Compromise Defense policy measure advances retirement reforms

House-Senate negotiators included a number of pay and retirement provisions in a compromise version of the 2010 Defense authorization bill, overcoming the objections of Republican senators who blocked the language from the Senate version of the bill.

The conference report, approved on Wednesday morning, includes a provision that would allow workers in the Federal Employees Retirement System to count unused sick leave toward their retirement. The provision would be phased in over a four-year period. Until Dec. 31, 2013, employees would receive 50 percent credit for unused sick time; they would receive full credit beginning on Jan. 1, 2014.

Rep. Jim Moran, D-Va., who wrote the original legislation to give FERS workers credit for unused sick leave, said the language was critical because it provides financial incentives for employees to avoid taking unnecessary time off toward the end of their careers. Senior workers who spend more time in the office are in a better position to train their successors, he noted. And while the decision to phase in the benefit was motivated by budgetary considerations, it might encourage some workers to delay their retirement so they could receive full credit for their sick time, he said.

The conference report also contains language that would make it easier for agencies to rehire federal retirees, without forcing them to take a cut in their annuity checks. Those retirees would be able to return to work only for a limited period of time, and the comptroller general would be required to report on how agencies use this new authority. Another provision would allow employees who choose to work part time toward the end of their careers to use a higher salary figure to calculate how that work factors into their retirement benefits. And FERS employees who left and returned to government service would be able to redeposit savings in the retirement system and earn credit for years they already worked in government.

"The changes included in the conference report will enhance the federal retirement system's efficiency and effectiveness as a recruitment and management tool at a time when the government needs to be attracting the best and brightest individuals," said Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee.

In addition, the compromise version of the bill incorporates language that was a priority for Sen. Daniel Akaka, D-Hawaii. The provision would move federal employees who live and work outside the continental United States from a system that provides them with cost-of-living adjustments to the locality pay system. In contrast to COLA adjustments, locality pay counts toward federal employees' retirement calculations, and as part of salary for Thrift Savings Plan contributions. The change would be phased in gradually, according to the summary of the conference report.

"This is fantastic," said Jessica Klement, government affairs director for the Federal Managers Association. "We've been fighting for these provisions for so long. Some people see these as a benefits issue, but for us this is strictly a productivity issue."

It was not a given that conferees would accept the workforce provisions. The House approved them, but Sen. Tom Coburn, R-Okla., blocked their addition to the Senate version using a filibuster.

Coburn objected to the bill's cost, which he said would be more than $3 billion. But supporters contend it could save the government money by providing incentives for reduced use of sick leave, for instance.

Moran said that Towns and Rep. Stephen Lynch, D-Mass., chairman of the House Oversight and Government Reform Federal Workforce Subcommittee, were able to convince conferees to include the workforce provisions by threatening to withhold their signatures unless the language made it in.

The provisions face a few more legislative hurdles before arriving at the president's desk.

Both the Senate and the House must vote on the conference report in order for it to become law. The House is scheduled to vote on it Thursday, and the Senate also is expected to consider it on Thursday. While congressional procedure does not allow for amendments to the conference report, senators can raise budgetary objections to provisions through a parliamentary procedure.