[Congressional Record Volume 145, Number 62 (Monday, May 3, 1999)]
[Senate]
[Pages S4580-S4582]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER (by request):
  S. 940. A bill to provide a temporary authority for the use of 
voluntary separation incentives by the Department of Veterans Affairs 
to reduce employment levels, restructure staff, and for other purposes; 
to the Committee on Veterans' Affairs.


 department of veterans affairs employment reduction assistance act of 
                                  1999

  Mr. SPECTER. Mr. President, as chairman of the Committee on Veterans' 
Affairs, I have today introduced, at the request of the Department of 
Veterans Affairs, S. 940, the proposed Department of Veterans Affairs 
Employment Reduction Assistance Act of 1999. The Department of Veterans 
Affairs submitted this legislation to the President of the Senate by an 
undated letter received by the President of the Senate on April 13, 
1999.
  My introduction of this measure is in keeping with the policy which I 
have adopted of generally introducing--so that there will be specific 
bills to which my colleagues and others may direct their attention and 
comments--all Administration-proposed draft legislation referred to the 
Committee on Veterans' Affairs. Thus, I reserve the right to support or 
oppose the provisions of, as well as any amendment to, this 
legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record, together with the transmittal letter and the 
enclosed analysis of the draft legislation which accompanied it.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 940

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Department of Veterans 
     Affairs Employment Reduction Assistance Act of 1999.''

     SEC. 2. DEFINITIONS.

       For the purpose of this Act--
       (a) ``Department'' means the Department of Veterans 
     Affairs.
       (b) ``Employee'' means an employee (as defined by section 
     2105 of title 5, United States Code) of the Department of 
     Veterans Affairs, who is serving under an appointment without 
     time limitation, and has been currently employed by such 
     Department for a continuous period of at least 3 years, but 
     does not include--
       (1) a reemployed annuitant under subchapter III of chapter 
     83 or chapter 84 of title 5, United States Code, or another 
     retirement system for employees of the Federal Government;
       (2) an employee having a disability on the basis of which 
     such employee is eligible for disability retirement under 
     subchapter III of chapter 83 or chapter 84 of title 5, United 
     States Code, or another retirement system for employees of 
     the Federal Government;
       (3) an employee who is in receipt of a specific notice of 
     involuntary separation for misconduct or unacceptable 
     performance;
       (4) an employee who previously has received any voluntary 
     separation incentive payment by the Federal Government under 
     this Act or any other authority;
       (5) an employee covered by statutory reemployment rights 
     who is on transfer to another organization; or
       (6) any employee who, during the twenty-four month period 
     preceding the date of separation, has received a recruitment 
     or relocation bonus under section 5753 of title 5, United 
     States Code, or a recruitment bonus under section 7458 of 
     title 38, United States Code;
       (7) any employee who, during the twelve-month period 
     preceding the date of separation, received a retention 
     allowance under section 5754 of title 5, United States Code, 
     or a retention bonus under section 7458 of title 38, United 
     States Code.
       (c) ``Secretary'' means the Secretary of Veterans Affairs.

     SEC. 3. DEPARTMENT PLANS; APPROVAL.

       (a) In General.--The Secretary, before obligating any 
     resources for voluntary separation incentive payments, shall 
     submit to the Director of the Office of Management and Budget 
     a strategic plan outlining the use of such incentive payments 
     and a proposed organizational chart for the Department once 
     such incentive payments have been completed.
       (b) Contents.--The plan shall specify--
       (1) the positions and functions to be reduced or 
     eliminated, identified by organizational unit, geographic 
     location, occupational category and grade level; the proposed 
     coverage may be based on--
       (A) any component of the Department;
       (B) any occupation, level or type of position;
       (C) any geographic location;
       (D) other non-personal factors; or
       (E) any appropriate combination of the factors in 
     paragraphs (A), (B), (C) and (D);
       (2) the manner in which such reductions will improve 
     operating efficiency or meet actual or anticipated levels of 
     budget or staffing resources;
       (3) the period of time during which incentives may be paid; 
     and
       (4) a description of how the affected component(s) of the 
     Department will operate without the eliminated functions and 
     positions.
       (c) Approval.--The Director of the Office of Management and 
     Budget shall approve or disapprove each plan submitted under 
     subsection (a), and may make appropriate modifications to the 
     plan with respect to the time period in which voluntary 
     separation incentives may be paid, with respect to the number 
     and amounts of incentive payments, or with respect to the 
     coverage of incentives on the basis of the factors in 
     subsection (b)(1).

     SEC. 4. VOLUNTARY SEPARATION INCENTIVE PAYMENTS.

       (a) Authority To Provide Voluntary Separation Incentive 
     Payments.--
       (1) In General.--The Secretary may pay a voluntary 
     separation incentive payment to

[[Page S4581]]

     an employee only to the extent necessary to reduce or 
     eliminate the positions and functions identified by the 
     strategic plan;
       (2) Employees who may receive incentives.--In order to 
     receive a voluntary separation incentive payment, an employee 
     must separate from service with the Department voluntarily 
     (whether by retirement or resignation) under the provisions 
     of this Act;
       (b) Amount and Treatment of Payments.--A voluntary 
     separation incentive payment--
       (1) shall be paid in a lump sum after the employee's 
     separation;
       (2) shall be equal to the lesser of--
       (A) an amount equal to the amount the employee would be 
     entitled to receive under section 5595(c) of title 5, United 
     States Code, if the employee were entitled to payment under 
     such section (without adjustment for any previous payment 
     made under that section); or
       (B) an amount determined by the Secretary, not to exceed 
     $25,000;
       (3) shall not be a basis for payment, and shall not be 
     included in the computation, of any other type of Government 
     benefit;
       (4) shall not be taken into account in determining the 
     amount of severance pay to which an employee may be entitled 
     under section 5595 of title 5, United States Code, based on 
     any other separation; and
       (5) shall be paid from the appropriations or funds 
     available for payment of the basic pay of the employee.

     SEC. 5 EFFECT OF SUBSEQUENT EMPLOYMENT WITH THE GOVERNMENT.

       (a) An individual who has received a voluntary separation 
     incentive payment under this Act and accepts any employment 
     with the Government of the United States, or who works for 
     any agency of the United States Government through a personal 
     services contract, within 5 years after the date of the 
     separation on which the payment is based shall be required to 
     repay, prior to the individual's first day of employment, the 
     entire amount of the incentive payment to the Department.
       (b)(1) If the employment under subsection (a) is with an 
     Executive agency (as defined by section 105 of title 5, 
     United States Code), the United States Postal Service, or the 
     Postal Rate Commission, the Director of the Office of 
     Personnel Management may, at the request of the head of the 
     agency, waive the repayment if the individual involved 
     possesses unique abilities and is the only qualified 
     applicant available for the position.
       (2) If the employment under subsection (a) is with an 
     entity in the legislative branch, the head of the entity or 
     the appointing official may waive the repayment if the 
     individual involved possesses unique abilities and is the 
     only qualified applicant available for the position.
       (3) If the employment under subsection (a) is with the 
     judicial branch, the Director of the Administrative Office of 
     the United States Courts may waive the repayment if the 
     individual involved possesses unique abilities and is the 
     only qualified applicant available for the position.
       (c) For the purpose of this section, the term 
     ``employment'' includes--
       (1) for the purposes of subsections (a) and (b), employment 
     of any length or under any type of appointment, but does not 
     include employment that is without compensation; and
       (2) for the purpose of subsection (a), employment with any 
     agency of the United States Government through a personal 
     services contract.

     SEC. 6. ADDITIONAL AGENCY CONTRIBUTIONS TO THE RETIREMENT 
                   FUND.

       (a) In addition to any other payments which it is required 
     to make under subchapter III of chapter 83 or chapter 84 of 
     title 5, United States Code, the Department shall remit to 
     the Office of Personnel Management for deposit in the 
     Treasury of the United States to the credit of the Civil 
     Service Retirement and Disability Fund an amount equal to 15 
     percent of the final basic pay of each employee of the 
     Department who is covered under subchapter III of chapter 83 
     or chapter 84 of title 5 to whom a voluntary separation 
     incentive has been paid under this Act.
       (b) For the purpose of this section, the term `final basic 
     pay', with respect to an employee, means the total amount of 
     basic pay that would be payable for a year of service by that 
     employee, computed using the employee's final rate of basic 
     pay, and, if last serving on other than a full-time basis, 
     with appropriate adjustment therefor.

     SEC. 7. REDUCTION OF AGENCY EMPLOYMENT LEVELS.

       (a) In General.--The total full-time equivalent employment 
     in the Department shall be reduced by one for each separation 
     of an employee who receives a voluntary separation incentive 
     payment under this Act. The reduction will be calculated by 
     comparing the Department's full-time equivalent employment 
     for the fiscal year in which the voluntary separation 
     payments are made with the actual full-time equivalent 
     employment for the prior fiscal year.
       (b) Enforcement.--The President, through the Office of 
     Management and Budget, shall monitor the Department and take 
     any action necessary to ensure that the requirements of this 
     section are met.
       (c) Subsection (a) of this section may be waived upon a 
     determination by the President that--
       (1) the existence of a state of war or other national 
     emergency so requires; or
       (2) the existence of an extraordinary emergency which 
     threatens life, health, safety, property, or the environment, 
     so requires.

     SEC. 8. CONTINUED HEALTH INSURANCE COVERAGE.

       Section 8905a(d)(4) of title 5, United States Code, is 
     amended--
       (1) in subparagraph (A) by inserting after force ``, or an 
     involuntary separation from a position in or under the 
     Department of Veterans Affairs due to a reduction in force or 
     a title 38 staffing adjustment'';
       (2) in subparagraph (B) by inserting at the beginning 
     thereof ``With respect to the Department of Defense,'';
       (3) by redesignating subparagraph (C) as subparagraph (D);
       (4) by adding a new subparagraph (C) as follows:
       (C) With respect to the Department of Veterans Affairs, 
     this paragraph shall apply with respect to any individual 
     whose continued coverage is based on a separation occurring 
     on or after the date of enactment of this paragraph and 
     before--
       (i) October 1, 2004; or
       (ii) February 1, 2005, if specific notice of such 
     separation was given to such individual before October 1, 
     2004.

     SEC. 9. REGULATIONS.

       The Director of the Office of Personnel Management may 
     prescribe any regulations necessary to administer the 
     provisions of this Act.

     SEC. 10. LIMITATION; SAVINGS CLAUSE.

       (a) No voluntary separation incentive under this Act may be 
     paid based on the separation of an employee after September 
     30, 2004;
       (b) This Act supplements and does not supersede other 
     authority of the Secretary.

     SEC. 11. EFFECTIVE DATE.

       (a) This Act shall take effect on the date of enactment.
                                  ____


                         Analysis of Draft Bill

       The first section provides a title for the bill, 
     ``Department Of Veterans Affairs Employment Reduction 
     Assistance Act of 1999.''
       Section 2 provides definitions of ``Department'', 
     employee'', and ``Secretary.'' Among the provisions, an 
     employee who has received any previous voluntary separation 
     incentive from the Federal Government is excluded from any 
     incentives under this Act.
       Section 3 requires the VA Secretary to submit to the 
     Director of the Office of Management and Budget a strategic 
     plan outlining the use of voluntary separation incentive 
     payments to Department employees, and a proposed 
     organizational chart for the Department once such incentive 
     payments have been completed. The Secretary must submit the 
     plan before obligating any resources for such incentive 
     payments.
       The plan must include the proposed coverage for offers of 
     incentives to Department employees, specifying the positions 
     and functions to be reduced or eliminated, identified by 
     organizational unit, geographic location, occupational 
     category and grade level. Coverage may be on the basis of any 
     component of the Department of Veterans Affairs, any 
     occupation, levels of an occupation or type of position, any 
     geographic location, other non-personal factors, or any 
     appropriate combination of these factors. The plan must also 
     specify the manner in which the planned employment reductions 
     will improve efficiency or meet budget or staffing levels. 
     The plan must also include a proposed time period for payment 
     of separation incentives, and a description of how the 
     affected component of the Department will operate without the 
     eliminated functions and positions.
       The Director of the Office of Management and Budget shall 
     approve or disapprove each plan submitted, and may modify the 
     plan with respect to the time period of incentives, with 
     respect to the number and amounts of incentive payments, or 
     the coverage of incentive offers.
       Section 4 authorizes the Secretary to pay a voluntary 
     separation incentive payment to an employee only to the 
     extent necessary to reduce or eliminate the positions and 
     functions identified by the strategic plan. It also requires 
     that an employee must separate from service with the 
     Department (whether by retirement or resignation) under the 
     Act in order to receive a voluntary separation incentive.
       The voluntary separation incentive is to be paid in a lump 
     sum after the employee's separation. The incentive payment 
     would be for an amount equal to the lesser of the amount of 
     severance pay that the employee would be entitled to receive 
     under section 5595 of title 5, United States Code, if so 
     entitled, (without adjustment for any previous severance 
     pay), or an amount determined by the Secretary, not to 
     exceed $25,000. The incentive payment is not to be a basis 
     for the computation of any other type of Government 
     benefit, and is not be taken into account in determining 
     the amount of severance pay to which an employee may be 
     entitled based on any other separation. Appropriations for 
     employee basic pay are to be used to pay the incentive 
     payments.
       Section 5 provides that any employee who receives a 
     voluntary separation incentive under this Act and then 
     accepts any employment with the Government within 5 years 
     after separating must, prior to the first day of such 
     employment, repay the entire amount of the incentive to the 
     agency that paid the incentive. If the subsequent employment 
     is with the Executive branch, including the United States 
     Postal Service, the Director of the Office of Personnel 
     Management may waive the repayment at the request of

[[Page S4582]]

     the agency head if the individual possesses unique ability 
     and is the only qualified applicant available for the 
     position. For subsequent employment in the legislative 
     branch, the head of the entity or the appointing official may 
     waive repayment on the same criteria. If the subsequent 
     employment is in the judicial branch, the Director of the 
     Administrative Office of the United States Courts may waive 
     repayment on the same criteria. For the purpose of the 
     repayment provisions, but not the waiver provisions, 
     employment includes employment under a personal service 
     contract. For the purpose of the repayment and waiver 
     provisions, employment does not include without compensation 
     employment.
       Section 6 requires additional agency contributions to the 
     Civil Service Retirement and Disability Fund in amounts equal 
     to 15 percent of the final basic pay of each employee of the 
     Department who is covered by the Civil Service Retirement 
     System, or the Federal Employees' Retirement System, to whom 
     a voluntary separation incentive is paid under this Act. It 
     also defines ``final basic pay''.
       Section 7 requires the reduction of full-time equivalent 
     employment (FTEE) in the Department of Veterans Affairs by 
     one FTEE for each separation of an employee who receives a 
     voluntary separation incentive under this Act. Also it 
     directs the Office of Management and Budget to take any 
     action necessary to ensure compliance. Reductions will be 
     calculated on a FTEE basis. For example, if the Department's 
     FTEE usage in FY 1998 was 1050 FTEEs, and 50 FTEE separate 
     during FY 1999 using voluntary separation incentive payments 
     provided under this Act, then the Department's staffing 
     levels at the end of FY 1999 shall not exceed 1000 FTEEs. The 
     President may waive the reduction in FTEE in the event of war 
     or emergency.
       Section 8 amends section 8905a(d)(4) of title 5 to provide 
     that VA employees who are involuntarily separated in a 
     reduction in force or staffing adjustment, can continue 
     health benefits coverage for 18 months and be required to pay 
     only the employee's share of the premium. Section 8 also 
     extends the section 8905a sunset provisions for VA employees 
     for FY 1999 through FY2004.
       Section 9 provides that the Director of OPM may prescribe 
     any regulations necessary to administer the provisions of the 
     Act.
       Section 10 provides that no voluntary separation incentive 
     under the Act may be paid based on the separation of an 
     employee after September 30, 2004, and that the Act 
     supplements and does not supersede other authority of the 
     Secretary.
       Section 11 provides that the Act is effective on the date 
     of enactment.
                                  ____



                               Department of Veterans Affairs,

                                                   Washington, DC.
     Hon. Albert Gore, Jr.
     President of the Senate,
     Washington, DC.
       Dear Mr. President: On behalf of the Department of Veterans 
     Affairs (VA), I am submitting a draft bill ``To provide a 
     temporary authority for the use of voluntary separation 
     incentives by the Department of Veterans Affairs to reduce 
     employment levels, restructure staff, and for other 
     purposes.'' The Department requests that it be referred to 
     the appropriate committee for prompt consideration and 
     enactment.
       In the next several years, VA will undergo significant 
     changes. VA believes that separation incentives can be an 
     appropriate tool for those VA components that are redesigning 
     their employment mix, when the use of incentives is properly 
     related to the specific changes that are needed. Separation 
     incentives can also be an invaluable tool for components that 
     are restructuring and reengineering, such as the Veterans 
     Health Administration (VHA) and the Veterans Benefits 
     Administration (VBA), as they move towards primary care and 
     new methods of delivering services to veterans. Other VA 
     components also are engaged in reengineering and 
     restructuring, and would benefit from this authority. Under 
     the draft bill, the use of the incentives would be related to 
     the specific changes that are needed for reshaping VA for the 
     future. Further, the draft bill would appropriately limit the 
     time period for the incentive offers over the next five 
     fiscal years, when VA will accomplish these changes.
       This initiative is based on VA's previous experience with 
     voluntary separation incentives under the Federal Workforce 
     Restructuring Act of 1994, and the Treasury, Postal Service, 
     and General Government Appropriations Act of 1997. We believe 
     that VA used these previous authorities conservatively, 
     responsibly, and effectively. As an example, VHA required 
     that elements allowing a buyout must abolish the position of 
     the employee receiving the buyout. VA has implemented a total 
     of 9,392 buyouts under both statutes, which is significantly 
     fewer than the total number authorized. VA's previous use of 
     buyouts significantly assisted VA in restructuring its 
     workforce, and enabled it to achieve downsizing and 
     streamlining goals while minimizing adverse impact on 
     employees, through such actions as involuntary separations.

                           *   *   *   *   *

       The Office of Financial Management would like to offer 
     approximately 60 buyouts over the next five fiscal years to 
     support its plans to reduce and adjust the staffing mix in 
     its Franchise Fund and Supply Fund activities. Over this 
     period, these activities will undergo changes in program and 
     product lines, as well as new technologies. These changes 
     will require fewer employees and employees with different 
     skill sets the current employees. The Office of Financial 
     Management will target any incentive payments to specific 
     organizations, locations, occupations and grade levels.
       Under the proposed bill, before obligating any resources 
     for any incentive payments, the VA Secretary must submit to 
     the Director of the Office of Management and Budget (OMB) a 
     strategic plan outlining the use of such incentive payments. 
     The plan must specify the positions and functions to be 
     reduced or eliminated, identified by organizational unit, 
     geographic location, occupational category and grade level. 
     Coverage may be on the basis of any component of VA, any 
     occupation, levels of an occupation or type of position, any 
     geographic location, other non-personal factors, or any 
     appropriate combination of these factors. The plan must also 
     specify the manner in which the planned employment reductions 
     would improve efficiency or meet budget or staffing levels. 
     The plan must also include a proposed time period for payment 
     of separation incentives, and a description of how the 
     affected VA component would operate without the eliminated 
     functions and positions. The Director of the OMB would 
     approve or disapprove each plan submitted, and would have 
     authority to modify the time period for payment of 
     incentives, the number and amounts of incentive payments, or 
     coverage of incentive offers. We believe that these 
     provisions for plan approval would ensure that separation 
     incentives are appropriately targeted within VA in view of 
     the specific cuts that are needed, and are offered on a 
     timely basis. Although VA would reduce full-time equivalent 
     employment by one for each employee receiving an incentive 
     payment who separates, we believe that service to veterans 
     would improve as a result of the reengineering that is 
     happening simultaneously within the system.
       The authority for separation incentives would be in effect 
     for the period starting with the enactment of this Act and 
     ending September 30, 2004. The amount of an employee's 
     incentive would be the lesser of the amount that the 
     employee's severance pay would be, or an amount determined by 
     the Secretary, not to exceed $25,000.
       Any employee who receives an incentive and then accepts any 
     employment with the Government within 5 years after 
     separating must, prior to the first day of employment, repay 
     the entire amount of the incentive. The repayment requirement 
     could be waived only under very stringent circumstances of 
     agency need.
       This proposal would provide a very useful tool to assist in 
     reorganizing VA and reengineering services quickly, 
     effectively, and humanely, to provide higher quality service 
     to more veterans. We also believe that it is a tool that 
     would allow significant cost savings. The buyout would be 
     funded within the base in the President's FY 1999 Budget. If 
     VA receives authority before June 30, 1999, it could 
     implement buyouts in VBA with modest costs of $4.7 million in 
     FY 1999 and estimated savings of $13.3 million annually in 
     subsequent years. It also could implement buyouts in the 
     Office of Financial Management with savings of $320,000 in FY 
     1999 and estimated savings of approximately $1 million 
     annually in subsequent years. VHA would implement buyouts at 
     the beginning of FY 2000, with expected discretionary savings 
     of $103 million in FY 2000 and estimated savings of $220.1 
     million annually in subsequent years. VBA's savings for 
     buyouts authorized for FY 2000 would be $2.7 million, with 
     estimated savings of $15.5 million annually in subsequent 
     years. The Office of Financial Management savings for FY 2000 
     would be $992,000, with estimated savings of approximately $1 
     million annually in subsequent years. In addition, each 
     subsequent year's buyouts during the five-year period would 
     yield additional discretionary savings.
       The Office of Management and Budget advises that there is 
     no objection to the submission of this draft bill from the 
     standpoint of the Administration's program.
           Sincerely yours,

                                       Sheila Clarke McCready,

                                        Principal Deputy Assistant
                              Secretary for Congressional Affairs.
                                 ______