Buyouts all around

It may seem counterintuitive: the government is facing an alleged retirement wave of crisis proportions, yet almost every agency's human resources chief is itching for the authority to offer as much as $25,000 to people to encourage them to retire.

Ask federal personnel directors why they want to encourage people to retire when many observers are ringing the alarm bells about too many retirements. They'll explain that federal agencies want some people-people with outdated skills, people in offices that are obsolete, people whose work is being outsourced-to retire sooner rather than later.

For most retirement-age federal workers, the buyout authority personnel directors want would mean very little, since personnel directors do not want to encourage most of them to leave. But for those select people with outdated skills or unneeded jobs-they probably won't make up a large percentage of the federal workforce near retirement age-a buyout may soon be on the way.

Federal personnel directors are about to get the buyout authority they want.

Congressional lawmakers tucked the authority into the bill creating the new Department of Homeland Security. It was approved by negotiators working out a compromise on the bill this week. The compromise bill is now working its way through the approval process.

Though most of the bill deals specifically with the new department, the buyout authority provision applies to most federal agencies.

Most agencies had buyout authority during the downsizing period of the 1990s, but that authority expired as agencies met downsizing goals. A few agencies, including the Defense Department, still have the authority to offer buyouts, and have been doing so, although at a far lower rate than during the downsizing days.

During downsizing, buyouts could only be offered if an agency was eliminating a position. In other words, one person would walk out the door, but no one would replace him. The agency would be down by one position in the total number of employees at the agency.

Under the new buyout authority that Congress is set to approve, agencies can offer buyouts even when they are not eliminating a position. One person will walk out the door, and another person will replace him. The new person is expected to have different skills or a different job. But the agency is not down a position.

For example, during downsizing, a computer programmer could take a buyout and retire. His position would have been eliminated. There would have been one less computer programmer on board.

Under the new buyout authority, a programmer, who knows an old computer system that is being shut down, could take a buyout and retire. The agency could then hire a new programmer, this one with the skills to run a new computer system. There would be no drop in the total number of employees at the agency.

The provision in the Homeland Security bill puts the following rules in place for the new buyout authority:

• The new buyouts can be offered to employees based on their organizational unit, their occupation, their geographic location, or their skills and knowledge. Agencies can also set certain windows of time during which employees can take buyouts.
• Buyouts will be paid in lump sums after an employee leaves. The sums will be up to $25,000.
• To qualify for a buyout, employees must have been with the government for at least three years of continuous service in a permanent (i.e., not temporary) appointment.
• The following employees could not take buyouts: rehired retirees; employees eligible for disability retirement; employees who have received notice that they are going to be fired for misconduct or poor performance; employees who have previously received buyouts; employees covered by statutory reemployment rights who are on transfer with other organizations; employees who received student loan repayments in the past three years; employees who received recruitment or relocation bonuses in the past two years; employees who received retention bonuses in the past year.
• Agencies have to submit plans for using the buyout authority for approval from the Office of Personnel Management. The plans have to explain which positions and functions are being eliminated, which employees are being offered buyouts, how long they're going to be offered, how many buyouts will be offered and how much they will cost and an explanation of how the agency will operate without the eliminated positions and functions.

The new buyout authority aims to correct that problem, allowing agencies to target buyouts to certain groups of people.

Donald Kettl, a professor of public management at the University of Wisconsin-Madison, said agencies' personnel directors must plan carefully before offering the new buyouts.

"The risk is that at a time when we are already facing substantial turnover of the civil service, a buyout system may accelerate that, and we don't have sufficient workforce planning capacity to make up the difference, and that could create a near-term crisis," Kettl said.