[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
 RETIREES RETURNING TO THE RESCUE: REEMPLOYING ANNUITANTS IN TIMES OF 
                             NATIONAL NEED

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON THE FEDERAL WORKFORCE
                        AND AGENCY ORGANIZATION

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 25, 2006

                               __________

                           Serial No. 109-235

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCHMIDT, Ohio                       (Independent)
BRIAN P. BILBRAY, California

                      David Marin, Staff Director
                Lawrence Halloran, Deputy Staff Director
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

     Subcommittee on the Federal Workforce and Agency Organization

                    JON C. PORTER, Nevada, Chairman
JOHN L. MICA, Florida                DANNY K. DAVIS, Illinois
TOM DAVIS, Virginia                  MAJOR R. OWENS, New York
DARRELL E. ISSA, California          ELEANOR HOLMES NORTON, District of 
KENNY MARCHANT, Texas                    Columbia
PATRICK T. McHENRY, North Carolina   ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   CHRIS VAN HOLLEN, Maryland

                               Ex Officio
                      HENRY A. WAXMAN, California

                     Ron Martinson, Staff Director
                Shannon Meade, Professional Staff Member
                           Alex Cooper, Clerk
            Tania Shand, Minority Professional Staff Member
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 25, 2006....................................     1
Statement of:
    Fallis, Charles, president, National Active and Retired 
      Federal Employees Association; and Duncan Templeton, 
      national legislative vice president, Federal Law 
      Enforcement Officers Association...........................    55
        Fallis, Charles..........................................    55
        Templeton, Duncan........................................    65
    Kichak, Nancy, Associate Director for Strategic Human 
      Resources Policy Division, Office of Personnel Management; 
      Patricia Bradshaw, Deputy Under Secretary of Defense, 
      Civilian Personnel Policy, Department of Defense; Barbara 
      Panther, Associate Deputy Assistant Secretary for Human 
      Resources and Management, Department of Veterans Affairs, 
      accompanied by Donna Schroeder, Director, Compensation and 
      Classification Service, Department of Veterans Affairs; and 
      Ronald Sanders, CHief Human Capital Officer, Office of the 
      Director of National Intelligence..........................    13
        Bradshaw, Patricia.......................................    21
        Kichak, Nancy............................................    13
        Panther, Barbara.........................................    34
        Sanders, Ronald..........................................    42
Letters, statements, etc., submitted for the record by:
    Bradshaw, Patricia, Deputy Under Secretary of Defense, 
      Civilian Personnel Policy, Department of Defense, prepared 
      statement of...............................................    25
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............    76
    Davis, Hon. Danny K., a Representative in Congress from the 
      State of Illinois, prepared statement of...................    11
    Fallis, Charles, president, National Active and Retired 
      Federal Employees Association, prepared statement of.......    57
    Kichak, Nancy, Associate Director for Strategic Human 
      Resources Policy Division, Office of Personnel Management, 
      prepared statement of......................................    16
    Panther, Barbara, Associate Deputy Assistant Secretary for 
      Human Resources and Management, Department of Veterans 
      Affairs, prepared statement of.............................    36
    Porter, Hon. Jon C., a Representative in Congress from the 
      State of Nevada, prepared statement of.....................     7
    Sanders, Ronald, CHief Human Capital Officer, Office of the 
      Director of National Intelligence, prepared statement of...    45
    Templeton, Duncan, national legislative vice president, 
      Federal Law Enforcement Officers Association, prepared 
      statement of...............................................    68


 RETIREES RETURNING TO THE RESCUE: REEMPLOYING ANNUITANTS IN TIMES OF 
                             NATIONAL NEED

                              ----------                              


                         TUESDAY, JULY 25, 2006

                  House of Representatives,
      Subcommittee on Federal Workforce and Agency 
                                      Organization,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2 p.m., in 
room 2247, Rayburn House Office Building, Hon. Jon C. Porter 
(chairman of the subcommittee) presiding.
    Present: Representatives Porter, Schmidt, Davis of 
Illinois, Norton, and Cummings.
    Staff present: Ronald Martinson, staff director; Chad 
Bungard, deputy staff director/chief counsel; Jessica Johnson, 
OPM detailee; Shannon Meade, professional staff member; Alex 
Cooper, legislative assistant; Tania Shand, minority 
professional staff member; and Teresa Coufal, minority 
assistant clerk.
    Mr. Porter. I would like to bring the meeting to order. We 
are going to continue on an initiative that I began last week 
that is recognizing some unsung heroes that are part of the 
Federal family. But unlike last week's recipient, today we are 
going to pay tribute to Mr. John Euler, who is connected to us 
via satellite from his duty station in Iraq where I understand 
it's about 10 p.m.
    We appreciate you being with us.
    Mr. Euler is a Vietnam veteran and retired U.S. marine; 
went on to a distinguished career at the U.S. Department of 
Justice from which he retired after 26 years of service. But 
his sense of duty could not allow him to stay retired. In 
January 2004, he volunteered to go to Iraq, where he served as 
Director of International Council. Here he faced the daunting 
task of building a new legal system for the country from the 
ground up. He overcame the loss of legal records destroyed by 
war, established a new court system, and helped Iraq defend 
itself in over 70 international cases.
    He returned home upon the completion of his mission, but 
his strong passion for public service overcame his personal 
interests, and he recently volunteered again to return to Iraq 
where he is serving as deputy legal counsel for the U.S. 
Embassy.
    Mr. Euler's bravery, his compassion and his dedication are 
an inspiration for all of us, and it is a privilege to say 
thank you.
    Mr. Euler, I am not sure of the time lag if you can hear 
OK. But again, I want you to know that there is about a 5-
second delay from what I say to you reaches Iraq.
    But again, I want to say thank you very, very much for your 
dedication to the Federal Government; more importantly, your 
dedication to every man, woman and child in this country. So it 
is the least that I can do to honor you in a small way as a 
Member of Congress we are able to place into the Congressional 
Record individuals that we think exemplify the great American 
spirit. So I have entered into the record your history and 
those things that you have done to make our world and our 
country a safer place, and we will be getting you a copy of the 
statement of the Record which is dated July 25, 2006. And I do 
believe that with us today, Jerry is going to be accepting the 
plaque on your behalf.
    So, John, congratulations, and again thank you for all that 
you have done for the United States of America. Thank you.
    Mr. Euler. Mr. Chairman, I want to thank you very much for 
this honor. I am very honored and gratified, and particularly 
thank you and the subcommittee for this wonderful initiative in 
recognizing some of the contributions of Federal public 
servants.
    I think that one of the significant and good stories and 
untold stories about Iraq are the thousands of public servants 
who have indeed volunteered to come over here to help try to 
develop this democracy and the freedom of this new nation, and 
I think several people have probably come in to the government 
just to do that kind of mission because they are inspired by 
the challenge and the promise. So I want to thank you again, 
and really I accept this tribute and this recognition on behalf 
of all of them. So thank you very much.
    The Chairman. Thank you.
    Mr. Davis.
    Mr. Davis of Illinois. Thank you, Mr. Chairman. Let me just 
commend you, first of all, for your creativity and sensitivity 
in initiating and implementing this program. I, like you, feel 
that far too often there are many individuals who contribute 
significantly to the further development of our country, and 
indeed to our world, who go unrecognized. So I join with you in 
recognizing the contributions of Mr. Euler and also praise him 
for being willing to come out of retirement to go into 
obviously a dangerous, in many ways, situation, and yet 
continue to give of himself in such a way that he uses his 
experiences and all of his ingenuity to try to help make not 
only Iraq, but the world a better place in which to live. I 
commend you, Mr. Euler.
    I thank you very much, Mr. Chairman, and commend you for 
your creativity.
    Mr. Porter. And understanding that you are just a few miles 
away from home, we would like to make this presentation to a 
friend of yours. Jerry is here today. I would like to make the 
presentation to Jerry.
    I'll come down there, Jerry. I don't know if you can see us 
from here, John, but we could probably make this a roast. Maybe 
there are some things that you need to know.
    Mr. Shaw. I would be happy.
    Mr. Porter. Jerry wants to say a few things, so maybe there 
are some stories you can share with us. Is there anything you 
want the say about John?
    Mr. Shaw. Well, besides being a great marine and a great 
public servant, he is also a great minister of his church. He 
is a leader that all of us have looked up to for years, and 
other than being a marine, he is probably the most intelligent, 
well-adjusted one we have ever met.
    So, John, congratulations to you. It's an honor to be able 
to accept this award on your behalf. Thank you very much.
    Mr. Euler. Thank you, Jerry, and thank you very much, Mr. 
Chairman.
    Mr. Porter. Before I begin the hearing, there are a few 
folks that I would like to thank that have worked very hard to 
put this satellite connection in place. We have Mr. Bill 
Bransford; Mr. Mitch Herckis of the Senior Executives 
Association; staff of the State Department including their 
video conference coordinator Sandra Bruckner. I thank you very, 
very much; and, of course, our own staff here at Government 
Reform Committee, and I appreciate all that has gone into this 
today.
    Again, we are here today to actually talk about something 
that probably is very appropriate. John, you are welcome to 
stick it out for a couple of hours and listen if you would 
like, but it has to do with encouraging folks to be able to 
return from retirement to Federal service, so that is what 
today is all about. Again, I know you are a few miles away, but 
again, thank you very much for your time.
    Mr. Euler. Thank you, Mr. Chairman. It is 10:30 at night 
here. So with your kind permission, I think I will let these 
good folks who have helped so much be on their way as well. I 
want to thank all of you and all of the subcommittee. This is a 
great honor.
    Mr. Porter. You can take the rest of the day off. No 
problem.
    Retirees returning to the rescue: Reemploying annuitants in 
times of national need, and again, I would like to thank 
everyone for being here today on this all-important topic.
    All too often Federal Government loses experience in highly 
qualified retirees not just to quiet, private life, but to the 
private sector where they get their full earned annuity, and 
many times, top salary. Work shortages highlight the need for 
management flexibilities that permit agencies to bring back the 
right people to fill an important need. We don't have to look 
further than to recover from Hurricane Katrina last year to 
demonstrate how important it is to deploy experienced Federal 
employees without delay in times of national crises. In the 
final report of the House Select Bipartisan Committee to 
Investigate the Preparation for and Responses to Hurricane 
Katrina, ``A Failure of Initiative,'' the committee found that 
both the Department of Homeland Security and the Federal 
Emergency Management Agency lacked adequate training and 
experienced staff for the Katrina response.
    We are here to today to examine whether existing 
flexibilities are enough to bring back valuable retirees to 
Federal service in a timely manner to fill voids, and whether 
additional flexibilities should be established that allow 
experienced Federal employees to phase into part-time service 
without negatively affecting our annuity so we don't 
unnecessarily incentivize them to leave government service 
prematurely.
    There has been much attention given lately to the 
anticipated retirement wave which is projected that roughly 60 
percent of the Federal work force is eligible to retire in the 
next 10 years. The baby boomer trend seems to be that many of 
those Federal annuitants return to work past retirement, and I 
would hope that the Federal Government would be their Federal--
be their employer of choice. The Federal Government has lost 
and will continue to lose our more seasoned employees. Perhaps 
more can be done to facilitate a return to Federal service by 
retirees in times of national need.
    There are several provisions under the law that allow 
annuitants to be reemployed in the Federal sector; however, 
several barriers exist. There is evidence that the current law 
on reemployed annuitants is not accommodating the national need 
or not being implemented wisely. One problem associated with 
reemploying annuitants is even being felt in my home district 
of southern Nevada and in Las Vegas where we are fortunate to 
have a quality veterans hospital. Unfortunately, this VA 
hospital is facing a nursing shortage. To counteract this 
shortage, the VA hospital has contracted with staffing 
companies that recruit licensed nurses on behalf of the 
hospital.
    Considering these conditions, I want to relate a story of 
how our current system of reemploying retired annuitants is 
hurting the Federal Government. A nurse in my district retired 
from the VA and began receiving her annuity. After a few years 
of retirement, this woman felt that she had more to offer, and, 
hearing of the nursing shortage, attempted to return to the job 
at the hospital. Unfortunately, because she was receiving her 
annuity payments, she was discouraged from returning to work 
because her salary would be offset by the amount of her hard-
earned annuity.
    Not easily thwarted, this determined woman contacted a 
private staffing company that had a contact with the VA 
hospital, and because of her immense experience and talent, was 
immediately hired and placed back in the veterans hospital.
    Now on the surface this may seem like a logical solution. 
However, the woman earned $35 per hour as a Federal employee. 
The bill rate to the hospital from the staffing company was $55 
per hour for the exact same service she performed 2 years 
prior, and she could continue to receive her annuity. In a time 
when the nursing shortage was at its most critical.
    If the hospital had returned her to service and requested a 
waiver so she could receive both the full amount of her annuity 
and salary, the government could have saved $20 an hour, or it 
should have made an extra $20 going to the employee. In 
addition to the savings in salary, the government would save by 
hiring a retired nurse because the hospital would not have to 
make any additional retirement contributions and would avoid 
the training cost associated with hiring a new employee.
    This is just one example that highlights where there is a 
need for enhanced flexibilities to reemploy annuitants and for 
a greater willingness to recognize retirees as truly valuable 
human capital resources.
    Another example, just 2 weeks ago I had an opportunity to 
travel to Nogales, Arizona, to visit the border between Arizona 
and Mexico. I met an individual who is in the Border Patrol 
that is soon going to have to retire, who specializes in 
technology as a law enforcement agent. His hobby and background 
is technology. Well, as we traveled and visited the border 
security, the very law enforcement officers that are charged 
with protecting our borders are changing tires, are building 
fences, are repairing vehicles because we have a shortage of 
staff on our borders between here and Mexico. So the very same 
people that we would want to spend time in law enforcement are 
literally having to repair vehicles.
    Now, on the surface that doesn't seem like a bad idea if, 
in fact, we had plenty of people that were available. But we 
don't. This individual literally is being forced to retire, 
would like to come back and stay in the system and do some of 
the clerical work that currently law enforcement agents are 
having to do because of a shortage. That is just another 
example.
    Another example is the option that was available to former 
retired Federal agents to return to work for the Federal 
Government as Federal law enforcement instructors. Under the 
first scenario, the former Federal agent receives her regular 
salary minus the amount of her annuity. The result of this 
reemployment system is that it is difficult to attract and 
retain Federal law enforcement personnel most experienced in 
working in the Federal law enforcement system to be Federal law 
enforcement instructors. Contrast this with a former retired 
State or local law enforcement officer who takes the same 
Federal law enforcement instructor position and continues to 
receive his or her State or local retirement with no penalty.
    Under the second scenario, a former retired Federal agent 
returns to work for the Federal Government as a Federal law 
enforcement instructor with a waiver of the offset requirement. 
This former Federal agent receives both her annuity and salary 
while teaching. She brings to her new employment 20-plus years 
in Federal law enforcement experience and training. Added to 
her career as a Federal law enforcement officer is the 
teaching, training and experience gained over the 4 years as a 
Federal law enforcement instructor. However, this highly 
trained and experienced Federal law enforcement instructor has 
to leave the job when her 4-year limited appointment comes to 
an end.
    At present, the effect of this restriction is to discourage 
America's most qualified former Federal law enforcement 
officers from returning to Federal service. It is an 
unnecessary loss of potential antiterrorist resources at a time 
of war, and in these troubled times it seems logical to want 
our best and brightest in the field of law enforcement and 
intelligence to be readily available to assist in areas of 
critical need. Unfortunately, many of our best and brightest 
are already retired or quickly nearing retirement age.
    Seasoned Federal employees on the brink of retirement have 
much to offer: Incomparable technical skills, vast 
institutional knowledge, wisdom, maturity, and a principled 
commitment to public service. In a market where we are 
competing with the private sector for limited talent and 
expertise, we must not ignore those experienced professionals 
that are eager to work longer in part-time service or come out 
of retirement and lend their expertise to the Federal 
Government.
    So to address the current unintended adverse effects on 
employees who perform part-term service at the ends of their 
careers, and to eliminate a disincentive for employees nearing 
the end of their careers who would like to phase into 
retirement by working part-time schedules, I will be 
introducing legislation as proposed in the President's fiscal 
year 2007 budget that would allow agencies to keep senior staff 
on board as part of a succession planning effort. This is a 
much needed fix that has been a long time coming.
    As you know, there was a day when 55 was the goal, or 65 
was the goal for retirement. Literally today 65 is not unlike 
55 of decades ago. So I really believe that we need to 
encourage and find incentives for our soon-to-retire or those 
who have retired as a way to get back into the Federal system. 
We need their talent. We need their abilities.
    So having said all of that, again, I want to thank you all 
for being here.
    [The prepared statement of Hon. Jon C. Porter follows:]

    [GRAPHIC] [TIFF OMITTED] T4772.001
    
    [GRAPHIC] [TIFF OMITTED] T4772.002
    
    [GRAPHIC] [TIFF OMITTED] T4772.003
    
    Mr. Porter. I would like to recognize our ranking minority 
member, Mr. Davis.
    Mr. Davis of Illinois. Thank you very much, Mr. Chairman, 
and as one who is approaching the age, I want to thank you for 
calling this hearing.
    Under the current law, a retired Federal employee who is 
reemployed by the Federal Government may not simultaneously 
receive a Federal retirement annuity and a Federal salary. The 
Civil Service Retirement System and Federal Employees 
Retirement System of title 5 stipulate that the Civil Service 
Retirement and Disability Fund annuity amount a reemployed 
Federal employee receives shall be deducted from his or her 
pay.
    There are exceptions to this regulation. In cases of 
emergencies that pose an immediate and direct threat to life 
and property or result from unusual circumstances, the Office 
of Personnel Management has the authority to grant waivers to 
the dual compensation ban on a case-by-case basis or to 
delegate waiver authority to agencies.
    Federal agencies should be able to hire Federal retirees 
without penalizing retirees; however, we must understand the 
impact of the reemployment of annuitants on new hires and 
whether or not agencies are effectively using human capital 
strategies to ensure that they have a work force in place to 
accomplish the goals and missions of the agency.
    I hope that the witnesses today will be able to provide us 
with insight on these matters related to reemployment of 
retirees, and thank them for taking the time to testify before 
this subcommittee about this issue.
    I thank you, Mr. Chairman, and yield back the balance of my 
time.
    Mr. Porter. Thank you, Mr. Davis.
    [The prepared statement of Hon. Danny K. Davis follows:]

    [GRAPHIC] [TIFF OMITTED] T4772.004
    
    Mr. Porter. Congresswoman.
    Ms. Norton. Well, Mr. Chairman, I appreciate this hearing. 
We are presented with an unusual situation, it seems to me. 
Federal employment is not what it was when we were young and 
foolish. And, therefore, many of the best and brightest--I am 
speaking for myself, Mr. Chairman. I understand that you are 
both still young and still foolish, and I won't tell you which 
of those I still am. But seriously, Mr. Chairman, the 
competition for the very highly qualified Federal work force 
that we have on board now not--is awesome, so awesome. There is 
every incentive to leave early with early retirement, not to 
mention the many employees who came in at the prime of their 
careers and are leaving already for usual retirement. Then let 
us take the new group of young people for whom Federal employee 
is one of many options, and very, very often not the most 
attractive when you consider all the career options and other 
benefits that come with Federal--with private employment of 
very highly skilled, often rarely skilled people.
    So as we look now at what amounts to a mixed message, yes, 
we will hire you under some circumstances, but at the same time 
we are going to penalize you through your annuity. We have to 
somehow come to grips with what is our message. Do we want to 
be able to hire these Americans who once worked for the Federal 
Government? When you consider the skill levels and occupations 
of many of them, I think the answer would be clear. We 
certainly have to look at the total picture. But as we look at 
the baby-boom generation and how huge it is, and how many of 
them were a part of the best and the brightest Federal work 
force we have ever seen, and see them offload often not to go 
home, but to go to work somewhere else, we have to be very, 
very clear when we need them and how we attract them.
    That, I think, is as much a problem as anything, 
particularly in occupations where I would be most concerned. 
And those are occupations where it is easiest for the trained 
Federal employees, people in whom we have heavily invested, to 
leave an occupation where we would want under some 
circumstances at the same time to have an annuitant reemployed 
because of the scarcity of labor.
    So I think what we have now before us, for most agencies at 
least, is a product of the old Civil Service, and among these 
things we have been trying to do in this, you know, double 
dipping and making sure that we make room for new people. What 
new people? New people that we still are not attracting in 
nearly the same levels and in nearly the same occupations as we 
once did. And we have to look with fresh eyes at the annuity 
question especially when we consider some of the occupations 
involved.
    Look at the DOD experience, and I think of a governmentwide 
policy on particularly what to do when we need people and how 
to attract them and how to make it possible for them to make a 
decision that is consistent with their own future and 
consistent with the needs of the Federal Government.
    So I thank you, Mr. Chairman, once again.
    Mr. Porter. Thank you very much. And I understand since you 
are 29, there is a long time before you have to worry about 
that.
    Ms. Norton. I'll take that.
    Mr. Porter. Thank you very much.
    The first thing I would like to do is some procedural 
matters, and ask unanimous consent that all Members have 5 
legislative days to submit written statements and questions for 
the hearing record. Any answers to the written questions 
provided by the witnesses will also be included in the record. 
Without objection, it is so ordered.
    I ask unanimous consent all exhibits, documents, other 
materials referred to by the committee members and the 
witnesses may be included in the hearing record; all Members be 
permitted to revise and extend their remarks. Without 
objection, so ordered.
    And as I think most of you know, it is the practice of this 
committee to administer the oath. I know you wanted to do it 
earlier, but I thought you could rest for a little bit. So 
would you please stand.
    [Witnesses sworn.]
    Mr. Porter. The record will reflect that all have answered 
in the affirmative.
    Now we have the first panel. They will begin today. As you 
know, you have approximately 5 minutes, and, of course, you can 
add fuller statements to the record as you wish.
    And again, I know some of you are experienced at the 
committee process. Some of our Members will probably come and 
go because of different hearings. So understand that all 
information is made available to all of those Members.
    On our first panel today we have Nancy Kichak, Patricia 
Bradshaw, Barbara Panther and Dr. Ronald Sanders.
    Ms. Kichak is Associate Director for Strategic Human 
Resources Policy Division at the U.S. Office of Personnel 
Management. Mrs. Bradshaw is the Deputy Under Secretary of 
Defense for Civilian Policy and Personnel with the Department 
of Defense. Ms. Panther is Associate Deputy Assistant Secretary 
for Human Resources and Management with Department of Veterans 
Affairs, and Dr. Sanders is Chief Human Capital Officer for the 
Office of Director of National Intelligence.
    So again, welcome. We appreciate you being here.
    Ms. Kichak.

 STATEMENTS OF NANCY KICHAK, ASSOCIATE DIRECTOR FOR STRATEGIC 
     HUMAN RESOURCES POLICY DIVISION, OFFICE OF PERSONNEL 
   MANAGEMENT; PATRICIA BRADSHAW, DEPUTY UNDER SECRETARY OF 
  DEFENSE, CIVILIAN PERSONNEL POLICY, DEPARTMENT OF DEFENSE; 
BARBARA PANTHER, ASSOCIATE DEPUTY ASSISTANT SECRETARY FOR HUMAN 
   RESOURCES AND MANAGEMENT, DEPARTMENT OF VETERANS AFFAIRS, 
  ACCOMPANIED BY DONNA SCHROEDER, DIRECTOR, COMPENSATION AND 
  CLASSIFICATION SERVICE, DEPARTMENT OF VETERANS AFFAIRS; AND 
  RONALD SANDERS, CHIEF HUMAN CAPITAL OFFICER, OFFICE OF THE 
               DIRECTOR OF NATIONAL INTELLIGENCE

                   STATEMENT OF NANCY KICHAK

    Ms. Kichak. Mr. Chairman and members of the subcommittee, I 
appreciate the opportunity to represent the Office of Personnel 
Management and Director Linda Springer for this discussion of 
how retirees might be used to assist the Federal Government in 
times of national need.
    Reemployed annuitants can and do make major contributions 
to ensuring that the vital work of the Federal Government can 
be carried out effectively. As you mentioned in your opening 
statement, the demographics of the work force show that 
approximately 60 percent of the government's 1.6 million white-
collar employees and 90 percent of the 6,000 Federal executives 
will be eligible for retirement over the next 10 years. OPM is 
working closely with Federal agencies to assure that if its 
valued employees choose to retire, the work of agencies can 
continue uninterrupted.
    We have worked with agencies to develop sound human capital 
strategies including work force planning, succession planning 
and leadership development. The steady focus on the strategic 
management of human capital is helping agencies identify and 
close skill gaps, meet mission needs and plan for the future.
    Despite the best planning efforts, there are times when the 
services of the men and women who have retired from the Federal 
work force are needed to increase work force effectiveness. 
Currently agencies other than the Department of Defense may 
rehire an annuitant at any time with the salary offset. Under 
limited circumstances, non-DOD agencies may request a waiver to 
the salary offset. The statute provides that OPM may grant a 
waiver to agencies faced with emergencies, exceptional 
difficulties in recruiting or retaining qualified individuals, 
or emergencies from other unusual circumstances.
    In 1998, OPM reminded agencies of this authority to waive 
the salary offset to hire critical computer specialists for the 
Y2K conversion efforts, and OPM quickly approved 16 delegations 
to meet this need. More recently, agencies have successfully 
used this authority to deal with the September 11th attacks, 
Katrina, and the tsunami. And we recently approved a delegation 
to allow Border Patrol agents to come back for training, as you 
mentioned.
    There are also people, reemployed annuitants now with the 
Department of Agriculture working to prepare for the avian flu 
outbreak if it occurs. OPM dual compensation regulations tie 
emergencies and unusual circumstances together, the result 
being that delegations can only be granted in emergencies.
    On Friday, July 21st, we published a proposed change to the 
rule to allow for OPM to grant such waivers in situations 
resulting from emergencies or situations resulting from unusual 
circumstances that do not involve an emergency. The comments we 
receive from those proposed regulations will be very helpful in 
shaping the final regulations on salary offset waivers. As we 
modernize the regulations, we will be mindful that because 
waivers result in compensation from both the retirement fund 
and salary, they must be used judiciously.
    Last month OPM introduced the new Career Patterns approach 
for hiring. In recognition of the changes in career patterns in 
the work place, OPM is studying a broad range of options that 
will encourage employees to extend their careers with part-time 
employment. These options will include a proposal to reemploy 
annuitants without salary offset on a part-time basis.
    In addition, we have included provisions in the Federal 
Employees Retirement Improvement Act that would remove the 
penalty to the calculations of the high three salary upon which 
annuities are based that result from part-time service at the 
end of the career.
    OPM values contributions that annuitants make in support of 
the work of the Federal Government. We welcome the opportunity 
to continue the dialog with this committee to review options to 
improve the use of retirees to meet the Nation's needs. I am 
happy to answer any questions you may have.
    Mr. Porter. Thank you very much.
    [The prepared statement of Ms. Kichak follows:]

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    Mr. Porter. Ms. Bradshaw is next. Approximately 5 minutes.

                 STATEMENT OF PATRICIA BRADSHAW

    Ms. Bradshaw. Good afternoon, Mr. Chairman and members of 
the subcommittee. I am very pleased to be here today on behalf 
of the Department of Defense to discuss the reemployment of 
annuitants within DOD.
    On behalf of the Department, I am very grateful and 
appreciative of the flexibility that Congress has granted DOD 
with regard to managing its civilian resources. The National 
Defense Authorization Act for fiscal year 2004 actually 
provided us with the authority to reemploy Federal retirees 
without requiring that their salaries be reduced as a result of 
their annuity payments. Our goal in asking for this authority 
was to give us rapid access to critical skills for both 
emergencies and ongoing critical needs.
    Balancing the infusion of new talent at all levels with 
access to critical knowledge and expertise that will be lost as 
the aging work force retires, the authority was intended as an 
additional tool for the Secretary of Defense to use judiciously 
to support the defense mission.
    I would like to provide just a little background.
    After one leaves Federal service, reemployment within the 
Federal sector can be much less attractive than private sector 
employment, as has been noted. A Federal retiree working for 
the private sector receives a full salary commensurate with the 
level of work he or she is expected to perform, and there is no 
impact on one's Federal annuity payment. Contrast that with 
reemployment with the Federal Government where prior to 
enactment of our authority, an employee's salary was typically 
reduced, sometimes significantly, by the amount of that 
annuity.
    Prior to the enactment of the NDAA, fiscal year 2004 saw 
all Civil Service retirees were subject to a salary offset 
unless a specific waiver had been granted by the Office of 
Personnel Management. And until September 11, 2001, virtually 
all of the Department's reemployed annuitants were subject to 
that offset.
    After 9/11, OPM took a very proactive approach to 
identifying flexibility that would be useful in combating the 
new threat. Among the flexibilities that OPM granted was a 
waiver of the salary offset restriction for retirees whose 
skills were critical to address 9/11 issues.
    This policy proved to be very helpful. In the 2 years after 
9/11, we hired approximately 400 annuitants, and all but 8 
percent of those were subject to the offset. In the 2 years 
after the 9/11 authority, we hired more than 800 annuitants; 34 
percent of those annuitants were not subject to a reduction.
    However, the OPM 9/11 waiver could only be used to fill 
positions and functions directly related to the aftermath of 9/
11. We believed it was still necessary for the Department to 
seek OPM approval for waiver of salary offset to hire 
annuitants to fill any other urgent defense personnel need.
    In the NDAA fiscal year 2004, Congress also recognized that 
need for DOD to have its own authority. The authority and 
flexibility granted by Public Law 109-108 provides the 
Department of Defense with the unique ability to quickly 
attract a pool of experienced candidates to meet critical and 
emerging needs. This authority is a key tool in ensuring the 
Department's ability to recapture skills that were developed 
through government employment and government expense.
    Additionally, with almost 30 percent of the DOD Federal 
work force eligible for retirement by 2011, it provides a 
method for managing the resulting loss of skills and corporate 
history without disruption to the mission.
    The Department is continuing with its transformation to 
meet the threat of the future, and we recognize that succession 
planning is critical to ensure leadership continuity for all 
key positions. But we see this tool as a crucial method to 
support our efforts.
    The Department was very grateful to receive the authority 
and mindful of the need to use it appropriately. We established 
Department policy that allows its use only in certain 
circumstances, such as for hard-to-fill or critical positions, 
positions requiring unique or unusual qualifications when 
necessary, to provide continuity during transitions and for 
mentoring.
    From November 2003, when we received the authority, until 
May 31, 2006, we have hired more than 1,500 annuitants using 
the authority. As expected, this number represents a very small 
portion, actually less than 1 percent, of our total hires 
during the same time period. Approximately 50 percent of these 
annuitants were placed in critical or hard-to-fill positions. 
Approximately 25 percent were placed in positions requiring 
unique skills or qualifications. And the remainder were used 
for mentoring and providing continuity for leadership during 
organizational transition.
    We believe this authority is working well for us. It 
enables the Department to attract the services of highly 
qualified annuitants who might otherwise have been deterred by 
the salary offset. We believe that perhaps the greatest benefit 
of authority will be seen in connection with the base 
realignment and closure, the upcoming BRACS, that we will be 
executing when the services of reemployed annuitants will 
ensure continuity of operations and result in organizational 
stability at our closing sites.
    Although the Department has used this tool effectively, we 
believe that one change to the law would make it even more 
effective. As currently written, any annuitant hired by the 
Department is entitled to receive both full salary and annuity. 
Since the payment of both salary and annuity becomes mandatory 
once an annuitant is employed, the Department has been managing 
use of the authority via policy that limits the reemployment of 
annuitants to specific situations which I have outlined.
    We believe it would be more appropriate to manage the 
authority by limiting the application of the salary offset 
rather than limiting the actual employment of any annuitant who 
would like to come back to the Department of Defense. This 
change would enable the Department to use the waiver of the 
salary offset as a discretionary recruitment tool without 
generally limiting when retirees are given the opportunity to 
work for the government.
    Providing discretionary authority to the Secretary would 
also allow us to address unintended consequences of our current 
law. For some of our annuitants, receiving full salary in 
addition to their annuities is actually disadvantageous. Under 
current law, any reemployed annuitant who receives full salary 
is excluded from the retirement provisions of title 5 and 
therefore cannot continue to contribute to the retirement 
system, cannot earn additional service credit no matter how 
long they are employed.
    While this may not affect employees who have voluntarily 
retired, employees forced into early retirement as a result of 
an voluntary separation such as reduction in force frequently 
receive significantly reduced annuities. This category includes 
employees that are separated by reduction in force. In these 
cases, it may be more beneficial for the employee to actually 
be covered by the retirement provisions of title 5 than to 
receive a full salary and annuity.
    Let me give you a quick example, a hypothetical situation. 
It's not hypothetical. It happened. A 48-year-old CSRS 
annuitant takes early retirement because his position is 
abolished. His annuity is reduced by 14 percent because he is 
subject to an age reduction by the law. He applies for our 
Priority Placement Program within the Department of Defense and 
is matched with a position and is rehired. However, upon 
reemployment, his annuity continued as required, and he was not 
able to make additional contributions to the retirement system. 
He was also ineligible to make TSP contributions. Had he been 
reemployed in another agency other than DOD, his annuity would 
have terminated, he would have been covered by the retirement 
system and been able to make TSP contributions unless the 
agency had sought a waiver on his behalf from OPM. Upon his 
second retirement, he would have received his full annuity with 
no reduction, and he could have significantly more earnings in 
the TSP fund.
    For FERS employees, the situation can be even more 
problematic. As you recall, there are three components of the 
FERS retirement plan: the FERS annuity benefit, which is 
significantly less than the CSRS annuity benefit; Social 
Security benefits; and the Thrift Savings Plan, TSP. In some 
instances such as RIF, employees are forced to retire early. 
When this happens, first benefits are reduced, and the employee 
may not yet be eligible to receive TSP or Social Security 
benefits. If reemployed under the current DOD law, these 
employees are unable to increase their benefits on either FERS 
or TSP.
    Another hypothetical example. The position of a 57-year-old 
FERS employee with 12 years of service is eliminated because of 
BRAC. Because of the retirement eligibility structure under 
FERS, the employee was only eligible for about 75 percent of 
her full annuity and accepted that annuity with the reduction 
in order to maintain her health benefits. The employee was 
later reemployed within a DOD component and worked for an 
additional 5 years. However, due to our law, she was not 
eligible to earn additional retirement credit or have 
additional government contributions made to the TSP. Prior to 
our law, she would have been eligible for a redetermined 
annuity after reemployment. And at the age of 62, her new 
annuity would no longer be subject to age reduction, plus she 
could have significantly more TSP funds for her second 
retirement.
    If the laws were revised to provide the Department 
discretionary authority, our intent would be to allow employees 
the flexibility to determine whether a salary offset is in 
their best interest when they are being offered a position 
meeting our salary offset waiver criteria. We would continue to 
apply the criteria we use today in determining whether a salary 
offset waiver is in the best interest of the Department. 
Annuitants who did not meet that criteria would be free to 
accept positions under the terms available in the rest of the 
Federal Government; that is, with the salary offset comparable 
to their annuity payment. As the Department positions itself to 
deal with the current BRAC, the revision of the current 
authority would meet both the needs of the Department and our 
employees.
    Thank you for the opportunity to discuss this important 
tool available to the Department. I'll be happy to answer any 
questions that you have.
    Mr. Porter. Thank you very much.
    [The prepared statement of Ms. Bradshaw follows:]

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    Mr. Porter. Next Barbara Panther, Associate Deputy 
Assistant Secretary for Human Resources Management, Department 
of VA.

                  STATEMENT OF BARBARA PANTHER

    Ms. Panther. Thank you, Mr. Chairman. Good afternoon. First 
I would like to introduce Ms. Donna Schroeder, who is 
accompanying me today. She is the Director of our Compensation 
and Classification Service and is our program expert on how 
annuities are affected by the offset.
    Thank you for the invitation to appear before you this 
afternoon, and I request that the written testimony be entered 
into the record.
    Before I describe VA's experience with reemployment of 
annuitants, I would like to note the emphasis that this 
Department places upon work force planning. Since 2003, VA has 
operated according to a Strategic Human Capital Plan that 
aligns with our departmental Strategic Plan as well as the 
President's Management Agenda. VA has created and implemented a 
departmentwide system that ensures that work force planning 
activities are conducted throughout all levels of the 
organization.
    VA success in attracting, developing and retaining top 
talent has resulted in numerous benefits to veterans. Outside 
sources are giving kudos for services and products that 
demonstrate the quality of VA's work force. For example, VA 
recently was awarded the prestigious 2006 Innovations in 
American Government award for its electronic patient records 
data base. This award, sponsored by Harvard University's Ash 
Institute for Democratic Governance and Innovation at the 
Kennedy School of Government, honors excellence and creativity 
in the public sector. On July 17, 2006, VA's superior health 
care was highlighted in a Business Week article entitled ``The 
Best Medical Care in the U.S.'' These accolades recognize the 
work of employees who have a special dedication and commitment 
to serving veterans. More likely than not, it is this sense of 
dedication to the unique and honorable VA mission that would 
encourage retirees to reconsider reemployment with VA.
    There are a number of instances when VA has sought to 
reemploy annuitants in order to better serve veterans. In the 
Veterans Benefits Administration, retired veterans service 
representatives are required to provide training, to mentor, 
and to transfer institutional knowledge which was gained over 
the course of decades of service. In 2005, VA needed additional 
healthcare professionals to provide care to veterans who were 
displaced from New Orleans and Mississippi when Hurricanes 
Katrina and Rita hit the Gulf Coast.
    There are two primary reasons for reemploying annuitants in 
VA. First: to facilitate and complement succession planning. VA 
retirees with institutional and professional knowledge are 
reemployed to transfer that knowledge to the next generation of 
employees, to train and monitor them, allowing regular staff to 
focus on their workload.
    The second primary purpose for rehiring annuitants is for 
true critical immediate needs ranging from shift coverage, to 
IAEA, to assisting in VA's fourth mission of support to the 
Nation during emergencies.
    From 2000 to the present, VA has hired 434 retired 
annuitants, with 92 in the nursing field, including registered 
nurses, licensed practical nurses and nursing assistants. We 
currently have 201 annuitants employed at VA facilities with 
the dual waived for 44, including 14 nurses.
    VA has received OPM's approval to waive the salary offset 
for certain occupations on several occasions. In 2001, OPM 
delegated to VA the authority to waive the reduction for up to 
250 veteran service representatives in the Veterans Benefit 
Administration. In 2002, VA received delegated authority to 
waive the offset for RNs. In 2003, VA was given the authority 
to waive the offset in certain other medical occupations within 
that Veterans Health Administration. In addition, VA has 
requested two waivers from OPM for particular individuals with 
unique qualifications.
    The need for waivers of the salary offset varies with the 
development and resolution of emergency situations, the market 
for specific professions, and individual retirees' personal 
situations. In general, the waiver of the offset facilitates 
the employment of retirees, especially those with highly sought 
skills. However waivers are not always needed and do not always 
result in retirees returning to work for VA.
    Of the 201 current annuitants at VA, only 44 have been 
approved for a waiver of the offset. The remaining 157 
annuitants have their salaries offset by the amount of their 
annuities.
    Mr. Chairman, thank you again for the opportunity to be 
here today, and I am prepared to respond to any questions the 
Members may have.
    Mr. Porter. Thank you very much.
    [The prepared statement of Ms. Panther follows:]

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    Mr. Porter. Next, Dr. Ronald Sanders, Chief Human Capital 
Officer, Office of National Intelligence.

                  STATEMENT OF RONALD SANDERS

    Mr. Sanders. I do appreciate the opportunity to appear 
before you today to address this important and urgent topic: 
reemploying Federal retirees in times of national need by 
allowing them in certain circumstances to return to the public 
service without any penalty. The Intelligence Community [IC], 
has some experience in this regard as well as some special 
authorities, and both may help inform the subcommittee as it 
considers ways to better leverage the skills and talents of 
former Feds, a critical but, I believe, underutilized national 
resource.
    The ability to reemploy retirees to meet mission exigencies 
has proved increasingly critical to the IC in large part 
because of our demographics. The OPM Director Linda Springer 
talks about the retirement tsunami, and the metaphor is apt. 
Our work force is literally shaped like a wave front. On the 
one hand the majority of our work force has more than 20 years 
of service. By 2010, more than half of our employees will be 
eligible to retire, with even greater percentages among our 
senior technical experts, managers, professionals and 
executives. On the other hand, 30 percent or more of our work 
force has less than 5 years of Federal service, the result of 
our post-9/11 hiring surge, and that percentage is growing.
    Our growth is intended in part to cover the capability we 
lost during the downsizing of the 1990's in part to deal with 
the brutal operating tempo that our current mission demands. In 
between those two steep population peaks is a substantial 
trough at our middle grades, precisely where we would look for 
our next generation of senior analysts, case officers, 
technical experts and leaders.
    Rebuilding our bench strength is made even more difficult 
by the nature of our work. Operational and analytical 
tradecraft is far more art than science. It literally takes 
years of experience and training to develop a single seasoned 
intelligence analyst or case officer, and even longer to 
prepare someone to lead them effectively. Yet the seasoned 
professionals who can teach our next generations those 
operational and analytical arts are ready to retire.
    The ability to bring back some of those artisans without 
penalty is critical to our human capital recovery plan, and 
parts of the IC have already seen the benefit of this 
flexibility, albeit in limited fashion. For example, those IC 
agencies under the Department of Defense have had dual 
compensation waiver authority since 2004 and have used it to 
great effect. The NSA has been especially strategic in 
employment of retirees. The CIA has exercised similar 
authority, but only with respect to those former Agency 
employees who retired under a special retirement system. For 
all other annuitants, including its own, the CIA is set to rely 
on authority delegated by OPM. And while Congress gave the FBI 
the flexibility to do something similar as part of the 
Intelligence Reform Act, it may only reemploy its former 
employees. These various authorities limitations are 
problematic when one is trying to integrate and strengthen the 
Intelligence Community as a whole.
    The Congress recognized this when it also included section 
1053 of the Intelligence Reform Act. That section provides the 
Director of National Intelligence authority to establish a 
National Intelligence Reserve Corps, NIRC, for the temporary 
reemployment on a voluntary basis of former civilian employees 
of elements of the IC during periods of emergency as determined 
by the Director of National Intelligence.
    The statute further ensures that the salary of a former 
employee appointed to the Reserve Corps who is receiving an 
annuity under the Civil Service and Disability fund will not be 
offset. In other words, the Intelligence Reform Act granted 
dual compensation waivers to those retirees reemployed under 
the auspices of the Reserve Corps. And in that regard, it is 
discretionary under DOD, we can also reemploy a retiree outside 
of the confines of the Corps and avoid some of the 
complications that Pat Bradshaw mentioned.
    Thus under the statutory authority I have described, the 
FBI can reemploy a CIA retiree and vice versa, leveraging the 
individual expertise of our former employees for the good of 
the entire Intelligence Community and the Nation as a whole.
    When you're trying to integrate the talents of current and 
former intelligence professionals in 16 separate intelligence 
agencies and 6 different Cabinet departments, an IC-wide 
Reserve Corps has the potential to become one of our most 
powerful human capital tools. Accordingly, I am pleased to 
announce that just yesterday Ambassador Negroponte took 
official action to establish that Reserve Corps, issuing a 
policy memorandum governing use of this authority across the 
Intelligence Community. In so doing, the Director has also 
determined that a period of emergency exists for the 
Intelligence Community, as required by the law, and has 
delegated authority to make appointments to the Reserve Corps 
to the heads of our IC agencies under certain limited 
conditions and subject to certain mission-based criteria.
    For example, the authority requires the head of one of our 
agencies to make a specific written determination that the 
appointment of a reemployed annuitant to the Reserve Corps will 
meet a requirement critical to the agency's mission during the 
period of the emergency. It also requires the agency head to 
notify my office in writing of every such determination.
    In order to build a robust communitywide talent pool to 
support the Reserve Corps, the DNI has also required each IC 
agency to provide employees who separate with an opportunity to 
place their names on a roster of volunteers. However, former 
employees who are not on that roster may also be reemployed if 
they are otherwise eligible and the agency's head determines, 
again in writing, that they meet a mission-critical need. The 
policy does not allow a retired employee to be brought back to 
his or her former position except under extremely narrow 
circumstances, nor does it permit a former employee to come 
back at a higher General Schedule grade or step. The policy 
also excludes employees who were separated for cause, who 
resign upon notice of proposed separation for cause, or who are 
terminated upon revocation of their security clearance. And it 
provides that an individual appointment may be terminated at 
any time and for any reason by the head of the agency or the 
DNI.
    In establishing the National Intelligence Reserve Corps, we 
seek to reemploy exceptional people to meet exceptional 
circumstances, to leverage their priceless experience and 
intellectual capacity without having to ask them to suffer a 
financial penalty to the salary we pay for additional service 
or the annuity that they earned for past. In so doing, we 
believe our former employees can continue to make valuable 
contributions to the U.S. Intelligence Community's agile, all-
source work force of military, civilian and contractor 
personnel as we prosecute the global war on terror.
    Mr. Chairman, that concludes my testimony. I would be happy 
to answer any questions you may have. Thank you.
    Mr. Porter. Thank you very much for your testimony.
    [The prepared statement of Mr. Sanders follows:]

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    Mr. Porter. A staggering statistic that I failed to mention 
in my opening comments that really helped drive my interests in 
this issue is that we are going to be short 800,000 civilian 
nurses in the next 10 years; 800,000, which, if I bring it 
closer to home in Nevada, which started my investigation and my 
research, we are short 1,000 healthcare professionals today in 
the nursing field. We hire about 2,500 new teachers a year.
    Some of you may have heard me talking about our challenges 
of growth, but some of our issues specific to growth are not 
related just to Nevada, and that is, as I looked at the nursing 
shortage, also spent some time in the Middle East meeting with 
healthcare professionals that were in the different branches of 
service, and some volunteering their time around the world, and 
what we could do to keep nurses in the Federal service, you 
know, prior to going into the civilian corps.
    So I guess it's been a rude awakening. I think tsunami is 
well said. Not only do we have a shortage in the Federal 
Government of qualified new employees, we are having a problem 
keeping them within the system. And as we look at the 
competition today for the private sector, if we are--we need 
800,000 civilian nurses in the next 10 years. Imagine the 
pressure that is going to be putting on our Federal employees 
to jump ship and to go into the civilian work force.
    So today as we have heard from each of you in your specific 
areas, some of your challenges and some of your support and 
some ideas--Patricia, I know you mentioned that you really lack 
flexibility when it comes to the program is one size fits all, 
and it sounds like you would prefer that if and when this is 
available, as it is in some cases, that you have some 
flexibility, correct? Would that help you in recruiting and/or 
keeping folks to stay in the system?
    Ms. Bradshaw. Yes, Mr. Chairman. We believe that if we had 
the flexibility that I described, we would have access to other 
employees that would prefer to come back and be able to add to 
their annuity stream for the future. It is one of those costs 
of opportunity here. We just don't know how many people know 
about the DOD policy, and so therefore they don't even bother 
to inquire about opportunity or make themselves available 
because they go to a Federal agency where they can be hired 
back; especially if you have been continued, you can go back as 
a regular employee and start contributing back into the 
retirement system and into your TSP account. So that is the 
kind of flexibility that we would like to have.
    Mr. Porter. And this is really for all of you. Do you find 
that a lot of these folks don't understand or do not know of 
some of the options that are currently available? Do you find 
that to be part of the problem? Because it sounds like there 
are areas where they fit into the right box. Are you finding 
that they need to understand? Is that one of the challenges?
    Mr. Sanders. I think the rules have been so deeply embedded 
that, generally speaking, you are going to have a salary offset 
unless there is an exception to the rule granted by OPM or 
granted by law, and I think that may inherently discourage 
employees.
    One of the things that the FBI has done about its own 
Reserve Corps is it literally posts vacancy announcements on 
its Web site looking specifically for retired law enforcement 
officers, and they've had great success in that regard.
    Mr. Porter. Well, if I were to ask each of you to give me 
one solution--Patricia, you already have, because you have 
given us one, so you have to come up with a second one--what 
would you suggest that we do to fix this?
    Ms. Kichak.
    Ms. Kichak. We think the great need that we want to address 
is to allow people to transition in--to stay in the workplace 
longer by transitioning to part-time work instead of retiring. 
So we are looking for a way to use this authority to encourage 
people to stay with us on a part-time basis.
    Mr. Porter. OK. That is good.
    Do you need a moment Patricia? We will come back if you 
like.
    Ms. Bradshaw. I would second that. We would support that. I 
think it is absolutely critical to find a way to help people 
transition. I think when you reach that--an interesting number, 
we discovered, is that 20 percent of people who become eligible 
within DOD actually retire. They actually tend to stay about 3 
years on average beyond their eligibility date. And I think 
that is about the point that people really start to burn out. 
And so if we know that as a number, if we had a tool that would 
say, OK, we know that you are about to move on at some point, 
how can we make that transition easy for you, and allow us to 
use those individuals for mentoring, organizational, transition 
on a part-time basis, I think that would be most helpful to us.
    Mr. Porter. Ms. Panther.
    Ms. Panther. I, too, would have to agree with Nancy's 
proposals, particularly the proposal that she described with 
regard to annuitants who come back on a part-time work schedule 
automatically getting a waiver of the offset. That would be 
particularly helpful because we do have many retirees who 
aren't interested in work full time; they are really only 
interested in coming back on a part-time basis. And that 
particular proposal from OPM would be very helpful.
    Mr. Porter. Doctor.
    Mr. Sanders. Ditto, ditto, on the part time and the 
discretion to offer this or not. And I am also going to be 
presumptuous as a member of the OPM alumni association to 
encourage OPM to establish criteria for the delegation of this 
authority; I think if agencies are going to make this a 
permanent part of their strategic human capital planning, they 
need to be able to count on it. OPM should say, these will be 
the conditions under which we will grant the delegation and 
then they ought to be able to get that delegation for an 
extended period so they can use it over time. That is in 
addition to the one-time emergency use, but for the unusual 
circumstances, the longer term, I think more predictability in 
that delegation of authority would be useful.
    Mr. Porter. And I alluded to it earlier, but this is not 
just a problem for Federal employees. It is a problem 
nationwide in many specialized areas, as I mentioned, in 
healthcare. And I would like, as I am preparing legislation, a 
lot of it, it really is what OPM is suggesting and the language 
we are working on. If we could find a model, although the 
civilian work force is different than Federal, but if we could 
find a model that could be used in the private sector also 
because they are experiencing the very same challenge as far as 
this wealth of talent that is retiring. And I am not an 
actuary. I know a little bit about annuities, but I am 
certainly not an expert, but it seems to me we could even 
establish a separate annuity process for those retirees who 
want to come back in the system. Because I know the first 
system is established with certain actuarial scales and certain 
dollars. I would like to look at setting up a simplified 
retirement program that retirees could use, separate, of 
course, in the private and public but maybe the model could be 
used in both. So thank you very much.
    Mr. Davis.
    Mr. Davis of Illinois. Well, thank you very much, Mr. 
Chairman.
    I must confess that this is somewhat of a perplexing 
problem, and I find it perplexing because it deals with some of 
what I consider to be the great contradictions in our society. 
I mean, here we are on one hand talking about, how do we let 
individuals who have worked, developed, gained experience, 
continue to work without punishing them, and then on the other 
hand, we talk about the unemployment rate that exists, and we 
talk about other individuals who can't find a job. I mean, this 
seems to be one of the real paradoxes. I live in a community, 
for example, where unemployment in many instances is 25, 30 
percent. And there are thousands of people in our society, who 
for all practical purposes, will never work and will never have 
a meaningful job at all. And on the other hand, we have not 
found a way to make sure that those individuals have access to 
the workplace and make sure that they have the kind of 
training, the kind of education and develop the skills to make 
them an integral part of work force and workplace development.
    And on the other hand, I remember a few years ago, when we 
were talking about the whole question and the whole issue of 
leisure time activity, because there were people who thought 
that individuals were going to have too much leisure time and 
were going to retire, everybody when they were 55, and they 
wouldn't have anything to do with themselves after that. So we 
needed to create all of these additional opportunities.
    Let me ask if any of the agencies have given--is there a 
way to mix the conversation that we are having right now with 
the development of approaches to generating the personnel that 
we would need so we wouldn't have to have this kind of 
discussion?
    Ms. Bradshaw. I will take a crack. Sir, I would offer that 
your observation is a very legitimate one in that we see that 
there are multiple ways in which we need to be preparing for 
the future. Succession planning is key. We see that using 
reemployed annuitants is but one source for a critical emerging 
need because the pipeline has not provided for us perhaps the 
talent that is immediately--that we need immediately.
    On the other hand, that is part of our responsibility to 
ensure that we only use this authority appropriately so that we 
do not inhibit the development opportunity, that we ensure that 
we are tapping into the work force that is not employed that is 
available and bringing them into the work force, training them 
so that we are building the pipeline. So we have absolutely had 
conversations with DOD around that delicate balance between 
ensuring that you are using all the multiple tools available to 
you, targeting new hires, ensuring that you have developmental 
programs in place, building that pipeline so that, as you watch 
for the tsunami to hit, you have people in the pipeline. But 
oh, by the way, we have so many emerging needs within DOD, that 
is not always possible and because we are still competing with 
the private sector for these opportunities, we may need those 
people immediately, and we are willing to pay the offset and 
the salary for those individuals. So we see that you are 
absolutely right. There are multiple ways to address our 
emerging needs, and that is certainly part of the discussion 
that we have within DOD.
    Mr. Davis of Illinois. And I certainly appreciate that 
because I think the comprehensiveness of planning--I mean, I 
can think of school districts, for example, that developed 
incentives for their more experienced teachers to retire so 
they would have more money left, and then they could hire 
people at lower rates of pay. I can also think of some 
businesses and industries that have done essentially the same 
thing; that is, try and usher out those individuals at the high 
end of the pay scale so that there is more room. Of course, you 
sacrifice quality. You sacrifice experience. You jeopardize 
other kinds of things at the same time. And it seems to me that 
we really have some serious, serious challenges.
    And then there are those individuals who seemingly are 
afraid that, if we have the wrong kind of immigration policies, 
that we are going to have just a flood of individuals in our 
country, and there is not going to be enough work opportunities 
for them. Granted that individuals often come in at the lower 
end of things, but then, you know, they manage to go to college 
and learn some things and get some skills and develop and get 
an opportunity to move up. And so it seems to me that we need 
to always be thinking comprehensively about these issues when 
we are trying to plan for continuous development.
    And, Mr. Chairman, if I could just ask one additional 
question. For example, with DOD, if we are going to hire the 
same individuals in some instances, I am saying individuals, 
have we made some determinations of, relative to cost 
effectiveness, what would be most cost efficient, is the most 
cost-efficient way to handle this and try and get the same 
level of productivity while keeping costs down--I hate to use 
the term minimum--but keeping the cost at the point where we 
would most likely want it to be?
    Ms. Bradshaw. Yes, sir. Part of our policy and the reason 
we have put policy in place, even though the law is very broad 
in the authority it granted the Secretary, our policy is very 
specific about the circumstances in which you may use this 
authority to reemploy someone, and part of the reason we did 
that was to ensure that we are not bringing back people into 
positions where we could fill it with someone that is already 
in-house that has been growing and just promote that person or 
move that person into the job or that we couldn't perhaps 
recruit someone from the outside at a lower salary. So we are 
very conscious of being judicious in our use of this authority 
for one of those reasons.
    Mr. Davis of Illinois. Well, thank you very much.
    And Mr. Chairman, let me thank you. Because I am afraid it 
seems to me that we are creating a society where we are going 
to have a bunch of people up here, and we are going to have a 
bunch of other people down here, and a lot of other people 
floating in between. And I think that we have to find ways to 
try and ensure and make sure that does not happen and that we 
don't end up in a situation where, in my community, we often 
talk about whether we are helping the needy or the greedy. And 
I think we have to keep people out of that needy category and 
keep others from becoming too greedy. I mean, I have friends 
who have retired from places and all, and then they just decide 
to go back to work, and of course, when they go back to work, 
they prevent other younger, less experienced people, I think, 
from having the opportunity to do so.
    So I thank you very much, Mr. Chairman.
    Mr. Porter. And along that line, what we are finding is 
that in entry level in the work force, we have a lot of young 
folks that have chosen not to study math and science, for 
whatever reason, whether it be their choice or a lack of 
parental involvement or encouragement. So we are trying to find 
incentives to get people into the work force in specialized 
areas, whether it be math, science instructors, nurses. So I 
know, in Congress, we are trying to find ways to encourage 
folks to go into these different areas. There is another reason 
we want to keep----
    Mr. Davis of Illinois. I am not running out on you. I just 
have to go manage a bill.
    Mr. Porter. Go take care of it. We can talk about you. That 
is OK. We need to find a way to encourage them into the work 
force, and in the meantime, we have this talent in the private 
and public sector, especially in those areas that are leaving. 
So it is another reason why today is so important.
    Having said all that, thank you very much for your 
testimony. We appreciate your being here and look forward to 
working with you in the future. Thank you.
    And we do have a second panel.
    Charles and Duncan, will you join us, please?
    I am not sure if you guys stood for the swearing in. I am 
not sure. Why don't we do the formal portion here? Please raise 
your right hands.
    [Witnesses sworn.]
    Mr. Porter. Let the record reflect that the respondents 
have agreed in the affirmative.
    Thank you, gentlemen, for being here.
    In our second panel, we have Mr. Duncan Templeton, national 
legislative vice president, Federal Law Enforcement Officers 
Association; and Mr. Charles Fallis, president of the National 
Active and Retired Federal Employees Association.
    Welcome, gentlemen. I have a list of about 300 questions 
for you, so get prepared. No, not really.
    Charles, please.

 STATEMENTS OF CHARLES FALLIS, PRESIDENT, NATIONAL ACTIVE AND 
 RETIRED FEDERAL EMPLOYEES ASSOCIATION; AND DUNCAN TEMPLETON, 
 NATIONAL LEGISLATIVE VICE PRESIDENT, FEDERAL LAW ENFORCEMENT 
                      OFFICERS ASSOCIATION

                  STATEMENT OF CHARLES FALLIS

    Mr. Fallis. Mr. Chairman, members of the subcommittee, I am 
Charles L. Fallis, President of NARFE, and I am very pleased to 
be here today to testify on behalf of the members of our 
association, and I want to thank you for inviting us to 
testify. NARFE has long held that Federal retirees returning to 
government service should receive the full salary of their new 
job without any offset against the retirement annuities they 
earned through prior Federal service.
    Under current law, the wages of reemployed annuitants are 
generally offset by the amount of their annuity. However, OPM 
and certain Federal agencies can offer waivers, which allows 
select returning retirees with critical or crucial skills to 
keep both sources of earned income. The needs of the war on 
terror and homeland security underscore their importance. While 
no one complains about receiving a waiver, the inability to add 
retirement credit from their reemployment often creates 
dissatisfaction. Without a waiver, many retirees will not 
consider reemployment since the offset of their Federal pay 
would make their reemployed salary unacceptable.
    As a practical matter, many of them would be working for 
free. Sometimes we hear that waivers are not applied equitably. 
Indeed, the real challenge of recruitment and retention is 
whether incentives are used fairly. As you know, many Federal 
workers with crucial skills avoid the waiver process by working 
for a government contractor where their Federal annuities 
present no barrier to being paid full salary. Additionally, 
working for a contractor means one can earn more quarters in 
Social Security, and that is Social Security covered 
employment, thus mitigating the reduction of their Social 
Security benefits by the unfair and arbitrary Windfall 
Elimination Provision. In addition to reemployment, we are 
pleased, Mr. Chairman, that you are examining the application 
of the 1986 COBRA budget law which unfairly reduces the 
annuities of thousands of Federal employees who worked part 
time in the final years of their careers. This reduction occurs 
when actual part-time wages instead of full-time equivalent 
salaries are used to calculate the employee's highest 3 years 
of salary. President Bush's 2007 budget recognized this 
inequity and proposes using full-time equivalent salary to 
compute the annuities of future retirees who work part time. We 
agree part-time work near retirement encourages skilled, 
talented and experienced workers to remain employed.
    Unfortunately, the President's proposal does not remedy the 
inequity for current retirees whose annuities were lowered. For 
that reason, NARFE supports Representative Jim Moran's bill, 
H.R. 480, which would modify the President's proposal to 
include and correct the annuities of current affected retirees 
and survivors. H.R. 480 would alleviate any potential 
administrative complication in several ways. First, it would 
put the burden on annuitants to identify themselves as eligible 
for the correction rather than directing OPM to go out and find 
them. Upon enactment, annuitants would have 18 months to apply 
to OPM for a prospective, and that is a prospective calculation 
of their annuities. H.R. 480 would require that the newly 
calculated annuity amount become effective after the annuitant 
applied for a recomputation.
    Equity is also warranted for certain Veterans 
Administration nurses, and you mentioned that earlier, Mr. 
Chairman, nurses whose annuities were unfairly reduced by their 
part-time service. Before 1986, the Veterans Administration 
promised full-time retirement credit for part-time work to 
satisfy nurse staffing shortages. They have made that promise. 
Unfortunately, the VA did not keep that promise. Perhaps they 
couldn't, but they didn't keep that promise. Some nurses have 
never received their promised full-time retirement credit. This 
inequity was corrected prospectively in 2002 by the 107th 
Congress, but the new law did not extend full-time credit to VA 
nurses who retired between April 6, 1986, and January 23, 2002. 
Now, in this connection, NARFE supports Representative Tammy 
Baldwin's legislation, H.R. 4298, which would fix this 
inequity.
    Mr. Chairman, NARFE urges that in any part-time retirement 
computation, in any bill that the subcommittee addresses, we 
urge that you please include, No. 1, equity for all retired VA 
nurses and, two, fairness for all current retirees whose 
annuities were wrongly reduced because of their part-time 
service.
    Finally, Mr. Chairman, we commend you for your interest in 
enabling Federal annuitants to continue making critical 
contributions. Thank you for inviting us to testify, and if you 
have questions, I would be glad to address them.
    [The prepared statement of Mr. Fallis follows:]

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    Mr. Porter. Thank you very much.
    Mr. Templeton.

                 STATEMENT OF DUNCAN TEMPLETON

    Mr. Templeton. Chairman Porter, I want to thank you for the 
opportunity to appear before you today to testify about the 
need for Federal law enforcement to utilize an invaluable 
resource commonly referred to as retired annuitants.
    My name is Duncan Templeton, and I am currently the 
National Legislative Vice President of the Federal Law 
Enforcement Officers Association [FLEOA]. I am here today on 
the part of ART Gordon, FLEOA's National President.
    FLEOA is the largest nonpartisan professional association 
exclusively representing Federal law enforcement officers. I am 
here today representing over 25,000 Federal agents from over 50 
different agencies. Some of our members are rehired annuitants 
who are currently employed by the Transportation Security 
Administration and the Federal Air Marshal Service. All FLEOA 
national officers, like myself, are full-time Federal law 
enforcement officers who conduct FLEOA business on their own 
time. I am a criminal investigator with the U.S. Department of 
Justice, but I am here today on annual leave representing 
members of FLEOA.
    Ever since the tragic events of September 11, 2001, it is 
obvious that rehired annuitants have and continue to play a 
critical role within Federal law enforcement. Both the 
Transportation Security Administration, TSA, and the Federal 
Air Marshal Service, FAMS, utilize many experienced Federal law 
enforcement personnel, retired annuitants, to initially set up 
and operate these two new and important Federal agencies. Many 
retired annuitants currently occupy critical management 
positions within both TSA and FAMS. These positions include 
Federal security directors and assistant Federal security 
directors for the law enforcement within TSA as well as most 
middle level, upper level and executive level management 
positions within the FAMS. Since both TSA and the FAMS have 
only existed for 4 years, the loss of these key management 
personnel retired annuitants within these agencies and the lack 
of experienced personnel to fill this void will have a 
devastating effect upon public safety.
    OPM encourages agencies to utilize retired annuitants, and 
Congress recently passed legislation to enable the Defense 
Department to take advantage of this unique personnel practice. 
Since most other departments were already utilizing this 
valuable resource, this personnel practice actually saves the 
agencies money. Since they don't have to pay any fringe 
benefits to retired annuitants, it saves about 40 percent or 
$40,000 per employee and bridges the knowledge and skills gap 
between the newer employees and the highly experienced 
employees.
    FLEOA recently urged Secretary Chertoff to act now and 
authorize a 2-year extension for all retired annuitants within 
TSA and FAMS to avert major problems resulting from the 
potential loss of over 100 retired annuitants within these two 
agencies. This is just one example of how effective it was and 
continues to be to utilize retired annuitants within the 
Federal law enforcement agencies. Some Department of Justice 
agencies have sporadically utilized retired annuitants to fill 
the void within critical areas of their agencies as well. Most 
Federal law enforcement officers retire at age 50 with over 20 
years of dedicated law enforcement service and are not allowed 
to return to the Federal work force unless they have received 
dual compensation waivers for a specific period of time, 
usually no more than 3 years.
    These Federal agents have received thousands of hours of 
training during their careers and honed their investigative 
skills over many years while conducting complex investigations. 
These talented individuals then take their skills and expertise 
with them and move on to the private sector in higher-paying 
positions within Homeland Security, crisis management, forensic 
investigations, private security or with a State or local law 
enforcement agency. This is necessary because they are 
prohibited from starting a second career within the Federal 
Government.
    However, it should be noted that there is one exception to 
this rule of dual compensation and rehired annuitants. Over the 
past 20 years, hundreds of U.S. Secret Service agents have 
retired from Federal law enforcement service and retired under 
the Washington Metropolitan Police retirement system and, 
therefore, are allowed to start a second Federal law 
enforcement career with another Federal agency. They are not 
required to get dual compensation waivers. There are hundreds 
of retired Secret Service agents currently employed by TSA, 
FAMS, Department of Defense, Department of Justice and many of 
the Inspector General offices. FLEOA would like to see these 
same benefits, the same benefits reaped by Secret Service 
agents, extended to all Federal law enforcement retirees.
    Currently, the law regarding waivers appears to be 
implemented differently by agency and by position for different 
periods of time. There does not seem to be any uniformity. 
Indeed, within the entire Federal law enforcement community, 
the need for rehired annuitants is great, and the need for more 
widely utilized--and the need to be more widely utilized if we 
plan to continue to beef up Homeland Security agencies and to 
develop a higher level of intelligence gathering that relates 
to potential terrorist attacks or groups wishing to harm our 
great Nation.
    The skills of experienced criminal investigators and 
intelligence analysts take many years to develop and cannot 
simply be taught in a classroom environment. These assets 
cannot continue to be ignored. Dual compensation waivers for 
retired annuitants should become the norm within Federal law 
enforcement until each agency is satisfied that we have 
adequately highly skilled and trained personnel to adequately 
perform their mission.
    This becomes even more critically important when you get 
into the management ranks of the Federal law enforcement 
agencies. Inexperienced leaders within Federal law enforcement 
can result in disastrous consequences for the safety and 
security of our Nation. Competent law enforcement leaders are 
bred over a period of many years. They move up through the 
ranks of their respective agencies. With newly created agencies 
like TSA and FAMS, this is not possible. So the use of retired 
annuitants is a necessity. The waivers should be based on the 
demonstrated skills of the individuals, law enforcement retiree 
and the needs of the agency. Timeliness should not be set for 
the waivers. However, uniform policies need to be established.
    FLEOA has proposed a Federal law enforcement reserve force 
to be utilized in times of extreme agency emergency to 
supplement Federal law enforcement resources. This proposal has 
previously been submitted by FLEOA to Congress and the 
administration but has never been implemented. This is 
feasible, since the Law Enforcement Officers Safety Act of 2004 
authorizes retired Federal law enforcement officers to carry 
firearms anywhere in the country as long as they qualify with 
the firearm annually.
    FLEOA President Gordon has asked that I attach a copy of 
his letter to DHS Secretary Chertoff dated February 12, 2006, 
regarding the issue of rehired annuitants within the Department 
of Homeland Security. To date, no action has been taken by DHS 
on this request. In addition, FLEOA President Gordon has asked 
that I provide this committee with a copy of FLEOA's proposal 
for a U.S. Homeland Security reserve force. Thank you for 
allowing me to testify today, and I would be happy to take any 
questions as well.
    [The prepared statement of Mr. Templeton follows:]

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    Mr. Porter. Thank you very much.
    First, Mr. Templeton, just reiterate my agreement that the 
current pay benefits situation really is a hodgepodge, and that 
is part of what is driving my concern and comprehensive review 
in developing policy. So I appreciate your comments again, and 
I look forward to some more ideas from your groups as we move 
forward because it absolutely is a hodgepodge, and I understand 
that something must be done. So as we move forward looking at 
retirees, getting them back in the system or remaining, know 
that the primary goal of mine is to see if we can correct some 
of that problem. It is very confusing. And we are doing 
everything we can to correct that.
    From a question perspective, I guess if you could both just 
share with me some of the trends that you are seeing. What is 
happening with the retirees, Charles? And what is happening as 
far as wanting to get back to work or choosing not to? Are you 
seeing an increase in those that want to come back into the 
work force? And if so, do they want to come back full time or 
part time, or what are you sensing happening?
    Mr. Fallis. We have had concerns expressed to us about 
people who want to go back to work, but there are barriers in 
coming back to work for the Federal Government, that is the 
issue we are talking about now. There are also barriers that 
face those who want to go back and work in the private sector. 
And that falls into the WEP situation, Windfall Elimination 
Provision. We have people who will only work if they are paid 
under the table. They do not want to contribute into a fund, 
which in this case, it is Social Security from which they have 
no hope of receiving any benefit, or if they do receive a 
benefit, it will be a reduced benefit. And so that is the 
concern we see. I am sure that we have members who would be 
happy to go back to work if the conditions were right.
    I must say, though, that as far as I am concerned, it is 
not a burning issue. I can't say that, you know, I get calls 
every day on this. Our people, for the most part, are happy to 
be retired. I might be the exception. I retired 21 years ago, 
and I was retired for 14 years before I came back to work.
    Mr. Porter. You should know better.
    Mr. Fallis. I should know better, right. But I happened 
also to be one of those folks who was eligible to retire before 
January 1, 1986. And so I am exempt from the ravages of WEP.
    Mr. Porter. And Duncan, what do you sense? What are you 
hearing?
    Mr. Templeton. Well, the Federal law enforcement system is 
unique in that you can retire with 20 years of service at age 
50. Also in that, you have to retire by age 57 regardless, 
unless you get a waiver. You could get a 1-year waiver to stay 
1 extra year. I think people, you know, are desiring to--I know 
people who are retired and are desiring to come back and work 
in a law enforcement function. It is a passion for them, not 
just a financial issue. And I can speak for myself 
specifically. At this point, I have 19 years of service. In a 
year, I will be totally vested with 20 years. I can continue to 
contribute at 1 percent to my retirement after that, but I 
currently contribute at 1.7. If they were to increase that, it 
would make it more attractive for me to stay, but I am eligible 
to retire myself in 3 years. I certainly won't be ready to stop 
at that point, but I think that our retired Federal law 
enforcement officers have a lot to offer and should be given a 
chance to come back and contribute for all of us.
    Mr. Porter. Where are you finding a lot of the law 
enforcement officers going after their retirement?
    Mr. Templeton. I think predominantly to the private sector, 
to banking investigative positions, internal banking 
investigative positions, private investigation positions, that 
kind of thing, from my experience. To go to a--you know, 
realistically, to go to a local law enforcement position where 
you would be an officer for a person of retirement age is not 
that realistic, but there is a wealth of knowledge there and an 
incredible brain drain from all the people who are retiring and 
not being replaced by as experienced employees.
    Mr. Porter. Charles, I would like to talk for a moment 
about the nurses and those that retired between April 1986 and 
January 2002. So that group was left out of a correction, or 
what happened?
    Mr. Fallis. There was--it was fixed, as I indicated, 
prospectively. There was no retrospective coverage. So they 
left that 16 years between 1986 and 2002. Those nurses still 
have received nothing even though they were promised that they 
would receive full credit for their part-time work because they 
had a critical shortage problem. They persuaded them to stay on 
with this promise, and they took that in good faith. They 
really did. And they are terribly, terribly disappointed today 
in the Federal Government that they have fallen short of that 
promise.
    Mr. Porter. So, Charles, these were folks that could have 
retired and chose, because of the need, to stay on in a part-
time basis or full time or both?
    Mr. Fallis. Yes. Some, both, yes.
    Mr. Porter. And they weren't able to contribute at all into 
the retirement system or just partially?
    Mr. Fallis. Well, I think they might have been able to 
contribute into the retirement system, but it was on--when they 
figured their retirement, they didn't include what--let's say, 
you know, the full salary for the position. These people were 
working part time. They worked part time, but they were not 
given full-time credit for the time that they worked, and that 
was what they were promised. They said, if you will come back 
and work 4, 6, 7, anything short of 8 hours a day, we will see 
that you get full credit on your retirement, full-time credit 
for the time and the hours and the days and the months and the 
years that you put in. And then it was not delivered.
    Mr. Porter. Have there been numbers run on what effect, 
what the impact is financially? Is there like--I don't know if 
the term is scoring in this case, but has there been 
information available on the cost to correct these problems?
    Mr. Fallis. These nurses have been valiant in pressing for 
justice here, but they are small in number. Normally, the 
Congress responds to situations that involve millions of 
people. We have small numbers now, and they have not been able 
to generate the kind of support for the legislation that they 
would like to see passed to make them whole.
    Mr. Porter. And that is Tammy Baldwin's H.R. 4298?
    Mr. Fallis. That is it, yes.
    Mr. Porter. And it corrects the problem?
    Mr. Fallis. It does.
    Mr. Porter. So after 2002 then, they made a correction for 
anyone that is in that capacity? Or what happened after----
    Mr. Fallis. Prospectively, the nurses from 2002 are taken 
care of. Those before 1982 back to--I mean, before 2002, back 
to 1986 are the victims.
    Mr. Porter. And the H.R. 480, you mention Mr. Moran's, that 
has to do with not having a waiver or--if you could explain to 
me what we are trying to fix with that, with Mr. Moran's? What 
does it do?
    Mr. Fallis. Well, Mr. Moran's bill is bill No. 480. It is a 
bill that we support, and it would modify the President's 
proposal that came out in his 2007 budget. His proposal, you 
know, recognized that we had an inequity here as opposed to 
using full-time equivalent salary to compute the annuities of 
future retirees who would work part time. But it fell short of 
the mark, and the inequity that was left there is covered by 
Representative Jim Moran's bill, H.R. 480, it would modify the 
President's proposal to include and correct the annuities of 
current affected retirees. It is the retirees who would be left 
out in terms of the President's proposal. Here, again, we are 
talking about fixing it prospectively, but not fixing it 
retrospectively because there are victims here who are--I won't 
call them victims. There are people here who have been 
penalized unfairly.
    Mr. Porter. Like my mom who is a notch baby. I hear----
    Mr. Fallis. These are all notch people. That's exactly it.
    Mr. Porter. Well said. I want to thank you very much for 
your testimony. I appreciate you both being here and to the 
other members of the panel. And with that, we will adjourn the 
meeting. Thank you very much.
    [Whereupon, at 3:52 p.m., the committee was adjourned.]
    [The prepared statement of Hon. Elijah E. Cummings and 
additional information submitted for the hearing record 
follow:]

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