Saying the word “buyout” to a long-time federal worker is the equivalent of saying “cold beer” to a NASCAR fan or “tally-ho” to a foxhunter or fighter pilot: It gets their attention!

The U.S. Postal Service last week confirmed that it will be offering early-retirement and buyouts ($20,000 maximum spread over 2 years) to about 4,000 workers. It is part of a major downsizing plan first reported by the Federal Times on our March 8 Your Turn with Mike Causey radio show.

Federal News Radio has learned that half a dozen other federal agencies, including the Federal Trade Commission, are looking at buyouts as a way to downsize without being forced to resort to layoffs. For the past two years, Congress has failed to approve agency budgets on time. This has led to government by CR (continuing resolution) which allows agencies to keep going while Congress and the White House play legislative chicken which could lead to a shutdown and/or furloughs. Congress approved the latest CR (for three weeks) just before embarking on a 10-day spring break.

In the case of the FTC, retirement age employees say they’ve been contacted to see if they would take a buyout if offered. Under the buyout plan formulated during the Clinton administration, workers can be paid up to $25,000 if they take regular or early retirement.

For months, rumors have circulated that various federal agencies are planning to offer $25,000 buyouts to induce employees to take regular or early retirement. Under an early-out, VERA in government lingo, workers can leave on immediate annuity (and continue health insurance coverage for life) if they are at least age 50 with 20 years of service, or at any age if they have 25 years of federal (or federal and military) service. In some cases that would be as young as 43 years. CSRS employees who have their annuities reduced 2 percent for each year they are under age 55, but that is still better than most private sector early-outs where pensions can be reduced as much as 5 percent for each year under age 65.

The buyout program was launched during the Clinton administration as part of his effort to downsize the government without resorting to wide-spread layoffs. They were originally aimed at relatively low-paid Defense Department workers and were then expanded by Congress to other agencies. More than 100,000 employees took buyouts, and that, along with expanded contracting out and limited layoffs, reduced federal employment by 270,000 jobs.

The value of the buyout ($25,000 gross, and $16,000 to $18,000 net after deductions) was considered a sufficient lure in the mid-1990s for its target audience: Long-time, relatively low wage military veterans in the Defense Department. Under government layoff rules, employees with the most time in government and veterans preference are generally protected from reductions-in-force, or RIFs.

A former top personnel official said “buyouts are essential if you want to get people to take early retirement. A VERA offer without a buyout is like fishing without bait…you get no takers.” He said he expects a number of federal agencies to test the buyout waters and make decisions relatively soon. He suggested that “anybody of retirement age should at least run the numbers and see if it is worth it. Nobody should retire simply on account of the buyout,” he said. “When you think about it, if you desperately need the money and you will quit a steady job for a one-time $18,000 payoff…you probably should not be retiring anyhow.”

To reach me: mcausey@federalnewsradio.com

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