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OMB Bulletin No. 97-02

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|T H E   W H I T E   H O U S E                                          | OMB Bulletin No. 97-02        | Help

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|October 24, 1996 
OMB BULLETIN NO. 97-02 
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIESSUBJECT:  Voluntary Separation Incentives for Employees of 
          Certain Federal Agencies1.   Purpose and Overview.  Section 663 of the Treasury, Postal 
Service, and General Government Appropriations Act, 1997 (Public 
Law 104-208; September 30, 1996) (the Act) authorizes most 
Executive branch agencies to provide voluntary separation 
incentives (buyouts) to minimize the need for involuntary 
separations that might otherwise be required for downsizing and 
restructuring the agencies.  The Act requires each agency that 
uses buyouts to reduce its full-time equivalent employment (FTE) 
by one for each buyout separation.Buyouts under the Act are authorized for separations by 
retirement or resignation that occur on or after October 1, 1996 
and before December 31, 1997.  No delayed separations are 
permitted.  The buyout payment is the lesser of the amount based 
on an employee's severance pay calculation or an amount to be 
determined by the agency head that cannot exceed $25,000.  In 
addition, agencies will pay into the retirement fund 15% of the 
final basic pay of any employee who receives a buyout and is 
covered by the Civil Service Retirement System (CSRS) or Federal 
Employees' Retirement System (FERS).  Should a buyout recipient 
be reemployed, including employment under a personal services 
contract, in the Government within 5 years of separation, the 
entire buyout payment must be repaid before their first day of 
employment.  There is no authority for waivers of repayment in 
the Act.2.   Coverage.  Generally, all Executive agencies not otherwise 
authorized in the Act or other legislation to conduct buyouts at 
any time during Fiscal Year 1997 are covered by the Section 663 
authority and the guidance in this OMB Bulletin.  Excluded 
agencies with buyout authority under other legislation will 
receive separate guidance from OMB, if required.3.   Attachment A provides guidance on agency implementation of 
the Act's buyout program, including:--   definitions for key terms and provisions in the Act; 
--   required agency plan for use of buyout authority 
          (referred to in the Act as "Agency Strategic Plan");--   required reduction in agency employment levels; and--   reporting requirements. 
4.   Attachment B is a copy of Section 663 from the Act.5.   The content of this OMB Bulletin does not cancel or 
otherwise amend OMB guidance on Section 5 of the Federal 
Workforce Restructuring Act of 1994 (FWRA) (Public Law 103-226; 
March 30, 1994) contained in OMB Bulletin 94-04, dated April 18, 
1994.6.   Contact.  Questions regarding this Bulletin should be 
directed to the agency's OMB representative with primary 
responsibility for the account or program.  The Office of 
Personnel Management will provide further human resources 
management guidance and assistance to agencies, as well as 
instructions on payments to the retirement fund and on reporting 
requirements.Franklin D. Raines 
                              DirectorAttachments[Note: Attachment B, Section 663 of the Treasury-Postal 
Appropriations Act of 1997 is not included in this file.]Attachment A 
 
OMB Bulletin No. 97-02 
Guidance 
         Voluntary Separation Incentives for Employees 
                  of Certain Federal Agencies 
    Section 663 of the Treasury, Postal Service, and General 
              Government Appropriations Act, 1997 
       (Public Law 104-208; September 30, 1996)(the Act) 
 
1.  Definitions. 
a.   Employee - An employee (as defined in section 2105 of 
title 5, U.S.C.) under the Act must have been continuously 
employed for at least 3 years in order to be potentially eligible 
for a buyout.  This is unlike the buyout authority in the Federal 
Workforce Restructuring Act (FWRA) which required only a minimum 
of 12 months of current continuous employment.  Further, the Act 
disallows buyout payments to the following categories of 
employees, including some not excluded in FWRA:--   an employee who, during the previous 24 months, 
          received a recruiting or relocation bonus, or within 12 
          months of the separation date received a retention 
          allowance; 
--   an employee completing an additional period of service 
          (not to exceed March 31, 1997) to satisfy the 
          requirements for a deferred buyout payment under FWRA;--   an employee in receipt of a specific notice of 
          involuntary separation for misconduct or unacceptable 
          performance;--   an employee who previously received any buyout payment 
          by the Federal Government and has not repaid such 
          payment;--   a reemployed annuitant;--   an employee who is or would be eligible for disability 
          retirement; and--   an employee with statutory reemployment rights on 
          transfer to another organization.b.   Agency - The Act specifically excludes from the term 
"agency" (defined as Executive agency in section 105 of title 5, 
U.S.C.) any agency that is authorized by any other provision of 
the Act or any other Act (except the Department of Transportation 
Appropriations Act, 1997) to provide voluntary separation 
incentive payments during all, or any part of, Fiscal Year 1997. 
Therefore, the agencies excluded from offering buyouts under 
the Act are the Departments of Agriculture and Defense, Central 
Intelligence Agency, Smithsonian Institution, Agency for 
International Development, the National Aeronautics and Space 
Administration, the Railroad Retirement Board (RRB) and the 
Office of the Inspector General of the RRB.  These agencies' 
buyout programs are governed by other legislation. Separate 
guidance will be issued by OMB to excluded agencies, if required.c.   Strategic Plan - Before an agency may obligate any 
resources for buyouts, the Act requires the agency to submit its 
buyout plan to the House and Senate Committees on Appropriations 
and the Committee on Governmental Affairs of the Senate and the 
Committee on Government Reform and Oversight of the House of 
Representatives.  The Act requires that the plan outline the 
intended use of the buyouts and include a proposed organizational 
chart for the agency once the buyout separations have been 
completed.  The plan must identify:--   the positions and functions to be reduced or 
          eliminated, identified by organizational unit, 
          geographic location, occupational category, and grade 
          level; 
--   the number and amounts of voluntary separation 
          incentive payments to be offered; and--   a description of how the agency will operate without 
          the eliminated positions and functions.The Act's use of the term "strategic plan" is not a 
reference to strategic plans under the Government Performance and 
Results Act (GPRA).  However, agency buyout plans are expected to 
support the objectives of the agency's strategic plan.2.   OMB Review of Agency Plans for Use of Buyouts.Agencies that intend to use the buyout authority shall 
submit to their OMB representative a draft of the plan or plans 
for buyout use prior to it being submitted to the Congress.  In 
addition to the above cited content requirements, the information 
submitted should include:--   the timing of buyout offers and scheduled separation 
          dates; 
--   where appropriate, the maximum dollar amount of buyout 
          payments if determined by the agency head to be less 
          than $25,000; and--   an estimate of the savings to be achieved in the fiscal 
          year(s) following the planned buyout separations.The agency's plan or plans may be submitted at any time and 
will be reviewed and acted on generally within 10 working days.3.   Reduction in Agency Full-Time Equivalent Employment.A one-for-one reduction in an agency's funded positions, 
measured on an FTE basis, is required for each employee who 
separates by retirement or resignation with a buyout payment. 
Generally, the reductions are from department-wide totals, but 
may, in special situations acceptable to OMB, come from only the 
department's separate component undergoing downsizing.For buyout separations under this Act, the required FTE 
reduction will be measured as the change from the agency's actual 
FTE usage in Fiscal Year 1996 to the actual FTE usage in Fiscal 
Year 1998.  To the extent known at that time, the President's 
Fiscal Year 1998 Budget should reflect the impact of any planned 
buyout separations in the FTE estimates for Fiscal Years 1997 and 
1998.Example:  If the agency's actual FTE use in Fiscal Year 1996 
               was 1,000 and the agency plans to have 100 buyout 
               separations under the Act, the agency's estimate 
               of FTE usage for 1998 shown in the President's 
               1998 Budget, and the resulting actual FTE usage in 
               Fiscal Year 1998, cannot exceed 900 FTE.Agency heads are responsible for ensuring compliance with 
the Act's requirement for FTE reductions.  OMB will monitor 
monthly FTE reports against the agency's plan for use of buyouts 
and may direct corrective action, including a freeze on agency 
hiring, should it appear at any time that agency-wide FTE 
reductions will not be sufficient to offset buyout separations by 
the end of Fiscal Year 1998.4.   Additional Agency Contribution to the Retirement FundFor each employee covered under the Civil Service Retirement 
System (CSRS) or the Federal Employees' Retirement System (FERS) 
who is paid a buyout, the agency will pay into the retirement 
fund an amount equal to 15% of that employee's final basic pay. 
Final basic pay is defined in the Act.  This payment to the 
retirement fund is the amount determined by the Congressional 
Budget Office as the required offset to meet the "pay-as-you-go" 
(PAYGO) requirement in the Budget Enforcement Act of 1990.  The 
Office of Personnel Management (OPM) will advise agencies on the 
procedures for making these payments.5.   Reporting Requirements.Although the Act does not include specific reporting 
requirements, OMB has asked OPM to gather information on buyout 
activity under the Act.  This data will be needed to meet 
Congressional and other information requirements.  Agencies will 
be asked by OPM to submit quarterly reports that provide, at a 
minimum:--   the number of employees who received buyouts under the 
          Act for each type of separation involved and for each 
          geographic location; 
--   the average amount of the buyouts that were paid;--   the average grade or pay level of the employees who 
          received buyouts; and--   other information that OMB and OPM may require.In addition, OMB offices will review agency implementation 
of buyout plans to monitor accomplishment of planned FTE 
reductions and restructuring of the agency.  Agencies are advised 
to maintain current data on accomplishments in relation to the 
agency's buyout plan.OPM will issue separate guidance on reporting requirements 
under the Act.  OPM currently collects information on buyout 
separations under FWRA that have been deferred to not later than 
March 31, 1997.  Agencies are reminded to ensure that information 
is accurately maintained and reported to distinguish between 
buyouts under FWRA and the new authority in the Act.The Budget
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