[Senate Report 108-409]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                                 SENATE
 2d Session                                                     108-409
_______________________________________________________________________

                                     

                                                       Calendar No. 800


                  RESERVISTS PAY SECURITY ACT OF 2004

                               __________

                              R E P O R T

                                 of the

         COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE

                              to accompany

                                 S. 593

TO ENSURE THAT A FEDERAL EMPLOYEE WHO TAKES LEAVE WITHOUT PAY IN ORDER 
 TO PERFORM SERVICE AS A MEMBER OF THE UNIFORMED SERVICES OR MEMBER OF 
 THE NATIONAL GUARD SHALL CONTINUE TO RECEIVE PAY IN AN AMOUNT WHICH, 
  WHEN TAKEN TOGETHER WITH THE PAY AND ALLOWANCES SUCH INDIVIDUAL IS 
  RECEIVING FOR SUCH SERVICE, WILL BE NO LESS THAN THE BASIC PAY SUCH 
INDIVIDUAL WOULD THEN BE RECEIVING IF NO INTERRUPTION IN EMPLOYMENT HAD 
                                OCCURRED




               November 16, 2004.--Ordered to be printed
                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

           Michael D. Bopp, Staff Director and Chief Counsel
            Jennifer A. Hemingway, Professional Staff Member
Andrew Richardson, Staff Director, Oversight of Government Management, 
        Restructuring, and the District of Columbia Subcommittee
 Theresa M. Prych, Professional Staff Member, Oversight of Government 
  Management, Restructuring, and the District of Columbia Subcommittee
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                  Lawrence B. Novey, Minority Counsel
  Marianne Clifford Upton, Minority Staff Director and Chief Counsel, 
Oversight of Government Management, Restructuring, and the District of 
                         Columbia Subcommittee
      Cathryn J. Kennedy, Legislative Assistant to Senator Durbin
                      Amy B. Newhouse, Chief Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background.......................................................1
III. Legislative History..............................................2
 IV. Section-by-Section Analysis......................................3
  V. Estimated Cost of Legislation....................................4
 VI. Evaluation of Regulatory Impact..................................6
VII. Changes in Existing Law..........................................6


                                                       Calendar No. 800
108th Congress                                                   Report
                                 SENATE
 2d Session                                                     108-409

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



 
                  RESERVISTS PAY SECURITY ACT OF 2004

                                _______
                                

               November 16, 2004.--Ordered to be printed

                                _______
                                

Ms. Collins, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 593]

    The Committee on Governmental Affairs, to whom was referred 
the bill (S. 593) to ensure that a Federal employee who takes 
leave without pay in order to perform service as a member of 
the uniformed services or member of the National Guard shall 
continue to receive pay in an amount which, when taken together 
with the pay and allowances such individual is receiving for 
such service, will be no less than the basic pay such 
individual would then be receiving if no interruption in 
employment had occurred, having considered the same reports 
favorably thereon with an amendment and recommends that the 
bill do pass.

                         I. Purpose and Summary

    S. 593, the Reservists Pay Security Act of 2004, is a bill 
to ensure that a Federal employee who takes leave without pay 
in order to perform active duty military service shall continue 
to receive pay in an amount which, when taken together with 
military pay and allowances, would be no less than the basic 
pay the individual would be receiving if no interruption in 
Federal employment had occurred.

                             II. Background

    Under current law, a federal employee who is a member of 
the National Guard or Reserve is entitled to 15 days of paid 
military leave each fiscal year for active duty, active duty 
training, or inactive duty training. When an employee is 
mobilized under a Presidential Reserve Call Up or a partial to 
full mobilization,\1\ he or she is placed in a leave without 
pay status from his or her federal job and begins drawing 
military pay and allowances. According to a 2000 Department of 
Defense survey of approximately 35,000 reserve personnel, 
including federal employees, 41% of respondents reported a loss 
of income during mobilization and deployment.\2\
---------------------------------------------------------------------------
    \1\ 10 U.S.C. Sec. 101(a)(13)(B).
    \2\ Defense Manpower Data Center. Report No. 2002-005, ``DRAFT 
Tabulations of Responses from the 2000 Survey of Reserve Component 
Personnel: Vol 1, Military Background.'' iv, 326-327 (August 2002).
---------------------------------------------------------------------------
    In recognition of the potential significant financial 
impact of long term mobilization, many private companies have 
chosen to continue to cover the difference in pay and benefits 
for their employee reservists called to active duty. Companies 
such as Boeing Aerospace, State Farm Insurance, and Safeway 
have elected to cover any pay differences.\3\ In addition, a 
number of state governments cover either a significant portion 
of or all differences in pay for state employee reservists, 
including: Alabama, Alaska, California, Connecticut, Delaware, 
Florida, Illinois, Maryland, Massachusetts, Minnesota, Nevada, 
New Hampshire, New Jersey, New York, North Carolina, Ohio, 
Oklahoma, South Dakota, Tennessee, Texas, Vermont, Virginia, 
Washington, Wisconsin, and Wyoming.
---------------------------------------------------------------------------
    \3\ National Committee for Employer Support of the Guard and 
Reserve, (www.esgr.org).
---------------------------------------------------------------------------
    S. 593 would alleviate the financial burdens created when 
federal employees are called to active duty and experience a 
reduction in pay because their military pay and allowances are 
less than their basic federal salary. Approximately 10 percent 
of the 1.2 million members of the Guard and Reserve are federal 
employees.\4\ Since September 11, 2001, more than 43,000 of 
these 120,000 federal employees have been called to active duty 
(as of June 2004), with more than 15,000 presently mobilized 
for the Global War on Terrorism.\5\
---------------------------------------------------------------------------
    \4\ Annual Report by the Assistant Secretary of Defense (Reserve 
Affairs), ``Ready Reservists in the Federal Government.'' 3 (December 
2001).
    \5\ Information provided to Senator Durbin by the Defense Manpower 
Data Center, ID 4901 (June 14, 2004).
---------------------------------------------------------------------------

                        III. Legislative History

    S. 593 was introduced by Senator Durbin on March 11, 2003, 
and was referred to the Committee on Governmental Affairs. The 
legislation is cosponsored by Senators Mikulski, Leahy, 
Sarbanes, Bingaman, Lautenberg, Landrieu, Kerry, Gregg, and 
Allen. The bill was referred to the Subcommittee on Oversight 
of Government Management, the Federal Workforce, and the 
District of Columbia on June 20, 2003. On May 13, 2004, the 
Subcommittee favorably polled S. 593 to the full Committee.
    On July 21, 2004, the Committee on Governmental Affairs 
considered S. 593 and ordered the bill reported by voice vote, 
with an amendment in the nature of a substitute, as part of an 
en bloc vote. Senators present: Collins, Voinovich, Specter, 
Fitzgerald, Lieberman, Akaka, Durbin, Carper, and Lautenberg.
    S. 593 as amended makes four changes to the bill as 
introduced. Specifically, the amendment: (1) changes the bill 
title to ``Reservists Pay Security Act of 2004''; (2) makes the 
bill applicable to the level of mobilization under 10 U.S.C. 
101(a)(13)(B) and eliminates reference to Title 32; (3) 
specifies the effective date as October 11, 2002; and (4) 
provides for conditional retroactive application to pay periods 
beginning on or after October 11, 2002 through date of 
enactment, subject to availability of appropriations.

                    IV. Section-by-Section Analysis


Section 1. Nonreduction in pay while federal employee is performing 
        active service in the Uniformed Services or National Guard

    Section (a) establishes the title of the legislation as the 
``Reservists Pay Security Act of 2004.''
    Section (b) amends subpart IV of chapter 55 of title 5, 
United States Code, by adding a new provision at the end.
    New section 5538 states that an employee who is absent from 
a position with the Federal Government in order to perform 
active duty in the uniformed services pursuant to a call to 
order in accordance with section 101(a)(13)(B) of title 10, 
United States Code, shall be entitled to receive an amount of 
pay which, when taken together with their military pay and 
allowances, is no less than the amount of basic pay which would 
otherwise have been payable if the employee's employment with 
the government had not been interrupted. New subsection (b) 
makes clear that the amounts payable under this section shall 
be payable with respect to each period during which the 
employee is entitled to reemployment rights under chapter 43 of 
title 38, United States Code, and for which the employee does 
not otherwise receive basic pay, including by taking any 
annual, military, or paid leave. In addition, new subsection 
(b) makes clear that the period under which an employee is 
entitled to reemployment rights shall be determined without 
regard to section 4312(d) of title 38, United States Code; and 
shall include the time period within which the employee may 
report or apply for employment or reemployment. New subsection 
(c) states that the difference in pay shall be paid by the 
employing agency from appropriated funds in the same manner as 
if the individual's civilian employment had not been 
interrupted. New subsection (d) states that the Office of 
Personnel Management shall, in consultation with the Secretary 
of Defense, prescribe regulations to carry out this section. 
New subsection (e) requires the head of each agency, in 
consultation with the Office of Personnel Management, to 
prescribe procedures to ensure the rights under new section 
5538 apply to agency employees. New subsection (f) makes a 
number of references to existing definitions in law.
    Section (c) makes a clerical amendment to the table of 
sections for chapter 55 of title 5, United States Code.
    Section (d) states that the provisions within the 
legislation will apply with respect to pay period beginning on 
or after the date of enactment of S. 593. In addition, this 
section states that new section 5538 may apply with respect to 
pay periods beginning on or after October 11, 2002, subject to 
the availability of appropriated funds, and authorizes 
$100,000,000 for the conditional retroactive payments.

                    V. Estimated Cost of Legislation


S. 593--Reservist Pay Security Act of 2004

    Summary: S. 593 would authorize an increase in federal 
salaries to pay for the difference between civilian and 
military compensation for federal employees called to active 
duty in the uniformed services or National Guard. The 
legislation also would authorize the appropriation of $100 
million for retroactive pay for the difference between civilian 
and military compensation for federal employees activated since 
October 11, 2002.
    CBO estimates that implementing S. 593 would cost $152 
million in 2005 and $334 million over the 2005-2009 period. 
(Retroactive pay would account for an estimated $128 million of 
the five-year cost.) Most of the costs of the bill would be 
paid from agencies' appropriations, but S. 593 would also 
affect off-budget direct spending of the U.S. Postal Service 
(USPS). About $6 million of the 2005 cost (and $4 million in 
2006) would be paid by the Postal Service. Over the 2005-2014 
period, however, we expect that such costs would be offset by 
revenues from higher postal rates.
    S. 593 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 593 is shown in the following table. The 
costs of this legislation fall within all budget functions that 
include federal salaries.

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2005     2006     2007     2008     2009
----------------------------------------------------------------------------------------------------------------
                                  Changes in Spending Subject to Appropriation

Retroactive Federal Employee Reservist Pay:
    Estimated Authorization Level..................................      128        0        0        0        0
    Estimated Outlays..............................................       88       40        0        0        0
Prospective Federal Employee Reservist Pay:
    Estimated Authorization Level..................................       58       44       38       35       31
    Estimated Outlays..............................................       58       44       38       35       31
Total Proposed Changes:
    Estimated Authorization Level..................................      186       44       38       35       31
    Estimated Outlays..............................................      146       84       38       35       31

                                      Changes in Off-Budget Direct Spending

Federal Employee Reservist Pay--Postal:\1\
    Estimated Authorization Level..................................        6        4       -1       -1       -1
    Estimated Outlays..............................................        6        4       -1       -1       -1
----------------------------------------------------------------------------------------------------------------
\1\ The direct spending amounts shown for this provision are the off-budget effects associated with the cost of
  providing the difference between civilian and military compensation for postal workers called to active-duty
  military service. The net expenditures of the U.S. Postal Service are classified as ``off-budget.'' Over the
  2005-2014 period, CBO estimates that this provision would have no net cost as the USPS would adjust its rates
  to fully recover the cost of higher salaries provided to its employees called to active duty.

    Basis of estimate: Based on information from the Department 
of Defense (DoD), CBO estimates that federal employees account 
for approximately 120,000 positions or almost 15 percent of the 
total Ready Reserve. For this estimate, we assume that 15 
percent of those reserves called to active service at any time 
are federal employees.
    In a 2000 DoD survey of 35,000 reserve personnel, 59 
percent of surveyed reservists (including federal employees) 
reported either no difference in their income while on active-
duty military status or an increase in their income while on 
active duty, while 41 percent reported a loss of income during 
mobilization and deployment. For this estimate, CBO assumes 
that those self-reported survey data are applicable to the 
federal employees affected by the current call-up of reservists 
and National Guard forces.
    Of the 41 percent of survey respondents who reported a loss 
of income during military reserve service, most (about 70 
percent) said their income was reduced by $3,750 or less while 
on active duty. Some reported much larger losses. For example, 
approximately 7 percent of those reporting an income loss 
indicated a loss of $37,000 to $50,000 annually. Considering 
the loss income reported by all survey respondents and the 
number who reported no loss or an increase in salary, CBO 
estimates that the average annual reduction in salary while 
serving in the active-duty military is about $3,000.

Spending subject to appropriation

    Retroactive Federal Employee Reservist Pay. S. 593 would 
authorize an increase in federal salaries to pay for the 
difference between civilian and military compensation for 
federal employees called to active duty in the uniformed 
services or National Guard. That increase would apply not only 
to future service but also to service since October 11, 2002, 
subject to the availability of appropriations. The bill also 
would authorize the appropriation of $100 million for the cost 
of providing the difference between military and civilian pay 
since October 11, 2002. Based on information from DoD about the 
use of military reserves and National Guard, CBO estimates that 
about 42,500 person-years of active-duty military service will 
have been performed by federal employees from October 11, 2002, 
through September 30, 2004, when we assume the bill would be 
signed into law. Using the above assumptions on the average 
annual reduction in salary while serving in active duty and 
assuming appropriation of the necessary amount, CBO estimates 
that the retroactive pay provision would cost $128 million. We 
expect that some of those payments would be made in 2006 
because of the time required to determine pay differentials and 
adjust payroll systems.
    Prospective Federal Employee Reservist Pay. The cost of 
implementing the legislation for federal employees on active 
duty in the future depends on the size of the future reserve 
force, which in turn depends on the duration of the military 
operations in Iraq and Afghanistan and the forces required for 
it, as well as the size and duration of any future military 
conflicts, all of which are uncertain. For this estimate, CBO 
assumes that the total number of reservists on active duty will 
decline from about 160,000 person-years in fiscal year 2005 and 
to about 87,500 person-years by 2009. If the number of 
reservists called to active duty were to remain at current 
levels over the 2005-2009 period, the cost of implementing S. 
593 would be significantly greater.
    Based on the above assumptions about the future size of the 
reserve force, CBO estimates that an average of about 21,000 
federal employees will be on active-duty military service in 
fiscal year 2005, diminishing to approximately 11,500 by 2009. 
On that basis, CBO estimates that the prospective costs of 
implementing this provision would total $58 million in 2005 and 
$206 million over the 2005-2009 period, assuming the 
appropriation of the necessary amounts.

Direct spending

    In general, federal salaries are paid from agencies' annual 
appropriations, but this bill would also affect the U.S. Postal 
Service, whose spending is not governed by appropriation 
action. CBO estimates that enacting this legislation would 
increase direct spending of the USPS by about $6 million in 
2005 and $4 million in 2006. (Spending and receipts of the 
Postal Service are classified as off-budget.) Beginning in 
fiscal year 2007, additional costs would be covered by 
additional revenues because the USPS is required to set rates 
to cover its costs; CBO expects that the next rate increase 
will occur in 2006. At that time, CBO expects that the USPS 
also would seek to recover prior, unanticipated costs. 
Consequently, S. 593 would have no net impact on Postal Service 
outlays over the 2005-2014 period.
    Intergovernmental and private-sector impact: S. 593 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Previous CBO cost estimates: On July 21, 2004, CBO 
transmitted a cost estimate for S. 2400, the Ronald W. Reagan 
National Defense Authorization Act for Fiscal Year 2005, as 
passed by the Senate on June 23, 2004. The Senate-passed 
version of that act and S. 593 contain identical provisions 
regarding pay for federal reservists. The estimated cost of 
those provisions is the same.
    On May 15, 2003, CBO transmitted a cost estimate for H.R. 
1836, the Civil Service and National Security Personnel 
Improvement Act, as ordered reported by the House Committee on 
Government Reform on May 8, 2003. On May 1, 2003, CBO 
transmitted a cost estimate for S. 593, as introduced by 
Senator Richard J. Durbin on March 11, 2003. H.R. 1836 contains 
a reservist pay provision but does not authorize retroactive 
pay. S. 593 as introduced did not authorize appropriations for 
retroactive pay. Other differences in CBO's cost estimates are 
due to updated assumptions about the size of U.S. forces in 
Iraq.
    Estimate prepared by: Federal Costs: Matthew Pickford; 
Impact on State, Local, and Tribal Governments: Melissa 
Merrell; and Impact on the Private Sector: Paige Piper/Bach.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                  VI. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b)(1) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill. CBO states that 
there are no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act and no costs on 
state, local, or tribal governments. The legislation contains 
no other regulatory impact.

                      VII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the changes in existing law made 
by the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in blank brackets, new 
matter is printed in italic and existing law, in which no 
change is proposed, is shown in roman):

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *


GOVERNMENT ORGANIZATION AND EMPLOYEES

           *       *       *       *       *       *       *



PART III--EMPLOYEES

           *       *       *       *       *       *       *



Subpart D--Pay and Allowances

           *       *       *       *       *       *       *



CHAPTER 55--PAY ADMINISTRATION

           *       *       *       *       *       *       *



              Subchapter IV--Dual Pay and Dual Employment


SECTION 5538. NONREDUCTION IN PAY WHILE SERVING IN THE UNIFORMED 
                    SERVICES OR NATIONAL GUARD.

    (a) An employee who is absent from a position of employment 
with the Federal Government in order to perform active duty in 
the uniformed services pursuant to a call or order to active 
duty under a provision of law referred to in section 
101(a)(13)(B) of title 10 shall be entitled, while serving on 
active duty, to receive, for each pay period described in 
subsection (b), an amount equal to the amount by which--
          (1) the amount of basic pay which would otherwise 
        have been payable to such employee for such pay period 
        if such employee's civilian employment with the 
        Government had not been interrupted by that service, 
        exceeds (if at all)
          (2) the amount of pay and allowances which (as 
        determined under subsection (d))--
                  (A) is payable to such employee for that 
                service; and
                  (B) is allocable to such pay period.
    (b)(1) Amounts under this section shall be payable with 
respect to each pay period (which would otherwise apply if the 
employee's civilian employment had not been interrupted)--
          (A) during which such employee is entitled to 
        reemployment rights under chapter 43 of title 38 with 
        respect to the position from which such employee is 
        absent (as referred to in subsection (a)); and
          (B) for which such employee does not otherwise 
        receive basic pay (including by taking any annual, 
        military, or other paid leave) to which such employee 
        is entitled by virtue of such employee's civilian 
        employment with the Government.
    (2) For purposes of this section, the period during which 
an employee is entitled to reemployment rights under chapter 43 
of title 38--
          (A) shall be determined disregarding the provisions 
        of section 4312(d) of title 38; and
          (B) shall include any period of time specified in 
        section 4312(e) of title 38 within which an employee 
        may report or apply for employment or reemployment 
        following completion of service on active duty to which 
        called or ordered as described in subsection (a).
    (c) Any amount payable under this section to an employee 
shall be paid--
          (1) by such employee's employing agency;
          (2) from the appropriation or fund which would be 
        used to pay the employee if such employee were in a pay 
        status; and
          (3) to the extent practicable, at the same time and 
        in the same manner as would basic pay if such 
        employee's civilian employment had not been 
        interrupted.
    (d) The Office of Personnel Management shall, in 
consultation with Secretary of Defense, prescribe any 
regulations necessary to carry out the preceding provisions of 
this section.
    (e)(1) The head of each agency referred to in section 
2302(a)(2)(C)(ii) shall, in consultation with the Office, 
prescribe procedures to ensure that the rights under this 
section apply to the employees of such agency.
    (2) The Administrator of the Federal Aviation 
Administration shall, in consultation with the Office, 
prescribe procedures to ensure that the rights under this 
section apply to the employees of that agency.
    (f) For purposes of this section--
          (1) the terms ``employee'', ``Federal Government'', 
        and ``uniformed services'' have the same respective 
        meanings as given them in section 4303 of title 38;
          (2) the term ``employing agency'', as used with 
        respect to an employee entitled to any payments under 
        this section, means the agency or other entity of the 
        Government (including an agency referred to in section 
        2302(a)(2)(C)(ii)) with respect to which such employee 
        has reemployment rights under chapter 43 of title 38; 
        and
          (3) the term ``basic pay'' includes any amount 
        payable under section 5304.
    (g) Clerical Amendment.--The table of sections for chapter 
55 of title 5, United States Code, is amended by inserting 
after the item relating to section 5537 the following:

5538. Nonreduction in pay while serving in the uniformed services or 
          National Guard.

                                  
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