The White House has again asked Congress to increase the maximum buyout, or voluntary separation incentive payment, to $40,000 government-wide–an idea that made some progress last year but fell short of enactment.
Like last year, the request is in a technical part of the budget involving State Department spending, but the section of law it seeks to amend applies government-wide. It would increase the amount from the $25,000 that applies everywhere except DoD, which has had the authority to pay the higher amount since late 2016.
The administration in making the same proposal last year argued–as had the Obama administration before it–that the $25,000 maximum, in effect since the early 1990s, is an insufficient lure for employees to resign or retire. Agencies offer buyouts, typically paired with early retirement offers, to avoid having to conduct costly and contentious RIFs during downsizing or restructuring.
Buyout payments are taxable, reducing the take-home amount on a $25,000 payment commonly to around $18,000, depending on the individual’s tax status. Increasing the pre-tax amount to $40,000 would raise the average take-home amount to perhaps something over $30,000. None of the proposals have included projections of how much the boost would increase the acceptance rate.
The only final action Congress took on buyouts last year was to extend by three years, through fiscal 2021, the DoD authority, which otherwise would have expired at the end of this September. The Senate Homeland Security and Governmental Affairs Committee late last year did approve applying the higher amount across all agencies but the measure has not advanced since.