CBO deficit report advises smaller fed workforce

By Jory Heckman Federal News Radio

Forcing agencies to make only one new hire for every three workers leaving and trimming the federal workforce by 10 percent is just one of the new cost- cutting suggestions from the Congressional Budget Office.

In its latest report, CBO has outlined a series of deficit reducing changes for federal employees that could save $100 billion over the next decade.

Retirement benefits for...

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By Jory Heckman
Federal News Radio

Forcing agencies to make only one new hire for every three workers leaving and trimming the federal workforce by 10 percent is just one of the new cost- cutting suggestions from the Congressional Budget Office.

In its latest report, CBO has outlined a series of deficit reducing changes for federal employees that could save $100 billion over the next decade.

Retirement benefits for federal employees are also on the table. The CBO report suggests an alternative pension benefit calculation for both civilian and military retirees.

Under the current system, a civilian retiree’s annuity is based on the average of the three highest consecutive years of earnings, while the military considers a retiree’s annuity based on the average of his or her 36 months of highest earnings.

If CBO’s proposal was implemented, civilian retirement would be based on a five- year average instead, and military retirees would have their annuities based on a 60-month highest earning average. The change, if carried out, would have a 10- year savings of $3.1 billion, according to the report.

In fiscal year 2013, the government paid $75 billion in pension benefits to civilian retirees and their survivors, and $55 billion to military retirees and their survivors.

CBO also advises that the government could save $49.4 billion in 10 years reducing the size of the federal workforce through attrition. In FY 2013, CBO estimated that the government had 2.1 million civilian employees, not counting workers at the Postal Service.

The proposal outlined in the report would reduce the size of the federal workforce by about 10 percent if select agencies could only make one new hire for every three vacancies. CBO noted that two-thirds of agencies would be exempt from the attrition, but would result in an overall reduction of more than 70,000 employees. Agencies would not be allowed to hire contractors to make up for the reduction in employees.

The biggest cost savings, however, would come from taking half a percentage point off of the annual raises mandated by the Federal Employees Comparability Act of 1990. Over 10 years, CBO projects that the government would save $53.6 billion.

Other cost-cutting advice from CBO includes reducing the annual contribution limit to the Thrift Savings Plan by 15 percent. For 2015, that would mean $5,000 per year would be the maximum contribution for IRAs and $15,500 per year for 401(k) plans.

The report also recommends changing to the chained CPI — consumer price index— in determining the cost-of-living adjustments for Social Security.

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