[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE COST AND BENEFITS OF THE REEMPLOYMENT OF FEDERAL PART-TIME
ANNUITANTS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FEDERAL WORKFORCE,
POSTAL SERVICE, AND THE DISTRICT
OF COLUMBIA
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
MAY 20, 2008
__________
Serial No. 110-140
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
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48-242 PDF WASHINGTON : 2009
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
HENRY A. WAXMAN, California, Chairman
EDOLPHUS TOWNS, New York TOM DAVIS, Virginia
PAUL E. KANJORSKI, Pennsylvania DAN BURTON, Indiana
CAROLYN B. MALONEY, New York CHRISTOPHER SHAYS, Connecticut
ELIJAH E. CUMMINGS, Maryland JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio JOHN L. MICA, Florida
DANNY K. DAVIS, Illinois MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts TODD RUSSELL PLATTS, Pennsylvania
WM. LACY CLAY, Missouri CHRIS CANNON, Utah
DIANE E. WATSON, California JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts MICHAEL R. TURNER, Ohio
BRIAN HIGGINS, New York DARRELL E. ISSA, California
JOHN A. YARMUTH, Kentucky KENNY MARCHANT, Texas
BRUCE L. BRALEY, Iowa LYNN A. WESTMORELAND, Georgia
ELEANOR HOLMES NORTON, District of PATRICK T. McHENRY, North Carolina
Columbia VIRGINIA FOXX, North Carolina
BETTY McCOLLUM, Minnesota BRIAN P. BILBRAY, California
JIM COOPER, Tennessee BILL SALI, Idaho
CHRIS VAN HOLLEN, Maryland JIM JORDAN, Ohio
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont
------ ------
Phil Schiliro, Chief of Staff
Phil Barnett, Staff Director
Earley Green, Chief Clerk
Lawrence Halloran, Minority Staff Director
Subcommittee on Federal Workforce, Postal Service, and the District of
Columbia
DANNY K. DAVIS, Illinois
ELEANOR HOLMES NORTON, District of KENNY MARCHANT, Texas
Columbia JOHN M. McHUGH, New York
JOHN P. SARBANES, Maryland JOHN L. MICA, Florida
ELIJAH E. CUMMINGS, Maryland DARRELL E. ISSA, California
DENNIS J. KUCINICH, Ohio, Chairman JIM JORDAN, Ohio
WM. LACY CLAY, Missouri
STEPHEN F. LYNCH, Massachusetts
Tania Shand, Staff Director
C O N T E N T S
----------
Page
Hearing held on May 20, 2008..................................... 1
Statement of:
Gilman, Maureen, legislative director, National Treasury
Employees Union; and Daniel C. Adcock, assistant
legislative director, National Active and Retired Employees
Association................................................ 29
Adcock, Daniel C......................................... 36
Gilman, Maureen.......................................... 29
Kichak, Nancy H., Associate Director for Strategic Human
Resources Policy, U.S. Office of Personnel Management...... 13
Purcell, Patrick, Specialist in Income Security, Domestic
Social Policy Division, Congressional Research Service..... 20
Letters, statements, etc., submitted for the record by:
Adcock, Daniel C., assistant legislative director, National
Active and Retired Employees Association, prepared
statement of............................................... 38
Davis, Hon. Danny K., a Representative in Congress from the
State of Illinois, prepared statement of................... 3
Davis, Hon. Tom, a Representative in Congress from the State
of Virginia, prepared statement of......................... 11
Gilman, Maureen, legislative director, National Treasury
Employees Union, prepared statement of..................... 31
Kichak, Nancy H., Associate Director for Strategic Human
Resources Policy, U.S. Office of Personnel Management,
prepared statement of...................................... 15
Lynch, Hon. Stephen F., a Representative in Congress from the
State of Massachusetts, prepared statement of.............. 52
Marchant, Hon. Kenny, a Representative in Congress from the
State of Texas, prepared statement of...................... 7
Purcell, Patrick, Specialist in Income Security, Domestic
Social Policy Division, Congressional Research Service,
prepared statement of...................................... 22
THE COST AND BENEFITS OF THE REEMPLOYMENT OF FEDERAL PART-TIME
ANNUITANTS
----------
TUESDAY, MAY 20, 2008
House of Representatives,
Subcommittee on Federal Workforce, Postal Service,
and the District of Columbia,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 2 p.m., in
room 2247, Rayburn House Office Building, Hon. Danny K. Davis
(chairman of the committee) presiding.
Present: Representatives Davis of Illinois, Marchant, and
Norton.
Staff present: Lori Hayman, counsel; William A. Miles,
professional staff member; Marcus A. Williams, clerk; and Jim
Moore, minority counsel.
Mr. Davis of Illinois. Good morning, and thank you all very
much. The subcommittee will come to order.
Today's hearing on Cost and Benefits of Reemployment of
Federal Part-Time Annuitants is about striking a balance
between agencies, meeting their staffing needs and ensuring
that promotion and work opportunities for new and current
employees are not stymied by returning Federal retirees.
Federal law prohibits annuitants from being dually
compensated. Federal retirees who are reemployed by the
Government are not permitted to simultaneously receive a
Federal salary and a Federal retirement annuity. The dual
compensation rule can create a financial disincentive for
retirees wishing to return to Federal service.
However, the Office of Personnel Management [OPM], may
grant waivers allowing agencies to fill hard to fill positions
with re-hired Federal annuitants without offsetting the
salaries by the amount of the annuity. Agencies can request
waivers on a case by case basis for positions that are
extremely difficult to fill, or for emergencies of any unusual
circumstances. On September 19, 2007, the full committee
ranking member, Tom Davis, along with the subcommittee ranking
member, Kenny Marchant, introduced H.R. 3579 to facilitate the
temporary re-employment of Federal annuitants. H.R. 3579 would
permit Federal agencies to reemploy retired Federal employees
on a temporary basis without the consent of the director of
OPM.
The testimony of today's witnesses will help us to
ascertain what course of action is in the best interests of the
Government and its employees. I will now yield to Ranking
Member Marchant for an opening statement.
[The prepared statement of Hon. Danny K. Davis follows:]
[GRAPHIC] [TIFF OMITTED] 48242.001
[GRAPHIC] [TIFF OMITTED] 48242.002
[GRAPHIC] [TIFF OMITTED] 48242.003
Mr. Marchant. Thank you, Mr. Chairman. Thank you for
holding this hearing today at the request of Mr. Davis, of the
minority. Political gridlock seems to be the status quo these
days, so it is refreshing to see teamwork, compromise and
bipartisanship whenever possible.
Mr. Chairman, I think we may be facing a crisis in Federal
employment and Congress needs to be working to find a solution.
As we look at the number of current Federal employees who are
eligible to retire in the next 5 years, we must consider how we
intend to replace those employees.
I believe that Ranking Member Davis' bill, H.R. 3579, could
be a major part of the solution. The legislation would allow
agencies to waive the salary offset requirement with respect to
any Federal annuitant who is employed on a part-time basis. I
am proud to be an original co-sponsor of this legislation.
While the reemployed annuitants would receive both salary
and annuity payments, they would not be considered employees
for purposes of retirement and would receive no additional
retirement benefits based on their service. To demonstrate the
importance of having this bill, the State Department recently
had a nationwide backlog of issued passports which extended the
expected turnaround time from the normal 6 weeks to a snail's
pace that was anyone's guess for when the individual would
receive a passport. These delays greatly impacted thousands of
business travelers and planned vacations.
In spite of its best efforts, the State Department was
dealing with record levels of retirement and an unprecedented
44 percent increase in passport demand. To make matters worse,
all new applicants must undergo background check and training
of about a year for new hires. The fastest solution was to
bring in recent hires who have the expertise and required
minimal new training. But the State Department lacked the
statutory authority to do this on a temporary basis. It took
legislation action by Congress to bring back State Department
employees to its offices.
Needless to say, this was not the most efficient way to
address the problem. It resulted in several additional months
of backlogs before these employees were back to work at the
State Department, finally helping to make some headway on the
backlog of passport applications. This sort of inefficiency is
the kind of thing that we have to avoid and responsibly crafted
legislation like Ranking Member Davis' bill is something we
should look to and something I fully support.
Thank you again, Mr. Chairman, for giving the minority this
hearing on this important issue.
[The prepared statement of Hon. Kenny Marchant follows:]
[GRAPHIC] [TIFF OMITTED] 48242.004
[GRAPHIC] [TIFF OMITTED] 48242.005
[GRAPHIC] [TIFF OMITTED] 48242.007
Mr. Marchant. I would also like to have permission, Mr.
Chairman, to enter Ranking Member Davis' statement into the
record.
Mr. Davis of Illinois. Without objection, so ordered.
[The prepared statement of Hon. Tom Davis follows:]
[GRAPHIC] [TIFF OMITTED] 48242.008
[GRAPHIC] [TIFF OMITTED] 48242.009
Mr. Davis of Illinois. Thank you very much, Mr. Marchant.
Now we will actually go to our first witness. Ms. Nancy
Kichak was named Associate Director for the Human Resources
Policy Division in September 2005. In this position, she leads
the design, development and implementation of innovative,
flexible and merit-based human resource policies.
Thank you very much, Ms. Kichak. If you would stand and be
sworn in.
[Witness sworn.]
Mr. Davis of Illinois. The record will show that the
witness answered in the affirmative.
We thank you very much for being here with us this
afternoon to testify. If you would give us your 5-minute
statement and of course, the yellow light means you have 1
minute left, and red means that the 5-minutes are up. We thank
you very much and will then go to questions.
STATEMENT OF NANCY H. KICHAK, ASSOCIATE DIRECTOR FOR STRATEGIC
HUMAN RESOURCES POLICY, U.S. OFFICE OF PERSONNEL MANAGEMENT
Ms. Kichak. Chairman Davis, Representative Marchant, thank
you for holding this hearing to examine proposals to facilitate
reemployment of Federal retirees. I appreciate the opportunity
to be here today to discuss the importance of these policies.
Because of the demographic makeup of the Federal work
force, the Office of Personnel Management projects a
substantial number of retirements in the coming years. We have
put succession plans in place that will help ease the impact of
the loss of expertise. But we need limited access to the
departing skilled workers to help make the transition to new
workers as seamless as possible.
Currently, retirees who become reemployed by the Federal
Government must have their salaries reduced. However, if that
same employee would go to work for a contractor, they would be
able to collect an annuity and salary. Or if a private sector
retiree is hired by the Government, that employee receives an
annuity and salary.
The law allows OPM to grant salary offset waivers on a case
by case basis to agencies experiencing exceptional difficulties
in recruiting or retaining qualified individuals or in unusual
circumstances. OPM may also delegate this authority to agencies
faced with emergencies or other unusual circumstances that do
not involve an emergency.
This authority has been used to help agencies in the
aftermath of the terrorist attacks of September 11th as well as
to respond to Hurricane Katrina. However, none of these
regulatory authorities provide the ability to waive the offset
for such short-term needs as mentoring new employees or
providing short-term assistance with critical projects.
OPM submitted a legislative proposal to Congress in March
of last year that would allow agencies, without coming to OPM
for approval, to rehire annuitants under certain conditions
without a salary offset. This proposal is substantially similar
to H.R. 3579, introduced last fall by Representative Tom Davis.
H.R. 3579 would cover only executive branch agencies while
OPM's proposal would also apply to the legislative and judicial
branches.
H.R. 3579 would permit Federal agencies to reemploy retired
Federal employees without offsetting annuity from salary for a
maximum of 520 hours in the first 6 months following
retirement, a maximum of 1,040 hours in any 12-month period,
and a total of 6,240 hours for any individual. While those re-
employed under this authority would receive both salary and
annuity payments, they would earn no additional retirement
benefits based on the reemployment.
The legislation would make reemployment both attractive to
annuitants and easy for agencies to use and it is designed to
avoid abuse. This will encourage individuals who otherwise
would leave Government permanently or provide their services to
a contractor to return to work for the Government part-time.
Amending the law in this way will also go a long way toward
eliminating the inequity in the treatment of reemployed Federal
retirees compared to private sector retirees, who continue to
collect their pensions and full salaries when they are hired by
the Federal Government.
I also want to thank Congressman Moran for introducing H.R.
2780, a bill to remove the penalty under the Civil Service
Retirement System, which results from part-time service at the
end of a career. And I want to thank members of the
subcommittee, along with members of the Committee on Oversight
and Government Reform, who supported passage of the bill out of
committee on March 13, 2008.
Similar legislation has been introduced by Senators Conrad
and Smith as part of their broader efforts to assist older
workers in the private and public sectors. Together, both of
these legislative initiatives are important to our efforts to
have the right people with the right skills in place, so that
agencies are able to meet their mission goals.
I want to especially thank you, Representative Davis, and
Representative Marchant, for your interest in this important
issue. Thank you for inviting me here today and I would be glad
to answer any questions.
[The prepared statement of Ms. Kichak follows:]
[GRAPHIC] [TIFF OMITTED] 48242.010
[GRAPHIC] [TIFF OMITTED] 48242.011
Mr. Davis of Illinois. Thank you very much. We appreciate
your testimony.
I will begin. Ms. Maureen Gilman, legislative director for
the National Treasury Employees Union, and a witness on the
third panel, states in her testimony for the record that the
lack of qualified employees is due to the funding and the
contracting out of critical expertise to private businesses. I
have a two-part question.
One, can current staffing shortages be attributed to a lack
of funding, and if so, why not hire staff now that can be
trained by more experienced workers before they retire? Then I
will go to the other part.
Ms. Kichak. I think it is fair to say that the Government
is trying to be as efficient as possible, and therefore does
not fund a position that is not needed if somebody else is
there doing the job. So if money were unlimited and you could
double-encumber certain positions and give people a long
training period, that would certainly help. There is no
question about that.
On the other hand, we work with our agencies. At OPM we
have human capital officers assigned to every agency to do
succession planning, to make sure there are people training
behind the folks in place. So it is not strictly a funding
issue. We do train people, but unexpected things occur. People
leave before you expect them to, folks that aren't able to
retire, folks get sick and folks decide to change jobs. So even
if we had more money, we couldn't guarantee that we would put
the right person in the right place to anticipate a problem in
the future.
Mr. Davis of Illinois. Strategic planning suggests that
work forces plan for the future in order to meet staffing
needs. Wouldn't proper planning and preparation by the agencies
alleviate staffing and training concerns if there was enough
planning taking place before we get to the point where there is
a need?
Ms. Kichak. I think there is a lot of planning taking
place. Again, you identify the people where you expect you
might have shortages and you start to build succession plans
around those areas. But unexpected things do happen.
The other problem you have is that no matter how much you
put down in documentation of a position and work with the next
person, they would really like to have somebody they could talk
to and work with when it absolutely falls in their lap. There
is no substitute for the person who is the most experienced at
that job being available as the new person takes over to answer
questions.
Our proposal is for a part-time job. It is really not for
full-time employment. So it is just to be able to access people
and rely on them for help in limited circumstances. It is not
to do the job.
Mr. Davis of Illinois. Let me ask you, are there provisions
in H.R. 3579 to address concerns that agencies would be
required to re-hire Federal annuitants with no benefits versus
new hires and current employees that are entitled to benefits,
thereby saving the agency money?
Ms. Kichak. I think there are many provisions in that piece
of legislation. The first one is the limitation on the hours
that can be worked immediately after retirement. It is very
clear that immediately after retirement, you can only work 600
hours of the first 6 months. What that means is that you cannot
let somebody retire and immediately come back to work.
So there is going to be some kind of break there where the
person is not going to be available to you full-time. Then
there is also the limitation that you can only work half the
hours in a year, which means that an agency which has a very
vital job is really going to have to find somebody who can
handle that full-time, and then again there is the provision of
the 6,000 hours in a lifetime. So again, that person is only
going to be available for a limited amount of time and an
agency has to plan to replace them.
As far as the issue of these folks not earning benefits
while they are retired, it would be, OPM also administers the
Civil Service Retirement System. It would not be good
management of that fund to allow reemployed annuitants to
increase their pensions while they are retired. Planning for
your retirement and building for your pension is something you
need to do when you are working. It wouldn't be good business
or good pension sense to build that while you are retired.
Mr. Davis of Illinois. Thank you very much. We will go to
Mr. Marchant.
Mr. Marchant. Thank you.
I have a few questions about just how this bill would work
mechanically. Would an annuitant be able to go to work for any
Federal agency?
Ms. Kichak. Yes.
Mr. Marchant. So it wouldn't necessarily be the agency that
they retired from?
Ms. Kichak. That is right.
Mr. Marchant. That is not limited in any way?
Ms. Kichak. That is right.
Mr. Marchant. Is the agency bound to offer what the
annuitant was making as his or her last salary?
Ms. Kichak. No, they are not.
Mr. Marchant. Is it an open, we post this job, we are
looking for a part-time person?
Ms. Kichak. The person who is going to be retired is going
to be required to meet the requirements of the job. In other
words, if you hire somebody as a physician, they are going to
have to be a physician. If you hire somebody as a police
officer, they are going to have to have those skills.
So their pay will also be set based on the job they are
hired to do, not necessarily the salary they were earning at
the time they left.
Mr. Marchant. Would an agency then be required to pay the
amount of money that job paid, currently paid at the level that
they hired them?
Ms. Kichak. The agency would set the pay based on the
responsibilities the person would have and the job they are
being hired into. One example would be, and it is an unlikely
one, but if you had somebody who was operating at a very high
level and you wanted them to come back and do some
administrative work, to organize some files, you could set that
job as an administrative person and they could have a lower
grade than what they were making when they left.
Mr. Marchant. There are several bills that are floating
around now in committee, on the House floor and maybe some that
are even out of the House that are proposing what I would
consider to be a very generous leave program for adoptive
parents, newborns, for both the husband and the wife. We were
told, we had testimony that said basically there was sufficient
workplace in force to fill those holes if someone left for 8 or
10 weeks.
Do you think that if this becomes law, and this becomes
policy, where it could extend, I think up to 12 weeks, is this
a situation where an annuitant could be used to come in and
fill in?
Ms. Kichak. Absolutely. One very good use of this bill
would be if somebody had an unexpected absence and they were
coming back. And a maternity is a good one.
On the bills on the leave, we do have good leave policies
for our folks so they can take a long period of time off. But
it would be a very good use of this bill to bring people,
reemployed annuitants back to fill in that gap.
Mr. Marchant. Thank you, Mr. Chairman.
Mr. Davis of Illinois. Thank you very much.
Let me just ask you, are there any other flexibilities that
you can think of that perhaps could be used to retain older
workers, such as maybe teleworking, flexible schedules, part-
time work or any other things that might be used to arrive at
the same goal?
Ms. Kichak. We absolutely support the Moran bill that fixes
the problem with the high three salary for CSRS employees, that
penalizes them if they go to part-time at the end of their
career. So we think part-time service at the end of a career is
a very good thing to do.
We are strong advocates of telework and we work very hard
to get policies in place so that managers can offer telework to
their employees. We believe in flexible work schedules. So all
of those things are great tools.
But there are also instances where this is the only kind of
thing that would work. Because in the instance that
Representative Marchant just described, where somebody is on
maternity leave, that person is gone. And you have to fill that
need. Allowing somebody to telework that is already gone
wouldn't really do that.
So all of those things are good ideas.
Mr. Davis of Illinois. Are there any other questions?
Thank you very much. We appreciate your being here.
We will go to our second panel. Mr. Patrick Purcell is a
Specialist in Income Security with the Congressional Research
Service. He works on issues related to Federal employee
retirement benefits, private sector pensions, 401(k) plans and
individual retirement accounts. Mr. Purcell, if you would raise
your right hand.
[Witness sworn.]
Mr. Davis of Illinois. The record will show that the
witness answered in the affirmative. We thank you for being
here and if you would summarize your testimony in 5 minutes,
the full testimony is in the record. The yellow light indicates
you have a minute and red means the time is up.
STATEMENT OF PATRICK PURCELL, SPECIALIST IN INCOME SECURITY,
DOMESTIC SOCIAL POLICY DIVISION, CONGRESSIONAL RESEARCH SERVICE
Mr. Purcell. Thank you, Mr. Chairman and Ranking Member
Marchant, for inviting me here to speak to you today on
reemployment of Federal annuitants. As you mentioned, Mr.
Chairman, I have submitted a written statement for the record,
so I am only going to focus on a few points concerning the
current law and the proposed legislation.
As you are aware, under the Federal Employee Pay
Comparability Act of 1990, the Director of OPM can waive the
prohibition on concurrent receipt of a salary and a retirement
annuity on a case by case basis if an agency is unable to
retain or recruit qualified employees. The 1990 law also allows
the Director of OPM to delegate to the head of a Federal agency
authority to grant waivers on a case by case basis for
employees serving on temporary appointments if the agency is
facing an emergency.
While the individual is employed under these waivers, they
do not earn additional retirement benefits except Social
Security.
Under H.R. 3579, agency heads would be allowed to hire
Federal annuitants on a temporary basis without reducing their
salaries by the amount of their retirement annuities and
without seeking the approval of OPM. The authority of an agency
head to grant a waiver would be limited, as was mentioned
earlier, to 520 hours in the 6 months following the starting
date of the annuity; 1,040 hours of service in any 12-month
period, 6,240 hours over the individual's lifetime.
In recent years, the number of reemployed Federal
annuitants has increased, but they are a still a small fraction
of all Federal employees. Between 2000 and 2007, the number of
reemployed annuitants doubled from roughly 2,700 to 5,400. This
is still less than one-third of 1 percent of all executive
branch Federal employees. Over this same 7-year period, the
percentage of reemployed annuitants subject to salary offset
fell, and the percentage who were reemployed under waivers that
allow concurrent receipt of a salary annuity increased.
In 2000, 75 percent of reemployed annuitants were subject
to salary offset and 25 percent were employed under waivers. By
2007, 40 percent of reemployed annuitants were subject to
salary offset, 60 percent were employed under waivers that
allowed concurrent receipt of salary and annuity.
Many Federal employees are going to be eligible to retire
over the next 10 years. More than 40 percent of the Federal
work force is over age 50 and 35 percent have already completed
more than 20 years of service. Because these employees have
skills that are needed for Federal agencies to carry out their
missions, managers in the Federal Government are seeking tools
to delay retirement of employees and to induce some retirees to
return to work.
In 1990, Congress approved one such tool by granting the
Director of OPM authority to waive in certain cases the law
that prohibits concurrent receipt of a Federal salary and an
annuity. H.R. 3579 would give agency heads more flexibility in
hiring retired Federal employees and to temporary employment by
allowing them to grant waivers to the salary offset without
seeking the approval of OPM.
Providing Federal agencies with the authority they need to
recruit and retain skilled workers is an important issue before
Congress. However, the prohibition on concurrent receipt of a
retirement annuity and full salary reflects the judgment of
previous Congresses that Federal employment policies should not
encourage workers to retire and then seek reemployment in a
Federal job in which they can receive both a salary and an
annuity.
Without the prohibition on concurrent receipt of a salary
and annuity, there would be a financial incentive for employees
to retire and seek reemployment with the Government. Because
H.R. 3579 limits the waiver authority to temporary employment,
it would substantially mitigate the possibility that this would
occur.
However, it is worth noting that in 2006, the Assistant
Director of OPM testified before this committee, ``that because
waivers result in compensation from the retirement fund and
salary, they must be used judiciously.''
This concludes my testimony and I would be happy to answer
any questions that members of the subcommittee might have.
[The prepared statement of Mr. Purcell follows:]
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[GRAPHIC] [TIFF OMITTED] 48242.015
Mr. Davis of Illinois. Thank you very much. I will begin.
Mr. Purcell, you testified that H.R. 3579 would allow the
head of a Federal agency to hire a Federal annuitant on a
temporary basis without reducing the annuitant's salary by the
amount of his retirement annuity. You also testified that such
a measure could create an incentive for some employees to
retire and seek reemployment which would encourage retirement.
Are there provisions in H.R. 3579 to prevent agencies from
abusing this authority and the early retirement of Federal
employees?
Mr. Purcell. Yes, there are. The limitation on employment
to 500 hours in the first 6 months, 1,000 hours in any 12-month
period and 6,000 hours over a lifetime is a key element of this
bill. Because an individual could only count on appointment to
a temporary job, it would substantially mitigate the
possibility that an employee who knows he or she has a valuable
skill and would be likely to be reemployed from attempting to
game the system, which does occur.
If I could just refer briefly to an article in News Day,
May 10th, about a school district employee in New York State
who retired on a pension of $100,000 a year, was rehired the
next day at a salary of $175,000 a year, raising his total
compensation to $275,000 a year, this occasionally has happened
in State and local governments that have allowed retirees to be
reemployed and collect both a salary and an annuity. My
experience reading about these stories in the past is they
generally elicit a uniformly negative response from the public.
[Laughter.]
Mr. Davis of Illinois. I was wondering if the person may
have had some clout. Not a bad plan.
Let me ask, are there any other suggestions or
recommendations that you might have that would help assure that
there is no mis-use of this concept?
Mr. Purcell. When reading the bill, I noticed that it would
be a permanent change to the statute. One possibility might be
to make this change for a period of 5 or 10 years and evaluate
how agencies and individuals respond. Another, somewhat more
drastic measure, might be to put in an absolute ceiling, say,
no more than, well, let me backtrack.
I believe right now about three-tenths of a percent of
Federal workers are reemployed annuitants, the largest share in
the Department of Defense, which has an entirely separate
authority under the National Defense Authority Act of 2004. But
a ceiling of a half a percent, three-fourths of a percent
should be ample room for an agency to fill positions for, as
Ms. Kichak said, training and mentoring and bringing the newer
group of Federal employees up to speed.
Mr. Davis of Illinois. Thank you very much.
Mr. Marchant.
Mr. Marchant. I am in one of those States that, when I was
in the State legislature, this came before Texas as a solution.
And it was not very long before the mis-use appeared. Then we
had to take another action to keep that from happening.
Is it possible to put a cap salary in there or a cap pay in
there?
Mr. Purcell. It would be possible to say that, I am just
going to make a number up here, that the combined annuity and
salary shall not exceed 100 and X percent of somewhere in the
general schedule. You could do it. You would have to give it
some thought. You wouldn't want to make it so constraining that
people wouldn't go for it, and you wouldn't want to make it so
broad that it is ineffective.
Mr. Marchant. But you could make it a functional thing?
Mr. Purcell. Yes, it could be based on the combined annuity
and some level of the general schedule.
Mr. Marchant. I am sure no one contemplates that at this
point. But there are people who spend 24 hours a day thinking
about stuff like this.
The other question I have about it is, have you given some
consideration, with this early retirement argument where it
incentives an early retirement, the way the retirement system
is set up, the sooner you retire then you are cutting the
amount of your monthly annuity over a long period of time.
Mr. Purcell. That is true.
Mr. Marchant. So you have an offsetting, the fund itself
has an offsetting compensation. So the fund itself, the quicker
someone retires, once it gets to a threshold and they retire,
they are going to receive a diminished benefit----
Mr. Purcell. Forever.
Mr. Marchant [continuing]. From their retirement. Yet you
have the temporary employment capped over here, as best I can
tell, at five half years, five or six half years. So that if
you incentivize someone to retire at age 55, that could have
worked until 65, then their benefit at 65 from the fund would
be much higher and a person 55 could take a significantly less
amount. Then it would be fairly shortsighted on that person's
part to limit himself to five half years for his total exposure
to Government pay, with no additional benefit.
Mr. Purcell. True. The way this legislation is drafted, I
think it is very significant that, for instance, the 6,240 hour
cap, which is equal to three full years, the way this is
written, you couldn't work three full consecutive years,
because you are limited to half-time in any 12 month period. If
that weren't there, if the only limit were, say, 6,240 hours, I
think the bill would present problems in creating adverse
incentives for people to retire to 56, 57, whatever their
minimum age is, begin the pension and go back to work.
The way this is crafted, that would be difficult to do,
because in most cases, you would have to have a gap. You could,
I suppose, work part-time, because actually it is a limit on
hours.
Mr. Marchant. Yes, they could string it out over----
Mr. Purcell. You could string out part-time work over a
longer period of time. That is one reason I was suggesting that
perhaps a time limit initially for OPM to figure out if that is
happening, come back in five or 10 years and say, we need to
tweak this, because something is happening we didn't expect.
The way it is crafted now, it does at least limit the
possibility that somebody would say, ah, I know I have this
rare skill that they need, I am going to retire tomorrow and
come back and collect both.
Mr. Marchant. Mr. Chairman, my last question will be, even
though I am very much for this, the other thing that I think is
a potential abuse is for someone to come back as a consultant.
Mr. Purcell. Which they can do now. As far as I know, if
you retire from the Federal Government, come back on, say, a
personal services contract, you will be collecting both that
contract money and your pension. I may be wrong about that, but
I think you can do that.
Mr. Marchant. But I mean, the job description in itself
under this structure would just be to consult.
Mr. Purcell. Yes.
Mr. Marchant. Not a specific job title where you are coming
in and plugging this hole or doing this. I think if there is
any potential abuse there, this general description of what
that person does, management consultant, training or something
like that.
Mr. Purcell. Perhaps some of these issues could be dealt
with, the last section of the bill, director of Office of
Personnel Management shall prescribe regulations, perhaps some
of those potential issues could be dealt with in the
regulations accompanying it, or written after the bill was
passed.
Mr. Marchant. I recall that our reaction to fix the problem
was very extreme. So if those regulations don't----
Mr. Purcell. Actually, if I could just inject one last
thought. In some nearby States, Maryland and Virginia, for
instance, that recently experienced teacher shortages, the
legislature has authorized rehiring retired teachers and
saying, you can simultaneously collect pension and annuity,
with strict time limits. You can do this for 2 years or
something. And if we still have an emergency the legislature
will deal with it at a later date.
Mr. Marchant. Thank you, Mr. Chairman.
Mr. Davis of Illinois. Thank you very much.
I thank you very much, Mr. Purcell.
We will go to our third panel, which will be composed of
Ms. Maureen Gilman, who is the legislative director of the
National Treasury Employees Union. Prior to working for the
NTEU, she was the chief of staff and legislative director for
Representative Sam Gejdenson from Connecticut. We also have Mr.
Daniel Adcock. He is assistant legislative director for the
National Active and Retired Federal Employees Association
[NARFEA]. Prior to working for NARFEA, he served as Executive
Assistant to Assistant Secretary for Aging, Jeannette C.
Takamura.
If you would both stand and raise your right hands to be
sworn in.
[Witnesses sworn.]
Mr. Davis of Illinois. The record will show that the
witnesses answered in the affirmative.
Of course we are delighted to have you both. We have your
written statement for the record. If you would take 5 minutes
and summarize your statement, the green light indicates that
the full time is available, the yellow light means you have 1
minute and the red light means that your time is up.
We will begin with you, Ms. Gilman. Thank you very much.
STATEMENTS OF MAUREEN GILMAN, LEGISLATIVE DIRECTOR, NATIONAL
TREASURY EMPLOYEES UNION; AND DANIEL C. ADCOCK, ASSISTANT
LEGISLATIVE DIRECTOR, NATIONAL ACTIVE AND RETIRED EMPLOYEES
ASSOCIATION
STATEMENT OF MAUREEN GILMAN
Ms. Gilman. Thank you, Chairman Davis, Ranking Member
Marchant, for the opportunity to express the views of the
National Treasury Employees Union on H.R. 3579.
This bill has been suggested as a solution for an
anticipated lack of qualified Federal employees needed to
effectively accomplish the important missions of the Federal
Government. Many Federal agencies today are woefully
understaffed and the training, mentoring and promotional
opportunities needed to have experienced employees in place,
should we see large numbers of retirements in the next few
years, is not being adequately addressed.
The primary reason for this is not a lack of qualified
employees or applicants, but a lack of funding. In addition,
much critical expertise has been contracted out to private
businesses. NTEU believes that the real solution to current and
future personnel concerns is to focus now on the recruitment
and retention of talented employees. Fundamental to this
process is providing fair pay, adequate benefits, job security
and rewarding work. GAO has found that the use of current
flexibilities, such as part-time work, flexible schedules and
flexi-place options improve recruitment and retention efforts,
especially among older workers. NTEU strongly supports the
expanded use of these options throughout the Federal work
force.
We also support Congressman Moran's bill, H.R. 2780, to
make sure there is no penalty in terms of pension calculation
if an employee moves to a part-time schedule near retirement.
In addition, NTEU believes that legislation introduced by
Chairman Davis, H.R. 5550, that would allow FEHBP to cover
dependent children to age 25, rather than age 22, would be a
strong recruitment and retention tool for parents of young
adults, the kind of experienced workers that the Federal
Government needs.
One of the best recruitment and retention benefits that the
Federal Government provides that is especially attractive to
older workers is the ability to continue in the FEHBP program
with the Government continuing to contribute toward premium
costs upon retirement. Yet the administration proposed to limit
this FEHBP option in its last several budget submissions. NTEU
strongly opposed this proposal and we are pleased that the
Congress took no action on it.
While NTEU does not oppose the Federal Government's use of
reemployed annuitants, we do have some concerns with regard to
H.R. 3579, which would significantly change the rules on this
practice. Currently, most agencies are allowed to waive
statutory prohibitions on dual compensation or paying salaries
at the same time pension benefits are being received, under
certain circumstances, with the approval of Office of Personnel
Management. These circumstances include an emergency hiring
need, severe recruiting difficulty and the need to retain a
particular individual. last fall, regulations were amended to
expand the ability to waive the dual compensation rules for
unusual circumstances.
Under H.R. 3579, OPM will have no approval authority, but
rather, agencies will be free to act without outside review. In
addition, the bill does not set forth any standards that must
be met in order for agencies to reemploy annuitants without
pension offsets. It is also not clear that these appointments
would follow standard competitive hiring practices that protect
merit principles and veterans' preference.
Under current pension rules and the limited time
appointments prescribed under H.R. 3579, most benefits provided
to other Federal employees will not be available to reemployed
annuitants. Rehired annuitants would not be eligible for FEHBP
coverage as employees and if they retained coverage as
retirees, OPM accounts, not the employing agency, would pay the
Governments's share of their premiums. They would not be
eligible to earn additional retirement credit or participate in
the thrift savings plan, so agencies would incur no costs for
those benefits. This cost-shifting would provide agencies
powerful budgetary incentives to maximize the use of part-time
short-term annuitants, rather than hiring and promoting the
full-time permanent employees needed to successfully steer
agencies through the challenging times ahead.
NTEU is not aware of any serious problems with the current
rules that allow for reemployment of annuitants. We are
concerned, however, that the proposal under consideration,
while certainly intended to be used judiciously, could easily
be subject to abuse, especially due to the financial incentives
it will provide agencies, the lack of standards and the
elimination of OPM approval.
Thank you for the opportunity to present this statement. I
will be happy to answer any questions you might have.
[The prepared statement of Ms. Gilman follows:]
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Mr. Davis of Illinois. Thank you very much. We will proceed
to Mr. Adcock.
STATEMENT OF DANIEL C. ADCOCK
Mr. Adcock. Thank you, Mr. Chairman and members of the
subcommittee. I am Dan Adcock, assistant legislative director
of NARFE.
NARFE has long held that Federal retirees who are
interested in returning to Government service ought to be able
to receive the full salary of their new job without any offset
as a result of the retirement annuity they earned through prior
Federal service. NARFE's annuitant members count among our
ranks agency managers, line supervisors, security specialists,
computer programmers, air traffic controllers, and law
enforcement personnel.
At a time when the Nation faces critical challenges and our
Federal Government faces an unprecedented brain drain, we
should not ignore my side of ready, willing, able and proud men
and women who have dedicated their careers and service to our
Nation. Indeed, the reality of our current skill shortages
demonstrates the critical roles played by civilian employees of
the Government, thousands of whom are working alongside their
uniformed colleagues in locations like Iraq and Afghanistan.
After serving full careers in public service, most Federal
retirees want to stay retired. However, there is a growing
number who want to return to public service for several
reasons. Some are paying for their children's or
grandchildren's soaring college costs. All annuitants are
paying higher out of pocket health care expenses and mounting
daily living expenses, including energy costs. Others are
replacing Social Security benefits lost as a result of the
application of the unfair and arbitrary Government Pension
Offset and Windfall Elimination Provision.
But it is not always about money. Some retirees appreciate
the value of remaining professionally, mentally and physically
engaged through reemployment. In addition, more and more no
longer care to be bystanders with what is going on in the
Middle East and with homeland security, and they want to answer
the call to public service at a time when our Nation needs
their unique skills and talents.
So what is stopping them? Under current law, the wages of
those reemployed annuitants are generally offset by the amount
of their annuity. However, OPM and certain Federal agencies
have the authority to allow some returning retirees to avoid
the offset when serving in positions for which there is
exceptional difficulty in recruiting and retaining a qualified
employee and in jobs critical to accomplishment of the agency's
mission.
Unfortunately, not all qualified retirees with in-demand
skills receive a wavier. Indeed, they tell us that they would
not consider reemployment since the offset of their Federal pay
by the amount of their annuity would make their reemployed
salary uneconomical. Absent a waiver, some would be working for
free, as a practical matter, if their annuity was the same or
higher than jobs that pay a lower salary.
In fact, many crucial Federal workers avoid the red tape of
the waiver process by going to work for a Government contractor
where the Federal annuity presents no barrier to being paid
full salary at the new job. Working for a contractor also
allows Federal retirees to earn more quarters in Social
Security-covered employment in an effort to mitigate the
reduction of their Social Security benefits by the windfall
elimination provision.
Should the Federal Government continue to deny itself
access to this pool of experienced professionals at these
critical times? Why pay a premium to a contractor when you can
get skills of a seasoned professional basically at cost?
One way of making reemployment with the Federal Government
more attractive to skilled and motivated retirees is H.R. 3579,
legislation introduced by Ranking Members Tom Davis and Kenny
Marchant, which will allow Federal agencies to reemploy Federal
retirees on a limited, part-time basis without offset of
annuity from salary. It is our intention that agencies use this
authority to supplement and not supplant the current work force
and to find annuitants with specific skills that are not
presently available for hard to fill positions.
The flexibility of working part-time is appealing to many
retirees interested in going back to work, since they are not
trying to buildup their careers. What is more important for
them is not missing certain life events for work.
Additionally, some Federal annuitants, for certain aging
and physical reasons, will not consider taking full-time
employment. And some, H.R. 3579 removes many obstacles
preventing or discouraging the reemployment of Federal
annuitants, and it enables the Government to hire workers with
skills and talents in short supply.
For these reasons, NARFE urges you, Mr. Chairman and
members of the subcommittee, to approve this needed and crucial
legislation. We commend you for your interest in enabling
Federal annuitants to continue to make crucial contributions.
Thank you for inviting us to testify and for your able
leadership of the subcommittee.
[The prepared statement of Mr. Adcock follows:]
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Mr. Davis of Illinois. Thank you very much, Mr. Adcock. We
will now go into some questions.
Ms. Gilman, let me begin with you. Do you think that the
Office of Personnel Management and Federal agencies are doing
enough to recruit and retain staff to address staffing needs?
Ms. Gilman. No, I don't, Mr. Chairman. I think that is the
real problem that we should be focused on today. There is a
need to make sure that we have talented people in place and
that we are planning for the future. I don't think enough is
being done. Some of the flexibilities that I mentioned in my
testimony were recently pointed out in a GAO report, like
allowing current employees more options to work part-time
schedules, work flexi-place. Other kinds of job options that
are not being really used by the agencies would do a lot, I
think, to both recruit the talented people we need and to
retain those who might be thinking about retiring.
Mr. Davis of Illinois. Let me ask you also, why should
Federal retirees be subject to the dual compensation rule when
private sector employees are not?
Ms. Gilman. Mr. Chairman, if it were up to me, I wouldn't
have them subject to it. But I think Congress has put that in
place to potentially avoid abuse by retirees leaving and coming
back and getting a full salary while they are also collecting
their pension. I have heard the argument, why should they be
put at a disadvantage to a private sector employee who wants to
come back, but they are still at a disadvantage if they are
given the dual compensation waiver in terms of other benefits.
Also, onboard employees are at a disadvantage because their
benefit levels that have to be paid by the agencies are going
to be higher than a reemployed annuitant. If you put the two
applicants for the job side by side, and they are going to be
paid exactly the same salary, the agency will have to put in
much less money to pay the retired annuitant than the onboard
employee, because they don't pay in anything for their
benefits.
Mr. Davis of Illinois. Is there anything that you would,
well, let me ask you this. Do you think that this practice
impacts negatively on employees who are currently working
relative to opportunities for advancement or movement in any
way?
Ms. Gilman. I think it could, Mr. Chairman. One area that
has been mentioned is to bring back retirees for training
purposes and mentoring. Sometimes that can work. Sometimes if a
retiree has been out of the work force for a while, their
skills and their information may not be as up to date as an
onboard employee.
Also, onboard employees look at opportunities to be able to
provide training or mentoring as one of the biggest
opportunities to gain experience in terms of competing for
promotion. So if you are going to give more training and
mentoring opportunities to retirees, there may not be as much
available for onboard employees.
Mr. Davis of Illinois. Thank you very much.
Mr. Adcock, let me ask, you testified that Representative
Tom Davis' bill does not end the existing dual compensation
rule, but would extend it by giving agency heads the authority
to waive the restriction for retirees who return to work part-
time. Do you think that Federal agencies are capable of
policing themselves to the extent that there would be either no
or low abuse or must we have authority etched in law to try and
make sure that this would not happen?
Mr. Adcock. I think the main way that abuse will be
prevented is through the fact that these workers will be
working on a part-time basis for a temporary duration. So I
think those issues will be taken care of.
But you know, when we talk about whether or not, for
instance, someone who is being brought in to do mentoring has
the skill set or the current skill set. All these things have
to be case by case decisions, as any hiring decision is. At the
decisionmaking level, some of that has to be left to the
Federal agency to have that kind of discretion. But to answer
your question, I think the fact that the appointments would be
temporary, under special circumstances, and of limited
duration, should take care of that issue.
Mr. Davis of Illinois. Thank you very much.
Mr. Marchant.
Mr. Marchant. Thank you, Mr. Chairman.
Looking at the OPM projections for retirements over the
next 10 years, Ms. Gilman, this is obviously some information
that you have had a chance to look at, do you believe under the
current system that we have that they are going to be able to
successfully recruit this many new employees?
Ms. Gilman. I would hope that they would be planning for
that, and that they would be beginning to deal with it, both to
recruit and to retain enough qualified employees to do that
work. But I also think that if there is a need to bring back
annuitants that there should be some standards, similar to what
are in place today. If an agency can demonstrate that it has
unusual circumstances or particular needs, they can go to OPM,
get a waiver and bring employees back if they need to.
But if we give them a blank check, even if it is to bring
back employees part-time, if there are no standards and no
outside review, our concern is that will become a first option
instead of maybe a second or third option.
Mr. Marchant. So the previous testimony we heard that this
would not even represent more than one-third of 1 percent of
the work force, are you thinking that is not correct, or that
is too low of a projection? Because when you are talking about
60,000 people that are next year expected to retire in 2007
[sic], 61,000 in 2002 [sic] you don't view this as a valuable
tool to keep the workplace going?
Ms. Gilman. I think it is a tool that has been used
effectively under the current rules. I think if there is a need
that can be demonstrated by an agency that the rules in place
now would allow them to rehire an annuitant. I frankly didn't
hear anything in the OPM testimony that pointed to any
significant problem with the rules that are in place now. I
know they talked about this would prevent abuse because of the
part-time or short-term duration.
It is our view that if the agency has an emergency or a
severe need, they shouldn't be limited by part-time or the
amount of time. If there is one person that can do a job at the
Centers for Disease Control, I don't think we should be
limiting bringing them back for maximum 6 months at a time. If
the need is there, they should be able to come back and serve.
But if there isn't a special need, I also don't see why the
doors should be completely flung open to bring back annuitants
without any need, any specific need.
Mr. Marchant. Thank you, Mr. Chairman.
Mr. Davis of Illinois. Thank you very much, Mr. Marchant.
Ms. Norton.
Ms. Norton. I appreciate the testimony of both of you,
offering some insight into this issue that is not always
apparent on the surface. I have to tell you, I have a hard time
understanding why anybody would come back now, when you have to
give up your annuity. And if it is hard to find employees,
maybe you can help me out. First, let me say I understand the
search for the solutions. I don't want to say this is off the
top of my head not a good solution.
I do agree with Mr. Marchant, the way in which Federal
employees are pouring out of here, I can guarantee you this,
you are not going to replace them as easily with the baby-boom
quality generation. Because their opportunities throughout the
private sector are so much broader and often more attractive.
So I do think this presents a very serious problem for the
Federal Government. We have had hearings on it. And I must say,
nothing even approaching a satisfactory solution has come
forward. I think this is an attempt to try to do something to
shore up, at least shore up the Federal work force. Then we
have to look beneath the surface for the details.
My own sense, I wonder what your experience has been, for
hard to find positions, I don't know why anybody who has that
level of skill would want to bring it back to the Federal
Government rather than, you mentioned, contractors. I can think
of a dozen places right off hand that if you have a hard to
fill position, that it must be a position that is desired both
by the Federal Government and the private sector. Are we
talking about a ghost work force here? In your experience, you
who represent retirees and Federal workers, are these hard to
find workers which now requires a waiver coming back to the
Federal Government, seeking employment with the Federal
Government at all, rather than using other options, where you
don't even have to worry about keeping your annuity, etc.,
which is of course when they retire, which is what they want to
do in the first place?
Who is doing this?
Mr. Adcock. Congresswoman, I think what happens for many
annuitants is that obviously, if they can't get the waiver,
then it is a no-brainer, they are going to go to a contractor.
Ms. Norton. Well, just a moment. My question is why would
you want to come, you have your annuity, you have your
benefits. If you are in a hard to find employee position, why
would your first option be the Federal Government, rather than
a dozen other options, which don't raise the same issues?
Mr. Adcock. Well, I think that part, money is obviously,
compensation is a large consideration. But I think sometimes
people are led back to the Federal Government because they see
what is going on in the world and they want to do something
about it.
Ms. Norton. For love, not money, maybe.
Mr. Adcock. Right. I think that is a legitimate motivation
why people will do it.
Ms. Norton. And with the baby-boom generation, I am sure
you can find some of that. I must say, when Federal employees
retire, now we have them retiring early. It doesn't cross my
mind that they would any time soon be looking for reemployment
here. It may be as workers get older and as you indicated, Mr.
Adcock, this was, and it often is, very satisfying work, they
want to come back and do that work. But I really wonder if what
we are playing with here, I must say that I do agree with you,
Mr. Gilman, while this may be a stop-gap measure that at least
we ought to try, we are fooling ourselves if we think that the
Federal Government can lumber along, providing, for example,
the same health benefit ratio that it did whenever the program
was set up, and the rest of it, and still get the quality of
work force you need in a post-9/11 work force, I don't know
what it will take to make us understand.
But let me ask you about the part of your testimony that
talks about other options, as part of what we are talking about
here when we talk about benefits, and all of what we are
talking about is costs. You mentioned flexible schedules, for
that matter, part-time work and flexi-place options. Is it your
impression that those aren't available today, generally, in the
Federal Government?
Ms. Gilman. It is my understanding that the authority for
agencies to use those options is currently available. It is a
question of agencies using them. In some cases, agencies will
say they don't have adequate funding. But for many of those
potions, there is really no increase in funding. It is a
question of just trying to think of new ways to do things,
using telework, allowing employees to work from home.
Ms. Norton. What about flexible schedules?
Ms. Gilman. Flexible schedules, the availability of that is
there for agencies today. It is very attractive to employees
and especially, as I understand, a recent GAO report found, to
older employees who may be trying to decide whether they are
going to retire or not. I think everyone would agree that it
would be more cost-efficient and beneficial to everybody if
they decided to stay on as an employee rather than retire and
then face whether or not agencies had to do a compensation
wavier to bring them back. If we could provide them with
incentives to stay on, I think everybody would agree that would
be the best way to do it. They have said flexible schedules,
part-time work and working from home are some of the things
they are very interested in pursuing.
Ms. Norton. With those, are the benefits the same with
flexible schedules?
Ms. Gilman. Yes.
Ms. Norton. Part-time work?
Ms. Gilman. Yes, as I understand it, they are.
Ms. Norton. One then is left to wonder, Mr. Chairman, I
would wonder and perhaps staff could do some groundwork on
this, the extent to which flexible schedules, we know about
telework or flexi-place. But flexible schedules, part-time
work, in a world where we know we are losing out on many women,
very highly educated women, who given the child care situation
in the United States, the only advanced country that does not
provide educational child care as a matter of course, do decide
to stay home, some considerable number of them, for some
considerable years of their early years of a childhood, early
childhood years.
I do think the subcommittee should explore the use of, for
example, part-time work and flexible schedules and how much it
is being used, and for that matter, how much is being promoted
by OPM. Yes, part of the reason people are retiring early is
they say, hey, look, in this job I not only give my all, I give
much more than 9 to 5. So the notion of retaining these
employees in which we have invested so much, rather than have
them go out on early retirement, work as you say, for a
contractor or somebody else, that seemed to me to be penny-wise
and pound foolish.
I should think that while this may be one option available
to us, I want to know why they are not using more part-time
work and flexible schedules. I know that they have promoted,
because this subcommittee has promoted so-called flexi-place
options, the congestion of the roads, lots of things recommend
that.
But I certainly would like to know more about flexible
schedules a part-time work, considering parents, I mentioned
women, but I am not only talking about women by any means.
I am also very concerned about bringing to the Federal work
force one of the most contentious issues in the private sector
work force, and that is essentially a two-tier work force, a
work force that gets paid and has benefits and a work force
that does not. Now, we know that these retirees got certain
benefits all along, and they certainly are in the same position
as the private sector employees at Safeway, where they now have
two-tier. But I am concerned about those kinds of
controversies.
I am also concerned as to whether or not this has ever been
done or perhaps should be done on a pilot basis to see if it
does any good. Because it is hard for me to find, to understand
why the agencies and certainly why the retirees would go here
as a first option. OK, they come back, let's say we don't any
longer have to, what makes it impossible to come back now, not
receiving your annuity, but essentially no benefits, not thrift
savings, not apparently any of the benefits. Maybe they don't
need the health benefits because they get Medicare.
I can see what the benefit is to the Government. It is
certainly going to save a lot of money. I am certainly not
against that. The question is cost benefit, where are you going
to put your money, are you building a Federal work force?
I would like to ask you, Ms. Gilman, what do you mean by
standards? Because I certainly am not convinced that if they
could, agencies would not go to this option if it affected
their budgets at a time of very tight budgets. And look, it is
going to be that way. We have a huge deficit, an ongoing war,
it is going to be that way. So when you say standards, I would
like to spell that out a little bit. Standards that would
prevent abuse, would prevent saying, we will do this just to
save some money, I don't care if this whole unit is part-time,
my job is not to build this unit in the Federal work force, for
example, I am just here to get the job done.
Ms. Gilman. I would see standards being some kind of
special need. There are standards----
Ms. Norton. That is what we have now, Ms. Gilman.
Ms. Gilman. It could be broader than now. But as I said, I
haven't heard----
Ms. Norton. Well, now it is hard to fill jobs. So if it is
not hard to fill jobs, do you have any suggestions on what kind
of special need might keep abuse from occurring, or it is
simply being used to save money without anybody caring about
the job to be done or the need to build a Federal work force in
the particular positions?
Ms. Gilman. One of the things that I did not hear OPM say,
and I haven't heard in the argument, is that they are having a
hard time hiring particular people. Yes, there is----
Ms. Norton. You did not hear them say that?
Ms. Gilman. I did not hear them say that. That is something
that I would be----
Ms. Norton. No examples were given of the kinds of
positions that are being filled with annuitants, with waivers?
Ms. Gilman. The kinds of positions that they would like to
use these waivers for, I have not heard that. Yes, we are
expecting the possibility of a large number of retirees in the
future. But as I said, we haven't heard what exactly the
problems are with the current situation. That is something that
I would be interested in hearing, is specific problems with the
program that is in effect today.
Ms. Norton. Mr. Chairman, I understand the Department of
Defense already has this and can do it without----
Ms. Gilman. And they have standards, they have their own
standards similar, they don't have to go to OPM, but they have
to have a particularized need for a particularized kind of
skill or employe.
Ms. Norton. So a hard to fill?
Ms. Gilman. That is part of it, yes.
Ms. Norton. So we trust them, because there may be a number
of DOD jobs that are hard to fill.
Ms. Gilman. Yes.
Ms. Norton. And of course DOD knows they are going to go
through a contractor, knows where to find them if they leave.
Mr. Chairman, I don't know if we have any information on
the DOD experience. But one of the problems I have with this
bill is we already have an agency that can do it. At least they
have the waiver authority, they would certainly have hard to
fill positions. I would feel more comfortable knowing something
about the experience that we already perhaps have, and anything
DOD could tell us about the kinds of positions they might have
filled if they weren't hard to fill.
We also could find out from them whether they have abused
the matter, by looking at what is happening to them. I don't
know if a GAO report has ever been done on what GAO does.
But this may be the only answer that is available now. But
to the extent that we have any experience, it does seem to me
that we would want to document that experience before moving
forward with this bill.
Thank you very much, Mr. Chairman.
Mr. Davis of Illinois. Thank you very much. Let me just
ask, are we finding that with people living longer, having a
different health status in terms of health status improvement,
and early retirement, that there is a greater desire on the
part of people who retire to have something else to do after
they have retired which may be work or may be something else?
Mr. Adcock. Speaking for our members, I know that once they
retire, most of them want to stay that way. It is something
that they have earned, they are looking forward to it, they
want to spend time with their grandchildren and enjoy the good
life.
But I think that what happens for many people is they go
from working 1 day, basically going from 60 to zero and being
retired the next day, and trying to figure out, what are they
going to do with the rest of their life. I think maybe some of
them over a number of years decide, well, there are really
things that I really miss about work. The idea of coming back
on a temporary part-time basis is something that is really
appealing, particularly if there is something that they have
some sort of special skill that is in demand or that addresses
some national crisis or priority that we have right now. I
think those are situations in which more retirees are
interested in coming back to work.
Ms. Gilman. I would add that I think that is probably the
case that some retirees want to stay retired, others may want
to go back to work. Or some may want to do something in
between, like work part-time.
Mr. Davis of Illinois. Do you think that there are many who
are driven now by the state of the economy? I hear individuals
suggest that they have a need, quite frankly, to earn
additional money, in addition to what they are receiving as
annuities.
Mr. Adcock. I know that for retirees, that is especially
true. When you look at what their costs are, if you are in Blue
Cross Blue Shield's standard option family plan, they are
paying $3,400 in premiums every year. If they are in Medicare
Part B they are paying upwards of, I think it is about $98 a
month now for that premium. Then you pile on whatever out of
pocket expenses they have. Then if they are hit by the
Government Pension Offset and Windfall Elimination provision,
they are not receiving any Social Security benefits.
You get down to, there is a woman we had testify at the
Ways and Means Social Subcommittee who was affected by both the
Windfall Elimination provision and the Government Pension
Offset. She had a very low annuity to start with. You are
essentially forcing people to go back and work at Wal-Mart in
order to basically survive.
I think especially when we are talking about people who are
on the lower to mid-end of the annuity scale, who are really
struggling to pay a lot of these expenses, like health care
expenses and now of course energy costs, that work is not just
something that is optional, it is something they have to do.
Ms. Gilman. I would agree with that.
Mr. Davis of Illinois. Mr. Marchant, did you have any other
questions?
Mr. Marchant. No, sir.
Mr. Davis of Illinois. Thank you all very much.
Ms. Norton. Could I just say one more thing?
I think Mr. Adcock makes an important case. We think of
annuitants in terms of the people we see around us, this is
what, a 2 million work force? I do think anybody who would want
to come back, even under the waiver authority we are talking
about, almost certainly would be a very valuable employee.
Because I believe that there are other options for the most
part. I would hate to deny those people the opportunity to come
back.
My sense is they may be very few. They may be so few that
it may do no harm if the agencies do not abuse the waiver and
essentially use it in ways that would worsen our work force
problem.
The way I am talking about worsening our work force problem
is leaving huge gaps of employee places that you don't try to
fill any more. Because the agency has developed the habit of,
maybe let's see if we can find an annuitant. And yet where it
is our belief, it would be the belief of perhaps the agencies
that have full-time employees who carry over from year to year
would be most important.
So I think the standards part is very important. If they
are not hard to fill positions, and many agencies don't have
hard to fill positions, frankly, in fact, most agencies don't
have positions that are ``hard to fill,'' I certainly believe
that you need only look at the statistics on people going back
to work, and even before we got to near recession conditions,
to know that many people are going back to work to live, that
the combined cost that retirees face now, even with the
pharmaceutical bill, even with Medicare, have put a real hurt
on many of them.
That is why I am very interested in who would be
interested. My own hypothesis is that they would not come out
of the woodwork, and those who did would probably be the best
of the best, because they would be coming because they loved
their work in the Federal Government. There are many, many
Federal employees like that. This has been the great and
important, great wonder of our work force. Despite all of the
very bad and undeserved rap that has been on them, it is an
extraordinary work force.
The one thing I would ask the subcommittee to get is,
whatever summary of the DOD experience can help us understand
what we are talking about, or perhaps other agencies as well.
But since DOD has been able to do it, it seems to me you have a
perfect laboratory right there. I guess they were supposed to
do it only in hard to fill positions. But we could then see
what that meant in some setting. I certainly think that if
there are retirees who want to come back, and I would love to
see you, Mr. Adcock, or somebody who had the capacity to do it,
do a survey. If you could return, if there were this waiver,
would you do so? I should think OPM would have done that before
coming forward with this bill.
Thank you, Mr. Chairman.
Mr. Davis of Illinois. Thank you very much. I thank you
both.
This hearing is adjourned.
[Whereupon, at 3:35 p.m., the subcommittee was adjourned.]
[The prepared statement of Hon. Stephen F. Lynch and
additional information submitted for the hearing record
follow:]
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