Leaked Compensation Proposals Could Have ‘Huge’ Repercussions for Civil Service

Advocates for federal employees and government observers said that if pursued, the proposals outlined in a leaked White House policy council budget wish list could have a sizable impact on the government’s ability to attract the next generation of workers.

On Thursday, the liberal news site Crooked Media posted an undated memo sent from the Domestic Policy Council, the White House’s internal think tank, to the Office of Management and Budget outlining a laundry list of policy proposals it recommended to be included in the fiscal 2019 budget request.

Contained in the wish list were a number of proposals on federal employee compensation, including a pay freeze for feds in fiscal 2019. Also floated were ideas to eliminate the defined benefit program available through the Federal Employees Retirement System and to stop new hires from using the Federal Employees Health Benefits Program after they retire.

Officials also advocated slowing seniority-based pay increases by 50 percent, eliminating the mandatory 25 percent floor on employee contributions to FEHBP premiums “to encourage greater competition . . . and reduce costs,” and bringing federal paid leave benefits “in line with private sector norms.”

The document said that if the policies, along with other cuts to federal retirement programs proposed in the fiscal 2018 budget, are formally proposed by OMB for fiscal 2019 and enacted by Congress, they would save more than $300 billion over the next decade.

Jessica Klement, legislative director for the National Active and Retired Federal Employees Association, said the proposals outlined in the memo are “nothing new,” but that they would “disincentivize federal work.”

“Essentially what you’re doing is you’re getting attrition without having to actually pass attrition legislation,” she said. “The best and the brightest will leave public service . . . The government would go from being the employer of choice to the employer of last resort. Arbitrarily decreasing federal benefits just encourages a race to the bottom for our country.”

Donald Kettl, a professor and former dean of the University of Maryland School of Public Policy, described the policies as a “greatest hits” of conservative ideas. He said that even though many of the proposals would not apply to current feds, they could push people to leave government anyway.

“The combination of a salary freeze, an end of defined benefit retirement for new hires and reductions in bonuses would all have a very major impact on federal employees," psychologically as well as financially, he said. “Conservatives have had these items in their sights for a long time. It’s a reasonable guess that at least some senior Trump staffers mean to push those items forward—hard.”

But Kettl said the impact could be greatest felt in recruitment of new federal employees, at a time when agencies already are struggling to attract the next generation of workers.

“Many students are already turning away from the federal government,” he said. “There’s a sense that there are few jobs and that the hiring process is too hard to navigate. If there’s a sense that the Trump administration aims at cutting pay and benefits, it would make it even harder for the government to recruit new workers—at precisely the time Boomers will be retiring.”

Tony Reardon, national president of the National Treasury Employees Union, said in a statement that the union will fight these proposals if they are formally offered, as well as any others that do not adequately protect federal workers.

"NTEU has a long history of opposing these recycled policies to cut the pay and benefits of federal employees, and our position on such proposals has not changed," he said. "Federal employees are nonpartisan civil servants who want and deserve a fair wage, a secure retirement and adequate resources to carry out the work of the American people at their agencies."

Klement acknowledged that there likely will be a strong push in Congress to pursue broad civil service reform. But she said if lawmakers and the White House want to bring the government more in line with private sector employment, they should simultaneously look to increase pay.

“If you really want to bring federal compensation reforms, you’ll have to start paying federal employees a lot more money,” she said. “You have [members of the Senior Executive Service] overseeing hundreds, if not thousands of employees—they’re basically Fortune 500 executives—and yet their salary is capped at $170,000 per year. And if you want to bring pay in line with the private sector, you’ll probably have to reform the General Schedule itself.”