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THE COST AND BENEFITS OF THE REEMPLOYMENT OF FEDERAL PART-TIME ANNUITANTS

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERAL WORKFORCE,

POSTAL SERVICE, AND THE DISTRICT

OF COLUMBIA

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

MAY 20, 2008

Serial No. 110–140

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

HENRY A. WAXMAN, California, Chairman

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

JOHN A. YARMUTH, Kentucky

BRUCE L. BRALEY, Iowa

ELEANOR HOLMES NORTON, District of

Columbia

BETTY MCCOLLUM, Minnesota

JIM COOPER, Tennessee

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

JOHN P. SARBANES, Maryland

PETER WELCH, Vermont

——— ———

TOM DAVIS, Virginia

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

BILL SALI, Idaho

JIM JORDAN, Ohio

PHIL SCHILIRO, Chief of Staff

PHIL BARNETT, Staff Director

EARLEY GREEN, Chief Clerk

LAWRENCE HALLORAN, Minority Staff Director

SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL SERVICE, AND THE DISTRICT OF

COLUMBIA

DANNY K. DAVIS, Illinois

ELEANOR HOLMES NORTON, District of

Columbia

JOHN P. SARBANES, Maryland

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio, Chairman

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

KENNY MARCHANT, Texas

JOHN M. MCHUGH, NEW YORK

JOHN L. MICA, Florida

DARRELL E. ISSA, California

JIM JORDAN, Ohio

TANIA SHAND, Staff Director

(III)

C O N T E N T S

Page

Hearing held on May 20, 2008 ............................................................................... 1

Statement of:

Gilman, Maureen, legislative director, National Treasury Employees

Union; and Daniel C. Adcock, assistant legislative director, National

Active and Retired Employees Association ................................................. 29

Adcock, Daniel C. ...................................................................................... 36

Gilman, Maureen ...................................................................................... 29

Kichak, Nancy H., Associate Director for Strategic Human Resources

Policy, U.S. Office of Personnel Management ............................................ 13

Purcell, Patrick, Specialist in Income Security, Domestic Social Policy

Division, Congressional Research Service .................................................. 20

Letters, statements, etc., submitted for the record by:

Adcock, Daniel C., assistant legislative director, National Active and Retired Employees Association, prepared statement of ................................. 38

Davis, Hon. Danny K., a Representative in Congress from the State

of Illinois, prepared statement of ................................................................ 3

Davis, Hon. Tom, a Representative in Congress from the State of Virginia, prepared statement of ........................................................................ 11

Gilman, Maureen, legislative director, National Treasury Employees

Union, prepared statement of ...................................................................... 31

Kichak, Nancy H., Associate Director for Strategic Human Resources

Policy, U.S. Office of Personnel Management, prepared statement of ..... 15

Lynch, Hon. Stephen F., a Representative in Congress from the State

of Massachusetts, prepared statement of ................................................... 52

Marchant, Hon. Kenny, a Representative in Congress from the State

of Texas, prepared statement of .................................................................. 7

Purcell, Patrick, Specialist in Income Security, Domestic Social Policy

Division, Congressional Research Service, prepared statement of ........... 22

(1)

THE COST AND BENEFITS OF THE REEMPLOYMENT OF FEDERAL PART-TIME ANNUITANTS

TUESDAY, MAY 20, 2008

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL

SERVICE, AND THE DISTRICT OF COLUMBIA,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 2 p.m., in room

2247, Rayburn House Office Building, Hon. Danny K. Davis (chairman of the committee) presiding.

Present: Representatives Davis of Illinois, Marchant, and Norton.

Staff present: Lori Hayman, counsel; William A. Miles, professional staff member; Marcus A. Williams, clerk; and Jim Moore,

minority counsel.

Mr. DAVIS OF ILLINOIS. Good morning, and thank you all very

much. The subcommittee will come to order.

Today’s hearing on Cost and Benefits of Reemployment of Federal Part-Time Annuitants is about striking a balance between

agencies, meeting their staffing needs and ensuring that promotion

and work opportunities for new and current employees are not stymied by returning Federal retirees.

Federal law prohibits annuitants from being dually compensated.

Federal retirees who are reemployed by the Government are not

permitted to simultaneously receive a Federal salary and a Federal

retirement annuity. The dual compensation rule can create a financial disincentive for retirees wishing to return to Federal service.

However, the Office of Personnel Management [OPM], may grant

waivers allowing agencies to fill hard to fill positions with re-hired

Federal annuitants without offsetting the salaries by the amount

of the annuity. Agencies can request waivers on a case by case

basis for positions that are extremely difficult to fill, or for emergencies of any unusual circumstances. On September 19, 2007, the

full committee ranking member, Tom Davis, along with the subcommittee ranking member, Kenny Marchant, introduced H.R.

3579 to facilitate the temporary re-employment of Federal annuitants. H.R. 3579 would permit Federal agencies to reemploy retired Federal employees on a temporary basis without the consent

of the director of OPM.

The testimony of today’s witnesses will help us to ascertain what

course of action is in the best interests of the Government and its

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employees. I will now yield to Ranking Member Marchant for an

opening statement.

[The prepared statement of Hon. Danny K. Davis follows:]

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Mr. MARCHANT. Thank you, Mr. Chairman. Thank you for holding this hearing today at the request of Mr. Davis, of the minority.

Political gridlock seems to be the status quo these days, so it is refreshing to see teamwork, compromise and bipartisanship whenever possible.

Mr. Chairman, I think we may be facing a crisis in Federal employment and Congress needs to be working to find a solution. As

we look at the number of current Federal employees who are eligible to retire in the next 5 years, we must consider how we intend

to replace those employees.

I believe that Ranking Member Davis’ bill, H.R. 3579, could be

a major part of the solution. The legislation would allow agencies

to waive the salary offset requirement with respect to any Federal

annuitant who is employed on a part-time basis. I am proud to be

an original co-sponsor of this legislation.

While the reemployed annuitants would receive both salary and

annuity payments, they would not be considered employees for purposes of retirement and would receive no additional retirement

benefits based on their service. To demonstrate the importance of

having this bill, the State Department recently had a nationwide

backlog of issued passports which extended the expected turnaround time from the normal 6 weeks to a snail’s pace that was

anyone’s guess for when the individual would receive a passport.

These delays greatly impacted thousands of business travelers and

planned vacations.

In spite of its best efforts, the State Department was dealing

with record levels of retirement and an unprecedented 44 percent

increase in passport demand. To make matters worse, all new applicants must undergo background check and training of about a

year for new hires. The fastest solution was to bring in recent hires

who have the expertise and required minimal new training. But

the State Department lacked the statutory authority to do this on

a temporary basis. It took legislation action by Congress to bring

back State Department employees to its offices.

Needless to say, this was not the most efficient way to address

the problem. It resulted in several additional months of backlogs

before these employees were back to work at the State Department,

finally helping to make some headway on the backlog of passport

applications. This sort of inefficiency is the kind of thing that we

have to avoid and responsibly crafted legislation like Ranking

Member Davis’ bill is something we should look to and something

I fully support.

Thank you again, Mr. Chairman, for giving the minority this

hearing on this important issue.

[The prepared statement of Hon. Kenny Marchant follows:]

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Mr. MARCHANT. I would also like to have permission, Mr. Chairman, to enter Ranking Member Davis’ statement into the record.

Mr. DAVIS OF ILLINOIS. Without objection, so ordered.

[The prepared statement of Hon. Tom Davis follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Marchant.

Now we will actually go to our first witness. Ms. Nancy Kichak

was named Associate Director for the Human Resources Policy Division in September 2005. In this position, she leads the design, development and implementation of innovative, flexible and meritbased human resource policies.

Thank you very much, Ms. Kichak. If you would stand and be

sworn in.

[Witness sworn.]

Mr. DAVIS OF ILLINOIS. The record will show that the witness answered in the affirmative.

We thank you very much for being here with us this afternoon

to testify. If you would give us your 5-minute statement and of

course, the yellow light means you have 1 minute left, and red

means that the 5-minutes are up. We thank you very much and

will then go to questions.

STATEMENT OF NANCY H. KICHAK, ASSOCIATE DIRECTOR

FOR STRATEGIC HUMAN RESOURCES POLICY, U.S. OFFICE

OF PERSONNEL MANAGEMENT

Ms. KICHAK. Chairman Davis, Representative Marchant, thank

you for holding this hearing to examine proposals to facilitate reemployment of Federal retirees. I appreciate the opportunity to be

here today to discuss the importance of these policies.

Because of the demographic makeup of the Federal work force,

the Office of Personnel Management projects a substantial number

of retirements in the coming years. We have put succession plans

in place that will help ease the impact of the loss of expertise. But

we need limited access to the departing skilled workers to help

make the transition to new workers as seamless as possible.

Currently, retirees who become reemployed by the Federal Government must have their salaries reduced. However, if that same

employee would go to work for a contractor, they would be able to

collect an annuity and salary. Or if a private sector retiree is hired

by the Government, that employee receives an annuity and salary.

The law allows OPM to grant salary offset waivers on a case by

case basis to agencies experiencing exceptional difficulties in recruiting or retaining qualified individuals or in unusual circumstances. OPM may also delegate this authority to agencies

faced with emergencies or other unusual circumstances that do not

involve an emergency.

This authority has been used to help agencies in the aftermath

of the terrorist attacks of September 11th as well as to respond to

Hurricane Katrina. However, none of these regulatory authorities

provide the ability to waive the offset for such short-term needs as

mentoring new employees or providing short-term assistance with

critical projects.

OPM submitted a legislative proposal to Congress in March of

last year that would allow agencies, without coming to OPM for approval, to rehire annuitants under certain conditions without a salary offset. This proposal is substantially similar to H.R. 3579, introduced last fall by Representative Tom Davis. H.R. 3579 would

cover only executive branch agencies while OPM’s proposal would

also apply to the legislative and judicial branches.

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H.R. 3579 would permit Federal agencies to reemploy retired

Federal employees without offsetting annuity from salary for a

maximum of 520 hours in the first 6 months following retirement,

a maximum of 1,040 hours in any 12-month period, and a total of

6,240 hours for any individual. While those re-employed under this

authority would receive both salary and annuity payments, they

would earn no additional retirement benefits based on the reemployment.

The legislation would make reemployment both attractive to annuitants and easy for agencies to use and it is designed to avoid

abuse. This will encourage individuals who otherwise would leave

Government permanently or provide their services to a contractor

to return to work for the Government part-time. Amending the law

in this way will also go a long way toward eliminating the inequity

in the treatment of reemployed Federal retirees compared to private sector retirees, who continue to collect their pensions and full

salaries when they are hired by the Federal Government.

I also want to thank Congressman Moran for introducing H.R.

2780, a bill to remove the penalty under the Civil Service Retirement System, which results from part-time service at the end of a

career. And I want to thank members of the subcommittee, along

with members of the Committee on Oversight and Government Reform, who supported passage of the bill out of committee on March

13, 2008.

Similar legislation has been introduced by Senators Conrad and

Smith as part of their broader efforts to assist older workers in the

private and public sectors. Together, both of these legislative initiatives are important to our efforts to have the right people with the

right skills in place, so that agencies are able to meet their mission

goals.

I want to especially thank you, Representative Davis, and Representative Marchant, for your interest in this important issue.

Thank you for inviting me here today and I would be glad to answer any questions.

[The prepared statement of Ms. Kichak follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much. We appreciate

your testimony.

I will begin. Ms. Maureen Gilman, legislative director for the National Treasury Employees Union, and a witness on the third

panel, states in her testimony for the record that the lack of qualified employees is due to the funding and the contracting out of critical expertise to private businesses. I have a two-part question.

One, can current staffing shortages be attributed to a lack of

funding, and if so, why not hire staff now that can be trained by

more experienced workers before they retire? Then I will go to the

other part.

Ms. KICHAK. I think it is fair to say that the Government is trying to be as efficient as possible, and therefore does not fund a position that is not needed if somebody else is there doing the job. So

if money were unlimited and you could double-encumber certain

positions and give people a long training period, that would certainly help. There is no question about that.

On the other hand, we work with our agencies. At OPM we have

human capital officers assigned to every agency to do succession

planning, to make sure there are people training behind the folks

in place. So it is not strictly a funding issue. We do train people,

but unexpected things occur. People leave before you expect them

to, folks that aren’t able to retire, folks get sick and folks decide

to change jobs. So even if we had more money, we couldn’t guarantee that we would put the right person in the right place to anticipate a problem in the future.

Mr. DAVIS OF ILLINOIS. Strategic planning suggests that work

forces plan for the future in order to meet staffing needs. Wouldn’t

proper planning and preparation by the agencies alleviate staffing

and training concerns if there was enough planning taking place

before we get to the point where there is a need?

Ms. KICHAK. I think there is a lot of planning taking place.

Again, you identify the people where you expect you might have

shortages and you start to build succession plans around those

areas. But unexpected things do happen.

The other problem you have is that no matter how much you put

down in documentation of a position and work with the next person, they would really like to have somebody they could talk to and

work with when it absolutely falls in their lap. There is no substitute for the person who is the most experienced at that job being

available as the new person takes over to answer questions.

Our proposal is for a part-time job. It is really not for full-time

employment. So it is just to be able to access people and rely on

them for help in limited circumstances. It is not to do the job.

Mr. DAVIS OF ILLINOIS. Let me ask you, are there provisions in

H.R. 3579 to address concerns that agencies would be required to

re-hire Federal annuitants with no benefits versus new hires and

current employees that are entitled to benefits, thereby saving the

agency money?

Ms. KICHAK. I think there are many provisions in that piece of

legislation. The first one is the limitation on the hours that can be

worked immediately after retirement. It is very clear that immediately after retirement, you can only work 600 hours of the first

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6 months. What that means is that you cannot let somebody retire

and immediately come back to work.

So there is going to be some kind of break there where the person is not going to be available to you full-time. Then there is also

the limitation that you can only work half the hours in a year,

which means that an agency which has a very vital job is really

going to have to find somebody who can handle that full-time, and

then again there is the provision of the 6,000 hours in a lifetime.

So again, that person is only going to be available for a limited

amount of time and an agency has to plan to replace them.

As far as the issue of these folks not earning benefits while they

are retired, it would be, OPM also administers the Civil Service Retirement System. It would not be good management of that fund

to allow reemployed annuitants to increase their pensions while

they are retired. Planning for your retirement and building for your

pension is something you need to do when you are working. It

wouldn’t be good business or good pension sense to build that while

you are retired.

Mr. DAVIS OF ILLINOIS. Thank you very much. We will go to Mr.

Marchant.

Mr. MARCHANT. Thank you.

I have a few questions about just how this bill would work mechanically. Would an annuitant be able to go to work for any Federal agency?

Ms. KICHAK. Yes.

Mr. MARCHANT. So it wouldn’t necessarily be the agency that

they retired from?

Ms. KICHAK. That is right.

Mr. MARCHANT. That is not limited in any way?

Ms. KICHAK. That is right.

Mr. MARCHANT. Is the agency bound to offer what the annuitant

was making as his or her last salary?

Ms. KICHAK. No, they are not.

Mr. MARCHANT. Is it an open, we post this job, we are looking

for a part-time person?

Ms. KICHAK. The person who is going to be retired is going to be

required to meet the requirements of the job. In other words, if you

hire somebody as a physician, they are going to have to be a physician. If you hire somebody as a police officer, they are going to have

to have those skills.

So their pay will also be set based on the job they are hired to

do, not necessarily the salary they were earning at the time they

left.

Mr. MARCHANT. Would an agency then be required to pay the

amount of money that job paid, currently paid at the level that

they hired them?

Ms. KICHAK. The agency would set the pay based on the responsibilities the person would have and the job they are being hired

into. One example would be, and it is an unlikely one, but if you

had somebody who was operating at a very high level and you

wanted them to come back and do some administrative work, to organize some files, you could set that job as an administrative person and they could have a lower grade than what they were making when they left.

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Mr. MARCHANT. There are several bills that are floating around

now in committee, on the House floor and maybe some that are

even out of the House that are proposing what I would consider to

be a very generous leave program for adoptive parents, newborns,

for both the husband and the wife. We were told, we had testimony

that said basically there was sufficient workplace in force to fill

those holes if someone left for 8 or 10 weeks.

Do you think that if this becomes law, and this becomes policy,

where it could extend, I think up to 12 weeks, is this a situation

where an annuitant could be used to come in and fill in?

Ms. KICHAK. Absolutely. One very good use of this bill would be

if somebody had an unexpected absence and they were coming

back. And a maternity is a good one.

On the bills on the leave, we do have good leave policies for our

folks so they can take a long period of time off. But it would be

a very good use of this bill to bring people, reemployed annuitants

back to fill in that gap.

Mr. MARCHANT. Thank you, Mr. Chairman.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Let me just ask you, are there any other flexibilities that you can

think of that perhaps could be used to retain older workers, such

as maybe teleworking, flexible schedules, part-time work or any

other things that might be used to arrive at the same goal?

Ms. KICHAK. We absolutely support the Moran bill that fixes the

problem with the high three salary for CSRS employees, that penalizes them if they go to part-time at the end of their career. So

we think part-time service at the end of a career is a very good

thing to do.

We are strong advocates of telework and we work very hard to

get policies in place so that managers can offer telework to their

employees. We believe in flexible work schedules. So all of those

things are great tools.

But there are also instances where this is the only kind of thing

that would work. Because in the instance that Representative

Marchant just described, where somebody is on maternity leave,

that person is gone. And you have to fill that need. Allowing somebody to telework that is already gone wouldn’t really do that.

So all of those things are good ideas.

Mr. DAVIS OF ILLINOIS. Are there any other questions?

Thank you very much. We appreciate your being here.

We will go to our second panel. Mr. Patrick Purcell is a Specialist

in Income Security with the Congressional Research Service. He

works on issues related to Federal employee retirement benefits,

private sector pensions, 401(k) plans and individual retirement accounts. Mr. Purcell, if you would raise your right hand.

[Witness sworn.]

Mr. DAVIS OF ILLINOIS. The record will show that the witness answered in the affirmative. We thank you for being here and if you

would summarize your testimony in 5 minutes, the full testimony

is in the record. The yellow light indicates you have a minute and

red means the time is up.

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STATEMENT OF PATRICK PURCELL, SPECIALIST IN INCOME

SECURITY, DOMESTIC SOCIAL POLICY DIVISION, CONGRESSIONAL RESEARCH SERVICE

Mr. PURCELL. Thank you, Mr. Chairman and Ranking Member

Marchant, for inviting me here to speak to you today on reemployment of Federal annuitants. As you mentioned, Mr. Chairman, I

have submitted a written statement for the record, so I am only

going to focus on a few points concerning the current law and the

proposed legislation.

As you are aware, under the Federal Employee Pay Comparability Act of 1990, the Director of OPM can waive the prohibition on

concurrent receipt of a salary and a retirement annuity on a case

by case basis if an agency is unable to retain or recruit qualified

employees. The 1990 law also allows the Director of OPM to delegate to the head of a Federal agency authority to grant waivers on

a case by case basis for employees serving on temporary appointments if the agency is facing an emergency.

While the individual is employed under these waivers, they do

not earn additional retirement benefits except Social Security.

Under H.R. 3579, agency heads would be allowed to hire Federal

annuitants on a temporary basis without reducing their salaries by

the amount of their retirement annuities and without seeking the

approval of OPM. The authority of an agency head to grant a waiver would be limited, as was mentioned earlier, to 520 hours in the

6 months following the starting date of the annuity; 1,040 hours of

service in any 12-month period, 6,240 hours over the individual’s

lifetime.

In recent years, the number of reemployed Federal annuitants

has increased, but they are a still a small fraction of all Federal

employees. Between 2000 and 2007, the number of reemployed annuitants doubled from roughly 2,700 to 5,400. This is still less than

one-third of 1 percent of all executive branch Federal employees.

Over this same 7-year period, the percentage of reemployed annuitants subject to salary offset fell, and the percentage who were reemployed under waivers that allow concurrent receipt of a salary

annuity increased.

In 2000, 75 percent of reemployed annuitants were subject to salary offset and 25 percent were employed under waivers. By 2007,

40 percent of reemployed annuitants were subject to salary offset,

60 percent were employed under waivers that allowed concurrent

receipt of salary and annuity.

Many Federal employees are going to be eligible to retire over

the next 10 years. More than 40 percent of the Federal work force

is over age 50 and 35 percent have already completed more than

20 years of service. Because these employees have skills that are

needed for Federal agencies to carry out their missions, managers

in the Federal Government are seeking tools to delay retirement of

employees and to induce some retirees to return to work.

In 1990, Congress approved one such tool by granting the Director of OPM authority to waive in certain cases the law that prohibits concurrent receipt of a Federal salary and an annuity. H.R.

3579 would give agency heads more flexibility in hiring retired

Federal employees and to temporary employment by allowing them

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to grant waivers to the salary offset without seeking the approval

of OPM.

Providing Federal agencies with the authority they need to recruit and retain skilled workers is an important issue before Congress. However, the prohibition on concurrent receipt of a retirement annuity and full salary reflects the judgment of previous Congresses that Federal employment policies should not encourage

workers to retire and then seek reemployment in a Federal job in

which they can receive both a salary and an annuity.

Without the prohibition on concurrent receipt of a salary and annuity, there would be a financial incentive for employees to retire

and seek reemployment with the Government. Because H.R. 3579

limits the waiver authority to temporary employment, it would substantially mitigate the possibility that this would occur.

However, it is worth noting that in 2006, the Assistant Director

of OPM testified before this committee, ‘‘that because waivers result in compensation from the retirement fund and salary, they

must be used judiciously.’’

This concludes my testimony and I would be happy to answer

any questions that members of the subcommittee might have.

[The prepared statement of Mr. Purcell follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much. I will begin.

Mr. Purcell, you testified that H.R. 3579 would allow the head

of a Federal agency to hire a Federal annuitant on a temporary

basis without reducing the annuitant’s salary by the amount of his

retirement annuity. You also testified that such a measure could

create an incentive for some employees to retire and seek reemployment which would encourage retirement.

Are there provisions in H.R. 3579 to prevent agencies from abusing this authority and the early retirement of Federal employees?

Mr. PURCELL. Yes, there are. The limitation on employment to

500 hours in the first 6 months, 1,000 hours in any 12-month period and 6,000 hours over a lifetime is a key element of this bill.

Because an individual could only count on appointment to a temporary job, it would substantially mitigate the possibility that an

employee who knows he or she has a valuable skill and would be

likely to be reemployed from attempting to game the system, which

does occur.

If I could just refer briefly to an article in News Day, May 10th,

about a school district employee in New York State who retired on

a pension of $100,000 a year, was rehired the next day at a salary

of $175,000 a year, raising his total compensation to $275,000 a

year, this occasionally has happened in State and local governments that have allowed retirees to be reemployed and collect both

a salary and an annuity. My experience reading about these stories

in the past is they generally elicit a uniformly negative response

from the public. [Laughter.]

Mr. DAVIS OF ILLINOIS. I was wondering if the person may have

had some clout. Not a bad plan.

Let me ask, are there any other suggestions or recommendations

that you might have that would help assure that there is no misuse of this concept?

Mr. PURCELL. When reading the bill, I noticed that it would be

a permanent change to the statute. One possibility might be to

make this change for a period of 5 or 10 years and evaluate how

agencies and individuals respond. Another, somewhat more drastic

measure, might be to put in an absolute ceiling, say, no more than,

well, let me backtrack.

I believe right now about three-tenths of a percent of Federal

workers are reemployed annuitants, the largest share in the Department of Defense, which has an entirely separate authority

under the National Defense Authority Act of 2004. But a ceiling of

a half a percent, three-fourths of a percent should be ample room

for an agency to fill positions for, as Ms. Kichak said, training and

mentoring and bringing the newer group of Federal employees up

to speed.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Mr. Marchant.

Mr. MARCHANT. I am in one of those States that, when I was in

the State legislature, this came before Texas as a solution. And it

was not very long before the mis-use appeared. Then we had to

take another action to keep that from happening.

Is it possible to put a cap salary in there or a cap pay in there?

Mr. PURCELL. It would be possible to say that, I am just going

to make a number up here, that the combined annuity and salary

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shall not exceed 100 and X percent of somewhere in the general

schedule. You could do it. You would have to give it some thought.

You wouldn’t want to make it so constraining that people wouldn’t

go for it, and you wouldn’t want to make it so broad that it is ineffective.

Mr. MARCHANT. But you could make it a functional thing?

Mr. PURCELL. Yes, it could be based on the combined annuity

and some level of the general schedule.

Mr. MARCHANT. I am sure no one contemplates that at this point.

But there are people who spend 24 hours a day thinking about

stuff like this.

The other question I have about it is, have you given some consideration, with this early retirement argument where it incentives

an early retirement, the way the retirement system is set up, the

sooner you retire then you are cutting the amount of your monthly

annuity over a long period of time.

Mr. PURCELL. That is true.

Mr. MARCHANT. So you have an offsetting, the fund itself has an

offsetting compensation. So the fund itself, the quicker someone retires, once it gets to a threshold and they retire, they are going to

receive a diminished benefit——

Mr. PURCELL. Forever.

Mr. MARCHANT [continuing]. From their retirement. Yet you have

the temporary employment capped over here, as best I can tell, at

five half years, five or six half years. So that if you incentivize

someone to retire at age 55, that could have worked until 65, then

their benefit at 65 from the fund would be much higher and a person 55 could take a significantly less amount. Then it would be

fairly shortsighted on that person’s part to limit himself to five half

years for his total exposure to Government pay, with no additional

benefit.

Mr. PURCELL. True. The way this legislation is drafted, I think

it is very significant that, for instance, the 6,240 hour cap, which

is equal to three full years, the way this is written, you couldn’t

work three full consecutive years, because you are limited to halftime in any 12 month period. If that weren’t there, if the only limit

were, say, 6,240 hours, I think the bill would present problems in

creating adverse incentives for people to retire to 56, 57, whatever

their minimum age is, begin the pension and go back to work.

The way this is crafted, that would be difficult to do, because in

most cases, you would have to have a gap. You could, I suppose,

work part-time, because actually it is a limit on hours.

Mr. MARCHANT. Yes, they could string it out over——

Mr. PURCELL. You could string out part-time work over a longer

period of time. That is one reason I was suggesting that perhaps

a time limit initially for OPM to figure out if that is happening,

come back in five or 10 years and say, we need to tweak this, because something is happening we didn’t expect.

The way it is crafted now, it does at least limit the possibility

that somebody would say, ah, I know I have this rare skill that

they need, I am going to retire tomorrow and come back and collect

both.

28

Mr. MARCHANT. Mr. Chairman, my last question will be, even

though I am very much for this, the other thing that I think is a

potential abuse is for someone to come back as a consultant.

Mr. PURCELL. Which they can do now. As far as I know, if you

retire from the Federal Government, come back on, say, a personal

services contract, you will be collecting both that contract money

and your pension. I may be wrong about that, but I think you can

do that.

Mr. MARCHANT. But I mean, the job description in itself under

this structure would just be to consult.

Mr. PURCELL. Yes.

Mr. MARCHANT. Not a specific job title where you are coming in

and plugging this hole or doing this. I think if there is any potential abuse there, this general description of what that person does,

management consultant, training or something like that.

Mr. PURCELL. Perhaps some of these issues could be dealt with,

the last section of the bill, director of Office of Personnel Management shall prescribe regulations, perhaps some of those potential

issues could be dealt with in the regulations accompanying it, or

written after the bill was passed.

Mr. MARCHANT. I recall that our reaction to fix the problem was

very extreme. So if those regulations don’t——

Mr. PURCELL. Actually, if I could just inject one last thought. In

some nearby States, Maryland and Virginia, for instance, that recently experienced teacher shortages, the legislature has authorized rehiring retired teachers and saying, you can simultaneously

collect pension and annuity, with strict time limits. You can do this

for 2 years or something. And if we still have an emergency the

legislature will deal with it at a later date.

Mr. MARCHANT. Thank you, Mr. Chairman.

Mr. DAVIS OF ILLINOIS. Thank you very much.

I thank you very much, Mr. Purcell.

We will go to our third panel, which will be composed of Ms.

Maureen Gilman, who is the legislative director of the National

Treasury Employees Union. Prior to working for the NTEU, she

was the chief of staff and legislative director for Representative

Sam Gejdenson from Connecticut. We also have Mr. Daniel Adcock.

He is assistant legislative director for the National Active and Retired Federal Employees Association [NARFEA]. Prior to working

for NARFEA, he served as Executive Assistant to Assistant Secretary for Aging, Jeannette C. Takamura.

If you would both stand and raise your right hands to be sworn

in.

[Witnesses sworn.]

Mr. DAVIS OF ILLINOIS. The record will show that the witnesses

answered in the affirmative.

Of course we are delighted to have you both. We have your written statement for the record. If you would take 5 minutes and summarize your statement, the green light indicates that the full time

is available, the yellow light means you have 1 minute and the red

light means that your time is up.

We will begin with you, Ms. Gilman. Thank you very much.

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STATEMENTS OF MAUREEN GILMAN, LEGISLATIVE DIRECTOR,

NATIONAL TREASURY EMPLOYEES UNION; AND DANIEL C.

ADCOCK, ASSISTANT LEGISLATIVE DIRECTOR, NATIONAL

ACTIVE AND RETIRED EMPLOYEES ASSOCIATION

STATEMENT OF MAUREEN GILMAN

Ms. GILMAN. Thank you, Chairman Davis, Ranking Member

Marchant, for the opportunity to express the views of the National

Treasury Employees Union on H.R. 3579.

This bill has been suggested as a solution for an anticipated lack

of qualified Federal employees needed to effectively accomplish the

important missions of the Federal Government. Many Federal

agencies today are woefully understaffed and the training, mentoring and promotional opportunities needed to have experienced employees in place, should we see large numbers of retirements in the

next few years, is not being adequately addressed.

The primary reason for this is not a lack of qualified employees

or applicants, but a lack of funding. In addition, much critical expertise has been contracted out to private businesses. NTEU believes that the real solution to current and future personnel concerns is to focus now on the recruitment and retention of talented

employees. Fundamental to this process is providing fair pay, adequate benefits, job security and rewarding work. GAO has found

that the use of current flexibilities, such as part-time work, flexible

schedules and flexi-place options improve recruitment and retention efforts, especially among older workers. NTEU strongly supports the expanded use of these options throughout the Federal

work force.

We also support Congressman Moran’s bill, H.R. 2780, to make

sure there is no penalty in terms of pension calculation if an employee moves to a part-time schedule near retirement. In addition,

NTEU believes that legislation introduced by Chairman Davis,

H.R. 5550, that would allow FEHBP to cover dependent children

to age 25, rather than age 22, would be a strong recruitment and

retention tool for parents of young adults, the kind of experienced

workers that the Federal Government needs.

One of the best recruitment and retention benefits that the Federal Government provides that is especially attractive to older

workers is the ability to continue in the FEHBP program with the

Government continuing to contribute toward premium costs upon

retirement. Yet the administration proposed to limit this FEHBP

option in its last several budget submissions. NTEU strongly opposed this proposal and we are pleased that the Congress took no

action on it.

While NTEU does not oppose the Federal Government’s use of

reemployed annuitants, we do have some concerns with regard to

H.R. 3579, which would significantly change the rules on this practice. Currently, most agencies are allowed to waive statutory prohibitions on dual compensation or paying salaries at the same time

pension benefits are being received, under certain circumstances,

with the approval of Office of Personnel Management. These circumstances include an emergency hiring need, severe recruiting

difficulty and the need to retain a particular individual. last fall,

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regulations were amended to expand the ability to waive the dual

compensation rules for unusual circumstances.

Under H.R. 3579, OPM will have no approval authority, but

rather, agencies will be free to act without outside review. In addition, the bill does not set forth any standards that must be met in

order for agencies to reemploy annuitants without pension offsets.

It is also not clear that these appointments would follow standard

competitive hiring practices that protect merit principles and veterans’ preference.

Under current pension rules and the limited time appointments

prescribed under H.R. 3579, most benefits provided to other Federal employees will not be available to reemployed annuitants. Rehired annuitants would not be eligible for FEHBP coverage as employees and if they retained coverage as retirees, OPM accounts,

not the employing agency, would pay the Governments’s share of

their premiums. They would not be eligible to earn additional retirement credit or participate in the thrift savings plan, so agencies

would incur no costs for those benefits. This cost-shifting would

provide agencies powerful budgetary incentives to maximize the

use of part-time short-term annuitants, rather than hiring and promoting the full-time permanent employees needed to successfully

steer agencies through the challenging times ahead.

NTEU is not aware of any serious problems with the current

rules that allow for reemployment of annuitants. We are concerned,

however, that the proposal under consideration, while certainly intended to be used judiciously, could easily be subject to abuse, especially due to the financial incentives it will provide agencies, the

lack of standards and the elimination of OPM approval.

Thank you for the opportunity to present this statement. I will

be happy to answer any questions you might have.

[The prepared statement of Ms. Gilman follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much. We will proceed

to Mr. Adcock.

STATEMENT OF DANIEL C. ADCOCK

Mr. ADCOCK. Thank you, Mr. Chairman and members of the subcommittee. I am Dan Adcock, assistant legislative director of

NARFE.

NARFE has long held that Federal retirees who are interested

in returning to Government service ought to be able to receive the

full salary of their new job without any offset as a result of the retirement annuity they earned through prior Federal service.

NARFE’s annuitant members count among our ranks agency managers, line supervisors, security specialists, computer programmers,

air traffic controllers, and law enforcement personnel.

At a time when the Nation faces critical challenges and our Federal Government faces an unprecedented brain drain, we should

not ignore my side of ready, willing, able and proud men and

women who have dedicated their careers and service to our Nation.

Indeed, the reality of our current skill shortages demonstrates the

critical roles played by civilian employees of the Government, thousands of whom are working alongside their uniformed colleagues in

locations like Iraq and Afghanistan.

After serving full careers in public service, most Federal retirees

want to stay retired. However, there is a growing number who

want to return to public service for several reasons. Some are paying for their children’s or grandchildren’s soaring college costs. All

annuitants are paying higher out of pocket health care expenses

and mounting daily living expenses, including energy costs. Others

are replacing Social Security benefits lost as a result of the application of the unfair and arbitrary Government Pension Offset and

Windfall Elimination Provision.

But it is not always about money. Some retirees appreciate the

value of remaining professionally, mentally and physically engaged

through reemployment. In addition, more and more no longer care

to be bystanders with what is going on in the Middle East and with

homeland security, and they want to answer the call to public service at a time when our Nation needs their unique skills and talents.

So what is stopping them? Under current law, the wages of those

reemployed annuitants are generally offset by the amount of their

annuity. However, OPM and certain Federal agencies have the authority to allow some returning retirees to avoid the offset when

serving in positions for which there is exceptional difficulty in recruiting and retaining a qualified employee and in jobs critical to

accomplishment of the agency’s mission.

Unfortunately, not all qualified retirees with in-demand skills receive a wavier. Indeed, they tell us that they would not consider

reemployment since the offset of their Federal pay by the amount

of their annuity would make their reemployed salary uneconomical.

Absent a waiver, some would be working for free, as a practical

matter, if their annuity was the same or higher than jobs that pay

a lower salary.

In fact, many crucial Federal workers avoid the red tape of the

waiver process by going to work for a Government contractor where

37

the Federal annuity presents no barrier to being paid full salary

at the new job. Working for a contractor also allows Federal retirees to earn more quarters in Social Security-covered employment in

an effort to mitigate the reduction of their Social Security benefits

by the windfall elimination provision.

Should the Federal Government continue to deny itself access to

this pool of experienced professionals at these critical times? Why

pay a premium to a contractor when you can get skills of a seasoned professional basically at cost?

One way of making reemployment with the Federal Government

more attractive to skilled and motivated retirees is H.R. 3579, legislation introduced by Ranking Members Tom Davis and Kenny

Marchant, which will allow Federal agencies to reemploy Federal

retirees on a limited, part-time basis without offset of annuity from

salary. It is our intention that agencies use this authority to supplement and not supplant the current work force and to find annuitants with specific skills that are not presently available for hard

to fill positions.

The flexibility of working part-time is appealing to many retirees

interested in going back to work, since they are not trying to buildup their careers. What is more important for them is not missing

certain life events for work.

Additionally, some Federal annuitants, for certain aging and

physical reasons, will not consider taking full-time employment.

And some, H.R. 3579 removes many obstacles preventing or discouraging the reemployment of Federal annuitants, and it enables

the Government to hire workers with skills and talents in short

supply.

For these reasons, NARFE urges you, Mr. Chairman and members of the subcommittee, to approve this needed and crucial legislation. We commend you for your interest in enabling Federal annuitants to continue to make crucial contributions.

Thank you for inviting us to testify and for your able leadership

of the subcommittee.

[The prepared statement of Mr. Adcock follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Adcock. We

will now go into some questions.

Ms. Gilman, let me begin with you. Do you think that the Office

of Personnel Management and Federal agencies are doing enough

to recruit and retain staff to address staffing needs?

Ms. GILMAN. No, I don’t, Mr. Chairman. I think that is the real

problem that we should be focused on today. There is a need to

make sure that we have talented people in place and that we are

planning for the future. I don’t think enough is being done. Some

of the flexibilities that I mentioned in my testimony were recently

pointed out in a GAO report, like allowing current employees more

options to work part-time schedules, work flexi-place. Other kinds

of job options that are not being really used by the agencies would

do a lot, I think, to both recruit the talented people we need and

to retain those who might be thinking about retiring.

Mr. DAVIS OF ILLINOIS. Let me ask you also, why should Federal

retirees be subject to the dual compensation rule when private sector employees are not?

Ms. GILMAN. Mr. Chairman, if it were up to me, I wouldn’t have

them subject to it. But I think Congress has put that in place to

potentially avoid abuse by retirees leaving and coming back and

getting a full salary while they are also collecting their pension. I

have heard the argument, why should they be put at a disadvantage to a private sector employee who wants to come back, but they

are still at a disadvantage if they are given the dual compensation

waiver in terms of other benefits.

Also, onboard employees are at a disadvantage because their

benefit levels that have to be paid by the agencies are going to be

higher than a reemployed annuitant. If you put the two applicants

for the job side by side, and they are going to be paid exactly the

same salary, the agency will have to put in much less money to pay

the retired annuitant than the onboard employee, because they

don’t pay in anything for their benefits.

Mr. DAVIS OF ILLINOIS. Is there anything that you would, well,

let me ask you this. Do you think that this practice impacts negatively on employees who are currently working relative to opportunities for advancement or movement in any way?

Ms. GILMAN. I think it could, Mr. Chairman. One area that has

been mentioned is to bring back retirees for training purposes and

mentoring. Sometimes that can work. Sometimes if a retiree has

been out of the work force for a while, their skills and their information may not be as up to date as an onboard employee.

Also, onboard employees look at opportunities to be able to provide training or mentoring as one of the biggest opportunities to

gain experience in terms of competing for promotion. So if you are

going to give more training and mentoring opportunities to retirees,

there may not be as much available for onboard employees.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Mr. Adcock, let me ask, you testified that Representative Tom

Davis’ bill does not end the existing dual compensation rule, but

would extend it by giving agency heads the authority to waive the

restriction for retirees who return to work part-time. Do you think

that Federal agencies are capable of policing themselves to the extent that there would be either no or low abuse or must we have

45

authority etched in law to try and make sure that this would not

happen?

Mr. ADCOCK. I think the main way that abuse will be prevented

is through the fact that these workers will be working on a parttime basis for a temporary duration. So I think those issues will

be taken care of.

But you know, when we talk about whether or not, for instance,

someone who is being brought in to do mentoring has the skill set

or the current skill set. All these things have to be case by case

decisions, as any hiring decision is. At the decisionmaking level,

some of that has to be left to the Federal agency to have that kind

of discretion. But to answer your question, I think the fact that the

appointments would be temporary, under special circumstances,

and of limited duration, should take care of that issue.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Mr. Marchant.

Mr. MARCHANT. Thank you, Mr. Chairman.

Looking at the OPM projections for retirements over the next 10

years, Ms. Gilman, this is obviously some information that you

have had a chance to look at, do you believe under the current system that we have that they are going to be able to successfully recruit this many new employees?

Ms. GILMAN. I would hope that they would be planning for that,

and that they would be beginning to deal with it, both to recruit

and to retain enough qualified employees to do that work. But I

also think that if there is a need to bring back annuitants that

there should be some standards, similar to what are in place today.

If an agency can demonstrate that it has unusual circumstances or

particular needs, they can go to OPM, get a waiver and bring employees back if they need to.

But if we give them a blank check, even if it is to bring back employees part-time, if there are no standards and no outside review,

our concern is that will become a first option instead of maybe a

second or third option.

Mr. MARCHANT. So the previous testimony we heard that this

would not even represent more than one-third of 1 percent of the

work force, are you thinking that is not correct, or that is too low

of a projection? Because when you are talking about 60,000 people

that are next year expected to retire in 2007 [sic], 61,000 in 2002

[sic] you don’t view this as a valuable tool to keep the workplace

going?

Ms. GILMAN. I think it is a tool that has been used effectively

under the current rules. I think if there is a need that can be demonstrated by an agency that the rules in place now would allow

them to rehire an annuitant. I frankly didn’t hear anything in the

OPM testimony that pointed to any significant problem with the

rules that are in place now. I know they talked about this would

prevent abuse because of the part-time or short-term duration.

It is our view that if the agency has an emergency or a severe

need, they shouldn’t be limited by part-time or the amount of time.

If there is one person that can do a job at the Centers for Disease

Control, I don’t think we should be limiting bringing them back for

maximum 6 months at a time. If the need is there, they should be

able to come back and serve.

46

But if there isn’t a special need, I also don’t see why the doors

should be completely flung open to bring back annuitants without

any need, any specific need.

Mr. MARCHANT. Thank you, Mr. Chairman.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Marchant.

Ms. Norton.

Ms. NORTON. I appreciate the testimony of both of you, offering

some insight into this issue that is not always apparent on the surface. I have to tell you, I have a hard time understanding why anybody would come back now, when you have to give up your annuity. And if it is hard to find employees, maybe you can help me out.

First, let me say I understand the search for the solutions. I don’t

want to say this is off the top of my head not a good solution.

I do agree with Mr. Marchant, the way in which Federal employees are pouring out of here, I can guarantee you this, you are not

going to replace them as easily with the baby-boom quality generation. Because their opportunities throughout the private sector are

so much broader and often more attractive. So I do think this presents a very serious problem for the Federal Government. We have

had hearings on it. And I must say, nothing even approaching a

satisfactory solution has come forward. I think this is an attempt

to try to do something to shore up, at least shore up the Federal

work force. Then we have to look beneath the surface for the details.

My own sense, I wonder what your experience has been, for hard

to find positions, I don’t know why anybody who has that level of

skill would want to bring it back to the Federal Government rather

than, you mentioned, contractors. I can think of a dozen places

right off hand that if you have a hard to fill position, that it must

be a position that is desired both by the Federal Government and

the private sector. Are we talking about a ghost work force here?

In your experience, you who represent retirees and Federal workers, are these hard to find workers which now requires a waiver

coming back to the Federal Government, seeking employment with

the Federal Government at all, rather than using other options,

where you don’t even have to worry about keeping your annuity,

etc., which is of course when they retire, which is what they want

to do in the first place?

Who is doing this?

Mr. ADCOCK. Congresswoman, I think what happens for many

annuitants is that obviously, if they can’t get the waiver, then it

is a no-brainer, they are going to go to a contractor.

Ms. NORTON. Well, just a moment. My question is why would you

want to come, you have your annuity, you have your benefits. If

you are in a hard to find employee position, why would your first

option be the Federal Government, rather than a dozen other options, which don’t raise the same issues?

Mr. ADCOCK. Well, I think that part, money is obviously, compensation is a large consideration. But I think sometimes people

are led back to the Federal Government because they see what is

going on in the world and they want to do something about it.

Ms. NORTON. For love, not money, maybe.

Mr. ADCOCK. Right. I think that is a legitimate motivation why

people will do it.

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Ms. NORTON. And with the baby-boom generation, I am sure you

can find some of that. I must say, when Federal employees retire,

now we have them retiring early. It doesn’t cross my mind that

they would any time soon be looking for reemployment here. It may

be as workers get older and as you indicated, Mr. Adcock, this was,

and it often is, very satisfying work, they want to come back and

do that work. But I really wonder if what we are playing with here,

I must say that I do agree with you, Mr. Gilman, while this may

be a stop-gap measure that at least we ought to try, we are fooling

ourselves if we think that the Federal Government can lumber

along, providing, for example, the same health benefit ratio that it

did whenever the program was set up, and the rest of it, and still

get the quality of work force you need in a post-9/11 work force,

I don’t know what it will take to make us understand.

But let me ask you about the part of your testimony that talks

about other options, as part of what we are talking about here

when we talk about benefits, and all of what we are talking about

is costs. You mentioned flexible schedules, for that matter, parttime work and flexi-place options. Is it your impression that those

aren’t available today, generally, in the Federal Government?

Ms. GILMAN. It is my understanding that the authority for agencies to use those options is currently available. It is a question of

agencies using them. In some cases, agencies will say they don’t

have adequate funding. But for many of those potions, there is

really no increase in funding. It is a question of just trying to think

of new ways to do things, using telework, allowing employees to

work from home.

Ms. NORTON. What about flexible schedules?

Ms. GILMAN. Flexible schedules, the availability of that is there

for agencies today. It is very attractive to employees and especially,

as I understand, a recent GAO report found, to older employees

who may be trying to decide whether they are going to retire or

not. I think everyone would agree that it would be more cost-efficient and beneficial to everybody if they decided to stay on as an

employee rather than retire and then face whether or not agencies

had to do a compensation wavier to bring them back. If we could

provide them with incentives to stay on, I think everybody would

agree that would be the best way to do it. They have said flexible

schedules, part-time work and working from home are some of the

things they are very interested in pursuing.

Ms. NORTON. With those, are the benefits the same with flexible

schedules?

Ms. GILMAN. Yes.

Ms. NORTON. Part-time work?

Ms. GILMAN. Yes, as I understand it, they are.

Ms. NORTON. One then is left to wonder, Mr. Chairman, I would

wonder and perhaps staff could do some groundwork on this, the

extent to which flexible schedules, we know about telework or flexiplace. But flexible schedules, part-time work, in a world where we

know we are losing out on many women, very highly educated

women, who given the child care situation in the United States, the

only advanced country that does not provide educational child care

as a matter of course, do decide to stay home, some considerable

48

number of them, for some considerable years of their early years

of a childhood, early childhood years.

I do think the subcommittee should explore the use of, for example, part-time work and flexible schedules and how much it is being

used, and for that matter, how much is being promoted by OPM.

Yes, part of the reason people are retiring early is they say, hey,

look, in this job I not only give my all, I give much more than 9

to 5. So the notion of retaining these employees in which we have

invested so much, rather than have them go out on early retirement, work as you say, for a contractor or somebody else, that

seemed to me to be penny-wise and pound foolish.

I should think that while this may be one option available to us,

I want to know why they are not using more part-time work and

flexible schedules. I know that they have promoted, because this

subcommittee has promoted so-called flexi-place options, the congestion of the roads, lots of things recommend that.

But I certainly would like to know more about flexible schedules

a part-time work, considering parents, I mentioned women, but I

am not only talking about women by any means.

I am also very concerned about bringing to the Federal work

force one of the most contentious issues in the private sector work

force, and that is essentially a two-tier work force, a work force

that gets paid and has benefits and a work force that does not.

Now, we know that these retirees got certain benefits all along, and

they certainly are in the same position as the private sector employees at Safeway, where they now have two-tier. But I am concerned about those kinds of controversies.

I am also concerned as to whether or not this has ever been done

or perhaps should be done on a pilot basis to see if it does any

good. Because it is hard for me to find, to understand why the

agencies and certainly why the retirees would go here as a first option. OK, they come back, let’s say we don’t any longer have to,

what makes it impossible to come back now, not receiving your annuity, but essentially no benefits, not thrift savings, not apparently

any of the benefits. Maybe they don’t need the health benefits because they get Medicare.

I can see what the benefit is to the Government. It is certainly

going to save a lot of money. I am certainly not against that. The

question is cost benefit, where are you going to put your money,

are you building a Federal work force?

I would like to ask you, Ms. Gilman, what do you mean by standards? Because I certainly am not convinced that if they could, agencies would not go to this option if it affected their budgets at a time

of very tight budgets. And look, it is going to be that way. We have

a huge deficit, an ongoing war, it is going to be that way. So when

you say standards, I would like to spell that out a little bit. Standards that would prevent abuse, would prevent saying, we will do

this just to save some money, I don’t care if this whole unit is parttime, my job is not to build this unit in the Federal work force, for

example, I am just here to get the job done.

Ms. GILMAN. I would see standards being some kind of special

need. There are standards——

Ms. NORTON. That is what we have now, Ms. Gilman.

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Ms. GILMAN. It could be broader than now. But as I said, I

haven’t heard——

Ms. NORTON. Well, now it is hard to fill jobs. So if it is not hard

to fill jobs, do you have any suggestions on what kind of special

need might keep abuse from occurring, or it is simply being used

to save money without anybody caring about the job to be done or

the need to build a Federal work force in the particular positions?

Ms. GILMAN. One of the things that I did not hear OPM say, and

I haven’t heard in the argument, is that they are having a hard

time hiring particular people. Yes, there is——

Ms. NORTON. You did not hear them say that?

Ms. GILMAN. I did not hear them say that. That is something

that I would be——

Ms. NORTON. No examples were given of the kinds of positions

that are being filled with annuitants, with waivers?

Ms. GILMAN. The kinds of positions that they would like to use

these waivers for, I have not heard that. Yes, we are expecting the

possibility of a large number of retirees in the future. But as I said,

we haven’t heard what exactly the problems are with the current

situation. That is something that I would be interested in hearing,

is specific problems with the program that is in effect today.

Ms. NORTON. Mr. Chairman, I understand the Department of Defense already has this and can do it without——

Ms. GILMAN. And they have standards, they have their own

standards similar, they don’t have to go to OPM, but they have to

have a particularized need for a particularized kind of skill or employe.

Ms. NORTON. So a hard to fill?

Ms. GILMAN. That is part of it, yes.

Ms. NORTON. So we trust them, because there may be a number

of DOD jobs that are hard to fill.

Ms. GILMAN. Yes.

Ms. NORTON. And of course DOD knows they are going to go

through a contractor, knows where to find them if they leave.

Mr. Chairman, I don’t know if we have any information on the

DOD experience. But one of the problems I have with this bill is

we already have an agency that can do it. At least they have the

waiver authority, they would certainly have hard to fill positions.

I would feel more comfortable knowing something about the experience that we already perhaps have, and anything DOD could tell

us about the kinds of positions they might have filled if they

weren’t hard to fill.

We also could find out from them whether they have abused the

matter, by looking at what is happening to them. I don’t know if

a GAO report has ever been done on what GAO does.

But this may be the only answer that is available now. But to

the extent that we have any experience, it does seem to me that

we would want to document that experience before moving forward

with this bill.

Thank you very much, Mr. Chairman.

Mr. DAVIS OF ILLINOIS. Thank you very much. Let me just ask,

are we finding that with people living longer, having a different

health status in terms of health status improvement, and early retirement, that there is a greater desire on the part of people who

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retire to have something else to do after they have retired which

may be work or may be something else?

Mr. ADCOCK. Speaking for our members, I know that once they

retire, most of them want to stay that way. It is something that

they have earned, they are looking forward to it, they want to

spend time with their grandchildren and enjoy the good life.

But I think that what happens for many people is they go from

working 1 day, basically going from 60 to zero and being retired

the next day, and trying to figure out, what are they going to do

with the rest of their life. I think maybe some of them over a number of years decide, well, there are really things that I really miss

about work. The idea of coming back on a temporary part-time

basis is something that is really appealing, particularly if there is

something that they have some sort of special skill that is in demand or that addresses some national crisis or priority that we

have right now. I think those are situations in which more retirees

are interested in coming back to work.

Ms. GILMAN. I would add that I think that is probably the case

that some retirees want to stay retired, others may want to go back

to work. Or some may want to do something in between, like work

part-time.

Mr. DAVIS OF ILLINOIS. Do you think that there are many who

are driven now by the state of the economy? I hear individuals suggest that they have a need, quite frankly, to earn additional money,

in addition to what they are receiving as annuities.

Mr. ADCOCK. I know that for retirees, that is especially true.

When you look at what their costs are, if you are in Blue Cross

Blue Shield’s standard option family plan, they are paying $3,400

in premiums every year. If they are in Medicare Part B they are

paying upwards of, I think it is about $98 a month now for that

premium. Then you pile on whatever out of pocket expenses they

have. Then if they are hit by the Government Pension Offset and

Windfall Elimination provision, they are not receiving any Social

Security benefits.

You get down to, there is a woman we had testify at the Ways

and Means Social Subcommittee who was affected by both the

Windfall Elimination provision and the Government Pension Offset. She had a very low annuity to start with. You are essentially

forcing people to go back and work at Wal-Mart in order to basically survive.

I think especially when we are talking about people who are on

the lower to mid-end of the annuity scale, who are really struggling

to pay a lot of these expenses, like health care expenses and now

of course energy costs, that work is not just something that is optional, it is something they have to do.

Ms. GILMAN. I would agree with that.

Mr. DAVIS OF ILLINOIS. Mr. Marchant, did you have any other

questions?

Mr. MARCHANT. No, sir.

Mr. DAVIS OF ILLINOIS. Thank you all very much.

Ms. NORTON. Could I just say one more thing?

I think Mr. Adcock makes an important case. We think of annuitants in terms of the people we see around us, this is what, a 2

million work force? I do think anybody who would want to come

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back, even under the waiver authority we are talking about, almost

certainly would be a very valuable employee. Because I believe that

there are other options for the most part. I would hate to deny

those people the opportunity to come back.

My sense is they may be very few. They may be so few that it

may do no harm if the agencies do not abuse the waiver and essentially use it in ways that would worsen our work force problem.

The way I am talking about worsening our work force problem

is leaving huge gaps of employee places that you don’t try to fill

any more. Because the agency has developed the habit of, maybe

let’s see if we can find an annuitant. And yet where it is our belief,

it would be the belief of perhaps the agencies that have full-time

employees who carry over from year to year would be most important.

So I think the standards part is very important. If they are not

hard to fill positions, and many agencies don’t have hard to fill positions, frankly, in fact, most agencies don’t have positions that are

‘‘hard to fill,’’ I certainly believe that you need only look at the statistics on people going back to work, and even before we got to near

recession conditions, to know that many people are going back to

work to live, that the combined cost that retirees face now, even

with the pharmaceutical bill, even with Medicare, have put a real

hurt on many of them.

That is why I am very interested in who would be interested. My

own hypothesis is that they would not come out of the woodwork,

and those who did would probably be the best of the best, because

they would be coming because they loved their work in the Federal

Government. There are many, many Federal employees like that.

This has been the great and important, great wonder of our work

force. Despite all of the very bad and undeserved rap that has been

on them, it is an extraordinary work force.

The one thing I would ask the subcommittee to get is, whatever

summary of the DOD experience can help us understand what we

are talking about, or perhaps other agencies as well. But since

DOD has been able to do it, it seems to me you have a perfect laboratory right there. I guess they were supposed to do it only in

hard to fill positions. But we could then see what that meant in

some setting. I certainly think that if there are retirees who want

to come back, and I would love to see you, Mr. Adcock, or somebody

who had the capacity to do it, do a survey. If you could return, if

there were this waiver, would you do so? I should think OPM

would have done that before coming forward with this bill.

Thank you, Mr. Chairman.

Mr. DAVIS OF ILLINOIS. Thank you very much. I thank you both.

This hearing is adjourned.

[Whereupon, at 3:35 p.m., the subcommittee was adjourned.]

[The prepared statement of Hon. Stephen F. Lynch and additional information submitted for the hearing record follow:]

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