[Congressional Record (Bound Edition), Volume 145 (1999), Part 4]
[Extensions of Remarks]
[Page 4841]
[From the U.S. Government Publishing Office, www.gpo.gov]




            FEDERAL RESERVE BOARD RETIREMENT PORTABILITY ACT

                                 ______
                                 

                               speech of

                          HON. JOE SCARBOROUGH

                               of florida

                    in the house of representatives

                        Tuesday, March 16, 1999

  Mr. SCARBOROUGH. Mr. Speaker, as the Chairman of the House 
Subcommittee on the Civil Service, I was pleased to introduce H.R. 807. 
As amended, this legislation addresses serious problems that affect a 
small number of Federal Reserve employees who transfer to other federal 
agencies and also federal employees who move from federal agencies to 
the Federal Reserve. This measure also ensures that the access 
provision of the Veterans Employment Opportunities Act of 1998 will be 
implemented as Congress intended it to be.
  The Federal Reserve Board maintains two retirement systems of its 
own. Both are similar to the retirement systems that cover most federal 
employees. One is comparable to the Civil Service Retirement System 
(CSRS), and the other is structured like the Federal Employees 
Retirement System (FERS).
  Despite these similarities, there are also distinct differences 
between the Federal Reserve's programs and these federal retirement 
systems. One difference is how they are financed. The Federal Reserve 
programs are backed by real assets, stocks and bonds, that have 
appreciated to create a substantial corpus from which benefits may be 
paid. In fact, the Federal Reserve's retirement fund is so over funded 
that it has not had to make any contributions to it since 1986. The 
CSRS and FERS systems, in contrast, are ``invested'' only in IOUs drawn 
on the taxpayers. Consequently, despite continuous employee and agency 
contributions, annuities are mainly paid from current tax revenue, and 
the Civil Service Retirement and Disability Fund is woefully under 
funded; its unfunded liability exceeds a half a trillion dollars.
  There is also a difference between how employees who transfer between 
the Federal Reserve and other agencies are treated under the FERS 
system. Employees who transfer into the Federal Reserve receive credit 
under the Federal Reserve's FERS-like plan for their other federal 
service. But FERS does not provide reciprocal treatment to Federal 
Reserve employees who transfer to positions in other agencies.
  Mr. Speaker, this is unfair. H.R. 807 will provide the retirement 
portability that is currently lacking. Under it, those employees who 
participate in the Federal Reserve's FERS-like retirement will receive 
FERS credit for their Federal Reserve years when they transfer to 
another federal agency. In short, this legislation provides 
reciprocity. Without this correction, former Federal Reserve employees 
would receive smaller annuities upon retirement than they otherwise 
should.
  H.R. 807 also fixes another problem that was brought to the Civil 
Service Subcommittee's attention after we held a hearing on the Federal 
Reserve's retirement programs and marked up the bill at subcommittee. 
Under current law, Federal employees participating in the Thrift 
Savings Plan (TSP) who transfer to the Federal Reserve Board, are not 
permitted by  law to withdraw funds from their TSP accounts. Current 
law specifies that employees ``must separate from Government 
employment'' in order to be entitled to withdraw funds. However, 
employment at the Board is considered to be ``Government employment.'' 
Therefore, employees who transfer to the Federal Reserve and are 
covered by its Thrift Plan may not withdraw the funds in their TSP 
accounts.

  I amended this bill when it was marked up by the Committee on 
Government Reform to correct this problem. H.R. 807 now allows Federal 
employees who have transferred or will transfer to the Board to move 
the funds in their TSP accounts to the Board's Thrift Plan. I believe 
that this technical correction, along with the portability language in 
the underlying bill, are appropriate and necessary remedies to ensure 
Board employees fair treatment under current law.
  Mr. Speaker, I am also very pleased to support section 4 of this 
measure. Section 4 was added to the bill by my good friend from 
Florida, Mr. Mica, who chaired the Civil Service Subcommittee during 
the last two Congresses. This provision will ensure that the 
Administration will implement the access provision of the Veterans 
Employment Opportunities Act of 1998 as Congress intended it to.
  Unfortunately, Mr. Speaker, OPM's interpretation of that Act 
undermined the very reason Congress adopted the access provision: to 
open competition for previously restricted jobs. OPM ruled that 
agencies cannot appoint veterans selected under the access provisions 
of that Act to the competitive service unless they already have 
competitive status. Instead, OPM instructed agencies to appoint these 
veterans to the excepted service under Schedule B. Many veterans fear 
that if they are appointed as excepted service employees, as OPM's 
guidance requires, they will, in effect, be placed in dead end jobs.
  This fear is not unfounded. As excepted service employees, these 
veterans would not be eligible to compete for other agency jobs under 
internal agency promotion procedures. That is manifestly unfair and 
directly contrary to congressional intent. The access provision of the 
Veterans Employment Opportunities Act intended to open up employment 
opportunities for veterans and to provide those selected under it with 
the same rights as their co-workers. Any other result is totally 
unacceptable.
  The men and women who have served our nation under arms should not be 
relegated to second-class status when hired into the civil service. 
Section 4 makes sure that they will not.
  Mr. Speaker, this bill has strong support on both sides of the aisle. 
I want to thank the distinguished Ranking Member of the Civil Service 
Subcommittee, the gentleman from Maryland, Mr. Cummings, for his strong 
support for this measure. I commend the majority and minority leaders 
of the Committee on Government Reform, Chairman Dan Burton and Ranking 
Member Henry Waxman, for expediting committee approval of H.R. 807 and 
for their support. I also want to express my appreciation to Mr. Mica, 
the distinguished gentleman from Virginia, Mr. Davis, the distinguished 
gentlelady from Maryland, Mrs. Morella, and the distinguished 
gentlelady from the District of Columbia, Ms. Norton, for their strong 
support.
  I urge all Members to support this bill.

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