[Senate Report 111-231]
[From the U.S. Government Publishing Office]
Calendar No. 484
111th Congress Report
2d Session SENATE 111-231
_______________________________________________________________________
UNITED STATES SECRET SERVICE RETIREMENT ACT OF 2009
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 1862
TO PROVIDE THAT CERTAIN SECRET SERVICE EMPLOYEES MAY ELECT TO
TRANSITION TO COVERAGE UNDER THE DISTRICT OF COLUMBIA POLICE AND FIRE
FIGHTER RETIREMENT AND DISABILITY SYSTEM
July 26, 2010.--Ordered to be printed
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri JOHN ENSIGN, Nevada
JON TESTER, Montana LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois
EDWARD E. KAUFMAN, Delaware
Michael L. Alexander, Staff Director
Kevin J. Landy, Chief Counsel
Kenya N. Wiley, Counsel
Brandon L. Milhorn, Minority Staff Director and Chief Counsel
Amanda Wood, Minority Director for Governmental Affairs
Trina Driessnack Tyrer, Chief Clerk
Calendar No. 484
111th Congress Report
SENATE
2d Session 111-231
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UNITED STATES SECRET SERVICE RETIREMENT
ACT OF 2009
_______
July 26, 2010.--Ordered to be printed
_______
Mr. Lieberman, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
REPORT
[To accompany S. 1862]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 1862) to provide
that certain Secret Service employees may elect to transition
to coverage under the District of Columbia Police and Fire
Fighter Retirement and Disability System, having considered the
same, reports favorably thereon without amendment and
recommends that the bill do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis......................................3
V. Evaluation of Regulatory Impact..................................4
VI. Congressional Budget Office Estimate.............................5
VII. Changes in Existing Law Made by the Bill, as Reported............8
I. PURPOSE AND SUMMARY
The purpose of S. 1862 is to permit certain employees of
the U.S. Secret Service (USSS) who were hired between January
1, 1984 and December 31, 1986, to transfer from the Federal
Employees' Retirement System (FERS) to the District of Columbia
Police and Firefighter Retirement and Disability System (DC
Retirement System). The bill would thereby resolve a
longstanding dispute between the federal government and these
employees regarding the employees' appropriate retirement
coverage and help ensure that the USSS does not lose a
significant number of highly experienced and critical
personnel.
II. BACKGROUND AND NEED FOR THE LEGISLATION
The Uniformed Division (UD) of the USSS has its origins in
a local District of Columbia special police force dedicated to
protecting the White House, known as the White House Police.
Although UD officers became federal employees in the first half
of the last century, the local origins of the USSS led to an
unusual situation in which these federal employees, as well as
their colleagues in the Secret Service division responsible for
protecting current and former Presidents and their families
(Secret Service agents),\1\ received their retirement coverage
under the DC Retirement System.\2\ That began to change in the
mid-1980s, when Congress enacted sweeping reforms to Federal
employees' retirement coverage. The Federal Employees'
Retirement System Act of 1986 (``the FERS Act'') began the
process of phasing out the Civil Service Retirement System
(CSRS) by putting most federal employees hired thereafter into
the Federal Employees' Retirement System, which was slated to
be up and running in 1987. The FERS Act required Federal
employees to make Social Security contributions and made them
eligible for Social Security benefits upon retirement. The FERS
Act also established the Thrift Savings Plan, a defined
contribution plan where each employee makes contributions into
an individual account. The Executive Branch has long
interpreted the FERS Act as requiring members of the U.S.
Secret Service Division (USSS agents) and the U.S. Secret
Service Uniformed Division (UD officers) hired after December
31, 1983 to receive their retirement coverage through FERS, not
the DC Retirement System.\3\
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\1\Unlike Uniformed Division Officers, who were automatically
placed into the DC Retirement System, agents who were hired before
January 1, 1984 who had accrued 10 years of protection time were
eligible to transfer into the DC Retirement System.
\2\The USSS reimburses the District of Columbia on a monthly basis
to cover the cost of annuity benefits for UD officers and agents,
pursuant to P.L. 71-221 and P.L. 76-847.
\3\See USSS memorandum on the District of Columbia Police and
Firefighters Retirement and Disability System, March 27, 2001.
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USSS agents and UD officers hired between January 1, 1984
and December 31, 1986, however, have since then alleged that
the USSS, in part as a recruiting and subsequently retention
tool, promised them eligibility for retirement under the more
generous DC Retirement System.\4\ Many of them have filed
judicial or administrative actions seeking to obtain coverage
under the DC Retirement System, but they have thus far been
unsuccessful in obtaining relief.\5\
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\4\Numerous agents and officers submitted letters to senior USSS
employees attesting that when they were recruited, they were informed
of the generous retirement system and the ability to participate in the
DC Retirement System.
\5\The USSS agents and UD officers have pursued actions to
participate in the DC Retirement System through the Office of Personnel
Management (OPM), the Merit Systems Protection Board (MSPB), the U.S.
Secret Service, and the U.S. District Court for the District of
Columbia.
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After reviewing the matter, the Committee has determined
that both fairness and the interests of the government in
retaining the services of these highly qualified and
experienced USSS employees warrants enabling certain USSS
agents and UD officers to transfer from the FERS system to the
DC Retirement System. Most importantly, as an increasing number
of this group of agents and officers become eligible for
retirement\6\ without the option to elect into the DC
Retirement System, many are leaving the Secret Service for
higher-paying positions in the private sector.\7\ The reasons
are clear: Secret Service employees participating in the DC
Retirement System have a significantly greater incentive to
continue working after 20 years of service than do those
covered by FERS. Those covered by the DC Retirement System
receive an additional 3 percent of their pay for each year they
work after twenty years of service, while FERS employees
receive only an additional 1 percent for each year over twenty.
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\6\The number of FERS retirees covered under S. 1862 retiring every
year has increased from 4 retirees in Fiscal Year 2004 to 10 retirees
in Fiscal Year 2009. Currently, 146 agents and officers hired between
1984 and 1986 are eligible to retire.
\7\According to the USSS, more than 60 percent of the agents and
officers eligible to retire hold senior leadership positions within the
agency.
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To remedy this situation, S. 1862 would offer a very
carefully defined group of UD officers and Secret Service
agents the opportunity to transfer into the DC Retirement
System.\8\ Only agents and officers hired between January 1,
1984 and December 31, 1986 would be eligible to transfer into
the DC Retirement System. In order to make the transfer, the
employees would have to apply and would agree to give up
certain benefits they received under FERS, such as eligibility
to receive Social Security in the future. Also, S. 1862 would
only apply to current Secret Service employees, and thus, this
legislation would not be applicable to current retirees who
were hired between January 1, 1984 and December 31, 1986.
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\8\The USSS informs the Committee that the bill would apply to
approximately 180 employees.
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III. LEGISLATIVE HISTORY
S. 1862 was introduced by Senator Lieberman on October 22,
2009 and referred to the Committee. Senator Akaka was added as
a cosponsor on October 29, 2009. The Committee considered the
bill on November 4, 2009, and then reported the bill to the
full Senate favorably by voice vote. Chairman Lieberman,
Senators Levin, Akaka, Carper, Pryor, Landrieu, Burris,
Collins, and Bennett were present.
IV. SECTION-BY-SECTION ANALYSIS
Section 1. Short title
This section provides that the short title of the bill is
the ``United States Secret Service Retirement Act of 2009.''
Section 2. Retirement treatment of certain Secret Service employees
This section sets forth the criteria for coverage under S.
1862 and the procedures for transferring covered USSS employees
from FERS to the DC Retirement System.
Subsection (a) defines ``covered employees'' as individuals
who: (1) were hired as members of the U.S. Secret Service
Division (USSS agents) or the U.S. Secret Service Uniformed
Division (UD officers) between January 1, 1984 through December
31, 1986; (2) actively performed duties directly related to the
protection mission of the USSS for 10 or more years; (3) serve
as agents or UD officers on the effective date of S. 1862; and
(4) file an election to be covered employees under S. 1862.
Subsection (b) provides that not later than 60 days after
the date of enactment of this Act, covered employees under
subsection (a) shall file an election with the USSS to be a
covered employee and to transition to the DC Retirement System.
It also requires that within 30 days of enactment of this Act,
the Office of Personnel Management and the USSS shall notify
USSS employees of the enactment of S. 1862 and that covered
employees are qualified to file an election.
Subsection (c) provides that within 180 days of the date of
enactment of this Act, and in consultation with the Secretary
of Homeland Security and the Thrift Savings Board, the Office
of Personnel Management shall prescribe regulations regarding
the transition of covered USSS agents and UD officers from FERS
to CSRS.
Subsection (c)(2)(A) provides that after a covered employee
files an election under subsection (b), the covered employee
shall be converted from FERS to CSRS, and then to the DC
Retirement System. All funds held for the covered employees
shall be transferred from FERS to CSRS, and then to the general
revenues of the District of Columbia. S. 1862 also provides
that all covered employees shall be entitled to the same
benefits as the other participants of the DC Retirement System.
Subsection(c)(2)(B) provides that a covered employee who
transfers to the DC Retirement System forfeits the portion of
his or her TSP account that came from federal agency
contributions and associated earnings, but keeps the portion
that derived from his or her own contributions. Covered
employees may keep the employee contributions in their TSP
accounts or withdraw or transfer their contributions in
accordance with the Federal Retirement Thrift Investment
Board's rules and regulations.
Subsection (c)(2)(C) provides that upon conversion into the
CSRS, a covered employee shall forfeit all contributions made
for purposes of title II of the Social Security Act, meaning
that, like other employees covered by the DC system, they will
give up eligibility to receive Social Security upon retirement.
Subsection (c)(2)(C) provides that S. 1862 will not affect the
covered employees' contributions to Medicare. Finally, this
subsection provides that the Office of Personnel Management,
the Department of Homeland Security, the Social Security
Administration, and the Thrift Savings Board shall take the
necessary actions to implement S. 1862.
Subsection (d) provides that S. 1862 shall take effect on
the first day of the first applicable pay period that begins
180 days after the date of enactment of this Act. The election
of coverage pursuant to subsection (b) and the provisions under
subsection (c)(1) and (c)(3) shall take effect on the date of
enactment of this Act.
V. EVALUATION OF REGULATORY IMPACT
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of S. 1862. The Congressional
Budget Office states that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandate Reform Act and would impose no costs on state,
local, or tribal governments, or private entities. The
enactment of this legislation will not have significant
regulatory impact.
VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
U.S. Congress,
Congressional Budget Office,
Washington, DC, December 3, 2009.
Hon. Joseph I. Lieberman,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1862, the U.S.
Secret Service Retirement Act of 2009.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Santiago
Vallinas.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure.
S. 1862--United States Secret Service Retirement Act of 2009
Summary: S. 1862 would provide a 60-day period after
enactment of the bill during which certain employees of the
U.S. Secret Service hired between January 1, 1984, and December
31, 1986, could elect to receive coverage under the District of
Columbia Police and Firefighter Retirement and Disability
System (DC system). Such a transition would increase benefit
payments as well as affect individual and agency contributions
to Social Security and the Thrift Savings Plan (TSP).
CBO estimates that enacting S. 1862 would, on net, increase
direct spending by $12 million over the 2010-2019 period,
mostly as a result of additional retirement benefits paid to
the affected employees. The bill also would eliminate employee
contributions to the Federal Employee Retirement System (FERS)
and Social Security by those employees, reducing revenues by $2
million over the 2010-2019 period. On balance, CBO estimates
that enacting S. 1862 would increase the deficit by $14 million
over the 2010-2019 period, consisting of a $15 million increase
in the on-budget deficit and a $1 million reduction in the off-
budget deficit (Social Security effects are classified as off-
budget).
CBO also estimates that implementing the bill would lower
discretionary spending by $13 million over the 2010-2019
period, because agency contributions to Social Security, FERS,
and TSP on behalf of those employees would cease. Such
reductions assume discretionary spending would be reduced by
the estimated amounts. The bill contains no intergovernmental
or private-sector mandates as defined in the Unfunded Mandates
Reform Act (UMRA) and would not affect the budgets of state,
local, or tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1862 is shown in the following table.
The direct spending impacts of the bill fall within budget
functions 600 (income security), 650 (Social Security). The
discretionary costs fall within budget function 750
(administration of justice).
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By fiscal year, in millions of dollars--
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010-2014 2010-2019
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CHANGES IN DIRECT SPENDING (OUTLAYS)Total Changes in Direct Spending........ * * * 1 1 2 2 2 2 2 2 12
On-Budget Spending.................. * * * 1 1 2 2 2 2 2 2 14
Off-Budget Spending................. 0 0 0 0 * * * * -1 -1 * -2 CHANGES IN REVENUESTotal Changes in Revenues............... * -1 -1 * * * 0 0 0 0 -2 -2
On-Budget Revenues................. * * * * * * 0 0 0 0 -1 -1
Off-Budget Revenues................. * -1 * * * 0 0 0 0 0 -1 -1 NET IMPACT ON THE DEFICIT FROM REVENUES AND DIRECT SPENDINGNet Effect on Deficit\1\................ 1 1 1 1 1 2 2 2 2 2 4 14
On-Budget Effects................... * 1 * 1 1 2 2 2 2 2 3 15
Off-Budget Effects.................. * 1 * * * * * * -1 -1 1 -1 CHANGES IN SPENDING SUBJECT TO APPROPRIATION (ON-BUDGET)Estimated Authorization Level........... * -2 -5 -3 -2 -1 0 0 0 0 -12 -13
Estimated Outlays....................... * -2 -5 -3 -2 -1 0 0 0 0 -12 -13
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Memorandum:
Total Intragovernmental Collections from * 2 4 3 2 1 0 0 0 0 10 11
Agency Contributions...................
On-Budget........................... 0 1 4 2 2 1 0 0 0 0 9 10
Off-Budget.......................... * 1 * * * 0 0 0 0 0 1 1
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\1\Negative numbers represent decreases in the deficit; positive numbers indicate increases in the deficit.
\2\Agency contributions are intragovernmental transactions that do not affect the deficit.
Notes: Components may not sum to totals because of rounding.
Off-budget effects reflect changes in revenues and spending in Social Security.
* = between -$500,000 and $500,000.
Basis of estimate: Based on information from the Department
of Homeland Security, CBO estimates that 180 employees of the
Secret Service would be eligible to transfer to the DC system
under S. 1862, and that 90 percent of them would choose to
transfer. For this estimate CBO assumes that S. 1862 will be
enacted early in calendar year 2010.
Direct spending
Because the DC system provides a higher basic pension than
FERS, the current retirement plan for those Secret Service
employees, CBO estimates that enacting the bill would result in
additional spending of about $18 million for benefit payments
to employees who transfer over the 2010-2019 period. (The DC
system is run by the Washington, DC, government, but receives a
payment from the federal government to cover certain
employees.) That additional spending would be partially offset
by $4 million in contributions that transitioning employees
would make to the DC system. In addition, the bill stipulates
that employees who elect to change to the DC system would
forfeit any Social Security benefits that would be based on
their earnings as employees of the Secret Service. That
provision would reduce direct spending on Social Security
benefits by $2 million (off-budget) over the 10-year period.
CBO estimates that, in total, those changes would lead to a net
increase in direct spending of $12 million over the 2010-2019
period.
Revenues
CBO estimates that enacting S. 1862 would reduce revenues
over the 2010-2019 period by $2 million because individuals who
elect to transfer to the DC system under the bill would no
longer contribute to Social Security or FERS. Those
contributions are recorded on the budget as revenues. The
reduction in Social Security revenues ($1 million) would be
off-budget.
Spending subject to appropriation
Under S. 1862 the Secret Service would no longer make
contributions to FERS, TSP, or Social Security for employees
who move to the DC system. CBO estimates that spending subject
to appropriation for the Secret Service thus would decline by
$13 million over the 2010-2019 period. Such reductions in
discretionary spending assume appropriations would be reduced
by the estimated amounts. Contributions to FERS and Social
Security are intragovernmental transactions that are recorded
as offsetting receipts elsewhere in the budget. CBO estimates
that those forgone contributions would total about $11 million
over the 2010-2019 period.
Intergovernmental and private-sector impact: S. 1510
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal costs: Retirement--Santiago
Vallinas and Jared Brewster Social Security--Sheila Dacey;
Impact on state, local, and tribal governments: Elizabeth Cove
Delisle; Impact on the private sector: Brian Prest.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
VIII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
Because this legislation would not repeal or amend any
provision of current law, it would make no changes in existing
law within the meaning of clauses (a) and (b) of paragraph 12
of rule XXVI of the Standing Rules of the Senate.