As agencies try to bring in new talent, a lot of current employees are making tough decisions

Guest:	John Hatton
Title:	Staff vice president at NARFE
Summary:	Budget uncertainty, pay debates, and retirement delays are shaping real decisions for federal workers right now. That’s affecting whether people stay, leave, or retire—and how stable the workforce feels day to day.

The Federal Drive with Terry Gerton provides expert insights on current events in the federal community. Read more interviews to keep up with daily news and analysis that affect the federal workforce. Reach out to Terry and the Federal Drive producers with feedback and story ideas at FederalDrive@federalnewsnetwork.com.

Terry Gerton As we sit and talk today, the DHS funding lapse is resolved, but we’re now talking about a reconciliation process that might provide multi-year appropriations for the portions of DHS that deal with the immigrations and customs and border protection. What signals are you watching at this point for 2027? Are we gonna go through this whole thing again in six months?

John Hatton Maybe, I think we’re grateful to see the regular appropriations process wrapped up for DHS and the rest of the bills after, you know, a 43-day shutdown in the fall and then a 76-day shut down of DHS that maybe was a little bit less consequential because federal employees wound up getting, many of them were paid during it and then at some point kind of in the middle, most of them, the rest of them got paid. So it was a little bit unique in that respect, but it’s still good to have that stability. People may be able to order office supplies now and get back to work. I think the budget reconciliation process looks like it’s moving forward. Anytime you talk about budget reconciliation, we worry about cuts to mandatory spending, but we’re not seeing that in the budget resolution in terms of which committees they’re directing to increase spending. One, they’re directing them to increase spending, and two, they are not directing anything to the House Oversight and Government Reform Committee, but we expect that to provide some additional funding for CBP and ICE. Where things go in the rest of the fiscal year ’27 appropriations process, I think the House Appropriations Committee is beginning its work, starting to move some bills. We’ll see how far they get through the House floor on that side, and then I would expect the Senate to work in a somewhat bipartisan fashion, again. But my best guess is we’re going to come into September and there’s not going to be many bills passed into law. And we’ll look at a continuing resolution to pass the election. And then what happens in the election will certainly determine kind of what it looks like. And then often it’s, you know, the winning party kind of sets the strategy for what goes forward.

Terry Gerton This instability has short-term and long-term impacts, right? In the short run, agencies can’t function. As you said, they can’t order office supplies, they can’t get to work. But in the longer term, there’s a residual accumulation of concern about, am I really gonna be able to hold on to this job? What is NARFE seeing in terms of retention, retirement timing, willingness to take promotions, even in this kind of environment?

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John Hatton Yeah, well, we’ve seen, you know, there was a large scale reductions in force last year and 285,000 or so people left, many of those involuntary. Now they might be described as voluntary. But if you are taking a deferred resignation program when you saw a reduction in force coming your way, or if you took a voluntary early retirement or anything like that, because you felt you might have been involuntarily separated, then I think that’s in that same rubric. But we still saw people now after December still retiring, right? There’s still claims coming into OPM. They still have a big backlog of claims, morale levels, according to outside party surveys from like Partnership for Public Service, dramatically down. And so, you know, I think it’s still too soon to say how long people are willing to hang in there, but certainly I think the calculus for federal employees has changed. It’s a less secure job prospect, particularly depending on your agency. And so do you want to kind of hunker down and put all your eggs in this basket of this job, or do you wanna find some more flexibility outside of the federal government? And I think that’s an unfortunate consequence, a lot of these policies and the speed at which they went, I think we would love to see an appropriations process become more stable. So one, you don’t have shutdowns, two, you have some more reliability, and you have some relative status quo stability. I mean, obviously, there’s changes every year, you know, between the parties between the executive branch and Congress about what the government’s doing. I think we’ve had that for a while. I mean, I think we’ve seen it inch forward with different shutdown fights over the course of the last 10 or 20 years or so. We’ve seen, Congress failed to pass budgets on time and now CRs get passed even at the end of the calendar year and all those things I think have had you know disruptions for federal agencies on the federal government over time but i think it really came to a head this last appropriations fight, you know, when there was a 43-day government shutdown and certainly some of it was over the Affordable Care Act agreements but a lot of it was really over who’s deciding what the government does. You know, the administration was asserting constitutional powers of empowerment, they’re trying to do recissions with just republicans votes in the senate. At the end of the day I think it came to a place that you know, you need, at least in this battle, you needed a bipartisan Senate to pass these bills. Because eventually that’s what happened. They needed some Democratic votes to get these bills across the finish line in the Senate. And they had a process for the full year appropriations bills that was largely bipartisan. That type of thing provides stability for federal agencies, so there’s not a huge swing based on who’s in the presidency or, you know, control of the Senate or the House. And so we hope to see that moving forward. I mean, obviously I think every new Congress is gonna come in and change priorities and they should do that based on changing circumstances and changing values of who’s elected, but having some degree of stability in this process is hopefully what we’ll see, but we don’t know yet.

Terry Gerton John Hatton is staff vice president at the National Active and Retired Federal Employees Association, NARFE. John, getting paid at all is one problem. Getting any pay raise at all is another. And the administration has not proposed a pay raise in the 2027 president’s budget. What message is that sending to this workforce that is hoping for some stability?

John Hatton Not a good one, so you’ve been asked to take on more work with less employees at these agencies pretty much across the board, and now you’re not being provided a market rate pay raise. The cost of goods are obviously going up, inflation is still at an elevated level. Obviously oil prices are high right now, gas prices are higher, so health insurance premiums have gone up, so you’re asking people to do more and pay them essentially less on an inflation-adjusted basis. So we support the Fair Act to provide market rate federal pay increases. This isn’t some massive federal pay raise. It’s just what is the private sector done in terms of average pay increases most recently? Take that number. That’s what the military pay raise is. That should be a policy that keeps those pay rates and pay tables up to speed with inflation. We’re not seeing that. The House Financial Services and General Government Appropriations Bill would be a bill that could carry a specific congressionally-appropriated pay raise. That did not include one. There was a vote on an amendment that was defeated on a partisan basis to provide a 3.6% pay raise, 3.1% across the board and 0.5% for localities. So, I think we may still see some votes on that. There’s still probably an effort in Congress to move forward to try to achieve that, whether there can be some resolution of that at the end of the day as part of the appropriations process, we’ll see. Obviously there’ll be different sides to that debate.

Terry Gerton One of the things we don’t talk about a lot with pay raises is the long-term impact. If you get a 0% pay increase in a particular year, what impact does that have for folks who are thinking about retirement where their pensions may be high three or high five dependent?

John Hatton Yeah, it’s certainly an impact because you’re not gonna have an increased high three for that retirement. And so, particularly in those retirement years where you don’t get that pay raise, the match up, that’s gonna affect the calculation of your annuity throughout the year. I mean, it may be that if you retire now that you at least get cost of living adjustments as opposed to the pay raise and the adjustments. So, getting a cost of a living adjustment which is statutorily set and not dependent on the president or Congress to authorize every year. We’ll see that annuity increase. Of course, the FERS COLA, if it’s above 2%, you’re not getting the exact match to the inflation number, but it’s still been a little bit more consistent than the federal pay raises.

Terry Gerton Well, as we talk about pensions, then what are the headlines regarding retirement processing? What is NARFE tracking?

John Hatton Well, we’re just tracking the inventories at OPM. We’re tracking what we’re hearing from our members in terms of how long they are experiencing delays. There’s still a pretty high inventory of claims sitting at OBM of about 50,000. Now it’s a slight improvement from the month before. We had heard some improvements from members where they retired essentially in July and OPM hadn’t even received their claim yet, as of February. That’s an extremely long time. They don’t get their interim pay from that. I’ve heard a few, we’re still trying to piece together the information about how quickly interim pay is actually getting done. The OPM stats say seven days. Heard a story or two about that maybe not being quite the case, but not enough to suggest that their reporting isn’t accurate on the interim pay. But that’s when they get the claim. And so there’s still a big delay at the agency and payroll processor side that we’re concerned about. And whether that’s resolved on the OPM side of things, they still have a large inventory of claims. They’re improving in terms of getting that inventory down, but it’s still going to take a while. It’s still gonna take months. I think they’re 70 or so day average now. They have some digital claims, some paper claims. Like moving faster through the digital claims, I think that shows that efforts to modernize can have an impact. So we want to see them continue to down that path. So that [they’re], you know, prepared for these situations in the future. But I think in the near term, it’s just brute force needs to get through all these claims with the amount they have. Unfortunately, that’s leading to impacts on things like, can you kind of retire? You just call into OPM and get somebody on the line. What we’re hearing from our members is that basically it’s almost impossible to do that. So you have some issue with OPM. Maybe it’s health benefits, maybe it’s a survivor annuity, or maybe it’s just finding the status of your claim and you can’t get an answer. And that’s very frustrating for our members and for federal retirees. I think that’s because OPM is just generally overworked because of the large influx of claims and they have probably less staff than they had last year because of the deferred resignation program. So, you know, not a great situation. I think hopefully they just continue to plod through and make improvements, get people the money they deserve and earned as quickly as possible.

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