President's budget makes pay raise proposal official

This story has been updated.

President Obama has proposed a 0.5 percent pay raise for federal workers in 2013, ending a two-year civilian pay freeze that began in 2011.

The White House’s fiscal 2013 budget request, however, also includes a proposal to increase the amount federal employees contribute to their government pensions by a total of 1.2 percent over three years beginning in 2013. The administration estimates the increase would save the government $27 billion over the next decade; officials estimate the current two-year pay freeze will save $60 billion over 10 years.

Neither proposal comes as a big surprise. In January, The Washington Post reported the administration would propose a 0.5 percent pay raise in its budget, and the White House has said it opposes legislative efforts to extend the current salary freeze.

In September 2011, Obama released a deficit reduction proposal that recommended increasing the amount federal employees contribute to their pensions over three years at a rate of 0.4 percent annually beginning in 2013. “While federal agency contributions for currently accruing costs of employee pensions would decline, these employers would pay an additional amount toward unfunded liabilities of the retirement system that would leave total agency contributions unchanged over the 10-year budget window,” the plan stated.

At the time, Obama called the changes “modest adjustments to federal retirement programs.”

In addition, the president's fiscal 2013 budget would eliminate the Federal Employees Retirement System Annuity Supplement for new employees. That recommendation also was in the September deficit reduction plan.

“Overall, these changes are not expected to have a negative impact on the administration’s ability to manage its human resources, nor inhibit the government’s ability to serve the American people,” the budget document stated.

The president also is recommending the creation of a Commission on Federal Public Service Reform to look at ways to modernize federal personnel practices in areas including compensation, performance and mobility.

Federal employee unions praised the Obama administration’s support for ending the pay freeze, but were not pleased about the recommendation to increase the amount workers chip in for their pensions. “We are disappointed that the administration is asking federal employees to once again shoulder the burden of our deficits by increasing their pension contributions with no corresponding increase in the benefit,” said Matt Biggs, legislative and political director at the International Federation of Professional and Technical Engineers.

“This attack on federal retirements is a sop to the right wing,” said John Gage, president of the American Federation of Government Employees. “The GOP has insisted on huge federal retirement cuts in the highway bill and payroll tax conference, and this only serves to fan the flames.”

There are several proposals pending in Congress that would extend the federal pay freeze and raise the amount feds contribute to their retirement benefits. For a list of some of those proposals, see our Feb. 9 Pay and Benefits Watch column.

“Some people may say that at least it’s not as bad as the Republican proposals,” said Carl Goldman, executive director of the American Federation of State, County and Municipal Employees Council 26. “That’s a heck of a standard to judge what is correct and just.”