[Congressional Record Volume 147, Number 1 (Wednesday, January 3, 2001)]
[Extensions of Remarks]
[Pages E11-E12]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    FAIRNESS AND EQUITY FOR FEDERAL RETIREES WITH PART-TIME SERVICE

                                 ______
                                 

                          HON. JAMES P. MORAN

                              of virginia

                    in the house of representatives

                       Wednesday, January 3, 2001

  Mr. MORAN of Virginia. Mr. Speaker, today, I am reintroducing 
legislation to correct a long-standing inequity that affects a great 
number of Federal retirees in my district and throughout the Nation who 
have served for a portion of their careers in a part-time capacity. I 
am pleased that Mr. Davis of Virginia, Mr. Wynn, Ms. Norton, Mrs. 
Morella, Mr. Wolf, and Mr. Gilman have joined me as original cosponsors 
of this important legislation.
  The current retirement formula for Federal workers with part-time 
service was enacted by Congress in 1986 as a provision of the 
Consolidated Omnibus Budget Reconciliation Act (COBRA) (P.L. 99-272). 
For the most part, the reforms contained in COBRA were fair. They 
ensured an equitable calculation for all employees hired after 1986 and 
prevented part-time employees from gaming the system in order to 
receive a disproportionately higher benefit. The 1986 reforms were 
based on a procedure developed and recommended to the Congress by the 
General Accounting Office (GAO). In a nutshell, the new methodology 
determines the proportion of a full-time career that a part-time 
employee works and scales annuities accordingly. Under the formula, a 
part-time worker's salary is calculated on a full-time equivalent basis 
(FTE) for retirement purposes. Thus, a worker's ``high-three salary'' 
could occur during a period of part-time service. This often happens 
when a senior level worker cuts back on his or her hours to care for an 
ill spouse or deal with other personal matters. Many of the people in 
this situation are women.
  The problem is that the 1986 law had unintended and often unfair 
consequences for workers hired before 1986 who have some part-time 
service after 1986. Specifically, according to the way the law has been 
implemented by OPM, some part-time workers are not able to apply their 
full-time equivalent (FTE) salary to pre-1986 employment. This 
effectively limits their ability to receive the advantage of their 
``high-three average'' salary for their entire careers. The reason for 
this inequity can be traced to subsection (c) of Section 15204 of 
COBRA. It provides that the new formula shall be effective with respect 
to service performed ``on or after the date of the enactment of this 
Act.''
  Whether this was a drafting error, or whether OPM has taken an 
unnecessarily restrictive reading of the statute is hard to determine. 
What is clear is that the current practice is plainly contrary to the 
intent of the Congress, which was to grandfather existing employees 
into the new system and to ensure that no Federal workers would be 
harmed by changes in the retirement formula.
  In a letter dated February 19, 1987 to then-OPM Director Constance 
Horner, the Chairman of the Committee on Post Office and Civil Service, 
The Honorable William D. Ford, objected to this anomalous and unfair 
result. He wrote:
  As in many other instances involving benefits, Congress chose to 
protect or to ``grandfather'' past service--to apply the new benefit

[[Page E12]]

formula only to future service rather than previously performed service 
under the older, more generous formula. This policy is often adopted to 
avoid penalizing individuals through the retroactive application of 
changes not anticipated by them. (As a measure of fairness, the policy 
of prospectivity is often applied to benefit improvements as well.)
  Notwithstanding Chairman Ford's efforts to clarify congressional 
intent, this inequity has continued for 14 years. OPM has publicly 
acknowledged that there is a problem with COBRA. Director Lachance 
stated publicly in a letter to Chairman Fred Thompson of the Senate 
Committee on Government Affairs: ``I agree that an end-of-career change 
to a part-time work schedule can have an unanticipated adverse effect 
on the amount of the retirement benefit.'' She also acknowledges in 
that same letter that a comparable bill in the other body, S. 772 
introduced by Senator Robb, ``would eliminate the potential for 
anomalous computations by providing that the full time salary would be 
applicable to all service regardless of when it was performed while the 
proration of service credit would apply only to service after April 6, 
1986 [the date of enactment].''
  This is precisely what the bill we are offering today does. It allows 
the retirees affected by this inequity to have their full-time 
equivalent salary for their high 3 years to apply to their entire 
careers, not just the portion after 1986. My bill differs from S. 772 
in that it places the burden on affected retirees to request a 
recalculation of benefits. This is coupled with a requirement that OPM 
conduct a good faith effort to notify annuitants of their right to 
obtain a recalculation. For all future retirees, benefits will be 
calculated in accordance with the new formula.
  This bill is identical to a measure I sponsored last year. That 
legislation was cosponsored by seven members of the House and was 
endorsed by the National Association of Federal Workers in July. NARFE 
has made the bill a high priority.
  Mr. Speaker, this is a matter of great consequence to many Americans 
who devoted their most productive years to public service. Some of my 
constituents have annuities that are thousands of dollars less than 
they would be under my bill. As I indicated, a disproportionate share 
of these retirees appears to be women, who left the federal service to 
care for others.
  It is particularly appropriate that we address this issue now, as 
changing work-force needs and lifestyles make part-time service more 
popular, both from the standpoint of the worker and the employee. Many 
of the anticipated work-force shortages that are anticipated in the 
federal civil service can and should be met with part-time workers. I 
am concerned that they will not be so long as the anomalous and unfair 
provisions of P.L. 99-272 are allowed to stand. I urge my colleagues to 
join me in cosponsoring this important legislation.

                          ____________________