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[House Report 106-53]
[From the U.S. Government Publishing Office]

106th Congress                                                   Report
  1st Session           HOUSE OF REPRESENTATIVES                 106-53

=======================================================================

 
            FEDERAL RESERVE BOARD RETIREMENT PORTABILITY ACT

                                _______
                                

 March 16, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______

    Mr. Burton of Indiana, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 807]

    The Committee on Government Reform, to whom was referred 
the bill (H.R. 807) to amend title 5, United States Code, to 
provide portability of service credit for persons who leave 
employment with the Federal Reserve Board to take positions 
with other Government agencies, having considered the same, 
reports favorably thereon with amendments and recommends that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
   I. Summary of legislation......................................     4
  II. Background and need for the legislation.....................     4
 III. Legislative hearings and committee actions..................     5
  IV. Committee hearings and written testimony....................     5
   V. Explanation of the bill.....................................     7
  VI. Compliance with rule XIII...................................     8
 VII. Budget analysis and projections.............................     9
VIII. Cost estimate of the Congressional Budget Office............     9
  IX. Specific constitutional authority for the legislation.......     9
   X. Committee recommendation....................................     9
  XI. Congressional Accountability Act; Public Law 104-1..........    10
 XII. Unfunded Mandates Reform Act; Public Law 104-4, sect. 423...    10
XIII. Federal Advisory Committee Act (5 U.S.C. App.) section 5(b).    10
 XIV. Changes in existing law.....................................    10
  The amendments are as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Federal Reserve Board Retirement 
Portability Act''.

SEC. 2. PORTABILITY OF SERVICE CREDIT.

  (a) Creditable Service.--
          (1) In general.--Section 8411(b) of title 5, United States 
        Code, is amended--
                  (A) by striking ``and'' at the end of paragraph (3);
                  (B) in paragraph (4)--
                          (i) by striking ``of the preceding 
                        provisions'' and inserting ``other paragraph''; 
                        and
                          (ii) by striking the period at the end and 
                        inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(5) a period of service (other than any service under any 
        other paragraph of this subsection, any military service, and 
        any service performed in the employ of a Federal Reserve Bank) 
        that was creditable under the Bank Plan (as defined in 
        subsection (i)), if the employee waives credit for such service 
        under the Bank Plan and makes a payment to the Fund equal to 
        the amount that would have been deducted from pay under section 
        8422(a) had the employee been subject to this chapter during 
        such period of service (together with interest on such amount 
        computed under paragraphs (2) and (3) of section 8334(e)).
Paragraph (5) shall not apply in the case of any employee as to whom 
subsection (g) (or, to the extent subchapter III of chapter 83 is 
involved, section 8332(n)) otherwise applies.''.
          (2) Bank plan defined.--Section 8411 of title 5, United 
        States Code, is amended by adding at the end the following:
  ``(i) For purposes of subsection (b)(5), the term `Bank Plan' means 
the benefit structure in which employees of the Board of Governors of 
the Federal Reserve System appointed on or after January 1, 1984, 
participate, which benefit structure is a component of the Retirement 
Plan for Employees of the Federal Reserve System, established under 
section 10 of the Federal Reserve Act (and any redesignated or 
successor version of such benefit structure, if so identified in 
writing by the Board of Governors of the Federal Reserve System for 
purposes of this chapter).''.
  (b) Exclusion From Chapter 84.--
          (1) In general.--Paragraph (2) of section 8402(b) of title 5, 
        United States Code, is amended by striking the matter before 
        subparagraph (B) and inserting the following:
          ``(2)(A) any employee or Member who has separated from the 
        service after--
                          ``(i) having been subject to--
                                  ``(I) subchapter III of chapter 83 of 
                                this title;
                                  ``(II) subchapter I of chapter 8 of 
                                title I of the Foreign Service Act of 
                                1980; or
                                  ``(III) the benefit structure for 
                                employees of the Board of Governors of 
                                the Federal Reserve System appointed 
                                before January 1, 1984, that is a 
                                component of the Retirement Plan for 
                                Employees of the Federal Reserve 
                                System, established under section 10 of 
                                the Federal Reserve Act; and
                          ``(ii) having completed--
                                  ``(I) at least 5 years of civilian 
                                service creditable under subchapter III 
                                of chapter 83 of this title;
                                  ``(II) at least 5 years of civilian 
                                service creditable under subchapter I 
                                of chapter 8 of title I of the Foreign 
                                Service Act of 1980; or
                                  ``(III) at least 5 years of civilian 
                                service (other than any service 
                                performed in the employ of a Federal 
                                Reserve Bank) creditable under the 
                                benefit structure for employees of the 
                                Board of Governors of the Federal 
                                Reserve System appointed before January 
                                1, 1984, that is a component of the 
                                Retirement Plan for Employees of the 
                                Federal Reserve System, established 
                                under section 10 of the Federal Reserve 
                                Act,
                        determined without regard to any deposit or 
                        redeposit requirement under either such 
                        subchapter or under such benefit structure, or 
                        any requirement that the individual become 
                        subject to either such subchapter or to such 
                        benefit structure after performing the service 
                        involved; or''.
          (2) Exception.--Subsection (d) of section 8402 of title 5, 
        United States Code, is amended to read as follows:
  ``(d) Paragraph (2) of subsection (b) shall not apply to an 
individual who--
          ``(1) becomes subject to--
                  ``(A) subchapter II of chapter 8 of title I of the 
                Foreign Service Act of 1980 (relating to the Foreign 
                Service Pension System) pursuant to an election; or
                  ``(B) the benefit structure in which employees of the 
                Board of Governors of the Federal Reserve System 
                appointed on or after January 1, 1984, participate, 
                which benefit structure is a component of the 
                Retirement Plan for Employees of the Federal Reserve 
                System, established under section 10 of the Federal 
                Reserve Act (and any redesignated or successor version 
                of such benefit structure, if so identified in writing 
                by the Board of Governors of the Federal Reserve System 
                for purposes of this chapter); and
          ``(2) subsequently enters a position in which, but for 
        paragraph (2) of subsection (b), such individual would be 
        subject to this chapter.''.
  (c) Provisions Relating to Certain Former Employees.--A former 
employee of the Board of Governors of the Federal Reserve System who--
          (1) has at least 5 years of civilian service (other than any 
        service performed in the employ of a Federal Reserve Bank) 
        creditable under the benefit structure for employees of the 
        Board of Governors of the Federal Reserve System appointed 
        before January 1, 1984, that is a component of the Retirement 
        Plan for Employees of the Federal Reserve System, established 
        under section 10 of the Federal Reserve Act;
          (2) was subsequently employed subject to the benefit 
        structure in which employees of the Board of Governors of the 
        Federal Reserve System appointed on or after January 1, 1984, 
        participate, which benefit structure is a component of the 
        Retirement Plan for Employees of the Federal Reserve System, 
        established under section 10 of the Federal Reserve Act (and 
        any redesignated or successor version of such benefit 
        structure, if so identified in writing by the Board of 
        Governors of the Federal Reserve System for purposes of chapter 
        84 of title 5, United States Code); and
          (3) after service described in paragraph (2), becomes subject 
        to and thereafter entitled to benefits under chapter 84 of 
        title 5, United States Code,
shall, for purposes of section 302 of the Federal Employees' Retirement 
System Act of 1986 (100 Stat. 601; 5 U.S.C. 8331 note) be considered to 
have become subject to chapter 84 of title 5, United States Code, 
pursuant to an election under section 301 of such Act.
  (d) Effective Date.--
          (1) In general.--Subject to succeeding provisions of this 
        subsection, this section and the amendments made by this 
        section shall take effect on the date of enactment of this Act.
          (2) Provisions relating to creditability and certain former 
        employees.--The amendments made by subsection (a) and the 
        provisions of subsection (c) shall apply only to individuals 
        who separate from service subject to chapter 84 of title 5, 
        United States Code, on or after the date of enactment of this 
        Act.
          (3) Provisions relating to exclusion from chapter.--The 
        amendments made by subsection (b) shall not apply to any former 
        employee of the Board of Governors of the Federal Reserve 
        System who, subsequent to his or her last period of service as 
        an employee of the Board of Governors of the Federal Reserve 
        System and prior to the date of enactment of this Act, became 
        subject to subchapter III of chapter 83 or chapter 84 of title 
        5, United States Code, under the law in effect at the time of 
        the individual's appointment.

SEC. 3. CERTAIN TRANSFERS TO BE TREATED AS A SEPARATION FROM SERVICE 
                    FOR PURPOSES OF THE THRIFT SAVINGS PLAN.

  (a) Amendments to Chapter 84 of Title 5, United States Code.--
          (1) In general.--Subchapter III of chapter 84 of title 5, 
        United States Code, is amended by inserting before section 8432 
        the following:

``Sec. 8431. Certain transfers to be treated as a separation

  ``(a) For purposes of this subchapter, separation from Government 
employment includes a transfer from a position that is subject to one 
of the retirement systems described in subsection (b) to a position 
that is not subject to any of them.
  ``(b) The retirement systems described in this subsection are--
          ``(1) the retirement system under this chapter;
          ``(2) the retirement system under subchapter III of chapter 
        83; and
          ``(3) any other retirement system under which individuals may 
        contribute to the Thrift Savings Fund through withholdings from 
        pay.''.
          (2) Clerical amendment.--The table of sections for chapter 84 
        of title 5, United States Code, is amended by inserting before 
        the item relating to section 8432 the following:

``8431. Certain transfers to be treated as a separation.''.

  (b) Conforming Amendments.--Subsection (b) of section 8351 of title 
5, United States Code, is amended by redesignating paragraph (11) as 
paragraph (8), and by adding at the end the following:
          ``(9) For the purpose of this section, separation from 
        Government employment includes a transfer described in section 
        8431.''.
  (c) Effective Date.--The amendments made by this section shall apply 
with respect to transfers occurring before, on, or after the date of 
enactment of this Act, except that, for purposes of applying such 
amendments with respect to any transfer occurring before such date of 
enactment, the date of such transfer shall be considered to be the date 
of enactment of this Act. The Executive Director (within the meaning of 
section 8401(13) of title 5, United States Code) may prescribe any 
regulations necessary to carry out this subsection.

SEC. 4. CLARIFYING AMENDMENTS.

  (a) In General.--Subsection (f) of section 3304 of title 5, United 
States Code, as added by section 2 of Public Law 105-339, is amended--
          (1) by striking paragraph (4);
          (2) by redesignating paragraphs (2) and (3) as paragraphs (3) 
        and (4), respectively; and
          (3) by inserting after paragraph (1) the following:
  ``(2) If selected, a preference eligible or veteran described in 
paragraph (1) shall acquire competitive status and shall receive a 
career or career-conditional appointment, as appropriate.''.
  (b) Effective Date.--The amendments made by subsection (a) shall take 
effect as if enacted on October 31, 1998.

  Amend the title so as to read:

      A bill to amend title 5, United States Code, to provide 
portability of service credit for persons who leave employment 
with the Federal Reserve Board to take positions with other 
Government agencies, and for other purposes.

                    I. Short Summary of Legislation

    This bill authorizes Federal Reserve Board employees who 
transfer to other federal agencies to receive credit under the 
Federal Employees Retirement System (FERS) for post-1988 Board 
employment. This legislation also permits employees who have 
transferred or will transfer to the Board to move the funds in 
their Thrift Savings Plan (TSP) accounts to the Board's Thrift 
Plan. The legislation also provides veterans hired under Public 
Law 105-339 with the same civil service protections and job 
opportunities as their co-workers.

              II. Background and Need for the Legislation

    H.R. 807, as amended, would permit those employees of the 
Board of Governors of the Federal Reserve hired after December 
31, 1983, when transferring to other federal agencies, to 
receive credit under the Federal Employees Retirement System 
(FERS) for their post-1988 Federal Reserve Board employment. 
Current statutory language prevents the transfer of credit for 
Board service after 1988. In most circumstances, this has the 
effect of causing former Board employees to receive a smaller 
annuity upon retirement than they would were they treated the 
same as employees of other federal agencies. H.R. 807 corrects 
this inequity by extending retirement portability for these 
federal employees.
    H.R. 807, as amended, would also allow federal employees 
who have transferred or will transfer to the Board to move the 
funds in their Thrift Savings Plan (TSP) accounts to the 
Board's Thrift Plan. Under current law, Federal employees 
participating in the Thrift Savings Plan who transfer to the 
Federal Reserve Board are not permitted to withdraw funds from 
their TSP accounts. This is because current law specifies that 
employees ``must separate from government employment'' in order 
to be entitled to withdraw funds. However, employment at the 
Board is considered to be ``government employment.'' Therefore, 
employees who transfer to the Board and commence participation 
in the Federal Reserve's retirement plan may not withdraw the 
funds in their TSP accounts. H.R. 807 offers a technical 
correction that remedies this problem by allowing these 
withdrawals.
    H.R. 807, as amended, also perfects Public Law 105-339, the 
Veterans Employment Opportunities Act of 1998. As enacted, PL 
105-339 allows veterans to compete for federal job vacancies 
previously restricted under internal agency promotion 
procedures. Under interpretation by the Office of Personnel 
Management, however, veterans hired under these procedures 
would not be accorded normal career status and would not enjoy 
full civil service protections. This amendment cures these 
problems and ensures that veterans would enjoy all of the 
promotional rights and protections possessed by other employees 
in federal service.

            III. Legislative Hearings and Committee Actions

    H.R. 807 was introduced on February 23, 1999, by the 
Honorable Joe Scarborough (R-FL), Chairman of the House 
Subcommittee on Civil Service. The bill was referred to the 
House Committee on Government Reform on February 23, 1999, and 
it was referred to the Subcommittee on Civil Service on 
February 25, 1999. The Subcommittee held a hearing and a mark 
up on February 25, 1999. No amendments were offered, and the 
measure was ordered favorably reported to the full Committee by 
voice vote. On March 10, 1999, the Committee on Government 
Reform met to consider the bill. Representative Scarborough 
offered an amendment in the nature of a substitute, which was 
approved by voice vote. Representative John L. Mica (R-FL) 
offered an amendment to the amendment in the nature of a 
substitute, which was also approved by voice vote. The 
Committee favorably reported the bill, as amended, to the full 
house by voice vote.

              IV. Committee Hearings and Written Testimony

Federal Reserve Board retirement portability

    The Subcommittee conducted a hearing comparing the Federal 
Reserve's retirement systems with the two major systems 
available to other federal employees, the Civil 
ServiceRetirement System (CSRS) and the Federal Employees Retirement 
System (FERS). Mr. Scarborough chaired the hearing, with Mrs. Morella, 
Mr. Cummings, and Mrs. Norton also participating. Mr. Scarborough noted 
that the Federal Reserve System operates a well-funded retirement 
system which provides a more generous retirement benefit to employees 
at a reduced cost to both the agency and at no cost to taxpayers. When 
employees transfer to the Federal Reserve from agencies operating under 
other federal retirement systems, the Federal Reserve has consistently 
credited their other federal service for purposes of retirement 
benefits under the Federal Reserve's retirement systems. Employees 
being recruited by other federal agencies, however, are not treated 
reciprocally. Thus, if Federal Reserve employees are being recruited by 
other agencies, they face the potential of reduced retirement benefits 
because their service with the Federal Reserve would not be credited as 
federal service under FERS. H.R. 807, the Federal Reserve Retirement 
Portbility Act of 1999 would authorize FERS credit for service with the 
Federal Reserve, thus eliminating this potential obstacle impairing 
employees' willingness to consider opportunities with other agencies.
    Mr. Scarborough contrasted the ``pay-as-you-go'' funding 
mechanism of CSRS and FERS, which have unfunded liabilities 
totaling a reported $512.4 billion, with the Federal Reserve's 
asset portfolio consisting of 80 percent common and preferred 
stocks and other market equities. The Federal Reserve's 
retirement programs possess $7 billion in assets which 
capitalize future retirement benefits. Not only has the fund 
generated sufficient revenues to pay annuities, but it has 
provided the source of revenue for both the employer's and the 
employees' contributions since 1986. In contrast, federal 
employees and annuitants in CSRS and FERS have experienced 
delays in payment of their cost-of-living adjustments (COLAs), 
increases in retirement contributions paid by themselves and 
their agencies, and intermittent proposals for future 
reductions in benefits. Such legislation has been part of 
policy discussions in each recent Reconciliation package. Mr. 
Scarborough concluded, ``The Federal Reserve's management of 
its retirement system demonstrates that it is possible to fund 
full benefits for employees without imposing a growing burden 
on future taxpayers.''
    Mr. Cummings noted that this retirement portability problem 
results from an oversight in the Federal Employees Retirement 
System Act of 1986. It affects approximately 60 current federal 
employees, and could affect as many as 1,000 employees in the 
future. Under current law, employment at the Federal Reserve 
after 1988 does not count as creditable federal service under 
FERS. H.R. 807 would end the inequity that results from this 
law, since federal employees transferring to the Federal 
Reserve already receive reciprocal credit for other federal 
service. Mr. Cummings noted the parallel with provisions 
already covering Foreign Service employees, and observed that 
the bill requires employees to surrender any claims to 
retirement benefits that could be considered ``double 
dipping.'' Mrs. Norton noted the importance of removing 
barriers to transfers between federal agencies when the federal 
workforce is in transition.
    Governor Edward W. Kelley, Jr., of the Federal Reserve 
reported that the Fed's Board of Governors strongly supports 
the legislation. He noted that the Board's retirement plans are 
qualified 401(k) plans under which the Bank and the Board, as 
employers are required to ensure funding adequate to pay the 
benefits. At the end of 1998, the current value of plan assets 
was $5.8 billion, with benefits accrued to date totaling $3.5 
billion. As a result of the surplus in theasset portfolio, 
since 1986 the Board's actuaries have concluded that employer 
contributions were unnecessary. The Federal Reserve Thrift Plan 
provides a defined contribution benefit, comparable to the Thrift 
Savings Plan for other federal employees. The Federal Reserve's thrift 
component, however, offers a post-tax option in addition to the tax 
deferred component, with employees able to save as much as 20 percent 
of their income, subject to the Internal Revenue Service annual limits. 
The retirement fund is supervised by a five-member oversight committee, 
which functions as a manager of fund managers, thus distancing itself 
from individual investment decisions and guarding against potential 
conflicts of interest. Performance of invested assets is measured 
against three benchmarks: (1) the expected long-term rate of return for 
investments, (2) comparison with a 36-month composite return index, and 
(3) against the plan's peer group in the Wilshire Trust Universe 
Comparison Service. Governor Kelley reported that the plan met or 
exceeded each of those benchmarks in recent years. Mrs. Morella noted 
that the advantage available for Federal Reserve employees to 
contribute to their defined contribution benefit far exceeds the 
opportunities available to many lower paid federal employees under 
either CSRS or FERS. In response, Mr. Kelley observed that many Federal 
Reserve employees consider their ability to contribute up to the IRS' 
cap a substantial benefit, and a large portion of these employees take 
advantage of the additional savings opportunity.
    Mr. Flynn observed that very few federal employees are 
covered in retirement plans comparable to the Federal 
Reserve's, so comparable legislation is unlikely to be required 
for other individual-agency federal retirement programs. He 
agreed that H.R. 807 would extend to Federal Reserve employees 
flexibility comparable to that already available to members of 
the Foreign Service. The Office of Personnel Management 
supports this legislation and assisted in its drafting.
    After Mr. Scarborough described the more generous benefits 
and lesser risk to the government of the Federal Reserve plan, 
Mr. Kelley noted that the equity component of the Federal 
Reserve's plan was established in 1934, and that it was, from 
the start, ``able to invest its funds more broadly than the 
Federal Government had invested its Trust Funds.'' The Board's 
plans have done particularly well, he observed, in the long 
bull market that has occurred since 1982. He further reported 
that surpluses generated by the retirement program's 
investments are booked as a credit against Federal Reserve 
income, so the taxpayers actually benefit from the revenues 
developed through the Federal Reserve's retirement investment 
practices. In response to further questioning, Mr. Kelley 
described firewalls that would prevent the Treasury making 
claims on surpluses in the Federal Reserve accounts. He 
contended that, once the funds are transferred to the 
retirement accounts, they become exclusively and legally 
dedicated to funding the benefits that the Board has contracted 
for with its beneficiaries. Mr. Kelley does not believe that it 
would be possible for the Federal Reserve Board to transfer the 
funds to the Treasury as was required of the District of 
Columbia Retirement Board.

       V. Explanation of the Bill as Reported: Section-by-Section

    Sec. 1. This section states that this Act may be cited as 
the ``Federal Reserve Board Retirement Portability Act.''
    Sec. 2. This section amends chapter 84 of title 5, United 
States Code, by providing forretirement service portability for 
Federal Reserve service after December 31, 1988, for employees who are 
later employed by other federal agencies.
    A new subsection (5) would be added to section 8411(b) to 
permit Federal Reserve Board employees who transfer to another 
federal agency in a position covered by FERS, and who were in 
the Federal Reserve Board's ``Bank Plan,'' to receive service 
credit under section 8411 for service credited under the ``Bank 
Plan.'' The term ``Bank Plan'' is specifically defined in 
subsection (5) to refer to the benefit structure of the Federal 
Reserve System's retirement plan in which employees of the 
Federal Reserve Board appointed after December 31, 1983, 
participate. To receive credit under FERS, Federal Reserve 
Board employees who transfer to a federal agency must waive 
their credit for service under the ``Bank Plan'' and they must 
make a mandatory contribution equal to the amount the 
transferring employee would have paid if he or she had 
participated in FERS for his or her entire period of Board 
employment, plus interest, in order to receive such service 
credit under FERS.
    Section 8402(b)(2)(A) currently states that someone who 
leaves federal employment having participated in CSRS, or in 
the equivalent FSPS provisions, and who had 5 years of civilian 
service under either CSRS or the equivalent FSPS provisions, 
shall not be permitted to participate in FERS. Section 
8402(b)(2)(A) is amended by adding the retirement benefit 
structure for Federal Reserve Board employees appointed prior 
to January 1, 1984, which is a Federal Reserve Board retirement 
plan equivalent to CSRS, so that the same exclusions that apply 
to CSRS and FSPS participants will apply to Board employees who 
served under that benefit structure.
    Section 8402(d) is amended to exclude those Federal Reserve 
Board employees who are in the Board's retirement benefit 
structure for employees hired after December 31, 1983 (this is 
referred to in a new subsection (5) of section 8411(b) as the 
``Bank Plan''), from the exclusionary provisions of section 
8402(b)(2); therefore, those employees will not be precluded 
from transferring their service to FERS provided that they 
transfer to another federal agency.
    The provisions of this Act shall apply prospectively, i.e., 
only individuals who retire after enactment may receive credit 
for service upon transferring from the Federal Reserve Board to 
another federal agency.
    Sec. 3. This section amends Subchapter III, of chapter 84 
of title 5, United States Code, by inserting a section 8431 
before section 8432. This is a technical correction that allows 
federal employees who have transferred or will transfer to the 
Federal Reserve Board to move the funds in their Thrift Savings 
Plan (TSP) accounts to the Board's Thrift Plan.
    Sec. 4. This section amends Subsection (f) of section 3304 
of title 5, United States Code, as added by section 2 of Public 
Law 105-339. PL 105-339 allows veterans to compete for federal 
job vacancies previously restricted under internal agency 
promotion procedures. However, under the interpretation of the 
Office of Personnel Management, veterans hired under these 
procedures would not be accorded normal career status and would 
not enjoy full civil service protections. This clarifying 
amendment ensures that veterans would enjoy all of the 
promotional rights and protections enjoyed by their co-workers.

                     VI. Compliance With Rule XIII

    Pursuant to the Rules of the House of Representatives, 
under the authority of rule XIII, clause 3(c)(1) and clause 
3(e), the results and findings from Committee oversight 
activities are incorporated in the bill and this report.

                  VII. Budget Analysis and Projections

    The budget analysis and projections required by section 
308(a) of the Congressional Budget Act of 1974 are contained in 
the estimate of the Congressional Budget Office.

         VIII. Cost Estimate of the Congressional Budget Office

To: George Nesterczuk, Committee on Government Reform.
From: Eric Rollins, CBO.
Date: March 15, 1999.
Re: Preliminary estimate for H.R. 807.

    As you requested, I have reviewed H.R. 807, the Federal 
Reserve Board Retirement Portability Act, as reported by the 
Committee on Government Reform on March 10, 1999. The bill 
would make changes to the Federal Employees' Retirement System 
(FERS) and the Thrift Savings Plan (TSP) that would benefit 
certain employees who have worked for both the federal 
government and the Federal Reserve Board of Governors.
    I estimate that H.R. 807 would not have a significant 
impact on the federal budget during the 2000-2004 period. 
Discretionary spending would decline by about $10,000 annually 
because the bill would allow certain employees to be covered by 
the Civil Service Retirement System's offset provisions instead 
of FERS, which has higher agency retirement contributions and 
requires agencies to make matching TSP contributions. Direct 
spending would increase slightly because the decline in agency 
retirement contributions would also reduce receipts received by 
the Civil Service trust fund. The bill would not have a 
significant impact on federal retirement benefits because the 
employees affected by the bill are generally still in the 
middle of their careers. Finally, revenues would increase by 
about $5,000 annually as employees make deposits to the Civil 
Service trust fund to receive credit under FERS for prior 
Federal Reserve service.
    Because this bill would affect direct spending and 
receipts, pay-as-you-go procedures would apply. This estimate 
is preliminary and subject to change. If you have any 
questions, please feel free to call me.

       IX. Specific Constitutional Authority for This Legislation

    Clauses 1 and 18 of Article I, Sec. 8 of the Constitution 
grant Congress the power to enact this law.

                      X. Committee Recommendation

    On March 10, 1999, a quorum being present, the Committee 
ordered the bill, as amended, favorably reported.

Committee on Government Reform, 106th Congress, Rollcall Vote

    Dated: March 10, 1999.
    Final: Passage of H.R. 807, as amended.
    Offered by: Hon. Joe Scarborough (FL).
    Adopted by voice vote.

    XI. Congressional Accountability Act; Public Law 104-1; Section 
                               102(B)(3)

    H.R. 807 affects employees of the legislation branch who 
transfer to the Federal Reserve Board, as well as employees who 
move from the Federal Reserve Board into the legislative 
branch.

    XII. Unfunded Mandates Reform Act; Public Law 104-4; Section 423

    In the opinion of the Committee, H.R. 807 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would not have any 
significant effects on the budgets of state, local, or tribal 
governments.

   XIII. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)

    The Committee finds that H.R. 807 does not establish or 
authorize establishment of an advisory committee within the 
definition of 5 U.S.C. App., Section 5(b).

       XIV. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *

PART III--EMPLOYEES

           *       *       *       *       *       *       *

Subpart B--Employment and Retention

           *       *       *       *       *       *       *

CHAPTER 33--EXAMINATION, SELECTION, AND PLACEMENT

           *       *       *       *       *       *       *

SUBCHAPTER I--EXAMINATION, CERTIFICATION, AND APPOINTMENT

           *       *       *       *       *       *       *

Sec. 3304. Competitive service; examinations

  (a) * * *

           *       *       *       *       *       *       *

  (f)(1) Preference eligibles or veterans who have been 
separated from the armed forces under honorable conditions 
after 3 years or more of active service may not be denied the 
opportunity to compete for vacant positions for which the 
agency making the announcement will accept applications from 
individuals outside its own workforce under merit promotion 
procedures.
  (2) If selected, a preference eligible or veteran described 
in paragraph (1) shall acquire competitive status and shall 
receive a career or career-conditional appointment, as 
appropriate.
  [(2)] (3) This subsection shall not be construed to confer an 
entitlement to veterans' preference that is not otherwise 
required by law.
  [(3)] (4) The area of consideration for all merit promotion 
announcements which include consideration of individuals of the 
Federal workforce shall indicate that preference eligibles and 
veterans who have been separated from the armed forces under 
honorable conditions after 3 years or more of active service 
are eligible to apply. The announcements shall be publicized in 
accordance with section 3327.
  [(4) The Office of Personnel Management shall establish an 
appointing authority to appoint such preference eligibles and 
veterans.]

           *       *       *       *       *       *       *

Subpart G--Insurance and Annuities

           *       *       *       *       *       *       *

CHAPTER 83--RETIREMENT

           *       *       *       *       *       *       *

SUBCHAPTER III--CIVIL SERVICE RETIREMENT

           *       *       *       *       *       *       *

Sec. 8351. Participation in the Thrift Savings Plan

  (a) * * *
  (b)(1) Except as otherwise provided in this subsection, the 
provisions of subchapters III and VII of chapter 84 of this 
title shall apply with respect to employees and Members making 
contributions to the Thrift Savings Fund under subsection (a) 
of this section.

           *       *       *       *       *       *       *

  [(11)] (8) In applying section 8432b to an employee 
contributing to the Thrift Savings Fund after being restored to 
or reemployed in a position subject to this subchapter, 
pursuant to chapter 43 of title 38--
          (A) any reference in such section to contributions 
        under section 8432(a) shall be considered a reference 
        to employee contributions under this section;
          (B) the contribution rate under section 
        8432b(b)(2)(A) shall be the maximum percentage 
        allowable under subsection (b)(2) of this section; and
          (C) subsections (c) and (d) of section 8432b shall be 
        disregarded.
          (9) For the purpose of this section, separation from 
        Government employment includes a transfer described in 
        section 8431.

           *       *       *       *       *       *       *

            CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec.
8401.  Definitions.
     * * * * * * *

                   SUBCHAPTER III--THRIFT SAVINGS PLAN

8431.  Certain transfers to be treated as a separation.

           *       *       *       *       *       *       *

SUBCHAPTER I--GENERAL PROVISIONS

           *       *       *       *       *       *       *

Sec. 8402. Federal Employees' Retirement System; exclusions

  (a) The provisions of this chapter comprise the Federal 
Employees' Retirement System.
  (b) The provisions of this chapter shall not apply with 
respect to--
          (1) * * *
          [(2)(A) any employee or Member who has separated from 
        the service after--
                  [(i) having been subject to subchapter III of 
                chapter 83 of this title, or subchapter I of 
                chapter 8 of the Foreign Service Act of 1980; 
                and
                  [(ii) having completed at least 5 years of 
                civilian service creditable under subchapter 
                III of chapter 83 of this title, or at least 5 
                years of civilian service creditable under 
                subchapter I of the Foreign Service Act of 1980 
                (determined without regard to any deposit or 
                redeposit requirement under either such 
                subchapter, or any requirement that the 
                individual become subject to either such 
                subchapter after performing the service 
                involved); or]
          (2)(A) any employee or Member who has separated from 
        the service after--
                          (i) having been subject to--
                                  (I) subchapter III of chapter 
                                83 of this title;
                                  (II) subchapter I of chapter 
                                8 of title I of the Foreign 
                                Service Act of 1980; or
                                  (III) the benefit structure 
                                for employees of the Board of 
                                Governors of the Federal 
                                Reserve System appointed before 
                                January 1, 1984, that is a 
                                component of the Retirement 
                                Plan for Employees of the 
                                Federal Reserve System, 
                                established under section 10 of 
                                the Federal Reserve Act; and
                          (ii) having completed--
                                  (I) at least 5 years of 
                                civilian service creditable 
                                under subchapter III of chapter 
                                83 of this title;
                                  (II) at least 5 years of 
                                civilian service creditable 
                                under subchapter I of chapter 8 
                                of title I of the Foreign 
                                Service Act of 1980; or
                                  (III) at least 5 years of 
                                civilian service (other than 
                                any service performed in the 
                                employ of a Federal Reserve 
                                Bank) creditable under the 
                                benefit structure for employees 
                                of the Board of Governors of 
                                the Federal Reserve System 
                                appointed before January 1, 
                                1984, that is a component of 
                                the Retirement Plan for 
                                Employees of the Federal 
                                Reserve System, established 
                                under section 10 of the Federal 
                                Reserve Act,
                        determined without regard to any 
                        deposit or redeposit requirement under 
                        either such subchapter or under such 
                        benefit structure, or any requirement 
                        that the individual become subject to 
                        either such subchapter or to such 
                        benefit structure after performing the 
                        service involved; or

           *       *       *       *       *       *       *

  [(d) Paragraph (2) of subsection (b) shall not apply to an 
individual who becomes subject to subchapter II of chapter 8 of 
title I of the Foreign Service Act of 1980 (relating to the 
Foreign Service Pension System) pursuant to an election and who 
subsequently enters a position in which, but for such paragraph 
(2), he would be subject to this chapter.]
  (d) Paragraph (2) of subsection (b) shall not apply to an 
individual who--
          (1) becomes subject to--
                  (A) subchapter II of chapter 8 of title I of 
                the Foreign Service Act of 1980 (relating to 
                the Foreign Service Pension System) pursuant to 
                an election; or
                  (B) the benefit structure in which employees 
                of the Board of Governors of the Federal 
                Reserve System appointed on or after January 1, 
                1984, participate, which benefit structure is a 
                component of the Retirement Plan for Employees 
                of the Federal Reserve System, established 
                under section 10 of the Federal Reserve Act 
                (and any redesignated or successor version of 
                such benefit structure, if so identified in 
                writing by the Board of Governors of the 
                Federal Reserve System for purposes of this 
                chapter); and
          (2) subsequently enters a position in which, but for 
        paragraph (2) of subsection (b), such individual would 
        be subject to this chapter.

           *       *       *       *       *       *       *

SUBCHAPTER II--BASIC ANNUITY

           *       *       *       *       *       *       *

Sec. 8411. Creditable service

  (a) * * *
  (b) For the purpose of this chapter, creditable service of an 
employee or Member includes--
          (1) * * *

           *       *       *       *       *       *       *

          (3) except as provided in subsection (f) or (h), any 
        civilian service (performed before January 1, 1989, 
        other than any service under paragraph (1) or (2)) 
        which, but for the amendments made by subsections 
        (a)(4) and (b) of section 202 of the Federal Employees' 
        Retirement System Act of 1986, would be creditable 
        under subchapter III of chapter 83 of this title 
        (determined without regard to any deposit or redeposit 
        requirement under such subchapter, any requirement that 
        the individual become subject to such subchapter after 
        performing the service involved, or any requirement 
        that the individual give notice in writing to the 
        official by whom such individual is paid of such 
        individual's desire to become subject to such 
        subchapter); [and]
          (4) a period of service (other than any service under 
        any [of the preceding provisions] other paragraph of 
        this subsection and other than any military service) 
        that was creditable under the Foreign Service Pension 
        System described in subchapter II of chapter 8 of the 
        Foreign Service Act of 1980, if the employee or Member 
        waives credit for such service under the Foreign 
        Service Pension System and makes a payment to the Fund 
        equal to the amount that would have been deducted from 
        pay under section 8422(a) had the employee been subject 
        to this chapter during such period of service (together 
        with interest on such amount computed under paragraphs 
        (2) and (3) of section 8334(e))[.]; and
          (5) a period of service (other than any service under 
        any other paragraph of this subsection, any military 
        service, and any service performed in the employ of a 
        Federal Reserve Bank) that was creditable under the 
        Bank Plan (as defined in subsection (i)), if the 
        employee waives credit for such service under the Bank 
        Plan and makes a payment to the Fund equal to the 
        amount that would have been deducted from pay under 
        section 8422(a) had the employee been subject to this 
        chapter during such period of service (together with 
        interest on such amount computed under paragraphs (2) 
        and (3) of section 8334(e)).
Paragraph (5) shall not apply in the case of any employee as to 
whom subsection (g) (or, to the extent subchapter III of 
chapter 83 is involved, section 8332(n)) otherwise applies.

           *       *       *       *       *       *       *

  (i) For purposes of subsection (b)(5), the term ``Bank Plan'' 
means the benefit structure in which employees of the Board of 
Governors of the Federal Reserve System appointed on or after 
January 1, 1984, participate, which benefit structure is a 
component of the Retirement Plan for Employees of the Federal 
Reserve System, established under section 10 of the Federal 
Reserve Act (and any redesignated or successor version of such 
benefit structure, if so identified in writing by the Board of 
Governors of the Federal Reserve System for purposes of this 
chapter).

           *       *       *       *       *       *       *

                  SUBCHAPTER III--THRIFT SAVINGS PLAN

Sec. 8431. Certain transfers to be treated as a separation

  (a) For purposes of this subchapter, separation from 
Government employment includes a transfer from a position that 
is subject to one of the retirement systems described in 
subsection (b) to a position that is not subject to any of 
them.
  (b) The retirement systems described in this subsection are--
          (1) the retirement system under this chapter;
          (2) the retirement system under subchapter III of 
        chapter 83; and
          (3) any other retirement system under which 
        individuals may contribute to the Thrift Savings Fund 
        through withholdings from pay.

           *       *       *       *       *       *       *

                                
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