Will Feds Be Asked to Sacrifice More in 2014?

By most accounts, 2013 was not a good year to be a federal employee.

Feds were hampered by a third consecutive year of frozen pay, forced to absorb furloughs and slashed budgets from sequestration, sent home without pay or forced to work with only the promise of delayed paychecks during the government shutdown, encumbered with disparaging rhetoric after various scandals and threatened by a wide array of legislative proposals to cut various benefits.

For the federal workforce, however, 2013 has ended on a bit of positive news.

First, a 1 percent, across-the-board pay raise seems all but guaranteed, with the House adjourned for the year and no longer capable of blocking President Obama’s 2014 proposal. Second, while the recently struck budget deal requires future federal employees to contribute more toward their retirement, current workers were spared.

So, with a two-year budget deal awaiting Obama’s signature and a pay hike on the way, are federal employees off the hook in the year to come? Or is the recent reprieve a temporary calm before the storm, with lawmakers ready to once again target the “low-hanging fruit” that is the federal workforce?

For his part, President Obama has said enough is enough, at least when it comes to feds’ pensions. After proposing a contribution hike for all current feds -- from 0.8 percent to 2 percent -- in his fiscal 2014 budget, Obama has promised not to touch the benefit next time around. An aide for Rep. Chris Van Hollen, D-Md., who reportedly lobbied to strip the Obama-backed pension provision out of the budget deal in favor of having the hike only hit new hires, said the president called the House Democrat to tell him future administration budgets would not cut federal employee pensions.

Washington-area and progressive lawmakers -- in chorus with federal employee unions -- have repeatedly said feds have sacrificed enough, citing the $114 billion the group has contributed to deficit reduction over the past few years.

Despite the president’s pledge and the redoubled commitment from certain advocates, not all concerns have been mollified.

Obama, for example, has not made any promise to exclude a less generous formula for calculating cost of living adjustments -- known as a chained Consumer Price Index -- from his next budget. Switching to the chained CPI would effectively lower the annual increases to federal retiree and Social Security beneficiaries. And, while federal employee unions have called the forthcoming 1 percent raise a positive step, they said it does not go nearly far enough to make up for the extended freeze. Another raise in 2015 is anything but certain, however.   

The upcoming pay raise also applies to all General Schedule workers, but not Wage Grade -- generally blue-collar, hourly -- employees. Rep. Matt Cartwright, D-Pa., introduced a bill to fix the disparity, but it never made it out of committee. Cartwright worked with Sen. Mark Pryor, D-Ark., to include the bill as part of the National Defense Authorization Act, but their efforts fell short. A spokesman for Cartwright said the congressman plans to push the legislation in 2014.

Additionally, while the budget deal rolls back sequestration by $63 billion over the next two years, the caps the 2011 Budget Control Act put in place originally forced the federal government to cut spending by $218 billion in 2014 and 2015. That means 71 percent of the cuts will still go into effect. While this could help agencies avoid the need for further furloughs, ongoing hiring freezes, training reductions and travel restrictions could still very much be on the table.

Looking forward, it is important to remember sequestration is a 10-year program. Absent further congressional action, the full slate of cuts will resume in 2016 and continue through 2021.

Finally, most employees forced to take unpaid leave over the summer who filed an appeal to the Merit Systems Protection Board have yet to have their cases adjudicated. No furloughed employee has won a case so far, but to date virtually all rulings have come from the local levels and applied to only one individual -- rather than a decision by the national board with applicability to a larger, consolidated group of employees.

About 32,000 federal employees, mostly Defense Department civilians, appealed their furlough decisions to the MSPB.

Housing Subsidy Bump

For now at least, the good news continues to roll in for federal workers.

The Pentagon has released its 2014 Basic Allowance for Housing rates, which will increase an average of 5 percent next year. This amounts to about a $79 per month bump for a typical mid-grade enlisted military member with dependents, and a $76 increase for a typical junior officer without dependents.

Not everyone’s subsidies will increase; the rates depend on the service member’s location, and in some areas the subsidy will actually decrease. That decrease will only apply to new members reporting to those locations, however, so those already in leases and contracts will not be harmed.

The Defense Department will spend an estimated $20 billion on 1 million service members for housing subsidies in 2014.