Weekend Reading on Your Federal Benefits 2-18.jpg

(for the week of January 6th – January 12th)

You’re too busy during the week to keep up on all the news around your employee benefits and pay. My weekly summary of the most interesting and relevant news stories could help you and includes my comments and insights.

By the way, if you’ve read something about your employee benefits that you think is important or interesting, send it to me. And, let me know about news sources that you follow. Have a great weekend.

George Ray
Federal Benefits Online

In this week’s Federal benefits news, we ask why we should care that budget talks are still underway, we get schooled on locality pay and how it's determined, and hear of early legislation to provide a pay raise for 2019. And, is OPM’s Retirement Processing Center preparing for a storm of retirements? Let’s get started.

Budget Talks Underway in Congress as Funding Deadline Nears

From govmatters.com

David Hawkings, Senior Editor at CQ Roll Call, and Sarah Ferris, Budget and Appropriations Reporter at Politico, discuss the upcoming budget deadline with Francis Rose during this 6-minute video on Government Matters TV. The latest Continuing Resolution (CR) expires on January 19th. The consensus is that we still won’t have a budget deal by the 19th, and a new CR will likely extend the decision out another month to President’s Day (February 19th). And that may not be the last Continuing Resolution before a budget deal is struck. But from our perspective, here’s an important question to ask . . .

Why Do We Care That Congress Does Not Pass Appropriations Bills on Time?

From ChiefHRO.com

Does it matter that we begin a new fiscal year without an approved budget? You may say, ‘well, based on the track record from the last few years, it doesn’t appear to matter’. But it does, and Jeff Neal of ChiefHRO.com explains why in his blog post.

It might seem that when money isn’t available to spend, we would just spend less of it. Wouldn’t that mean we would actually save money? No, because the government and its agencies still need the money to provide programs and services that have been promised to the American people, and having it delayed can cost us more. Imagine not getting your paycheck on time (you don’t have to imagine too hard because it has happened in the past). You still have a mortgage, car payment, cable TV, etc. that need to be paid on time. When they’re not, the bill doesn’t go away. You have to pay it when the money comes in—along with late fees most likely. It just costs you more.

As Jeff mentions, new projects can’t be started, contracts can’t be awarded, and people can’t be hired. And then, money gets spent in a rush at the end of the year which appears to be a ‘spending binge’ but is really just the program managers finally getting access to their budget and the dollars that are available to spend. I don’t need to tell you that the process is broken. It’s evident. The bigger question is how can we come up with a fix?

Better Understand Locality Pay: How it Works and What It Means for Your Salary

From federalnewsradio.com

Nicole Ogrysko from Federal News Radio does a thorough job in this piece of clearly reminding us of the importance of locality pay and how it works. Back in 1990, the Federal Employee Pay Comparability Act (FEPCA) was designed to eliminate what was a growing pay gap between salaries of private sector and civil service salaries in 47 localities. Everyone gets the same base pay rate, but locality pay adjusts your compensation based on where you work. What’s frustrating for many Feds is that the administration doesn’t always follow the schedule of pay adjustments that FEPCA authorizes.

The Federal Salary Council, a group comprised of pay and labor experts and representatives from Federal employee unions determine the amount of the locality pay rates. Rate changes aren’t based on an index like the Consumer Price Index (CPI), but on comparative salary information for private sector and Federal employees performing similar job functions.

In her article, Nicole provides some useful examples and includes calculations to show you how locality pay is determined. If you’d prefer to listen to an 8-minute interview on the subject, Nicole also talked with Tom Temin on his Federal Drive radio show about why the Trump Administration Made Few Changes to Locality Pay in 2018. What happened?

Here are two interesting questions related to locality pay that I’ve been asked more than once during a benefits training session. “Could I transfer to an area with higher locality pay about three years before I retire to increase my ‘High-3’ average pay?” The answer is yes, assuming you could get a job at the new location. The other question that gets asked is “After I retire if I move to a location where there is lower locality pay, will my pension be adjusted downward?” The answer, of course, is no. Your pension payment is calculated based on your ‘High-3’ average pay and years of creditable service at the time you retire and does not change afterward no matter where you move. (Cost of Living Adjustments can be made to the payment, but aren’t based on your location.)

Legislation Calls for 3% Pay Raise in 2019

From fedsmith.com

This is very early to consider, and you probably shouldn’t put much weight to it currently, but Legislation has been introduced in both the House and the Senate that would give federal employees a 3% pay raise in 2019. Basic pay would increase by 2% and locality rates would increase by 1%. This is better than the news that we heard a few weeks ago when a leaked committee memo said that they the administration would be asking for a pay freeze for 2019, but a lot can happen between now and then.

OPM’s Retirement Backlog: Preparing for the Storm

From Fedsmith.com

One of the suggestions that I usually make to Federal employees who are preparing to retire is to be prepared for the time and effort that’s needed to get your pension. When you file your retirement paperwork, you’re making a claim against the Federal government to receive a check for the rest of your life (and possibly a survivor benefit for someone else). This isn’t a request that the government takes lightly so your claim must be adjudicated – is it valid? This manual process is performed by OPM’s Retirement Processing Center and can take some time.

There is typically a backlog of claims that are being processed and OPM provides statistics on how many claims are processed per month and how long the average claim takes to process (claims typically take 60 days or less). Most Feds don’t pay much attention to this information (until they’re ready to retire), but Fedsmith and other sites do publish OPM’s stats regularly.

Something interesting happened in December. The Retirement Processing Center hunkered down and doubled the number of claims that they processed in November. Why? Because they get hit with lots of claims from Feds who are retiring after the first of the new year. And, there could be some anticipation that this January could break past records as folks who are eligible to retire may have decided that they’ve had enough of the current administration, including shutdown threats, and attempts to modify pension rules and benefits. It will be interesting to see the number of new claims received, which will be published early in February.

See you next week. Thanks.

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