Congress passes stopgap bill to avoid government shutdown, 22% pay cut for feds overseas

Congress passed a stopgap spending bill to avert a government shutdown and prevent overseas federal employees from seeing a 22% cut in pay.

The House and Senate approved a continuing resolution on Wednesday to extend current government funding levels through Dec. 20.

Senate Majority Leader Chuck Schumer (D-N.Y.) said congressional leaders agreed to a clean CR Tuesday night, with no “poison pill amendments” that could delay its passage.

“This is a good outcome for the country. There will be no shutdown, because finally, at the end of the day, our Republican colleagues in the House decided to work with us,” Schumer said on the Senate Wednesday.

The continuing resolution also extends Overseas Comparability Pay, a critical source of funding that narrows the basic pay disparity between federal employees based in Washington, D.C. and those serving overseas.

For the past 15 years, members of the Foreign Service serving abroad received up to two-thirds of locality pay for the Washington, D.C. metro area through OCP.

Congress, however, needed to reauthorize OCP before the start of fiscal 2025 to avoid a roughly 22% pay cut for 11,000 federal employees who spend most of their time overseas.

Beyond the State Department, employees at five other agencies receive a locality pay equivalent through OCP:  USAID, the Foreign Commercial Service, the Foreign Agricultural Service, the U.S. Agency for Global Media, and the Animal and Plant Health Inspection Service (APHIS).

Lawmakers previously kept OCP funded through the annual appropriations process, but last reauthorized the funding through the 2022 National Defense Authorization Act, with a deadline of Sept. 30, 2024, to reauthorize funding, according to a source familiar with congressional deliberations.

Lawmakers are also looking at a longer-term extension of these funds.

A “manager’s package” of amendments to the fiscal 2025 National Defense Authorization Act, introduced last week by top Senate Armed Services Committee members and approved by Senate leadership, would extend Overseas Comparability Pay through the end of fiscal 2026.

Under both bills, eligible federal employees will still receive two-thirds of locality pay for the Washington, D.C. metro area.

Tom Yazdgerdi, president of the American Foreign Service Association, said the continuing resolution provides a “collective sigh of relief” for the group’s members.

“We’re very thankful and grateful to the Congress for acting on this in a bipartisan fashion. And hopefully we can put it on a firmer footing, so this doesn’t happen again,” Yazdgerdi said.

“Our near-term concern is to make sure there is no lapse in OCP authorization and, longer-term, to make it permanent at the full D.C. locality pay amount,” he said. “Ideally, you would have a permanent authorization, where this would not have to be reauthorized every year or every two years,” Yazdgerdi said.

A lapse in OCP funding, he added, would have triggered an “unprecedented” 22% cut in pay for 11,000 Foreign Service employees across six agencies.

“Even if it was for one day, or two-and-a-half months or three months, that would have been just disastrous. We all have financial obligations. We count on our salary,” Yazdgerdi said.

AFSA is also asking that lawmakers give Foreign Service employees working overseas the full equivalent of Washington, D.C. locality pay through OCP, rather than two-thirds of that rate.

Anonymous Foreign Service officers represented by AFSA warned that a pay cut triggered by a lapse in OCP could mean unpaid mortgages and college tuition payments for their children.

“Any lapse in OCP will hurt hardworking Foreign Service officers when the world needs more diplomacy to prevent dangerous conflicts from escalating,” one employee told AFSA.

Another employee told the group that a lapse in OCP “would move us from being comfortably middle class to living paycheck-to-paycheck.”

Sens. Chris Van Hollen (D-Md.) and Dan Sullivan (R-Alaska), the co-chairmen of the Senate Foreign Service Caucus, urged congressional leaders to reauthorize OCP and avoid pay cuts for overseas federal employees in a letter last week.

“Our Foreign Service members and overseas federal employees work tirelessly to uphold U.S. values, lead our diplomatic efforts, and provide critical assistance to Americans living abroad,” Van Hollen told Federal News Network in a statement. “This fix was crucial to ensuring these dedicated public servants did not see a dramatic pay cut, and I’m glad that we’re able to get it done on a bipartisan basis.”

The continuing resolution keeps most government spending at current levels.

The bill, however, also includes $231 million in additional funds meant to bolster the Secret Service, after two assassination attempts against former President Donald Trump, as well as funding to support the upcoming presidential transition.

Senate Appropriations Committee Chairwoman Patty Murray (D-Wash.) said Tuesday that a bipartisan compromise on the CR is “something all sides can agree on, so that we can avoid a government shutdown and negotiate a full-year funding bill in a bipartisan way to tackle the many urgent issues that are left undressed.”

“We should all be very glad that we won’t have a painful shutdown,” Murray said.

President Joe Biden is expected to sign the stopgap spending bill when it reaches his desk.

The Office of Management and Budget said in a statement Tuesday that the Biden administration supports the continuing resolution, but is “deeply disappointed” it doesn’t include supplemental funding for the Department of Veterans and other agencies.

“The bill fails to include necessary funding for the Department of Veterans Affairs, creating a risk that the agency would slow hiring and reduce health care services to veterans,” OMB wrote.

The VA is asking Congress to address a $12 billion shortfall in its budget before the end of fiscal 2025. VA officials say the department is providing more health care and benefits to more veterans than expected under the toxic-exposure PACT Act.

Congress approved a $3 billion supplemental funding bill last week that would allow the VA to keep making disability compensation and pension payments on time to 7 million veterans and their survivors.

OMB said the IRS “has the resources it needs” between now and December to keep collecting taxes owed by millionaires and other wealthy individuals, but warned congressional Republicans not to push for further cuts to IRS funding in a comprehensive spending deal for fiscal 2025.

“The administration will oppose any cuts or restrictions on the IRS in final appropriations legislation which would limit the IRS’s ability to crack down on wealthy tax cheats, and increase the deficit,” OMB wrote.

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