Debate swirls over whether TSP is living within its means

The Thrift Savings Plan must bring down its costs in fiscal 2012, members of the Federal Retirement Thrift Investment Board said Monday.

The board in May considered an initial budget estimate of $147.2 million for fiscal 2012, a 12 percent increase over the previous year, but asked officials to scale back those costs. TSP Executive Director Greg Long on Monday offered $1.7 million in cuts, calling the revised $145.6 million budget request "reasonable" for the agency's growth.

"This is a substantially larger budget, but I can demonstrate that we have more clients, we're more stable and have virtually flat costs to participants," Long said. "That's a success in my book . . . otherwise you will have a substantial change in the service you provide."

Significant costs for 2012 include the introduction of a Roth 401(k) plan, scheduled to launch early next year; a $3.6 million technology refresh; a $2.7 million jump in personnel costs with a planned staff restructuring; and a $4 million boost in expenses associated with the agency's move to a new office. The revised budget estimate reduces funding for certain technology investments and staff positions in human resources, information technology security, risk management and communications.

Board Chairman Andrew Saul said despite the $1.7 million in cuts he would not approve the current budget estimate, which he called "unfair" to TSP participants in the current fiscal climate. The agency must control expenses and decide if any jobs or projects can be eliminated going forward, he said. Personnel costs account for 11 percent of TSP's budget.

According to Long, the TSP doesn't have any functions it can eliminate and in fact has open positions it has trouble filling due to lengthy hiring time, the challenge of attracting talent away from the private sector and communicating the agency's mission to potential employees. Human resources professionals are a particular need, he said.

"We need to get better skills to better design our processes to get people in the door," Long said.

Board member Michael Kennedy cautioned that the agency might have certain years in which increased costs for one-time expenses are unavoidable. Some of the projects proposed for short-term cuts may save more money in the long term, he said, noting that some of the budget increases are related to costs the agency cannot control.

The board will meet in September to consider and vote on a final fiscal 2012 budget.