CBO’s Analysis of ‘Accrual’ Proposal

The Congressional Budget Office has published an analysis of the White House’s fiscal 2003 budget proposes that federal agencies pay the full cost of their employees’ retirement benefits and health benefits in retirement as such benefits are earned-so-called “accrual” accounting. While the proposal has not advanced legislatively, CBO’s views could carry significant weight on Capitol Hill this year or, potentially, in the years ahead. “Recognition of accrued retirement costs of federal workers over the course of their careers could be interpreted as strengthening the commitment to provide promised benefits and limiting the Congress’s latitude in changing them. The change, however, could also have the opposite effect, increasing the likelihood that the Congress would reduce benefits. Many analysts believe that such an effect resulted from a required accounting change for retiree health benefits in private firms,” CBO’s report says.