Cuts to TSP, a Deeper Look at Low Morale and More

In a move that is getting old, lawmakers are once again looking at cuts in federal employees’ benefits as a way to offset increased spending in other areas. This time, the potential target is the Thrift Savings Plan’s government securities (G) fund.

Senators are looking for ways to finance a long-term extension of highway and transit funding, and while they had not officially endorsed particular cost-cutting proposals as of mid-day Wednesday, the National Association of Active and Retired Federal Employees was concerned about reports that a change in the rate of return on TSP’s G Fund was on the table.

“At a time when federal employees, retirees, job seekers and their families are reeling from news that their most personal information and financial data has been compromised, it is unconscionable that this very constituency would be targeted for cuts to pay for completely unrelated legislation,” NARFE National President Richard Thissen wrote in a July 14 letter to senators.

A similar change was proposed in an early version of the House Budget Resolution but later dropped, NARFE noted in the letter. “It should be discarded again,” the group stated.

Aside from hitting federal workers when they are already down, targeting the G Fund would not produce the estimated savings of $32 billion, NARFE argued. If the G Fund’s rate of return drops below inflation, then the Federal Thrift Retirement Investment Board would divest $21 billion of lifecycle (L) fund holdings from the G Fund and would tell participants to do the same, the organization said. That divestment would in turn increase the public debt, because the Treasury Department would need to come up with cash to convert G Fund securities to other assets in TSP accounts.

“The decision was made more than a quarter-century ago to keep the TSP off-budget and out of the hands of those who would use it as a piggy bank to pay for unrelated expenditures, or to reduce the federal deficit,” Thissen said. “The TSP belongs to the plan’s participants. It does not belong to the federal government, nor does it exist to pay for unrelated legislation, regardless of the worthiness or necessity of the legislation.”

Federal employees may end up catching a break, because the House on Wednesday afternoon approved a shorter-term extension of highway funding that does not target the G Fund. If the Senate cannot agree on a longer-term extension, then it may be forced to adopt the House measure to prevent a shutdown in transit funding to states when the current authority expires on July 31.

Meanwhile, the Homeland Security Department inspector general believes the Transportation Security Administration is squandering a narrower opportunity for saving money. The IG office issued an advisory reiterating that TSA’s Office of Inspection has classified too many of its employees as “criminal investigators.” Criminal investigators can collect 25 percent premium pay on top of their base salaries, and they are entitled to other “costly” law enforcement benefits, the IG noted.

Many of the TSA office’s criminal investigators actually work on “noncriminal cases; monitoring and reporting on criminal cases; and carrying out inspections, covert testing and internal reviews,” the watchdog said. The IG added that the investigators’ caseload did not seem to be complex enough to qualify as law enforcement work, based on average hours spent per criminal case.

The watchdog first noted this potential waste in 2013, but said in its latest advisory that the office’s response, including spending $330,000 for a contractor to perform a workforce analysis, was insufficient. The contractor’s analysis did not include a review of position classifications, the IG said. TSA’s inspection office should conduct a review that specifically looks at position classifications, and fix any discrepancies identified, the auditors recommended.

Proposals to save money – whether through governmentwide cuts to benefits or job reclassifications – are sure to be unpopular with federal employees, whose morale is already low. The Government Accountability Office on Wednesday released a report (GAO-15-585) looking at that morale problem in more depth.

One of the report’s observations will hardly come as a surprise: federal employee engagement is falling. Engagement levels – as measured by the Office of Personnel Management’s Employee Engagement Index – fell from 67 percent in 2011 to 63 percent in 2014, and views of agency leaders were particularly grim, GAO noted. Also perhaps unsurprisingly, engagement was higher among employees who earned more (those in the Senior Executive Service and General Schedule 13 through GS-15 pay grades were more engaged than those lower down on the GS scale).

But what may be more interesting, is that a handful of large agencies such as the Defense, Homeland Security and Veterans Affairs departments, brought down the governmentwide engagement score. The majority of agencies actually improved or sustained their engagement levels, despite sequestration, furloughs and the three-year pay freeze from 2011 through 2013.

“Even one agency with a downward trending engagement score is not to be taken lightly and there is opportunity for improvement at all federal agencies,” the report stated. “However, the large number of agencies that sustained or increased their levels of employee engagement during this time suggests that agencies can positively influence employee engagement levels even as they weather difficult external circumstances.”

So how can agencies boost employees’ spirits during tough times? GAO said the following six factors are the strongest drivers of engagement: constructive conversations about job performance, career development and training opportunities, support for work-life balance, inclusive work environments, employees’ involvement in decisions affecting their work and communication from managers. 

Of course, there is one recent external problem that could derail even the best of efforts to improve morale, and that is the breach of personal data maintained by OPM. Under new leadership from Beth Cobert, the personnel agency is working hard to control the damage from its initial response to the hacking incidents. But it remains to be seen whether the latest efforts will pacify employee unions, and there are many unanswered questions about the services that will be offered to hack victims.

(Image via  Matthew Benoit / Shutterstock.com)