Here’s a civil service reform bill you’ll want to pay attention to

A bill from Sen. Rick Scott (R-Fla.) would make federal executive branch employees “at-will.” You could be fired for any reason, short of a prohibited personnel practice. For one interpretation of what the bill could mean,  Federal Drive with Tom Temin spoke to John Hatton of NARFE: the National Active and Retired Federal Employees Association.

Interview Transcript:

Tom Temin And this bill has got a few co-sponsors, I think, already also in the House. And what’s your read on what it would actually do here?

John Hatton Well, I think you explained it pretty simply in terms of making everybody at-will. That means people can be fired or hired for political purposes. This is schedule F on steroids. It would abolish the Merit System Protection Board. So you would have no administrative right to appeal an adverse action. There would still be potential remedies to go to court in very limited circumstances similar to what may be available in the private sector. But this really eviscerates the merit based civil service entirely. And it doesn’t really hide the fact that it’s trying to do that.

Tom Temin So everybody is schedule F, in other words.

John Hatton Yeah, basically. And schedule have even envisioned perhaps agencies setting forth some rules. This doesn’t envision that. So there’s even a provision that if you have a bad faith whistleblower claim because you can still have some whistleblower protections, that you lose a portion of your pension. So it really discourages even those claims. And maybe if it’s bad faith, sure, you should have some penalty. But if you’re looking at a claim that may be a good faith and you’re worried about being called bad faith, then you’re going to have a financial penalty for making it, then that’s a problem, too. So.

Tom Temin Well, I guess, you know, one of the questions is who can decide whether someone comes or goes? Because if you have politicians deciding that at the level of GS 14, 13, 12, whatever, even senior executive service, then you’ve got spoils system back as opposed to maybe just not a very good civil service system, but it’s still a civil service system.

John Hatton Right, exactly. And, you know, right now there’s a limited amount of political appointees via schedule C, It’s about, I think, 4000 or so that come in with each administration that are political. The logistics of hiring 2 million people very quickly based on political affiliation might be difficult, but I think over time you would see people getting fired and hired and entirely new rolls of people coming in based on are they supporting the president that’s coming into power or not. And I think that’s the most extreme danger of this. And even if it doesn’t reach all 2 million employees, if it reaches 100,000 or 200,000, you still have a lot of worry about how the service is operating, whether it’s operating based on the rule of law or not, or based on the whoever is in charge.

Tom Temin Right. If you look at some of the language at, you know, Rick Scott’s Senate site, you know, it says it’s clear that the bureaucracy of the federal government is both a waste of taxpayer dollars and inefficient. I guess that’s until FEMA shows up in your disaster site and suddenly you’re glad they’re there. But yeah, that’s kind of a broad statement. I mean, yes, there are inefficiencies in the government and there are sclerotic issues with the bureaucracy, but the seems to blame it on the people that are in the same system that didn’t create that system.

John Hatton Right. Obviously, any large bureaucracy is going to have some inefficiencies and complexities. And it’s certainly reasonable and legitimate to take a look at how do you make the government operate better, more efficient, making sure that people are really hired and fired based on merit. But that’s, you know, within the merit system of saying like we should have a government that if we’re hiring somebody to be a nuclear scientist, that they should have the skills to be a nuclear scientist and not be hiring somebody who’s maybe has, you know, limited skills in nuclear science because they are supportive of whoever is the president in power. So that’s a very extreme example when it comes to science. But you can think of, you know, legal examples or just other professional jobs within the federal government, that you want somebody who knows what they’re doing and you want there to be some institutional knowledge carried over from one administration to the next. And you want some protections on nepotism or on political favoritism in the hiring and firing of people. So it’s a demagogic bill, in my opinion. It’s worse that it’s done in the middle of public service recognition week and being called the Public Service Reform Act. So a lot of issues with this bill, in my opinion.

Tom Temin Yeah. We’re speaking with John Hatton, vice president for policy and programs at the National Active and Retired Federal Employees Association. And what do NARFE members what does the NARFE body politic think would be constructive ways to reform the civil service?

John Hatton Well, certain things that NARFE as an organization has supported have been reforms to federal hiring practices. Right? So right now, it takes a really long time to hire people into the federal government. Could you reform that system so we’re not using these self-assessment questionnaires so somebody gets qualified into being in the role but is not really qualified for the role because they said they were, but they’re really not. So that’s the for example, the Chance to Compete Act. The administration has been moving towards using subject matter experts in hiring processes as well. You could look at some more modest reforms to, bring retirees back into the workforce by having dual compensation waivers. So your pay is an offset by your annuity when you know with certain safeguards so that people aren’t, planning to retire one day and go right to work the next day.

Tom Temin Yeah, double-dipping.

Right. But, you know, when an agency really needs the extra help, you know, for example, the IRS may need extra help hiring a lot of people. And that’s a specific skill set that’s very unique to the IRS. And so how do you get the numbers of people that they need with those skills? You need to improve your hiring processes so it’s more efficient. You need to be able to improve trainings, You need to be able to potentially hire back retirees. So there’s a lot of I think there’s a lot of complexities in the way the civil service operates right now where there’s a lot of room for growth in that system and modernization of that system without, throwing it out the door.

Tom Temin Plus, there’s also the idea of better training people that are designated as management, as career management, not just SCS, but even managers below that 15, 14, even some 13s have supervisory. And then if someone is a bad performer, then there are good procedures for getting rid of the people that need to go without that bureaucratic process that you often hear used to describe trying to remove the people that aren’t up to par.

John Hatton I think it’s a little bit of a myth that you cannot fire federal employees. There may be procedures you have to go through, but there certainly I’ve heard plenty of accounts of people firing federal employees. And so part of that, though, in cases where people aren’t taking disciplinary action, where they should, maybe it is a matter of training and a matter of knowing what the procedures are and knowing what you can do and having a performance management system in place that generally incentivizes managers to deal with poor performers rather than to accept them and going through it. So therefore, you know, you have an incentive to deal with that rather than the disincentive going through a more arduous process.

Tom Temin That bill probably doesn’t have a lot of chance of being enacted. It’s a close Congress and it probably won’t make anywhere in the House, and the president would veto it in any case. And while we have you, let’s talk about the debt limit, though, that could be reached. It’s kind of getting a little bit hot under the collar, around a lot of corners with respect to that. And what would that mean, do you think, for even if it’s a week of default or something for Feds and retirees?

John Hatton Well, if the government doesn’t have the authority to issue new debt to then pay financial obligations when bills come to like federal paychecks or like federal annuities, that means the federal employee or the federal annuitant won’t get that money. And so you know that the exact date that  will happen, if it’s default the first of the month and that’s when checks are supposed to go out, well, that’ll delay those checks until they’re able to pay them, but it may not happen until the next month. So immediately it’s unclear based on the timing that when the default X date is and the timing of payments. And then more broadly, then, how is it affecting directly federal employees and retirees, I think are the economic impacts, the impacts on interest rates. There are certainly plenty of economists with more expertise in economics that will give you numbers on the hits, the GDP and the interest costs for the government and things like that. But I think it’s certainly a situation that we should want to avoid in terms of disruptions of payments to the government and having that full faith and credit upheld.

Tom Temin Sure, pretty much everyone would be in the same suffering boat, whether you’re a retiree from the federal government or just on Social Security.

John Hatton Right. Social Security benefits could be affected as well. Medicare payments to providers that could affect your services. So there’s a whole host of consequences that occur here. And I think right now there’s “negotiations” happening between the president and Congress. Really, MCarthy. It looks like they’re still pretty far apart and it’s getting closer to a deadline without an understanding of how they get past it. And so even if both sides say, oh, they don’t want default, can you pass a clean debt limit extension through Congress or not? Like, how do you get that on the floor of the House or through the Senate? And so it’s getting more worrisome. And so we sent a letter or our national president sent a letter to Congress asking them to kind of avoid default here, because it is an extremely important issue. And, you know, we don’t have a specific negotiated solution that we’re pressing, but you shouldn’t hold it hostage for your own priorities.

Tom Temin And tell us about something totally unrelated. People can buy something now we hope they never need, and that is long term care insurance program from John Hancock.

John Hatton Yeah. So the federal long term care insurance program started in 2002 when the first policies were issued. And since then it is a very valuable insurance product. Long term care costs are extremely high. A lot of federal retirees specifically may not be able to qualify eventually for Medicaid if they had some other policy, which is really the catastrophic coverage, because you continue to have income, you’re not to be able to draw down your assets. So you need to figure out some way to plan for those costs in case you have them, because they could be very high. I’ve heard costs as high as $15,000 a month for care coverage in a facility. So even if you want to plan and you’d rather not do that, you still need to plan for the worst. So a lot of federal retirees and federal employees plan responsibly by enrolling in this program to provide them insurance in the future. They thought they were signing up for a contract that was for their life, that the premiums were quoted as supposedly staying stable. But every time OPM has renewed a contract with John Hancock to insure the program, they have forced these premium increases onto enrollees. So they were as high as 25% in 2009, as high as 126%, and I believe 83% on average in 2016. And now the contract just got renewed May 1st of this year. New premiums will be effective January 24, and the amounts and different options for people will be available in September of 23. OPM has not provided information on the average or range of increases, which tells me it could be very high.

Tom Temin Right. This thing has been getting more expensive and more limited over the years and almost no carriers deal in it anymore. Correct?

John Hatton Correct. There’s a lot of the carriers in in the private sector, the non-group coverage market. So this is a specifically a group plan just for federal employees and retirees. You could go to the private sector and there’s much more limited coverage for this type of insurance where it’s just straight long term care insurance, because a lot of other programs have had a similar situation where premiums had to go up. They’ve had to go to their state insurance commissioners to get those premium increases approved. Here, it’s going to OPM. I think one of the differences in the federal program and some of these private market programs is that the insurer has basically taken on very little risk because they get a guaranteed percentage of profit from the program. And this was detailed in the report that OPM had commissioned in connection with this premium increase. And so the insurer here has not really been on the hook for any of the mistakes in their actuarial assumptions, and they’re all being felt by the enrollees. And so that’s the biggest difference between this program and the private sector programs. Even if there have been similar premium increases and the private sector has moved to maybe these hybrid long term care life insurance models where you have like a long term care insurance rider on a whole life insurance. So you could at least draw down from that first. And so there’s been different products available than this current product is being done, right?

Tom Temin So think about it carefully. If you decide to invest in it and you know, look at your life and what you expect.

John Hatton Yeah. And well, I think right now enrollments in this program have been suspended. So they’re not even issuing new policies. So it’s just the people, there’s about 270,000 people that are enrolled in this program that are just continue to face these premium increases every seven years. And so it’s a difficult situation because you’re taking that choice away from the enrollees about what to do with their money and how to plan, because they were quoted, let’s say, $200 a month and now it’s going up to $800 a month. So, you know, as as a potential example.

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