Budget Deal Includes No Changes to Federal Employee Compensation

When Senate negotiators announced Wednesday that they had arrived at a far-reaching two-year deal increasing top-line spending levels by more than $300 billion, delaying a shutdown deadline by six weeks and suspending the debt limit for a year, one question remained at the front of the minds of groups representing federal employees: What about the offsets?

In past years, deals to increase spending limits have included cuts to federal employee benefits to help reduce the overall boost. But late Wednesday night lawmakers posted the text of the Bipartisan Budget Act of 2018, and while there are some measures to reduce spending in targeted ways, none of them are related to federal workers’ compensation or benefits.

Congress must approve the measure by midnight Thursday to avert a government shutdown. Without a deal on increasing spending caps as laid out in the 2011 Budget Control Act, agencies would have undergone sequestration beginning in late January. But in the last two short-term continuing resolutions, lawmakers temporarily suspended the existing caps from taking effect.

The deal would increase non-defense spending caps by $131 billion over fiscal years 2018 and 2019, and defense spending would jump by around $165 billion. The Senate was slated to vote on the measure Thursday afternoon, after which it would be sent to the House for consideration. On Thursday morning, House Speaker Paul Ryan said he believed he had the votes to pass the measure.

Federal employee groups praised the news that lawmakers had reached a long-term spending agreement, after four short-term CRs this fiscal year and a three-day government shutdown last month.

“The bipartisan budget deal announced by Senate leadership ensures the government stays open for business and keeps federal employees working on behalf of the American people,” said J. David Cox, national president of the American Federation of Government Employees. “The budget would provide long-overdue increases for both our military and non-defense agencies. Most federal agencies have been limping by on borrowed time for far too long due to harmful sequestration cuts. This budget will give agencies much-needed resources to invest in the programs and services that the public expects and deserves.”

But past budget deals, while providing certainty for agency funding and priorities, have often targeted federal employees in efforts to offset spending increases at the behest of congressional budget hawks. In 2014, a two-year budget deal required feds to contribute as much as 3.6 percent more toward their defined-benefit pensions, depending on when they joined the federal workforce.

This year, that appears not to be the case. Although the deal includes some offsets, they mostly are related to a variety of user and service fees, as well as to a drawdown of the nation’s strategic petroleum reserve.

That news drew quick praise from the National Active and Retired Federal Employees Association.

“After federal employees contributed more than $120 billion in lost pay and benefits over the last several years, NARFE members have been diligent in sounding the drumbeat that federal employees’ and retirees’ earned benefits are not a piggy bank,” said NARFE President Richard Thissen. “Congress heeded their call, and no cuts to federal pay and benefits are included in the budget deal.”

But the victory might be short-lived. The Trump administration is slated to announce its fiscal 2019 budget proposal Monday, and it is expected to include a pay freeze for all civilian feds next year, as well as a number of cuts to employees’ retirement programs. Last year, the White House unsuccessfully proposed changing the formula for determining pension annuities from being based on an employee’s top three years of salary to the top five years; significantly increasing employee contributions to the Federal Employees Retirement System, and eliminating the FERS supplement for feds who retire before Social Security kicks in at age 62, among other measures.

Longtime budget expert Stan Collender, who is now vice president of the MSLGROUP, questioned the timing of a budget likely to propose significant spending cuts so soon after reaching a deal increasing spending.

“There’s no way the fiscal 2019 budget that’s due to be released this Monday will be relevant [or] accurate in any way if the budget deal is adopted,” he said in an email. “The White House should postpone the release of its budget this Monday and announce that it is revising its proposal in light of the deal. If the White House moves forward with its original budget on Monday, it should be dismissed as a political anachronism and a waste of taxpayer dollars.”