Buyouts and the law of unintended consequences

Mike Causey

Buyouts and the law of unintended consequences

The Senate may consider raising the value of all federal buyouts from $25,000 to $40,000, though it's unlikely to happen this year.

Mike Causey@mcauseyWFED

October 4, 2017 1:00 am

3 min read

Are you one of hundreds of thousands of federal workers who could retire tomorrow if you wanted to?

What if Uncle Sam made you a once-in-a-lifetime cash offer you couldn’t refuse? And what if that payment, now $25,000, was bumped up by $15,000?

Does the possibility of a $40,000 buyout — however remote — tempt you to hang on to see what happens?

The good news is that the Senate may (as in MAY, MAYBE, MIGHT) consider and pass legislation that would raise the maximum for all government buyouts to $40,000. Currently, only the Defense Department can offer feds that much money to take regular or early retirement. Other agencies are limited to $25,000, which, after all those deductions, doesn’t have the buying power it did in the 1990s.

The enriched $40,000 buyout for all agencies has been proposed by Sen. James Lankford (R-Okla.). He’s a Republican, which helps the odds in the Senate. Also, he’s from a state that is chock-full of federal workers and facilities. That’s a plus. But it’s no guarantee anything will happen this year. Or next for that matter.

The fact that Congress approved the higher amount for Defense buyouts probably wasn’t lost on retirement-eligible workers in other agencies — the departments of Interior, Agriculture, State and the EPA — that are going to downsize. Buyouts are less expensive and messy than reduction-in-force actions, which typically bypass older, long-time employees with veterans preference protection. RIFs generally operate under the last-hired-first-fired rule. That usually means that new hires, many of them college graduates with IT experience, are the first to go.

For feds who are years away from retirement, and for people who have only been civil servants for a couple of years, the not-so-good news is that just the whiff of a much higher buyout payment might be enough to convince retirement-eligible employees to hang on (and on) until the buyout pot gets a little sweeter. And that could be another year, or two. Or more. Will just the possibility of a $40,000 buyout — no matter how remote — persuade thousands of retirement-age workers to stick around until they could get more? And if they don’t leave and your agency downsizes, are you a RIF candidate?

So what’s the legislative outlook for the few remaining working days of Congress? Will it OK major changes in the retirement program? If so, will it be the high-three to high-five plan? Or higher contributions for FERS workers? Will Congress decide to put CSRS retirees on diet COLAs in the future and eliminate inflation adjustments for FERS retirees?

Our guest on today’s Your Turn radio show is Greg Stanford. He’s legislative director of the Federal Managers Association. FMA , like other groups representing feds, postal workers, supervisors, managers and executives, tracks what is going on on Capitol Hill. And what’s coming out of the White House. This year, with the exception of possibly higher buyouts for all, there isn’t much news to report for feds. Greg will bring us up to speed on what, if anything, is likely to happen. Listen live at 10 a.m. EDT on FederalNewsRadio.com or 1500 AM in the Washington area. Also, all the Your Turn shows are archived here, and you can listen anytime.