Good news, not-so-good news on the possibility of a $40,000 federal buyout offer to retirement-age feds.

The Senate this week is expected to vote on a Defense-related package that includes buyouts for DoD civilians that could be worth up to $40,000. The current maximum buyout (voluntary incentive separation payment) is the $25,000 buyout first OK’d for Army, Navy, Air Force and Marine Corps civilians back in 1993. Although originally authorized for Defense civilians only, buyouts were later extended to a dozen other agencies. Most went to employees who were already eligible to retire, or who were also offered early retirement (voluntary early retirement authority) along with the buyout.

If approved, the new $40,000 maximum buyout would be subject to deductions for federal and state taxes, Social Security and the like. When Defense first proposed upgrading the buyouts, it said that inflation had eaten into the $25,000 model and that it would take a payment of $47,000 to reflect the increase in inflation since 1993. The enhanced buyout was in the defense authorization proposal sent to Congress by the Pentagon. The House Armed Services Committee did not include it in the bill it approved. But the $40,000 is in the bill OK’d by the Senate Armed Services Committee that will be voted on shortly by the Senate. That’s the good news!

The not-necessarily-bad-news is that for now this is strictly a Defense Department drill. So far.

The committee said buyouts were a much better way to downsize. “Buyouts provide a less expensive, more humane, and more manageable way to efficiently reduce and restructure the workforce.”

Translation: A buyout of this size will encourage long-time employees (many of them with veterans preference protection) to retire, avoiding a reduction-in-force that would hit younger employees and non-veterans because of the last-hired-first-fired rule. Defense told Congress it would probably offer about 6,000 buyouts each year over the next five years and that two of every three would go to Army civilians.

But things can change. If the Defense-only buyouts are approved, it is only a matter of time — probably early next year — before they are extended to other federal agencies. The original 1993 buyouts were Defense only. But the Clinton administration wanted to downsize other government agencies but didn’t want to risk the “diversity gains” that been made in hiring women, minorities and right-out-of-college workers. So it set the dollar amount just high enough ($25,000) in the 1990s and originally targeted the buyouts at older, blue-collar workers (mostly long-service males and or military veterans) in shipyards and military depots and Army and Air Force bases. Buyout authority was later extended to other non-defense agencies.

Buyouts are most cost-effective to the government if offered the first three months of the fiscal year, which begins Oct. 1.

An unofficial survey by Federal News Radio indicates that a high percentage of retirement-age workers would leave if the buyout amount is raised to $40,000.

Nearly Useless Factoid

By Michael O’Connell

The phrase “money-grubbing” dates back to the early 19th century, with the verb “grub” meaning “to dig or search”.

Source: Grammarist

Copyright © 2024 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.