Pay and Benefits Watch: House panel approves TSP changes

By the hair of its chinny-chin-chin, a bill that would allow new federal employees to roll over money from their previous jobs' 401(k) accounts into their Thrift Savings Plan accounts squeaked through the House Government Reform Committee Wednesday. The bill, H.R. 208, would also allow new employees to immediately begin participating in the TSP. Under current rules, new employees have to wait a year before making contributions to the TSP.

The bill, sponsored by Rep. Connie Morella, R-Md., met little resistance. Federal employee unions and other members of Congress like the bill, and the Clinton administration endorsed the TSP changes in its fiscal 2000 budget proposal. And at an estimated $14 million over five years (loose change in the context of federal spending), fiscal conservatives could see little to gripe about. Passage seemed certain; the House Government Reform Committee met Wednesday to approve the bill and send it to the House floor.

But at the eleventh hour, a controversy arose over how to cover the costs of the bill.

Morella's plan would have instructed agencies to pay for the TSP changes out of their salary and expenses accounts. But federal unions argued that doing so would force agencies to cut workers.

Susan Shaw, assistant director of legislative affairs at the National Treasury Employees Union, said making agencies cover the costs of the TSP changes out of salary accounts was unfair. She said many pieces of legislation Congress considers do not include such offsets.

"It strikes us as odd that only civil service bills that provide improvements to federal employees' benefits require offsets," Shaw said.

Congressional staffers contended that offsets are standard in bills that affect federal spending, and that the money to pay for better benefits has to come from somewhere. It made sense that the money for improving the TSP benefit would come out of the salary and expenses area, they argued.

At the last moment, congressional staffers and the unions struck a compromise. The $14 million will not be offset from salary accounts, but instead will come from agencies' general operating funds.

If the full House approves the bill and the Senate follows suit, the bill will go into effect on Oct. 1, 2000. At that time, new employees would be able to roll over money into their TSP accounts and begin immediately contributing into the plan.