The White House’s fiscal 2015 budget proposal released Tuesday aims to “put a stop to short-sighted cuts to government operations” and to expand funding for federal-employee training, which has been largely gutted by across-the-board sequestration cuts in recent years.
Federal employees’ pocketbooks would also get a slight boost. For the second year in a row, the Obama administration is proposing a 1 percent pay raise for federal employees.
Notably absent from the administration’s budget blueprint are a mandate that federal employees contribute more of their income toward their retirement and a proposal to shrink retirees’ annual cost-of-living adjustments by switching to a new formula. Both of those proposals were included in last year’s budget release but were left out of the current one.
OMB Director: Feds deserve a pay raise
In a budget briefing Tuesday, Office of Management and Budget Director Sylvia Burwell said the Obama administration recognizes the past few years have been challenging for federal employees.
“There are tradeoffs that have to be made at flat (budget) levels, and we believe that our federal employees were something that deserved an increase,” she said. “The 1 percent increase is what we felt we were able to do in the context of the budget constraints.”
The budget conforms to spending constraints negotiated by Congress as part of a two-year budget deal lawmakers agreed to late last year. That framework replaced about 60 percent of the mandatory budget cuts that otherwise would have gone into effect this year and next year with alternative deficit savings.
But the administration said even those spending levels are not sufficient to carry out all of the its priorities. The budget proposes freeing up an additional $56 billion in funding — to be split evenly between Defense and nondefense — to pay for other initiatives. These include investments in federal- employee training “to help train, retain, and recruit a skilled and effective federal workforce,” according to the budget.
“High-impact areas” such as customer service and technology areas will take precedence, the budget stated.
In addition, the additional expansion of funding — which the White House is calling, the “Opportunity, Growth and Security Initiative” — would provide extra funding to customer-service heavy agencies, such as the Internal Revenue Service.
Over the last four years, the IRS has seen its budget drop by some $900 million and its workforce downsized by thousands of employees. The budget proposal, which would boost total IRS funding by more than 6 percent next fiscal year, would provide $165 million in customer-service improvements at the agency in order to decrease telephone wait times and increase the number of phone calls the agency is able to answer to about 80 percent. Currently, only about 60 percent of phone calls to the agency are answered.
National Treasury Employees Union President Colleen Kelley praised the administration’s plan.
“With the loss of 10,000 employees and training cuts of 87 percent since 2010, it will take several years for the IRS to rebuild, but this is a good first step,” she said in a statement. “Taxpayers are not getting the assistance they need and revenue is being left on the table.”
While the federal retirement program is left untouched, the administration is proposing changes to other federal benefits programs.
The budget, as it did last year, calls for a “modernization” of the Federal Employees Compensation Act (FECA) program. Currently, federal workers who are injured on the job can earn up to two-thirds of their pre-injury wage under the program and even more — 75 percent — if they have dependents. Over the last few years, the Labor Department has pushed to establish a uniform rate of compensation and to reduce that rate once workers reach full retirement age. Labor officials contend that the program, which hasn’t been substantially updated since 1974, actually creates a disincentive for employees to return to work in some circumstances.
The Obama budget would propose a series of reforms to the FECA program that aims to generate savings of $340 million over a 10-year period.
The budget blueprint is also calling for a modernization of the Federal Employees Health Benefits Program (FEHBP) to save nearly $2 billion.
The reform proposals are similar to ones included in last year’s budget request, including streamlining pharmacy-benefit contracting, expanding plan types and allowing insurers to adjust employees’ premiums based “on wellness.”
In addition, the budget calls on OPM to provide FEHBP benefits to domestic partners. Last year, the proposal also sought to open up federal health coverage to domestic partners through a “self-plus-one” insurance option.
In the bipartisan budget framework passed by Congress last year, lawmakers included a provision allowing OPM to offer self-plus-one coverage.
However, the American Federation of Government Employees, in a release, said it had “grave concerns” about the administration’s proposed FEHBP changes. The wellness-based premiums, for example, would allow agencies to “discriminate among enrollees on the basis of health conditions,” the union contends.
In general, the Obama budget has garnered a mixed reaction from federal-employee unions. AFGE National President J. David Cox called the proposed 1 percent pay raise “woefully inadequate,” but praised the administration’s promise to invest in the federal workforce.
National Federation of Federal Employees President Bill Dougan applauded the administration’s decision not to include retirement changes in this year’s budget but said federal employees remain near a “tipping point.”
“Following years of unsustainable and extreme budget measures, workers are becoming increasingly unhappy with their federal employment,” he said in a statement. “We are reaching the point where we are putting federal agencies at risk of being unable to conduct the business of the American people.”