysidro community of our 
city. Customs and INS inspectors work side by side with others 
who have law enforcement status, and they have, we might say, 
an equal opportunity to be exposed to danger and I have seen 
this firsthand. They exchange shots and are roughed up, forced 
to run after suspects, disarm them, just the same as their 
counterparts on the Border Patrol or INS who do have law 
enforcement status.
    INS Inspector John La Cuesta who is also here with us from 
our Southern California District can similarly attest to the 
dangers of this job.
    Others are in a similar position ranging from drug 
enforcement agency diversion investigators to Department of 
Defense officers in charge of law enforcement of our military 
bases. They do the job of law enforcement officers. They do not 
have the status or the benefits.
    I know the work of the INS and Customs Inspectors at the 
United States-Mexico border. I live right at the border. These 
men and women make our community safer, but because of the 
current lopsided law, they are not given status and we lose, as 
a result, vigorous trained professionals to other law 
enforcement agencies.
    The average length of Federal service according to reports 
is 15 years compared with 7 for the Inspectors in Customs. Why 
would Customs Inspectors and INS Inspectors who daily face 
threats from drug smugglers upset after being arrested, who 
disarm thieves as they attempt to run across the border after 
robbing businesses in Mexico, who stop drunken revelers 
attempting to drive into the United States, why would they not 
want to work for some other organization that does recognize 
them as law enforcement officers? These Inspectors, like the 
others I deal with in my bill, carry guns and perform a great 
service in protecting us as they face a variety of dangerous 
folks.
    Last year alone, aside from minor injuries, 25 INS 
Inspectors were seriously injured on the job in dealing with 
these situations. The Customs Service has the highest narcotics 
seizure rate of any agency in the United States, year after 
year, with the highest apprehension of fugitives and felons of 
any agency in the country, and that is a testament to these 
Inspectors. They face dangerous felons. They have been run over 
by cars. They have been shot at and disarm sawed-off shotguns, 
switchblade knives and handguns. Many have lost their lives. In 
fact, 43 Inspectors in U.S. Customs and INS have been killed in 
the line of duty. And as I said at the beginning, their names 
are inscribed on the National Law Enforcement Officers Memorial 
in their death.
    I say, Mr. Chairman, it is too long for these Inspectors 
and other law men and women that I refer to in my bill to wait. 
I think the cost is way too high not to grant them this 
benefit.
    I am heartened, Mr. Chairman, and Mr. Cummings, to learn 
and know of your interest in exploring this issue. I hope we 
find a way to do what is right. I know you and your staff have 
looked at numbers. There are obvious arguments against this, 
but I ask you to try to find a way to do it. If you tell me the 
cost is too high, besides some questions of the methodology, I 
will say let's find a way to phase in the benefit so that the 
cost is not as high. Let us deal with the base wage in a 
different way if the cost is too high, but let us grant these 
men and women the law enforcement status that they actually 
perform every day.
    Mr. Scarborough. Thank you, Congressman Filner. You made 
some great points and I agree with you 100 percent. The purpose 
of this hearing and this committee should be to figure what is 
possible and what we can do to help those people that are 
working as law enforcement officers.
    [The prepared statement of Hon. Bob Filner follows:]

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    Mr. Scarborough. Congressman Traficant.

   STATEMENT OF HON. JAMES A. TRAFICANT, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Traficant. Thank you, Mr. Chairman. I am here on H.R. 
424, about the Capitol Police. It would extend the retirement 
age from 57 to 60. I think it is justified even though many are 
concerned that we may have to take other government agencies 
along with it, and that would be fine, but I think we should 
start here and recognize the impact.
    First let me say that in the beginning, the Capitol Police 
were looked at as political patronage soft jobs, good jobs. 
Now, after Officers Chestnut and Gibson, we know this is a 
police agency.
    Here is the dilemma we face, Mr. Chairman: having enough 
officers. Most Secret Service agents, Treasury agents, FBI 
agents, they are all excited with the status of their Federal 
employment, and they are not likely to lose their young 
members. Our young police officers are being recruited by 
suburban police departments for more pay after they have been 
qualified to the tune of $150,000 taxpayer dollars to say this 
is a good recruit. Then at age 57, they are in perfect health, 
and we tell them they have to leave because we have set in 
place some type of an accelerated retirement program that did 
make sense at some point but now serves no purpose.
    Since 1997, in a short 3 years, we will have lost 25 
experienced police officers, most of them who would opt to 
stay. We are having our young officers raided, our qualified 
older officers raided. And let me say this: Officer Gibson was 
mortally wounded when he took the police action that was 
necessary to protect the lives here at the Nation's Capitol.
    Experience is very important. I believe that there are 
merits to looking at the expansion of retirement age for all 
Federal agencies, but I believe that cost factor, which has 
everybody worried, could be set aside with an impact evaluation 
on the Capitol Police.
    And let me say this: There are many of these police 
officers averaging 56 hours of overtime a month because of the 
shortage of personnel. Now I have to say it, beam me up there. 
They are taking our young ones and we are sending our old ones 
on a fast track out of here. We are spending millions of 
dollars on overtime. I would like for you to report this bill 
out. Use it as an evaluating mechanism for that which my good 
friend and colleague, Patsy Mink, is bringing forward that 
would deal with the same issue for all Federal agencies. Do not 
tie this up. We will lose 4 more good officers in the next 2 
months.
    I ask unanimous consent that my written statement be 
included in the record.
    Mr. Scarborough. I don't think that anyone would dare 
object. Without objection, so ordered.
    [The prepared statement of Hon. James A. Traficant 
follows:]

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[GRAPHIC] [TIFF OMITTED] T4649.038



 STATEMENT OF HON. PATSY T. MINK, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF HAWAII

    Mrs. Mink. Thank you, Mr. Chairman and Ranking Member Mr. 
Cummings. I appreciate all of the comments made by my 
colleagues, and I support everything that they have said. I am 
here to support the bill that I introduced, H.R. 1748, and it 
is to underscore all of the comments that have been made about 
the importance of the work that law enforcement officers 
contribute to our communities and to the Nation as a whole.
    My bill is very simple. It just raises the age of mandatory 
retirement of law enforcement officers from 57 to 60 years. 
This matter came to my attention by a constituent of mine who 
works for the Department of Treasury in Honolulu. Under current 
law, Federal law enforcement officers have to retire at age 57. 
This includes officers from all of the various Federal 
agencies, the FBI, Bureau of Prisons, DEA, INS, and so forth.
    The current mandatory age I believe is too restrictive; 57 
years of age is too young to force a dedicated officer into 
retirement. If we applied this same retirement to the House of 
Representatives, 159 of us would be forced to retire. Today, 
medical advances have dramatically improved health and 
longevity. Law enforcement officers at 57 years of age are 
still in their prime and capable of performing the physical 
demands of their job. They should not be deprived of the work 
they love merely because they have reached the age of 57. 
Raising the mandatory retirement age to 60 would provide them 
the opportunity to continue to work. It would not jeopardize 
the safety of the younger officers on the force, nor the 
citizens they are assigned to protect. Instead, the younger 
officers would continue to benefit from the senior officers' 
wealth of experience. Other demanding jobs like air traffic 
controllers have a mandatory retirement age of 60.
    Furthermore, under current law the officer does not have to 
remain on the force until age 60. He can retire at the minimum 
age of 50 as long as that officer has completed 20 years of 
service. They cannot enter the law enforcement career after the 
age of 37. They put 37 as the maximum age for the initial 
employment, allow 20 years of service, and a person can go out 
at 57. That is the way that the current formula reads.
    I want to note to this committee that the Federal Law 
Enforcement Officers Association opposes my bill, and I attach 
a letter of their opposition which states primarily that they 
feel that agent safety will be impacted; but I am told by the 
individuals who have supported my bill that one of the things 
that they fear is that the mandatory age debate will renew 
consideration of raising the minimum retirement age, which they 
all oppose and I certainly would oppose that also. I see no 
reason to deprive experienced officers of an opportunity to 
work.
    We are facing an increasingly aging population and I am 
sure that the law community recognizes the experience that they 
bear into their various functions. I am told by this individual 
who came to me with this issue that in a 5-year period between 
1998 and the year 2002 in just the criminal investigation 
division of the U.S. Treasury, they expect to lose between 40 
to 45 percent of their special agents merely because of the 
mandatory age of 57.
    And so when you ask me the question what is this going to 
cost, I want to raise the issue that my colleague, Mr. 
Traficant also raised and others, that to bring in a new person 
to fill that job costs hundreds of thousands of dollars for 
just that one person. And so if we are talking about money as 
the main factor against doing what is logical, I raise for your 
consideration the point that the loss of these experienced 
individuals who want to continue, who are physically able to 
continue to work, is a factor that has to balance off whatever 
additional costs it might be to retain them, as against the 
cost of training new officers to take that position which is 
being vacated at age 57 by senior experienced officers that 
only want an opportunity to continue to serve. All officers can 
retire at age 50 if they wish. They can retire at any age at 
which they choose to do so after 20 years of service.
    It seems to me that this is a fair request and one that 
takes into recognition the superior quality of senior officers 
who merely desire to stay in, and I see no reason why they 
should be forced to retire at age 57. Thank you very much, Mr. 
Chairman.
    Mr. Scarborough. Thank you, Congresswoman.
    [The prepared statement of Hon. Patsy T. Mink follows:]

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    Mr. Scarborough. Mr. Filner, let me start with you. It 
sounds as if you and our other two witnesses who are still here 
are somewhat at odds with each other. You are wanting to allow 
more Federal employees to retire at the age of 57. You want to 
lower their requirement age. And Congressman Traficant and 
Congresswoman Mink are talking about raising the age up to 60.
    Who is right and who is wrong?
    Mr. Filner. Obviously we are all right.
    Mr. Scarborough. Can you explain that?
    Mr. Filner. Let me repeat. What we are arguing are whatever 
the rules are for law enforcement officers apply to these 
Inspectors. If the mandatory age were raised, it would be 
raised for those coming into that classification under my bill. 
The question is fairness and morale and good common sense. Give 
status to those who are doing the job of law enforcement, who 
just simply are denied that status mainly out of a bureaucratic 
classification; and whatever rules apply to those with law 
enforcement status--that is a different argument--would then be 
applied to them. They are not arguing for the lower retirement 
age, they are arguing for the status and the benefits that come 
to being a law enforcement officer.
    Mr. Scarborough. So you would not have any objection if 
that age was raised to 60?
    Mr. Filner. Offhand I haven't thought about the legislation 
itself, but I doubt it. The question here is equity and 
training. And again my colleagues pointed out the costs 
involved in retraining new people, which are not calculated in 
some of your staff reports. The same applies here in even 
greater numbers. Without that status and retirement benefit, we 
are losing good men and women to other agencies. I see it in my 
own county where the local police departments and sheriff's 
department grab off these people and we have to train again. We 
lose money in that deal.
    Mr. Scarborough. We are going to spend the next month or 
two, 2\1/2\ months, trying to figure out how to stay within 
spending caps, trying to figure out how to get out of here 
before Christmas and pass all of the appropriations bills 
without busting the budget agreement that we passed a few years 
ago. Obviously there are costs, there are some costs that are 
involved here. You and I think Congressman Traficant and 
Congresswoman Mink have made some arguments that say hey, there 
is another way to look at this.
    Let me ask you to respond to what the Treasury Department 
is going to be saying later on. The Treasury Department witness 
is going to testify this morning that H.R. 1228 would cost that 
Department alone nearly $750 million in payroll costs over the 
next 5 years and impose an unfunded liability of about $1 
billion on the Federal Employees Retirement Fund. Have you been 
made aware of that by the Treasury Department; and if so, what 
is your response to that?
    Mr. Filner. Well, we have to give you in more detail some 
of the criticism that we have of some of the methodology used. 
The Department used the worst kind of assumptions that 
everybody retires immediately, and that shoots up the unfunded 
liability. That shoots up the cost to the agency.
    I think that is probably not a good assumption. If it were, 
as I said, we could talk about and I am sure folks would be 
happy to explore different mechanisms to bring down that cost, 
whether it were a phase-in over 10 years even. Again the base 
pay is not the major issue, it is the retirement benefits, and 
so they included that base pay increase as part of their 
assumptions.
    We will get you in writing our criticisms of the 
methodology. We calculated a much, much lower cost based on the 
figures that were given to us by the Treasury and other 
agencies in dealing with the employee associations that are 
involved in this. We came up with far different numbers. As I 
said, even with those lower numbers, we can get them lower by 
again taking some other steps as a compromise way. If we say 
this is our goal--and I think that is what this committee ought 
to do--the goal is equity and common sense. The costs have to 
be dealt with, but I would also argue that they did not factor 
in the savings that come from a lower turnover, lower loss of 
good people and productivity factors, without getting into 
philosophical agreements whether those caps mean anything or 
should mean anything anyway.
    Mr. Scarborough. I appreciate the offer to send something 
in writing. That will help us out.
    OPM has provided data that some of the intended 
beneficiaries of your bill have to face immediate mandatory 
retirement, that the agencies would no longer be able to hire 
applicants who are older than 37, thereby cutting off an 
important source of new employees that agencies would need to 
replenish their work force. H.R. 583 would have a similar 
impact on the Department of Justice. Can you address what we 
are going to be hearing from OPM and mandatory retirement?
    Mr. Filner. Again, my problem is some of what I call 
bureaucratic response, reasons why we can't do something 
instead of let's find ways to achieve what we want to.
    Clearly you can be flexible in that. You phase in, 
phaseout. You do it in a gradual way so you are not faced with 
those downsides. So if I said to them, find me a way to do this 
in which we do not get the problems, I think then they will 
come up with that. But they tend to come up with reasons why 
you can't do something rather than giving them directions that 
say we want this equity. We have certain cost containment. We 
don't want to have these employee disruptions that you 
mentioned. Tell me how you do that, and I think everybody would 
be happy to sit down and figure it out.
    Mr. Scarborough. When you say that you have agencies that 
are looking for ways to just say no, you are sounding a little 
bit like John Mica. You need to be careful there.
    Mr. Filner. Thank you.
    Mr. Scarborough. Congressman Traficant and Congresswoman 
Mink, Representative Filner talked about flexibility, that we 
can be more flexible in the way that we deal with this issue. 
Under current law, agency heads already have the discretion to 
waive mandatory retirement provisions affecting law enforcement 
retirement coverage so that employees can work until the age of 
60 with the approval of the agency head, and data shows that 
very few employees request such waivers.
    Would you address why the ability to waive is not enough 
and why your approach is not overkill to a problem that some 
will argue on the next panel is.
    Mrs. Mink. Because basically when you approach the question 
of selectivity, giving the agency head the option to waive the 
mandatory rule, you are opening up a very small window for 
selected individuals. And it seems to me that if it is OK for 
some to stay on until the age 60 or whatever age it is extended 
to, that we ought to renew the look at the whole situation.
    Given the fact that not very many are going to stay, why 
not allow those who want to stay until age 60 an open window to 
do so? They already have the options to opt out at early 
retirement, at age 57, having come on before 37 and maybe at 
27, and they can retire at age 50. That is a given option under 
the current rule.
    For those that are reaching mandatory age, they have come 
into the service just before 37 to get out at 57, but looking 
at the character of the force, the degree of needs that they 
have for experienced personnel in a very short period of time, 
it seems to me that for those individuals that I have talked to 
who sincerely feel that they are being discriminated against by 
being kicked out so early, that this option of staying on until 
age 60 is a reasonable accommodation to those requests rather 
than having them go through this complicated system of seeking 
a waiver and seeking an option from their superiors.
    Mr. Scarborough. I know that can be frustrating. I actually 
had an officer that handed me several times a Dear Colleague 
from Congressman Traficant telling me to take it to the 
appropriate authorities, and I just smiled and kept my mouth 
shut and kept walking.
    Congressman Traficant, why don't you address that?
    Mr. Traficant. Let me talk about the waiver business and 
about a term that is involved with the art of elective 
politics, take elected out and talk politics. The one waiver 
that was granted was to a driver of one of the congressional 
leaders. A couple of other officers that sought it couldn't get 
through the front door.
    My bill is straightforward, and let me tell you something. 
It opens up a cost analysis factor that Mr. Filner is now 
facing, that Mrs. Mink is now facing, but we can evaluate the 
impact of cost through a demonstration of something very 
significant where we need Capitol Police here. That is why my 
bill has been straightforward on the Capitol Police. It takes 
politics out of it. You don't have to know anybody or kiss 
anybody's ring, and everybody is treated the same.
    Like old Vince Lombardi said, ``Treat everybody like dogs, 
by everybody alike.'' That is what we need to do, Mr. Chairman. 
I am very concerned about the loss of Capitol Police personnel. 
We are out trying to hire them. I think Mr. Filner and Mrs. 
Mink's comment about training is justifiable because you have 
to look at the double training: the one that you train that 
leaves, and the one that you train to take their place. And 
then you put them in that situation where they are still prime 
targets for leaving. Then you take a look at the overtime you 
are paying and the impact on morale which no one has yet talked 
about. You begin to tear into the morale and fabric of a police 
force. This is Capitol Police. It is no longer the country club 
program.
    Let me just say this. The Metro area is here. Many of them 
have no retirement age limit at all and they pay more money. So 
I think these are justifiable concerns on a macro basis and 
also the micro initiatives which we face because our personnel 
are being recruited very heavily.
    Mr. Scarborough. Mr. Cummings.
    Mr. Cummings. I have just a few questions.
    I take it that when this 57 age limit was set, I imagine it 
was done for more than one reason. They thought that the people 
would not be fit to do the job at that age, and maybe it has 
something to do with economics, I am not sure. In Maryland a 
few years ago we increased the retirement age for judges. One 
of the things that was required, if I recall correctly, was 
that they had to go through a physical examination and mental 
examination to try to make sure that they were fit to do the 
job.
    I am just trying to look at this whole picture. There is no 
doubt about it, when you look at a fellow like John Glenn going 
up in space and coming back and being in what appears to be 
great shape, and the fact that people are living longer and 
healthier lives and the fact that I am pushing 50 and not 
anxious to retire from anywhere.
    I am just wondering in the legislation or in the rules are 
there provisions for that kind of thing? I am just trying to 
make sure that those concerns are covered. I have no doubt that 
there are people at 57 and 59 and 60 who can do a great job.
    Mr. Traficant. My bill calls for certain standards. They 
must be able to meet those standards and be tested relative to 
performance, both mental and physical. But keep in mind that 
the current policy that we are talking of expanding was 
initiated in 1948 when the average life span and the impact on 
health and performance was nowhere near the times. So we have 
gone now 50-plus years, 50-plus years with a system that we 
continued to maintain for a lot of reasons that I believe 
cannot simply be justified.
    Our bill calls for these officers must be able to meet the 
standards of the younger and other employees of the division, 
and must be able to perform on the level consistent with that.
    Mrs. Mink. I totally agree with that. I am told by those 
that I have talked to in this category that they are constantly 
taking medical and physical exams to stay qualified, so I don't 
tamper with that requirement at all. And for most of the ones 
that I have talked to, they have joined the law enforcement 
community well before age 37. They were probably 28, 30 years 
of age when they started, and can take advantage of early 
retirement at age 50. So if there is any problem, mental, 
physical or otherwise, they are able to get out at age 50 with 
20 years of service, and so that opportunity is left available 
for these workers who are having difficulty maintaining 
themselves. And there are all sorts of medical disability 
considerations as well.
    Mandatory retirement at age 65 even in many jurisdictions 
for a wide variety of occupations has been discarded as 
unconstitutional by the courts. Only for this community we 
maintain this very strict requirement that mandates retirement 
at age 57, even though you are fully qualified mentally, 
physically and otherwise. I think that is unfair for those who 
are able to continue to contribute. I have a long list of those 
who work in my jurisdiction and the number of long distance 
marathon runs they have won and all of the physical prowess 
awards they have received because of their incredible physical 
ability, yet they are all at that age where they are going to 
be forced to retire. I think that is a dreadful loss and comes 
from an archaic provision that was inserted in the law many 
years ago, and should be modified.
    Mr. Traficant. Fifty-seven years 1 day and not competent 
and mentally unstable; well, 57 years and 1 day, where are we 
at 56, 364 days? Overnight did we develop incompetent officers? 
If we have an unstable officer, man or woman who is physically 
or mentally impaired before age 57, they should be removed.
    An officer that attains the age of 57 that 1 day, certainly 
those are grounds and conditions that must be expected, but we 
have gone from 1948, we now have a whole different society and 
a whole different work force and I think that changes the 
dynamics of the whole situation very much.
    Mr. Cummings. I think Mr. Filner said it best. A lot of 
things make sense. The question is whether we have the will to 
do them. I want to thank all of you for what you have said, and 
we are going to do our best to come up with a reasonable 
solution to this problem. Thank you.
    Mr. Scarborough. Thank you, Mr. Cummings. Just quickly, one 
last issue. Representative Traficant said that he had fitness 
standards.
    Do you have fitness standards in your bill?
    Mrs. Mink. No. I can make a change.
    Mr. Traficant. I simply make a change on that day. I don't 
know if we asked for qualifications of firearms, and I might be 
mistaken. That would be additional language that the committee 
could insert, more of an oversight.
    Mr. Scarborough. I certainly appreciate all of your 
interest in this. Obviously I see the Capitol Police officers 
day to day and the great job that they do.
    I understand, Mr. Filner, living out in San Diego you 
certainly see day in and day out the great men and women who do 
such a great job. We certainly want to do everything that we 
can. We have to make sure that we move forward in a way that we 
can afford, and also a way that does not discriminate against 
other people that are already there. We do not want to force 
one class of people out to help another class. It is going to 
take us all getting together and walking through it, but I do 
think that it can be done. We appreciate your taking time out 
of your busy schedules.
    Let us call up the second panel. Hopefully we can get some 
testimony from our second panel before we have to go vote.
    Our next panel includes Mr. William E. Flynn, Associate 
Director, Retirement and Insurance Services, Office of 
Personnel Management. OPM has primary responsibility for 
management of the Federal retirement systems, and the agency 
harbors the government's institutional knowledge about the 
coverage of this enhanced retirement benefit.
    Ms. Kay Frances Dolan, Deputy Assistant Secretary for Human 
Resources, Department of the Treasury. Treasury would face the 
major effects of these proposals, since more than 16,000 of its 
employees would gain extended coverage if these bills were 
enacted.
    Our third witness is Mr. John Vail, Deputy Assistant 
Attorney General for Management, Department of Justice. DOJ 
would also face major work force changes if law enforcement 
retirement coverage were extended to assistant U.S. attorneys, 
Immigration Inspectors and DEA Diversion Inspection 
Investigators.
    Welcome all three of you here and thank you for coming to 
testify.
    [Witnesses sworn.]
    Mr. Scarborough. Mr. Flynn, welcome back. I have the 
feeling that you are going to say something that somebody 
agrees with on our staff because I don't know if you noticed 
your introduction, it says that OPM has primary responsibility 
and the agency harbors the government's institutional knowledge 
about the coverage of this enhanced retirement benefits.
    Mr. Flynn. Thank you, Mr. Chairman.
    Mr. Scarborough. I think that is the kindest introduction 
that you have ever received. Certainly much kinder than any 
introduction John Mica ever gave to you.

STATEMENTS OF WILLIAM E. FLYNN, ASSOCIATE DIRECTOR, RETIREMENT 
  AND INSURANCE SERVICES, OFFICE OF PERSONNEL MANAGEMENT; KAY 
FRANCES DOLAN, DEPUTY ASSISTANT SECRETARY FOR HUMAN RESOURCES, 
  DEPARTMENT OF THE TREASURY; AND JOHN VAIL, DEPUTY ASSISTANT 
     ATTORNEY GENERAL FOR MANAGEMENT, DEPARTMENT OF JUSTICE

    Mr. Flynn. Thank you very much. Speaking of harboring 
institutional knowledge, I was listening to the earlier panel, 
and of course have read the prepared testimony of others, and 
was thinking to myself that knowing what I know today, I sure 
wish I was around in 1947 when this thing got started; we might 
have gotten off on a different path.
    I appreciate the opportunity to be here today to talk about 
special retirement provisions for law enforcement officers, 
firefighters and other special groups. As you know, Federal 
employees who perform these functions, like Federal employees 
everywhere, make many contributions to the Nation's welfare. As 
we discuss the desire by some groups to come under the special 
retirement provisions or otherwise modify them, I think it is 
important to emphasize that our views on that topic are not 
intended in any way to diminish the worth and importance of the 
contributions made by those who are seeking an enhanced 
retirement benefit.
    Now, as has been said this morning, Mr. Chairman, special 
requirement provisions were first enacted in 1947 for special 
agents of the FBI, and over the years the provisions have been 
modified on a number of occasions. Groups have been added, 
including criminal investigators, prison guards, Capitol 
Police, air traffic controllers and, more recently, nuclear 
couriers at the DOE. These provisions exist to make it possible 
for the government to maintain the young and vigorous work 
force in occupations requiring such employees. Special 
provisions have never been intended to reward or compensate 
employees for performing a certain type of work.
    In most situations, the most effective way to recognize 
special factors associated with work is in the pay setting 
process itself. In this regard, it is noteworthy that prior to 
1974 the benefit computation for these special groups was only 
marginally more generous than the regular retirement formula. 
The more liberal current formula was only added to the law in 
order to enable the affected individuals who were subject to 
mandatory retirement to retire without experiencing economic 
hardship.
    Now, for a variety of reasons, the evolution of decisions 
granting special retirement coverage has created some 
situations that appear to have departed from the fundamental 
human resource management concerns that I have just mentioned. 
As a result, some coverage decisions are not always consistent 
and are regarded in some cases as inequitable. While attempts 
have been made to create consistency, even these efforts can in 
some cases create anomalous results. All of this has 
contributed to some confusion regarding eligibility, and that 
in turn naturally tends to create a situation where the primary 
reasons for establishing the provisions in the first place 
become further clouded.
    Mr. Chairman recognizes this, and you have raised a number 
of questions related to those fundamental human resource 
issues. We agree that greater attention to these issues is 
needed. Without fully analyzing the underlying rationale for 
granting coverage or otherwise changing the provisions 
themselves, we run the risk of creating a situation where the 
government unnecessarily assumes added benefit costs.
    Matters to be considered have already been mentioned: 
recruitment, retention, physical and mental demands of 
employment, and many other factors. While your letter asks a 
number of questions in these areas, we do believe that more 
study and analysis is needed to provide useful answers, 
particularly in the context of the specific changes you have 
under consideration.
    One more point that I think is important to make, and that 
is that once those decisions have been made, we believe that it 
is essential that funding accompany any of them. It is 
important that prospective costs be financed as they are 
incurred and that provisions be established for the additional 
costs of benefits resulting from a change in the treatment of 
prior service. To create an expense without providing a funding 
mechanism fails to place responsibility for those costs where 
they belong and requires them to be addressed in the future.
    The current dynamic normal cost of requirement is 11\1/2\ 
percent for regular employees under the Federal Retirement 
System, and 24.6 percent for law enforcement officers, 
firefighters and others covered under the special retirement 
provisions. In the Civil Service Retirement System, the 
comparable figures are 24.2 percent and 40 percent.
    Now, obviously the rates are higher because of the enhanced 
benefit structure and earlier eligibility for retirement. 
Moreover, it is important to understand that the rates fund 
only the cost of the service to which they apply and do not 
fund credit for prior service.
    Now, Mr. Chairman, you requested an estimate of what it 
would cost to cover all of the groups seeking inclusion today. 
A few months ago, our actuary's office prepared such an 
estimate. While some of the underlying assumptions are not 
quite current, I think the analysis will satisfy our purposes 
today. The groups that we looked at included police, guards, 
other than those who are currently covered, Inspectors at the 
Immigration and Naturalization Service, Customs Inspectors, 
park rangers, Alcohol, Tobacco and Firearm Inspectors and a few 
other groups.
    To include such groups with credit for past service would 
add about $1\1/2\ billion to the underfunded liabilities of the 
retirement fund. Now that estimate already takes into account 
the additional cost to employing agencies of retirement 
deductions at the higher contribution rates. In other words, to 
bring all of these groups in would cost $1\1/2\ billion plus 
the future additional employing agency employee contributions 
at the higher rates.
    I think that pretty well concludes my opening statement, 
Mr. Chairman. I would be happy to answer any questions you may 
have.
    Mr. Scarborough. Thank you, Mr. Flynn.
    [The prepared statement of Mr. Flynn follows:]

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    Mr. Scarborough. Ms. Dolan.
    Ms. Dolan. Mr. Chairman and members of the subcommittee, I 
am pleased to speak concerning H.R. 1228, a bill to extend law 
enforcement retirement benefits to certain occupations within 
the Treasury Department. As you know, the Department is 
comprised of 14 bureaus whose missions range from drug 
interdiction to international finance. The Department is 
committed to supporting every occupation in carrying out its 
mission while managing resources in a responsible manner. In my 
position as Chief Human Resources Executive for the Department, 
let me assure you that Treasury management takes a great 
interest in the welfare of our employees, and we strive to 
ensure that employees receive the maximum value from the 
available benefits package.
    Both the Civil Service Retirement System and the Federal 
Employees Retirement System provide enhanced retirement 
benefits for certain classes of employees, including Federal 
law enforcement officers. These special retirement provisions, 
often known as 6(c) coverage, allow these classes of employees 
to retire earlier than other employees and were created because 
of a belief that the strenuous physical requirements of these 
positions mandate a young and vigorous work force.
    The law also provides for a mandatory retirement age and 
the authority of agency heads to set a maximum entry age for 
appointment. Treasury has a maximum entry age and reentry age 
of age 37. Law enforcement officers are also granted other 
benefits such as higher entry level pay and higher rates of pay 
in some localities. The current statute does not specify the 
positions eligible for this enhanced retirement benefit. 
Rather, it defines a law enforcement officer as someone who 
primarily investigates, apprehends, or detains individuals 
suspected or convicted of criminal offenses. For the most part, 
this has been defined as positions falling within the criminal 
investigator or GS-1811 series.
    Of the 127,000 full-time Treasury employees, more than 
11,000 are GS-1811s or others covered under the special law 
enforcement retirement provisions. H.R. 1228 proposes extending 
law enforcement retirement benefits to nine specific 
occupational categories with Treasury: Customs Inspectors, 
Customs Canine Enforcement Officers, Customs Operations 
Enforcement Officers, Customs Detection System Specialists 
Airborne, Customs Flight Engineers, Police Officers from the 
Bureau of Engraving and Printing, Secret Service Special 
Officers and IRS Revenue Officers.
    There are approximately 16,000 employees in these nine 
occupations. Under current statute, these occupations are not 
covered.
    H.R. 1228 would change this by expanding these enhanced 
retirement benefits to a larger number of employees. The 
administration is in the process of reviewing the complex 
nature of compensation for law enforcement and, in particular, 
port of entry inspectors. This review is not yet complete, and 
therefore we cannot support extending law enforcement coverage 
at this time.
    In addition, extending this coverage has significant 
budgetary impact which must be considered in making any 
determination to extend these special benefits. Enhanced law 
enforcement benefits cost employing agencies and the retirement 
fund more than regular employee benefits. In March 1998, the 
Treasury Office of Inspector General published an analysis of 
the costs associated with granting law enforcement retirement 
benefits to 8,000 Customs Inspectors and Canine Enforcement 
Officers. This detailed analysis has been submitted to the 
committee for its review.
    The annual increased cost for such coverage would be 
approximately $75 million per year. If retroactive retirement 
service credit is granted, that would create an unfunded 
liability of $538 million. Again these figures are based on an 
analysis of approximately 8,000 employees. And since H.R. 1228 
covers about 16,000 Treasury employees, we could expect the 
cost to be roughly double, or $150 million per year, which will 
increase over time and create, if retroactive retirement 
service credit is granted, an unfunded liability of $1 billion. 
We haven't had time between the notice of the hearing and 
today's hearing to do a detailed analysis using the IG model, 
but we would be happy to do so and report the cost to the 
committee within 45 days.
    Simply stated, we don't have the budgetary resources 
necessary to cover these costs. Because of the current 
statutory spending caps that were outlined in the 1997 budget 
agreement, the resources to pay for extending this coverage 
would have to be taken from other areas, and the resulting 
consequences need to be carefully thought through. Let me 
reiterate that the Department fully supports its work force and 
I believe this is evident in the caliber of the work we do and 
the people we employ.
    The current statute established a standard for determining 
which positions are eligible. Changes to the statute by 
including a broader and more diverse range of occupations will 
have significant budgetary impact, with possible related but 
unintended consequences, requiring careful consideration.
    Thank you for the opportunity to appear before you today. I 
would be happy to answer any questions you may have.
    Mr. Scarborough. Thank you very much for your testimony.
    [The prepared statement of Ms. Dolan follows:]

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    Mr. Scarborough. Mr. Vail.
    Mr. Vail. Mr. Chairman, thank you for the opportunity to 
testify about the Department of Justice's views on law 
enforcement retirement coverage for several classes of 
Department employees. With respect to H.R. 1228 and Immigration 
Inspectors, the Department views this legislation as part of an 
overall effort to ensure that Federal employees in border 
control positions with similar duties receive equivalent pay 
and other benefits. While we understand that this is an area of 
significant interest to Immigration Inspectors and the 
Immigration and Naturalization Service, it is also a complex 
issue that requires detailed planning and coordination among 
Federal agencies. As a result, the administration is studying 
the issue of parity in pay and benefits, and further work will 
be required before all of the policy questions raised by this 
matter can be resolved. Until that time, the Department cannot 
endorse amending title 5 to provide law enforcement retirement 
coverage to Immigration Inspectors.
    The DEA Diversion Investigators play a vital role in the 
Nation's antidrug efforts by conducting regulatory 
investigations to detect the diversion of legal, controlled 
substances into the illicit drug markets. However, it is our 
view that they do not perform front line law enforcement 
duties, and the Department cannot support extending law 
enforcement retirement coverage to Diversion Investigators. 
They do not carry weapons or have the authority to execute 
arrest search warrants. They do not conduct surveillance or 
undercover work of any kind and they are not required to 
maintain a high level of physical fitness.
    Like my colleagues, I am also concerned about the fiscal 
impacts of extending law enforcement coverage to this class of 
employees. We estimate that it would cost the Department about 
$2.8 million in fiscal year 2000 to prospectively implement law 
enforcement coverage, while retroactive law enforcement 
coverage would cost more than $30 million. We have not 
requested and do not anticipate funding for these potential 
obligations in the Department's fiscal year 2000 budget, and 
for these reasons we cannot endorse law enforcement retirement 
coverage for Diversion Investigators.
    With respect to H.R. 583, the Department recognizes that 
assistant U.S. attorneys are hardworking, dedicated employees 
whose jobs are increasingly demanding and sometimes dangerous. 
Indeed, some assistant U.S. attorneys have received threats 
against their lives and against their families. We appreciate 
that some assistant U.S. attorneys confront greater risk in 
their jobs than other lawyers in the Department or elsewhere in 
the government.
    However, we do not believe that law enforcement retirement 
coverage is appropriate for assistant U.S. attorneys. As 
counsel for the United States, they do not perform the kind of 
front line law enforcement duties anticipated by the statute. 
Assistant U.S. attorneys do not carry weapons as part of their 
duties. They do not have the authority to execute arrest or 
search warrants or conduct surveillance work and they are not 
required to maintain any level of physical fitness. 
Furthermore, the law enforcement coverage for assistant U.S. 
attorneys could significantly alter our work force. Current law 
enforcement retirement provisions would require the immediate 
mandatory retirement of more than 80 seasoned assistant U.S. 
attorneys, and would give more than 400 the opportunity to 
retire on an immediate annuity, resulting in the potential loss 
of more than 500 highly skilled assistants. Applying physical 
standards could deprive the Department and the United States of 
the outstanding services of assistant U.S. attorneys and 
applicants with physical disabilities.
    Finally, law enforcement coverage for assistant U.S. 
attorneys would be costly. The proposal in H.R. 583 would cost 
the U.S. attorneys' appropriation more than one-half billion in 
the first year, $300 million to pay retroactive employer and 
employee contributions to the requirement system as required by 
section 3(e)(2) of the bill, $220 million in interest, and $60 
million for the first annual agency contribution; the last, a 
cost which would recur every year. For these reasons, we cannot 
endorse law enforcement coverage for assistant U.S. attorneys.
    In conclusion, I thank the subcommittee for giving the 
Department of Justice the opportunity to testify on this 
matter, and I will be happy to answer any questions you may 
have.
    Mr. Scarborough. Thank you for your testimony.
    [The prepared statement of Mr. Vail follows:]

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    Mr. Scarborough. Let me start with some questions regarding 
some data that OPM has given us. They have given us 
considerable data on the occupations that are covered by these 
proposals before us.
    The data that they have given us show few difficulties in 
hiring of these categories, lower than average rate of 
attrition, and minor movement from occupations not covered by 
the enhanced retirement benefit to the jobs that are covered.
    So I guess my question is: In your studies do you find that 
your agencies have difficulty recruiting and retaining 
employees in the employment classifications that are being 
proposed for enhanced retirement benefits? Do you see that 
there is a serious problem that needs to be addressed?
    Mr. Vail. I will be happy to answer, Mr. Chairman.
    In the Department of Justice, as a general rule we have 
very little difficulty in recruiting for assistant U.S. 
attorneys, and I don't believe that there is any difficulty in 
recruiting for Diversion Investigators within the Drug 
Enforcement Administration.
    There were certain data, or allusions were made in earlier 
testimony to the loss of Immigration Inspectors to other 
occupations, and indeed that is a fact. I think we are 
fortunate that most of those losses are within the Department 
and within the Immigration and Naturalization Service, but it 
certainly is true that there are some Immigration Inspectors 
who want to leave that occupation because of the absence of 
this benefit.
    But at this point, as I say, while Department leadership 
has been supportive of law enforcement coverage for Immigration 
Inspectors, we recognize the need to deal with Treasury and 
other agencies which have border enforcement personnel and we 
simply cannot set the cost factors aside.
    Ms. Dolan. From the standpoint of Treasury, there might be 
one or two exceptions among the 9 occupations, but in general 
these occupations would not be characterized as ones that are 
particularly difficult to recruit for, nor that have unusual 
retention problems.
    Mr. Scarborough. Mr. Flynn.
    Mr. Flynn. I think, Mr. Chairman, we have provided the 
aggregate information, and the testimony of the two witnesses, 
I think, breaks that down a little bit and makes it more 
understandable.
    Mr. Scarborough. You have testified that granting law 
enforcement retirement to various groups would be very costly. 
Mr. Flynn and Ms. Dolan have estimated that it would exceed $1 
billion. Ms. Dolan, the subcommittee accepts your offer to 
provide a more detailed estimate. It will be helpful to have 
that, and so we will leave the record open 45 days for you to 
forward that to us.
    What kind of impact would the costs have on Federal 
personnel generally, and in the Treasury and Justice 
Departments in particular?
    Mr. Vail. I would like to address the issue of coverage for 
assistant U.S. attorneys. We have indicated the one time cost 
of providing the retroactive benefit that this bill would 
provide is I think in the neighborhood of $600 million. That is 
approximately half of the appropriation for the U.S. attorneys 
in any given year.
    The additional benefit would also require ongoing costs. 
Our first-year estimate for additional contributions of 
approximately $60 million, which would have a significant 
effect on the ability of the U.S. attorneys to carry out their 
operations.
    The Diversion Investigator impact, because Diversion 
Investigators represent a much smaller portion of the Drug 
Enforcement Administration, would be a less dramatic cost but 
certainly a concern. And as I have indicated, we are in the 
process of studying, along with the Department of Treasury and 
OMB, the impact of the cost of extending retirement coverage to 
Immigration Inspectors.
    Ms. Dolan. From Treasury's perspective, as Mr. Vail said, 
we are engaged in a study right now to look at the compensation 
package particularly for the Inspectors. The largest cost 
clearly is in the unfunded liability. We have not had 
discussions about how that cost might be met. The annual cost 
is also large and we have not identified the necessary offsets, 
as I testified, for that. So the costs are considerable and 
that is part of the review that we are engaged in.
    Mr. Scarborough. Mr. Vail, did you say that the $600 
million that this would cost is half of what your annual 
appropriation is?
    Mr. Vail. For the U.S. attorneys, that is correct.
    Mr. Scarborough. That is quite a mountain to climb.
    Mr. Vail. That is the one-time cost for providing 
retroactive coverage as the bill requires.
    Mr. Scarborough. Right. All right. A few months ago at a 
legislative hearing that we had for a bill to improve 
participation in the Thrift Savings Plan--we had to include 
provisions to offset some mandatory cost effects--and the cost 
of that bill over 5 years was only a total of $35 million 
governmentwide. That is $35 million spread out over 5 years 
covering all agencies. At the time, employees unions argued 
that it would cause RIFs. If you want to use that sort of 
logic, let me ask you by their logic how many RIFs would be 
caused by the proposals that we have discussed today?
    Mr. Vail. I don't know that we can provide an answer, Mr. 
Chairman. There are any number of tools, if an agency had to 
absorb a cost like this, that the agency would look at in terms 
of absorbing $60 million or $2 million or whatever the effect 
on the individual appropriation was.
    Personnel reductions would be one of those. There would be 
other areas that the agencies would have to look at as well.
    Mr. Scarborough. Ms. Dolan.
    Ms. Dolan. A reduction in force would certainly not be a 
route that Treasury would want to embark on. The costs of a 
reduction in force I know have been studied by GAO very 
recently and they say you can actually end up spending more 
than you save. So a reduction in force is very, very 
disruptive, and you have to lose more people than you need to 
in the short run in order to make long-term savings.
    Mr. Scarborough. If the employees unions stood up and 
screamed about $35 million spread over 5 years over all 
agencies, and that was something that they opposed, I find it 
interesting that they are supporting these proposals that will, 
if fully implemented, cost over $1 billion and will be 
devastating. And don't tell me that it is not going to cause a 
lot of RIFs because it is if it happens. There will be winners 
in these proposals, but there will definitely be losers unless 
we decide to spend an awful lot more money over the coming 
years.
    Let me ask one final question and then turn it over to Mr. 
Cummings.
    Each of you have said that the question who should be 
covered by law enforcement coverage is a complex one that is 
being reviewed right now by the administration. When did the 
administration begin the review, and when will it be completed? 
What is your agency's role in that review and what factors are 
you analyzing in the study?
    Ms. Dolan. We were just looking at each other trying to 
remember when it started.
    Mr. Scarborough. 1947.
    Ms. Dolan. The current one. About a year ago?
    Mr. Vail. Yes. We have been involved, to the best of my 
recollection, since the last appropriation cycle, Mr. Chairman, 
and have been working particularly with respect to the issue of 
Immigration Inspectors. Our review has not included Diversion 
Investigators or assistant U.S. attorneys. Those are not 
classes of employees that we have considered as potentially 
subject to the retirement coverage.
    In terms of the potential timing of the outcome, I don't 
think that I can answer the question, I am sorry.
    Ms. Dolan. Yes, I think we would need to defer to OMB as to 
when it will be completed.
    Mr. Scarborough. OPM, when will it be completed?
    Mr. Flynn. I think Ms. Dolan's reference is to OMB, an 
organization I cannot speak for. I would simply add, Mr. 
Chairman, that in addition to the occupations that are under 
consideration at both Treasury and the Department of Justice, a 
number of other agencies employ individuals who have sought 
this or similar kinds of treatment for groups of their 
employees that we are engaged in discussions with as well.
    These are important issues. It is interesting. Each 
occupation presents its own set of considerations and concerns. 
Likewise, I can't tell you when we will complete that, but we 
are working with the individual agencies with an eye toward 
reaching some resolution of this matter that works.
    Mr. Scarborough. Thank you. Mr. Cummings.
    Mr. Cummings. Mr. Flynn, give me your opinion on this 57 
age increase with regard to mandatory retirement.
    Mr. Flynn. Thank you, Mr. Cummings, for asking. It was 
stated by the early panel that mandatory retirement age at 57 
came about in 1947 or 1948. It was actually in 1974, if I have 
this correctly. So that mandatory retirement age, while it is 
now 20 some years ago, is not 50-some years as you may have 
come to the conclusion from listening to the earlier testimony.
    This is one of these very complex areas. If you think about 
the fundamental underpinning for the basis for this type of 
enhanced retirement coverage, young, vigorous, relatively 
healthy, mentally and physically agile work force, and the fact 
that the higher retirement accrual rates are there precisely 
for the purpose of making sure that people have income security 
in their retirement years, albeit they retire sooner than 
others, to then come back and today look at the mandatory 
retirement age and suggest that it should be limited 
altogether, raised, what have you, a lot of different 
proposals, begins to question that very foundation that 
underlies the retirement credit in the first place. That is 
what makes this issue so complicated and complex.
    I think that is just one of the factors that we are going 
to have to take into consideration, but the raising of the 
minimum retirement age, with the single exception perhaps of 
aligning the mandatory retirement age for firefighters with the 
general retirement age of 57 for others, is something that is 
quite complicated and will take more study.
    Mr. Cummings. If you can change one aspect of the current 
retirement benefit, what would that be?
    Mr. Flynn. Well, I think, Mr. Cummings, one of the things 
that has proved especially difficult in the evolution of 
retirement coverage with this particular type of situation is 
the fact that over the years, unlike position classification 
decisions that are made in terms of grade levels that also 
control compensation, there has been a tendency to regard 
retirement coverage as a matter of entitlement that is subject 
to external appeal and even review under the Federal courts.
    If you think of this for a moment, that what we were trying 
to do in 1947 and throughout has been to make the right human 
resource decision with respect to a group of individuals 
aligned with what an agency is trying to do strategically in 
terms of the work of the Nation, I think you begin to regard 
this as first a human resource decision that can and should be 
made administratively.
    Part of the difficulty that I think we have seen over the 
years has been the evolution of this into an issue of 
entitlement rather than an issue of how organizations get their 
jobs done well and compensate their people fairly. So that is 
probably the area of change, if I were back in 1947, I might 
offer a few suggestions on.
    Mr. Cummings. Back in 1993 when the Post Office and Civil 
Service Committee held a hearing on OPM's recommendations for 
new pay and job evaluation for Federal law enforcement folks, 
were any of those recommendations implemented?
    Mr. Flynn. If you don't mind, Mr. Cummings, I will have to 
go back and respond to that for the record. This predates my 
arrival in this area and I am sure that we have a good answer 
for that, but if you don't mind I would like to check on that.
    Mr. Cummings. No problem. Thank you.
    Mr. Scarborough. Thank you, Mr. Cummings. We certainly 
appreciate you three testifying, and you certainly have given 
us some insight regarding the difficulties we face. Thank you, 
and we will be in recess until after the vote.
    [Recess.]
    Mr. Scarborough. We will begin the third panel now, and on 
the third panel we have Ms. Colleen Kelley who is newly elected 
national president of the National Treasury Employees Union, 
her organization represents many of the employees who are 
seeking the enhanced retirement coverage. She will be followed 
by Mr. Gilbert Gallegos, national president of the Fraternal 
Order of Police, and Mr. Peter J. Ferrara, chief economist, 
Americans for Tax Reform, an organization concerned about 
public expenditures at all levels.
    As with all of our hearings, the record will remain open 
for 2 weeks to provide the submission of additional comments. 
Let me ask if our panelists will rise and take the oath.
    [Witnesses sworn.]
    Mr. Scarborough. Ms. Kelley, we will begin with you.

 STATEMENTS OF COLLEEN M. KELLEY, NATIONAL PRESIDENT, NATIONAL 
 TREASURY EMPLOYEES UNION; PETER J. FERRARA, CHIEF ECONOMIST, 
  AMERICANS FOR TAX REFORM; AND GILBERT G. GALLEGOS, NATIONAL 
              PRESIDENT, FRATERNAL ORDER OF POLICE

    Ms. Kelley. Thank you. Chairman Scarborough, my name is 
Colleen Kelley, and as you mentioned I am the newly elected 
national president of the National Treasury Employees Union. I 
was elected in August and I am very pleased that my first 
appearance in Congress is before your subcommittee to offer 
NTEU's strong support for 20-year retirement for U.S. Customs 
Inspectors and Canine Enforcement Officers as well as Revenue 
Officers of the IRS. These men and women put themselves in 
harm's way every day to uphold the laws passed by Congress. 
They are subject to the same perils, meet the same rigorous job 
standards and rely on the same investigative skills and 
techniques as other law enforcement officers who enjoy the 
significant benefits of law enforcement retirement, yet they do 
not receive these benefits. Common sense and simple justice 
demand an end to this inequity.
    I know that Congressman Filner already introduced Customs 
Inspector Robert Labrada, but I would like to again recognize 
him and his fellow Inspector, Nicholas Lira, who were victims 
of a violent gun attack in April 1997. The horrifying scene of 
their attack was captured on the surveillance cameras at the 
Calexico port that day.
    I have provided each subcommittee member with a video copy 
of the tape from that day. I urge each of you to watch the 
videotape and to ask yourself whether you think that Inspectors 
Labrada and Lira should be denied the benefits that other law 
enforcement officers enjoy. I ask the committee to ask what 
Congressman Filner already did. The irony, if Inspector Labrada 
had been killed that day in April 1997, his name would have 
been added to the wall at the National Law Enforcement Memorial 
here in Washington, DC. He would have been added as a Federal 
law enforcement officer who was slain in the line of duty. But 
in life he is denied the title and the benefits that befit that 
job.
    Customs Inspectors and CEOs, Canine Enforcement Officers, 
make up our Nation's first line of defense on the war on drugs. 
The Customs Service continues to seize more illegal narcotics 
than any other Federal agencies combined, and Inspectors and 
CEOs seize more than any Customs employees. They are required 
to undergo training at the Federal Law Enforcement Training 
Center, where they must learn criminal law, arrest authority 
and techniques, self-defense tactics, frisk and pat down 
procedures, handcuffing and takedown techniques, antiterrorism 
and firearms use.
    Inspectors carry guns and are required to qualify on the 
firing range three times a year. In the course of fighting the 
war on drugs, these men and women have been shot at, beaten, 
kicked and dragged behind cars. Sadly, 23 Customs Inspectors 
have been killed in the line of duty. Customs Commissioner 
Raymond Kelly recognizes the dedication of Customs Inspectors 
and CEOs, and he told me just yesterday that he personally 
supports law enforcement status for these dedicated men and 
women.
    The job of the IRS Revenue Officer is also one of the most 
hazardous in the Federal Government. Revenue Officers are 
required to call on delinquent taxpayers from crime-ridden city 
neighborhoods to remote and isolated rural areas. They have 
been held hostage, attacked by dogs, hit by cars, threatened 
with guns and knives, tire irons and bombs. Delinquent 
taxpayers are sometimes in very desperate financial or legal 
trouble. The neighbors and families of delinquent taxpayers 
have also threatened to shoot Revenue Officers if they don't 
leave the premises.
    Revenue Officers must collect from drug dealers, organized 
crime figures and tax protesters. Many of these groups advocate 
violence against the IRS. One RO told me about the time he 
visited a taxpayer's home and saw a sign in the window that 
read ``IRS personnel shot on sight.''
    All revenue officers can tell you about the times that they 
feared for their lives. In 1997 we asked ROs to describe these 
experiences. I would like the subcommittee's permission to have 
some of these responses included in the record. I have a 
package of these here, if I can do that.
    Mr. Scarborough. Without objection, that is fine.
    [The information referred to follows:]

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    Ms. Kelley. Thank you. They are truly indicative of he 
magnitude of physical danger that Revenue Officers are exposed 
to every day on the job. The adversarial nature of the Revenue 
Officer/delinquent taxpayer relationship means that danger and 
confrontation are part of their daily routine. These stresses 
can be exacerbated with age and lead to physical problems 
including high blood pressure, insomnia, depression and even 
suicide. The nature and hazards of these jobs clearly support a 
20-year retirement benefit for revenue officers.
    When law enforcement officers from different agencies join 
forces on a drug raid or search a boat for armed smugglers, 
Customs Inspectors and CEOs are often the only officers on the 
scene who are not eligible for law enforcement retirement. They 
are haunted by the same risk of death or injury, but when it 
comes to inferior benefits, the Customs Inspectors and CEOs 
stand-alone.
    Revenue Officers of the IRS are subjected to the same gross 
inequities when they join with law officers from other Federal 
agencies and their State and local counterparts on dangerous 
and risky operations. These dedicated men and women are united 
by the violence and the threats that they bravely endure. But 
when it comes to retirement benefits, the revenue officers go 
to the back of the line.
    I ask this subcommittee to consider the sacrifices that 
Inspector Labrada and thousands of others like him have made to 
enforce the laws of our country and to provide them with the 
benefits that they deserve by passing H.R. 1228. Thank you very 
much.
    Mr. Scarborough. Thank you Ms. Kelley.
    [The prepared statement of Ms. Kelley follows:]

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    Mr. Scarborough. Mr. Gallegos.
    Mr. Gallegos. Thank you, Mr. Chairman. My name is Gilbert 
Gallegos and I am the national president of the Fraternal Order 
of Police; and with more than 283,000 members, we are the 
largest organization of law enforcement professionals in the 
Nation. I am here to bring to your attention the concerns of 
the more than 25,000 Federal officers who are members of our 
organization regarding the issue of law enforcement retirement.
    The issue of who is and who is not a law enforcement 
officer for retirement purposes is a source of great confusion 
for the tens of thousands of police officers employed by the 
Federal Government. For them, law enforcement status is not 
about bigger paychecks or enhanced benefits but about achieving 
parity with their fellow officers. And it was interesting to be 
here earlier when I heard the administration bureaucrats talk 
about further study, and I urge what we need is not further 
study but action on H.R. 1228. That is what we really need.
    I also serve as a commissioner on the Commission for the 
Advancement of Federal Law Enforcement. I am not speaking today 
on behalf of the Commission, but in the last 2 years of the 
study that we have been doing that will be reported at the end 
of the month to Congress, I have never in my life seen such a 
mishmash of how police agencies operate as in the Federal 
Government. I come from the local agency, and if we operated in 
this way, we would be out of business. And I think it is all 
about parity.
    In a local law enforcement agency like Pensacola or 
Tallahassee, the backbone of those departments are the 
uniformed police officers. If you have any chief of police with 
any integrity, they will tell you that the backbone of their 
Department is the front line uniformed officer. That is the way 
that I was taught, and I have always thought that way. In the 
Federal system we treat them differently. And I think it is the 
reverse.
    I think we have to do something, and H.R. 1228 is the first 
step to deal with that and ensure that these uniformed officers 
are treated fairly. We know that the problems exist. We know 
that there is an increase in both domestic and international 
terrorism and that there are definite threats to the employees 
of the Federal Government and its facilities. We also know that 
the uniformed officer is the first line of defense to protect 
employees in the facilities of the Federal Government.
    I am not here to argue that security guards should be 
entitled to 20-year retirement, but they are not viewed as law 
enforcement and they don't meet the definition of a law 
enforcement officer. That means the people who make arrests, 
have the authority to make arrests, conduct investigations, 
wear a uniform and can take action. That is the difference 
between a law enforcement officer and a security guard.
    The majority of the officers who do not receive law 
enforcement officer status are GS-083's in the executive branch 
of the Federal Officer System.
    The way that I look at it is if you look at a Pensacola 
police officer, whether he is a uniformed officer or a school 
resource officer or an investigator, each position has the same 
retirement. They are not treated any differently. You go to any 
State or local agency and it is the same way. I think that is 
really the problem with the system that we have within the 
Federal Government.
    The duties that we have talked about--the right to make an 
arrest, carry firearms, advise suspects of the Miranda rights, 
conduct criminal investigations--does not take into account the 
full scope of what the uniformed officers' job is all about. 
Customs Inspectors and Immigration Inspectors have also 
consistently been denied the additional retirement benefit. It 
is time that this changes, because the duties that a Federal 
uniformed officer performs, is the same as what 99 percent of 
the law enforcement officers do at the local level all across 
the country; but yet, Federal officers are treated differently.
    The OPM bureaucrats talked about a study completed in 1993, 
and a subsequent plan to establish a new pay and job evaluation 
system for Federal law enforcement officers. That is why I say 
it is not time to study, it is time to act. And that is what we 
would try to encourage you, Mr. Chairman, to do.
    The Merit Systems Protection Board has been extremely 
active in deciding on a case-by-case basis as to what qualifies 
an employee for enforcement officer and retirement status. If 
the present situation stays in place, as some people have 
advocated, you are going to see more and more cases going to 
the Merit Systems Protection Board. Already in California and 
in Virginia, the Board has ruled against the different agencies 
and said you have to give these officers 20-year retirement. If 
Congressman Filner's legislation does not become law, you are 
going to see more and more such appeals.
    We also heard about cost this morning, and I challenge the 
Congress to really set aside this issue and consider the 
importance of public safety. I think that is the fundamental 
question: Do we want qualified officers, officers who are 
physically fit, officers who can at age 60 perform the same job 
as when they were age 30? And, believe me, I have been a cop 
since 1964. I am 55 years old, and I cannot do the same things 
I could as a 25-, 30-year-old police officer, and I challenge 
any Federal officer to say otherwise.
    What they can say is ``extend the mandatory retirement age 
and we can still do the job,'' and I challenge that because I 
don't believe it. I know in my own case I cannot do the same 
job as I did as a young patrol officer. It is a young person's 
profession. It has to be kept that way, and everyone has to be 
treated the same. And unfortunately under this system, we don't 
treat everyone the same.
    I agree with what was said earlier when Congressman 
Traficant said certain people apply for exceptions to the rule 
at age 57 retirement. Some get it and some don't. I think that 
something has to be done to make it equitable, and I think that 
is the challenge for this subcommittee, to make sure that 
everyone is treated equitably and that is what I would implore 
you to do.
    In the end, I think it comes down to the tradeoff of do we 
want a professional law enforcement group of uniformed officers 
or do we want security guards. And I think the American people 
and you in the Congress, and in the administration, want 
professional law enforcement officers, so we have to set aside 
the cost. And if agencies are unable to fill their staffing 
levels, I say that is poor planning, because if State and local 
agencies can do it, I am sure that the Federal system can.
    The Department that I came from, we knew 2 to 3 years ahead 
of time how many people we had to plan for in retirement and 
how many we had to hire to replace those officers. State and 
local agencies do it all the time. Why can't the Federal 
Government? I don't think that the will has been there. Now we 
have to pass H.R. 1228, and I think that will be a big step in 
providing equity to the uniformed officers who are really the 
backbone of the Federal law enforcement system. Thank you.
    Mr. Scarborough. Thank you, Mr. Gallegos, for your 
persuasive testimony.
    [The prepared statement of Mr. Gallegos follows:]

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    Mr. Scarborough. We will now see if Mr. Ferrara is so 
persuaded to set aside the cost issue.
    Mr. Ferrara. Thank you, Mr. Chairman. Let me focus on a 
couple of points. Ms. Kelley focused on the point that the 
people she would like to expand the benefits to are, ``subject 
to the same perils as other law enforcement officers.''
    Well, in panel 2, the agencies themselves testified that is 
not the case. They said that in each case the people they 
wanted to expand the benefits to do not have the same front 
line law enforcement responsibilities that these benefits were 
designed for. They don't carry weapons and don't apprehend 
criminals, et cetera. The agency said they are not subject to 
the same perils as other law enforcement officers. And that 
completely displaces the parity issue. It is not the same job 
and therefore it is not the same--the same benefits should not 
apply.
    Despite all of the issues raised by Ms. Kelley, the 
agencies also testified there is not an employment problem. 
They don't have problems filling the positions or retaining 
workers. And if there is not an employment problem, then from 
the perspective of taxpayers, it would be totally illegitimate 
to expand the pay and benefits further. We should not pay more 
than necessary to recruit the qualified personnel to fulfill 
these positions, and the agencies say with the current pay and 
benefits, they are achieving that goal and therefore it would 
be a waste of taxpayer funds to throw additional benefits on 
top of what is already being spent.
    So it is not an issue, as Mr. Gallegos says, do we want 
professional law enforcement agents or not. We already have a 
professional law enforcement force that is performing the job 
quite well at the current pay and benefits. He argued that we 
should set aside cost and focus on public safety. We are 
already achieving the public safety goals with the current pay 
and benefits. So it would be a waste of hard-earned taxpayer 
dollars to throw additional pay and benefits on top of what we 
are already paying that are achieving the goal.
    Another point I would like to raise is let's add into this 
discussion the fact that there is life after government 
employment. People who retire after 20 years, they go to work 
in the private sector. A perfect example is an assistant U.S. 
attorney. A U.S. attorney works for 20 years and retires from 
his Federal employment. He would be getting Federal employee 
retirement, and he goes to work for a private law firm based on 
all of the experience he had for 20 years as assistant U.S. 
attorney, making much more than he ever did as assistant U.S. 
attorney, and then he is getting taxpayer-funded retirement 
benefits on top of that pay? I would submit that falls into the 
category of waste, fraud and abuse that we have talked about as 
the kind of spending that should be eliminated.
    The same is true of other Federal employees. They gain 
expertise as Customs Inspectors and Revenue Officers and they 
go out in the private sector and utilize that expertise to earn 
even more. And the idea that the taxpayer should be paying 
benefits to these people who are still working and still 
earning good pay in the private sector is completely 
unjustifiable.
    So we would argue that--we strongly oppose this legislation 
and we strongly oppose expanding these benefits further. In 
fact, we suggest that in any study being conducted, we need to 
study the issue of what people do after they leave Federal 
employment in these occupations. Do they leave Federal 
employment after 20 years and find that they cannot work? Or do 
they leave Federal employment after 20 years and then find that 
they are gaining better jobs in the private sector? I would 
submit that study would show again that this kind of pay is 
unnecessary.
    I also want to bring up and focus on the point that these 
workers already have generous benefits in retirement. It is not 
like these workers have demanding jobs and are left bereft in 
retirement. We already have a more than adequate retirement 
system for these workers.
    My final point is that the Federal Treasury Employees Union 
in their written testimony suggested that we should forego the 
tax cut that the Congress recently passed and instead use the 
money for higher pay and benefits for the employees they 
represent.
    I would submit that this proposed legislation is in fact a 
good argument for a tax cut. It shows if we don't cut taxes, a 
long line of special interests will come before Congress with 
plenty of plans to spend the money. It shows the urgency to get 
this money out of Washington and get it back to the taxpayers 
where it belongs before it is spent on wasteful special 
interest spending. Thank you very much.
    Mr. Scarborough. Thank you for your subtle remarks, Mr. 
Ferrara.
    Mr. Ferrara. That is my job.
    Mr. Scarborough. That is your job, and you are doing it 
well.
    [The prepared statement of Mr. Ferrara follows:]

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    Mr. Scarborough. Ms. Kelley, let me ask you to touch on a 
couple of points, and that is the testimony of the agencies of 
the employees that you represent so well.
    What do you say to those agencies whose main argument is 
that they are not having problems in recruitment, they are not 
having any problems retaining employees that you represent. 
What is your counter to that?
    Ms. Kelley. One, as far as the U.S. Customs Service goes, 
they currently have a work group looking at recruitment and 
retention, I believe, because they recognize that there is a 
problem. Perhaps it is not as large a problem today as it may 
be tomorrow, but one of the reasons that they are looking at 
this is because in the last 5 years there have been over 3,000 
Customs Inspectors hired. And what we are hearing anecdotally 
is that the new Customs Inspectors that are being hired at the 
younger ages are not staying with the Customs Service. They are 
going to State and local law enforcement agencies where the 20-
year retirement is available.
    While there is no study, I would encourage that the Customs 
Service start tracking this issue very closely.
    I would just make another comment. I unfortunately missed 
the testimony of the second panel, but I would be shocked to 
hear that the Customs Service said that the Customs Inspectors 
and CEOs do not carry weapons. Every one of them does.
    Mr. Scarborough. I want to underline a point that you made 
earlier about IRS agents. I have heard from many, many IRS 
agents that even work in offices, that don't go out in the 
field, that they certainly do fear for their lives at times. It 
is obviously something that again we need to address and some 
issue. I guess the main problem today--and I certainly 
understand, Mr. Gallegos, your statement about let's worry 
about security first and cost later, but regrettably this year 
as we move toward adjournment, we are obviously up against some 
tremendous pressures regarding costs.
    If the costs associated with these benefits were imposed on 
the agencies--they have testified that other functions would 
have to be cut back and perhaps fewer people would be hired in 
the favored employment categories or the measures could result 
in RIFs from the current work force levels--what effects do you 
anticipate for the increase in benefits that you have supported 
in your testimony today regarding RIFs or what other areas of 
the agencies that you represent would have to be slashed, Mr. 
Gallegos?
    Mr. Gallegos. What I have seen in my experience in my own 
agency in New Mexico when we had a similar situation, they red-
circled different employees so that they were not put into RIF 
status--and that could easily be done with this type of 
legislation--the people on the cusp, so to speak, who are in 
the position of having to leave or whatever status they are in, 
that there could be special provisions to account for those 
until through attrition and normal retirements they can catch 
up.
    I think it is a challenge, and quite frankly my personal 
opinion on the position of Congress and with the moneys is that 
you have painted yourself into a corner by the ceiling levels 
that you have set. I don't think that they are realistic, but I 
understand your position on that and the position of Congress, 
and I think that is a separate issue. But I do think that it is 
going to cause a ripple effect on down the line.
    The last point I want to make is what was testified 
regarding attrition and the ability to hire people. It all 
depends who you talk to. I talk to the officers, front line 
supervisors, commanders, I talk to SACs of different agencies. 
You talk to them and you talk to the head of Customs or the 
head of DEA or the Bureau of Engraving Police, you get a 
totally different picture. And they are in fact--what they tell 
me is that they are having a hard time hiring people and 
maintaining the manpower levels that are required. It all 
depends on who you talk to. If you talk to the bureaucrats, 
they will tell you one thing, and if you talk to the front line 
people, they will tell you the real story.
    Ms. Kelley. We realize, Mr. Chairman, there is a cost 
attached to this. We do have some questions about the 
methodologies used by OPM to date and by those who testified in 
the second panel. We would join with Congressman Filner and 
offer to work with the subcommittee on what the appropriate 
costs would be and how they could be funded, because I would 
like to clarify that my testimony does not suggest that all of 
the tax cuts be foregone and used for this issue.
    What we did suggest was that a very small piece of it would 
be a wise investment for the country and what we would hope is 
that while these issues are surely connected, that first the 
decision would be made based on the merits of whether these men 
and women should have law enforcement status, and then to 
jointly work together to find the means within the budget and 
without causing RIFs to make that happen. So we see that as two 
pieces, but we worry that the decision is being made solely on 
money and that the merit issue is not being fully discussed and 
decided and that is what we would ask.
    Mr. Scarborough. Mr. Ferrara, any comments on this issue?
    Mr. Ferrara. Well, the bottom line is that there is a 
market test here for government employment: Can you attract the 
workers or not? And if--as an advocate of taxpayers, I don't 
want to see the government pay any more in pay and benefits 
than necessary to fill the jobs. I don't want to see any sort 
of employment crisis be manufactured to justify these 
additional benefits. Once it is clear that you can attract 
these workers, there is no justification for higher spending.
    A point that I would like to add is that the best way to 
address the problem that officers face is tax reform, and maybe 
Congress ought to get on with that, different types of tax 
codes which would not require the same level of enforcement 
burden that this one does.
    Mr. Scarborough. God bless you, man. A lot more people 
talked like you in 1994. He is a blast from the past, ain't he?
    Mr. Ferrara. And the future.
    Mr. Scarborough. I had a lot of friends who spoke like you 
a few years ago. I don't know where they went.
    Mr. Ferrara. They work for us now.
    Mr. Scarborough. After they got defeated in 1996 and 1998.
    Mr. Ferrara. Let me write that down.
    Mr. Scarborough. A couple of months ago, we tried to do 
some things regarding Thrift Savings Accounts, and the total 
cost was something like $35 million spread out over 5 years, 
very small compared to the one-time cost of possibly $600 
million or over $1 billion.
    The argument then by the unions was that could not be 
allowed because it would cause massive RIFs in the system.
    What I would like you to help square up for me today is how 
employees unions could take that stance a couple of months ago, 
saying if we cut $35 million, it is going to cause all of these 
RIFs. And yet we have costs that may run over $1 billion, and 
the argument now is that possibly no RIFs will be caused. Is it 
possible to square those two arguments up?
    Ms. Kelley. Mr. Chairman, I think that with work and with 
time, that it is possible. I was not here a few months ago to 
address the specific issue that you are referring to, but I 
think there are options available. There are surely ways to 
look at if it were to be determined that less employees were 
needed, not just from a cost standpoint, attrition, a long-term 
plan rather than an immediate reaction is one way to accomplish 
that.
    Another is to look at a proposal that law enforcement 
status and the costs associated with it--because as we all know 
you can do numbers a variety of ways and come up with a variety 
of conclusions. There are ways to phase in the cost. The 
current bill does suggest retroactivity and it raises the whole 
question of the unfunded liability. We would like to work with 
OPM on the numbers, and the subcommittee, and determine if 
there is a 5- or 10-year plan to look at this.
    Mr. Scarborough. Let me tell you, just like I told the 
first panel and like I said earlier, we will be glad to sit 
down and talk about what options are possible and look forward 
to working with all of you as we move forward.
    Let's talk about the question, the issue that Mr. Ferrara 
brought up in his last statement regarding whether this crisis 
regarding hiring and retaining and retention is actual or 
manufactured. Again your agencies have said that it is not an 
actual crisis, and we talked about this before. You talked 
about people on the front line telling you that there were 
problems with retention. Do you have any evidence, any studies 
that you can bring to the committee in the next 2 to 3 weeks 
that we can make as part of the record that would show that you 
are having problems recruiting or retaining people in any of 
these areas?
    Mr. Gallegos. We can provide you that information from the 
FOP.
    Again, the real question comes up as to how you set up a 
sensible level of staffing, and how you are going to keep that 
up and how you plan for the future. That is really what any law 
enforcement agency does. Through proper planning, which I don't 
think that they have done at the Federal level, I think you can 
address that.
    The other thing, and I agree, I think you can hire anybody. 
I think you can go out on the street and hire a bunch of 
people, and if you just want to fill the slots, you get one 
quality of people. However, if you want to have highly 
professional people like we have in the Capitol Police, you 
have to go after the best people available to fill those 
positions.
    State and local agencies are having the same problem. A lot 
of local agencies are now requiring college degrees. I know 
that in my agency, that is required. We are having a hard time. 
We are having to compete with industry to bring in qualified 
people, and I think that is what really the Federal Government 
has to do. They have got to come into focus on how are they 
going to attract the best people, and you do it just like the 
private sector does. They have attractive packages.
    You are providing a quality service now. I think the 
uniformed officers do that now. The FBI, DEA, everybody else 
does. I think that we can continue that. But we have got to 
look at really what is facing us ahead.
    Mr. Scarborough. So is your view today, as you testify 
before this committee, that based on the current facts that we 
have, that we do have qualified law enforcement officers across 
the broad spectrum of the government, or are you concerned that 
the quality is slipping now because you don't think that the 
benefits package is attractive enough?
    Mr. Gallegos. I have talked to high-ranking officials in 
various agencies who believe that; that it is starting to slip. 
I think when you are competing against the IBMs and the Intels 
and everybody else, I think we have to focus on how are you 
going to keep the people you have and attract new people. It is 
not a matter of just filling the slots with people who are 
security guards and can stand at a post and let people in or 
out or whatever. These are qualified law enforcement officers 
and they have to be viewed as such. When we view them seriously 
like that, I think it takes on a different tone.
    And it was interesting to hear Mr. Ferrara talk about 
``they are here'' and ``they can stay.'' We don't have to worry 
about retirements. The Emancipation Proclamation took care of 
that. We don't have slave labor in the Federal work force 
either, and you do have to compensate them and they do have a 
life after the Federal system and they should have those 
privileges to go on to other things like anybody does.
    Ms. Kelley. Mr. Chairman, you had asked if there were any 
studies that the agencies have. The U.S. Customs Service is 
currently in the process of putting a request together that 
would request special hiring authority for just this reason, 
because they believe that they are running up against a lot of 
problems of identifying--not identifying, but recruiting the 
best and the brightest into the inspector and the CEO ranks. 
Once that report is finished and available, we will be glad to 
provide it to the subcommittee.
    Mr. Scarborough. Let me say I have some people suggest that 
another option be put on the table. Part of the concern 
underlying this is what some people call the golden handcuffs. 
That is, people stay in their positions long after they have 
stopped advancing in their careers because they are attached to 
the retirement benefits. These benefits are not portable, and 
they hate to lose out on benefits earned because they didn't 
invest or they are just a few years away from eligibility. 
Rather than continuing to expand the golden handcuffs, these 
people suggest that we begin to migrate retirement toward a 
defined contribution framework. That is, move the Federal 
retirement benefit into an investment account that people could 
take with them wherever they went, and change careers according 
to their interests rather than according to the constraints of 
their retirement plans. Have you heard this suggestion and how 
would you react to such a proposal?
    Mr. Ferrara. Yes, I think that is a good alternative. 
Instead of saying we will give you retirement benefits so you 
can leave after 20 years, and we will give you this taxpayer 
subsidy, what you could do is make the retirement benefits more 
portable so that someone who wanted to leave after 20 years, 
instead of feeling that they were locked into Federal 
employment, would have a defined contribution account. In other 
words, instead of the Federal Government over years would make 
contributions to an account that would be invested and the 
worker--whenever the worker left, he or she would take that 
account with them. So after 20 years, people would be free to 
take that account with them, and they would not be locked into 
Federal employment when they might have better private 
opportunities. The taxpayers would not have to pay any more, 
but the workers could take that account and have those 
attractive benefits.
    I think that is a more appealing alternative. We have been 
advocates of this for some time. We want to see people have 
more control over their retirement resources. We have studies 
which show that people can get at least as good benefits, if 
not better, in terms of the final retirement benefit through 
these types of plans, and they are often more fair because you 
don't have this redistribution from some workers to others. 
Each worker gets the money and they have the chance to 
reinvest. They can get good returns in the private market. We 
think that is a better way of approaching this issue. Instead 
of saying after 20 years we will give you this benefit and you 
can get out, say at any point you can take the money and go to 
the best employment opportunity, best employment opportunity 
you have.
    I also want to state for the record in response to Mr. 
Gallegos, I think it is clear that Federal employees are 
compensated and they therefore are not slave labor and they do 
have attractive retirement benefits already.
    Mr. Scarborough. What do you think about the portability 
concept?
    Mr. Gallegos. Mr. Chairman, when you have portability, you 
have to stay basically within the same class. My experience has 
been if you have--let's say in the State of New Mexico, if you 
are a police officer in the city of Albuquerque for 10 years 
and move to Las Cruces, you carry that time and service and 
those contributions with you over to the other agency. Even if 
you become a public employee as a city planner or whatever 
other entity that you enter in the public sector, you carry 
those benefits and those contributions with you and you can 
apply that toward it. So there is some portability.
    I guess the question is if you are working for the Federal 
Government, then you decide to go to work at Intel doing 
something else, I think that is what Mr. Ferrara is speaking 
to. I think you would have a lot of demands on the funding 
issue and the ability for retirement funds to be solvent over 
the long term. I think you would have a tremendous drain on 
that. If they stay within the same class, I would argue that is 
probably true.
    If you are a Customs Inspector and you go to be an FBI 
officer, that should be portable and counted toward that, and I 
think in most cases it is.
    Ms. Kelley. I was a Federal employee for 15 years with the 
IRS under the CRS system. As I understand it, FERS addressed 
this golden handcuffs issue when it was created and the Thrift 
Savings Plan makes the Federal retirement system quite 
portable. So the retirement system does not need change, that 
is not the question that surrounds this law enforcement status 
in our opinion.
    Mr. Ferrara. Can I address those two questions briefly?
    Mr. Scarborough. Sure.
    Mr. Ferrara. Some other State and local jurisdictions are 
starting to move toward these types of plans. In the private 
sector you have had a vast switch away from defined benefit 
plans to defined contribution plans so you can design this, it 
has been shown, so that you do not endanger the solvency of 
current retirement funds, as Mr. Gallegos suggests.
    Moreover, unions that represent public employees, the 
notion of portability to go to nonpublic employment is 
anathema. So as long as you have portability within government 
employment, there is no problem. But for the worker, there is a 
problem because they may want to work in the private sector, 
outside the government, and there the portability issue has not 
been addressed. Particularly workers who work less than 20 
years lose out on the retirement benefits and, again, a lot of 
studies show that. They are greatly disadvantaged by the 
traditional type of defined benefit plans like you have at the 
Federal level and at most State and local governments.
    So if you go to a defined contribution plan, those workers 
have the same opportunity to benefit as longer-term workers, 
and so it is more fair and in many cases you can expect the 
benefits to be better over the long run for the longer-term 
worker with standard investment performance.
    Mr. Gallegos. But in most public sector retirement 
programs, you pull your contribution out if you leave after 10 
years and invest it into another program.
    Mr. Ferrara. But not the employer's contribution. That is 
the problem. That is where you lose.
    Mr. Scarborough. To be continued. Well, I appreciate your 
testimony. It certainly has been helpful and again I pledge 
that this subcommittee and the committee overall will be glad 
to work with you all, and the Members who put these bills 
forward, to see what we can do.
    We will keep the record open for the next 45 days so any 
additional comments that you all may wish to add or any 
proposals for true income tax reform that you may want to put 
in that you think may make an IRS agent's life easier, feel 
free to put that in the record. Thank you again, and we are 
adjourned.
    [Whereupon, at 12:55 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]

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