Highlights of President’s Budget Request for Fiscal Year 2018

Pension squeezeThe President’s proposed budget to Congress for Fiscal Year (FY) 2018 has been officially released. As a reminder, an administration’s budget request, serves as a spending blueprint and guide to Congress, and additional legislation is needed to enact any of the substance carried in subsequent congressional budgets. This proposed budget relies on overhauling an existing deficit reduction law, enacted in 2011, that established overall budget caps for both defense and nondefense discretionary spending. Non-defense discretionary spending, which is already at historic lows, would be further squeezed, while military and other defense spending would soar.

Federal employees and retirees would bear the brunt of the President’s proposed savings under the budget through substantial reductions to the existing retirement programs (CSRS and FERS), as well as through in most cases leaner agency budgets, which could impact jobs. The proposed retirement cuts would impact both current federal employees and federal retirees. The specific proposals are:

  • Significantly increasing Federal Employee Retirement System (FERS) employee contributions by about 1 percentage point each year until they equal the agency contribution rate. It would take approximately six years to fully reach the new employee contribution rate of about 7 percent, translating into a massive pay cut (most FERS employees currently contribute 0.8% of salary towards their future FERS pension, with the agency contributing 13.7%).
  • Base future retirement benefits on the average of the high five years of salary instead of the current high three.
  • Eliminate the FERS supplement which approximates the value of Social Security benefits for those who retire before age 62. This proposal would apply to all future retirees, including those individuals subject to mandatory retirement.
  • Eliminate the annual cost-of-living adjustments (COLA) for the pensions of current FERS retirees and future FERS retirees.
  • Reduce the COLA for the pensions of current Civil Service Retirement System (CSRS) retirees, and future CSRS retirees, by about 0.5 percent annually from what the current formula would provide.

Agency ShutdownThe administration’s budget also includes a renewed call for reducing the number of federal employees, and highlights the ongoing work, under the Executive Order to Reorganize the Executive Branch, of agencies to align their workforces based on increased efficiencies, outsourcing, and elimination of functions. The administration is calling for an end to the current moratorium on contracting-out (allowing A-76 competitions at agencies), which has been kept in place in recent years through the appropriations process. Language is also included in the budget that discusses the need for federal managers to better manage frontline employees, and cites the administration’s direction to agencies to craft as part of their formal Agency Reform plans how agencies plan to reward high performers and discipline poor performers. Further, the administration outlines their review of current employee due process rights, particularly in the area of removals by discussing the “administratively burdensome agency activities and processes, including barriers to efficient human capital management that exist in policy, legislation, and regulation… There is a commitment to advocating for policies to help agencies manage their workforce.”

The President’s budget calls for the immediate elimination of the Public Service Loan Forgiveness Program, under the Department of Education, that has aided many federal employees in recent years to be able to afford higher education while choosing a career with a federal agency.

One potential positive area in the budget is the establishment of a six-week paid parental leave program, which NTEU has confirmed with the Office of Management and Budget, would include federal employees. Additional details are needed on how the financing would work between agencies and states.

It is anticipated that House and Senate congressional leadership will not ultimately enact many of the proposed agency spending cuts contained in the President’s budget request, and will instead begin to move their own proposals over the next few weeks which could retain anti-federal employee initiatives, including the serious changes to retirement.

I will keep you updated on these developments, including sharing FDA-specific funding information in the next few days.

In the meantime, please visit the NTEU Legislative Action Center to see what you can do.