Benefits Breakthroughs

Federal employees are set to receive smaller raises than they've become accustomed to, and lawmakers failed to secure civilians the same pay hike as their military counterparts next year. But despite that setback, 2009 was a big year for federal pay and benefits. Congress passed long-delayed changes to federal benefits policy and rolled back the Pentagon's controversial pay-for-performance system. A new leadership team at the Office of Personnel Management embarked on potentially wide-ranging reforms to the pay and hiring processes. And First Lady Michelle Obama put her own stamp on federal personnel issues, championing work-life balance and family-friendly policies during visits to federal agencies.

Congress sprung into action, passing into law proposals that previously faded after approval in one chamber, or never got beyond the introductory stage at all. The fiscal 2010 Defense Authorization Act became a major vehicle for those long-stalled priorities.

The law will give workers covered by the Federal Employees Retirement System full credit for their unused sick leave in their retirement calculations by 2014; move all employees based in Alaska, Hawaii and other areas outside the contiguous states into the locality pay system by 2012; and allow employees who work part time at the end of their careers to use higher salary figures in calculating their retirement benefits.

Federal employee advocates also attached provisions to a tobacco reform bill enacted in June, prompting two major changes to the Thrift Savings Plan. In June, agencies began making contributions to employees' TSP accounts equivalent to 1 percent of their salaries, no matter how long they'd been with the government, and even if they hadn't opened TSP accounts in their own names. And in spring 2010, the TSP will undergo an even bigger shift when agencies start automatically enrolling new employees in the retirement savings program, taking 3 percent of their salaries out of their paychecks in addition to the 1 percent agency contribution and depositing those funds into accounts opened in employees' names. Employees will be free to change how that money is invested.

These ideas weren't necessarily new, but it took until this year to garner momentum to pass them, and to find legislative vehicles big enough so they wouldn't get lost in the shuffle of the congressional calendar. It also took lawmakers willing to stand up for federal benefits provisions. Reps. Edolphus Towns, D-N.Y., and Stephen Lynch, D-Mass., threatened not to sign the conference report on the Defense Authorization bill unless the benefits changes were included.

Congress and the administration worked in parallel, if not always in tandem, on one of the most significant changes in pay and benefits policy of 2009 -- the repeal of the Bush administration's National Security Personnel System. As the Obama administration convened a panel to review the Defense pay-for-performance system, lawmakers led by Rep. Carol Shea-Porter, D-N.H., introduced legislation to repeal it. After that panel concluded NSPS could not continue without a gut renovation, the administration dropped its objections to scrapping the system, and in October Obama signed a repeal into law as part of the Defense Authorization Act.

Determining how to return the employees covered by NSPS to their previous pay systems by 2012 will be a major project for the NSPS program office next year. And it comes at a time when OPM is weighing a complete overhaul of the federal pay system. OPM Director John Berry has been talking about the need to update the General Schedule since shortly after he arrived in Foggy Bottom. House Majority Leader Steny Hoyer, D-Md., seconded that sentiment during a Washington conference organized by Harvard University in October. And some federal employee unions have said the demise of NSPS will clear a path toward future productive conversations about pay, whether the subject is making better use of the performance provisions in the General Schedule or designing an entirely new pay system.

While Berry is listening to proposals for pay reform and working to streamline the federal hiring system, his agency is tackling another top priority for the Obama administration: fitness, health and other programs to improve work-life balance. Michelle Obama cast such initiatives as an issue of productivity as well as benefits when she stopped by OPM as part of her tour of agencies in the spring.

The changes in a wide range of federal pay and benefits areas during 2009 were the product of pent-up energy and proposals in Congress, and a shift in approach with the arrival of a new administration. But passing bills and announcing new policies, regulations and priorities, is just the beginning. Next year will bring significant implementation challenges, and continued legislative fights over issues such as extending health and retirement benefits to the domestic partners of gay and lesbian federal employees. Changing policies that affect 1.9 million federal employees and passing reforms to keep them productive and motivated is not something that can be accomplished in one year.