Agencies working on their 1997 buyout plans to encourage employees to resign or retire may want to pay attention to a new General Accounting Office report describing what worked--and what didn't--in the government's first round of buyouts.
Fifteen agencies told GAO that in the first round of buyouts, offered in 1994 and 1995, they lost a good deal of institutional memory. Another 11 agencies said their work backed up because key personnel had taken buyouts.
Furthermore, some employees who took buyouts were then hired by contractors doing work for their former agencies, raising the question of whether the buyouts actually saved any money for agencies. (Buyouts can be awarded for up to $25,000 per employee.)
Congress authorized buyouts this year for most agencies, but to prevent the mistakes of the first round, instructed agencies to submit strategic buyout plans to Congress before offering any. The Office of Management and Budget wants to see the plans before they go to Capitol Hill.
According to GAO, the strategic buyout plans should include the following information:
- How buyouts will help achieve operational and restructuring goals and be financially advantageous for the government.
- How productivity and service levels will be maintained with fewer employees, and whether eliminating employees will save the agency money or end up costing it more to maintain those levels.
- Which positions, occupations, grade levels and programs should be targeted for buyouts and who would be likely to take buyouts if they are offered. Priority should be given to employees eligible for early retirement or not eligible for regular retirement.
- Whether a reduction-in-force would be more cost-effective than a buyout.
- If it would be most cost-effective to offer buyouts early in the fiscal year.
Several agencies, including the General Services Administration and the IRS, have already offered buyouts this fiscal year to avoid RIFs and eliminate certain positions. The IRS has opened a buyout window for employees threatened with a RIF as the agency restructures, but that window closes Saturday. GAO estimated that in some instances a buyout produces $60,000 more in savings than a RIF over a five-year period.
Many agencies are expected to take advantage of the buyout authority after the start of the next fiscal year in October.
The Defense Department, NASA, and the Central Intelligence Agency have special buyout authority that runs through the end of fiscal 1999. The Department of Agriculture has buyout authority running through fiscal 2000. The Railroad Retirement Board and the Agency for International Development were granted special buyout authority for this fiscal year.
From 1994 to Sept. 1996, non-Defense agencies gave out 36,035 buyouts. The Defense Department paid 92,432 buyouts through Sept. 1996.
NEXT STORY: Medicare Fraud Costs Tallied