Move to Cut Benefits Possible in January

With the latest partial government shutdown threat just recently avoided, federal employee organizations already are warning that the next deadline could trigger a move to cut federal employee and retiree benefits.

Just before the December 22 deadline, Congress agreed to once again temporarily continue agency spending authority, passing a bill extending funding through January 19. Among the policy issues that were set aside with the most recent extension was whether to raise spending caps set by an earlier budget agreement, one for domestic discretionary spending and the other for defense.

Without raising those caps, the budget measures under consideration for the rest of the current fiscal year could trigger “sequestration” of the sort that hit in 2013, causing furloughs in some agencies for which affected employees later were not paid (in contrast to the separate shutdown furlough that occurred that October).

However, if the caps are raised, a move is expected to offset the costs with reduced spending elsewhere. Organizations note that in such situations Congress often has looked to the federal workforce–with the result, for example, of two increases in the required retirement contribution, although applying only to those first hired later.

Organizations expect that employee contributions to retirement would again be on the table, as would ideas Congress has considered numerous times–and some of which the House backed as recently as this year. These include paying retiree COLAs below the inflation rate and requiring FEHB enrollees to bear a greater share of the total premium cost.

Those proposals could be among the most likely to be considered since they would reduce government spending–while impacting employees and retirees–in the shorter-term time frames used in federal budgeting. Other ideas such as basing future annuities on the high-5 rather than the high-3 salary years, ending the FERS “special retirement supplement” for future retirees, and eliminating the defined benefit for employees hired in the future, would have most of their impact many years out.

When faced with deadlines such as the one coming January 19, Congress has repeatedly pushed the issue down the road by enacting temporary extensions. However, the limit of such delays is not far ahead. Going beyond the end of January would cause the 2018 budget deliberations to extend into the fiscal 2019 process.