fedweek.com | budget includes raise for feds

While proposing substantial changes in federal employee retirement benefits, the Trump administration budget proposal would leave other benefit programs alone while providing for a raise for active employees.

The budget document released Tuesday makes no mention of seeking cuts in the federal employee insurance programs—FEHB, FEGLI, FEDVIP and FLTCIP—nor in programs such as the TSP, flexible spending accounts, and various forms of leave benefits. It meanwhile proposes a national program of six weeks of paid parental leave on the birth or adoption of a child; presumably federal employees would be included, although that is not explicit.

Since as far back as last November’s elections, employee organizations had expressed concern that President Trump would repeat prior Republican proposals regarding the FEHB that over time would shift more of the premium cost to enrollees and away from the government. They also had kept a wary eye out for a repeat of a plan to reduce the rate of return on the TSP government securities G fund, the largest investment fund in that program and one especially popular with late-career employees and retirees.

However, the budget confirmed their fears that the administration would go after retirement benefits in other ways, including by proposing increased employee contributions toward retirement; reducing COLAs for both current and future retirees; and for future retirees, basing benefits on the highest five consecutive salary years and ending a supplement for those who retire under FERS below age 62 that is paid until they hit that age and can start collecting Social Security.

On pay, as OMB had confirmed earlier, the budget calls for a 1.9 percent January 2018 raise, an amount about in line with those of recent years that Congress allowed to take effect by default. The budget does not address whether the increase would be paid across the board or whether part—most likely, 0.9 percentage points—would be broken out and divided up in different amounts by locality. Unless Congress acts, that too would be up to the White House’s discretion, usually announced in a late-August message to Congress.

The budget meanwhile would provide a 2.1 percent raise for active duty military personnel. In many past years a higher military raise has benefitted federal employees by pulling up their raise in the name of “pay parity” between the two. That happened last year when in a late-year budget bill Congress set the military raise at 2.1 percent and President Obama boosted the federal employee raise to that level from the 1.6 percent that had been in progress up to that point.