House-passed reconciliation bill includes more changes to proposed federal benefits cuts
House lawmakers narrowly passed the GOP’s budget reconciliation bill early Thursday morning in a vote of 215-214, after making one last revision to a series of proposals cutting federal benefits and civil service protections.
Four of the six provisions on federal benefits cuts that originated from Republicans on the House Oversight and Government Reform Committee remain in the House-passed version of the bill, which now heads to the Senate for consideration. But notably, the proposed change to a “high-5” annuity calculation is no longer on the table. The provision was struck from the reconciliation legislation prior to the House’s passage of the bill.
Oversight committee Democrats, as well as Rep. Mike Turner (R-Ohio), led efforts to remove the “high-5” proposal from the reconciliation bill. Rep. Stephen Lynch (D-Mass.) proposed an amendment to strike the “high-5” provision, which was ultimately adopted.
The provision would have lowered retirement payments for many federal employees in the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS) by calculating annuities based on the average of an employee’s highest five consecutive years of salary, rather than the current calculation based on highest three consecutive years of earnings.
Lynch earlier this week called the now-removed provision on a “high-5” annuity calculation “an outright theft of earned benefits that would cost federal retirees thousands of dollars annually.”
A separate provision on increasing the FERS contribution rate to 4.4% across the board was already struck from the legislation earlier this week. All federal employees will maintain their current FERS contribution rates, according to the House-passed version of the legislation.
But there are several provisions on federal benefits Republicans voted to keep in the GOP reconciliation bill. For one, the bill still contains a proposal to eliminate the FERS annuity supplement. Currently, FERS retirees receive an annuity supplement if they retire before they become eligible for Social Security at age 62.
As currently written, the elimination of the FERS annuity supplement would take effect Jan. 1, 2028. The provision was also amended earlier this week to exempt any feds subject to a mandatory early retirement, such as law enforcement officers and air traffic controllers.
According to the language of the bill, the elimination would not impact any federal employee “entitled” to the supplement prior to 2028. But William Shackelford, president of the National Active and Retired Federal Employees Association (NARFE), expressed concerns that many feds may still be affected by the supplement’s elimination.
“This bill would claw back part of the value of vested retirement benefits via the elimination of the FERS annuity supplement,” Shackelford said Thursday. “Worse, the bill may retroactively reduce the retirement benefits of individuals taking a voluntary early retirement offer as part of ongoing reduction in force actions.”
Another provision that remains in the House’s final version of the bill would require all newly hired federal employees to choose between keeping a 4.4% FERS contribution rate but becoming an “at-will” employee — or keeping their civil service job protections but taking on a 9.4% FERS contribution rate. Current federal employees would not be impacted by the proposal.
A third provision to charge both current and former federal employees, as well as federal job applicants, a $ 350 fee to file an appeal with Merit Systems Protection Board is also still contained in the reconciliation bill. As currently written, feds who win their appeals would be refunded the fee.
One other provision on federal benefits would require an audit of enrollees in the Federal Employees Health Benefits (FEHB) program to ensure they are eligible to receive health insurance through the program. Unlike the other federal benefits proposals in the GOP bill, that provision has not garnered much pushback from federal unions or employee groups.
After the revisions made this week, the federal benefits proposals would account for about $ 16 billion in savings over 10 years, according to estimates from an Oversight committee document.
The American Federation of Government Employees staunchly opposed the federal benefits cuts that remain in the GOP reconciliation bill.
“The bill’s FERS provisions will compromise the civil service and drive out experienced and dedicated federal workers who deliver vital services to your constituents, while contributing almost nothing to reducing the bill’s cost,” AFGE National President Everett Kelley said Thursday.
The House-passed GOP reconciliation bill now heads to the Senate, where it will face further negotiations. Republican senators are aiming for a July 4 deadline to reach an agreement on a final version of the bill and pass it. In the meantime, groups including AFGE and NARFE are urging senators to strike the remaining provisions on federal benefits.
“This isn’t the final product,” Shackelford said. “NARFE will keep fighting until all of this bill’s onerous provisions directed at federal employees and retirees are removed.”
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