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[Senate Report 111-231]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 484
111th Congress                                                   Report
 2d Session                      SENATE                         111-231
_______________________________________________________________________

         UNITED STATES SECRET SERVICE RETIREMENT ACT OF 2009

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 1862

     TO PROVIDE THAT CERTAIN SECRET SERVICE EMPLOYEES MAY ELECT TO 
 TRANSITION TO COVERAGE UNDER THE DISTRICT OF COLUMBIA POLICE AND FIRE 
                FIGHTER RETIREMENT AND DISABILITY SYSTEM

                 July 26, 2010.--Ordered to be printed

        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
JON TESTER, Montana                  LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois
EDWARD E. KAUFMAN, Delaware

                  Michael L. Alexander, Staff Director
                     Kevin J. Landy, Chief Counsel
                        Kenya N. Wiley, Counsel
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
        Amanda Wood, Minority Director for Governmental Affairs
                  Trina Driessnack Tyrer, Chief Clerk

                                                       Calendar No. 484
111th Congress                                                   Report
                                 SENATE
 2d Session                                                     111-231

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

 
                UNITED STATES SECRET SERVICE RETIREMENT
                              ACT OF 2009

                                _______
                                

                 July 26, 2010.--Ordered to be printed

                                _______
                                

Mr. Lieberman, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                                 REPORT

                         [To accompany S. 1862]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 1862) to provide 
that certain Secret Service employees may elect to transition 
to coverage under the District of Columbia Police and Fire 
Fighter Retirement and Disability System, having considered the 
same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
 IV. Section-by-Section Analysis......................................3
  V. Evaluation of Regulatory Impact..................................4
 VI. Congressional Budget Office Estimate.............................5
VII. Changes in Existing Law Made by the Bill, as Reported............8

                         I. PURPOSE AND SUMMARY

    The purpose of S. 1862 is to permit certain employees of 
the U.S. Secret Service (USSS) who were hired between January 
1, 1984 and December 31, 1986, to transfer from the Federal 
Employees' Retirement System (FERS) to the District of Columbia 
Police and Firefighter Retirement and Disability System (DC 
Retirement System). The bill would thereby resolve a 
longstanding dispute between the federal government and these 
employees regarding the employees' appropriate retirement 
coverage and help ensure that the USSS does not lose a 
significant number of highly experienced and critical 
personnel.

              II. BACKGROUND AND NEED FOR THE LEGISLATION

    The Uniformed Division (UD) of the USSS has its origins in 
a local District of Columbia special police force dedicated to 
protecting the White House, known as the White House Police. 
Although UD officers became federal employees in the first half 
of the last century, the local origins of the USSS led to an 
unusual situation in which these federal employees, as well as 
their colleagues in the Secret Service division responsible for 
protecting current and former Presidents and their families 
(Secret Service agents),\1\ received their retirement coverage 
under the DC Retirement System.\2\ That began to change in the 
mid-1980s, when Congress enacted sweeping reforms to Federal 
employees' retirement coverage. The Federal Employees' 
Retirement System Act of 1986 (``the FERS Act'') began the 
process of phasing out the Civil Service Retirement System 
(CSRS) by putting most federal employees hired thereafter into 
the Federal Employees' Retirement System, which was slated to 
be up and running in 1987. The FERS Act required Federal 
employees to make Social Security contributions and made them 
eligible for Social Security benefits upon retirement. The FERS 
Act also established the Thrift Savings Plan, a defined 
contribution plan where each employee makes contributions into 
an individual account. The Executive Branch has long 
interpreted the FERS Act as requiring members of the U.S. 
Secret Service Division (USSS agents) and the U.S. Secret 
Service Uniformed Division (UD officers) hired after December 
31, 1983 to receive their retirement coverage through FERS, not 
the DC Retirement System.\3\
---------------------------------------------------------------------------
    \1\Unlike Uniformed Division Officers, who were automatically 
placed into the DC Retirement System, agents who were hired before 
January 1, 1984 who had accrued 10 years of protection time were 
eligible to transfer into the DC Retirement System.
    \2\The USSS reimburses the District of Columbia on a monthly basis 
to cover the cost of annuity benefits for UD officers and agents, 
pursuant to P.L. 71-221 and P.L. 76-847.
    \3\See USSS memorandum on the District of Columbia Police and 
Firefighters Retirement and Disability System, March 27, 2001.
---------------------------------------------------------------------------
    USSS agents and UD officers hired between January 1, 1984 
and December 31, 1986, however, have since then alleged that 
the USSS, in part as a recruiting and subsequently retention 
tool, promised them eligibility for retirement under the more 
generous DC Retirement System.\4\ Many of them have filed 
judicial or administrative actions seeking to obtain coverage 
under the DC Retirement System, but they have thus far been 
unsuccessful in obtaining relief.\5\
---------------------------------------------------------------------------
    \4\Numerous agents and officers submitted letters to senior USSS 
employees attesting that when they were recruited, they were informed 
of the generous retirement system and the ability to participate in the 
DC Retirement System.
    \5\The USSS agents and UD officers have pursued actions to 
participate in the DC Retirement System through the Office of Personnel 
Management (OPM), the Merit Systems Protection Board (MSPB), the U.S. 
Secret Service, and the U.S. District Court for the District of 
Columbia.
---------------------------------------------------------------------------
    After reviewing the matter, the Committee has determined 
that both fairness and the interests of the government in 
retaining the services of these highly qualified and 
experienced USSS employees warrants enabling certain USSS 
agents and UD officers to transfer from the FERS system to the 
DC Retirement System. Most importantly, as an increasing number 
of this group of agents and officers become eligible for 
retirement\6\ without the option to elect into the DC 
Retirement System, many are leaving the Secret Service for 
higher-paying positions in the private sector.\7\ The reasons 
are clear: Secret Service employees participating in the DC 
Retirement System have a significantly greater incentive to 
continue working after 20 years of service than do those 
covered by FERS. Those covered by the DC Retirement System 
receive an additional 3 percent of their pay for each year they 
work after twenty years of service, while FERS employees 
receive only an additional 1 percent for each year over twenty.
---------------------------------------------------------------------------
    \6\The number of FERS retirees covered under S. 1862 retiring every 
year has increased from 4 retirees in Fiscal Year 2004 to 10 retirees 
in Fiscal Year 2009. Currently, 146 agents and officers hired between 
1984 and 1986 are eligible to retire.
    \7\According to the USSS, more than 60 percent of the agents and 
officers eligible to retire hold senior leadership positions within the 
agency.
---------------------------------------------------------------------------
    To remedy this situation, S. 1862 would offer a very 
carefully defined group of UD officers and Secret Service 
agents the opportunity to transfer into the DC Retirement 
System.\8\ Only agents and officers hired between January 1, 
1984 and December 31, 1986 would be eligible to transfer into 
the DC Retirement System. In order to make the transfer, the 
employees would have to apply and would agree to give up 
certain benefits they received under FERS, such as eligibility 
to receive Social Security in the future. Also, S. 1862 would 
only apply to current Secret Service employees, and thus, this 
legislation would not be applicable to current retirees who 
were hired between January 1, 1984 and December 31, 1986.
---------------------------------------------------------------------------
    \8\The USSS informs the Committee that the bill would apply to 
approximately 180 employees.
---------------------------------------------------------------------------

                        III. LEGISLATIVE HISTORY

    S. 1862 was introduced by Senator Lieberman on October 22, 
2009 and referred to the Committee. Senator Akaka was added as 
a cosponsor on October 29, 2009. The Committee considered the 
bill on November 4, 2009, and then reported the bill to the 
full Senate favorably by voice vote. Chairman Lieberman, 
Senators Levin, Akaka, Carper, Pryor, Landrieu, Burris, 
Collins, and Bennett were present.

                    IV. SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    This section provides that the short title of the bill is 
the ``United States Secret Service Retirement Act of 2009.''

Section 2. Retirement treatment of certain Secret Service employees

    This section sets forth the criteria for coverage under S. 
1862 and the procedures for transferring covered USSS employees 
from FERS to the DC Retirement System.
    Subsection (a) defines ``covered employees'' as individuals 
who: (1) were hired as members of the U.S. Secret Service 
Division (USSS agents) or the U.S. Secret Service Uniformed 
Division (UD officers) between January 1, 1984 through December 
31, 1986; (2) actively performed duties directly related to the 
protection mission of the USSS for 10 or more years; (3) serve 
as agents or UD officers on the effective date of S. 1862; and 
(4) file an election to be covered employees under S. 1862.
    Subsection (b) provides that not later than 60 days after 
the date of enactment of this Act, covered employees under 
subsection (a) shall file an election with the USSS to be a 
covered employee and to transition to the DC Retirement System. 
It also requires that within 30 days of enactment of this Act, 
the Office of Personnel Management and the USSS shall notify 
USSS employees of the enactment of S. 1862 and that covered 
employees are qualified to file an election.
    Subsection (c) provides that within 180 days of the date of 
enactment of this Act, and in consultation with the Secretary 
of Homeland Security and the Thrift Savings Board, the Office 
of Personnel Management shall prescribe regulations regarding 
the transition of covered USSS agents and UD officers from FERS 
to CSRS.
    Subsection (c)(2)(A) provides that after a covered employee 
files an election under subsection (b), the covered employee 
shall be converted from FERS to CSRS, and then to the DC 
Retirement System. All funds held for the covered employees 
shall be transferred from FERS to CSRS, and then to the general 
revenues of the District of Columbia. S. 1862 also provides 
that all covered employees shall be entitled to the same 
benefits as the other participants of the DC Retirement System.
    Subsection(c)(2)(B) provides that a covered employee who 
transfers to the DC Retirement System forfeits the portion of 
his or her TSP account that came from federal agency 
contributions and associated earnings, but keeps the portion 
that derived from his or her own contributions. Covered 
employees may keep the employee contributions in their TSP 
accounts or withdraw or transfer their contributions in 
accordance with the Federal Retirement Thrift Investment 
Board's rules and regulations.
    Subsection (c)(2)(C) provides that upon conversion into the 
CSRS, a covered employee shall forfeit all contributions made 
for purposes of title II of the Social Security Act, meaning 
that, like other employees covered by the DC system, they will 
give up eligibility to receive Social Security upon retirement. 
Subsection (c)(2)(C) provides that S. 1862 will not affect the 
covered employees' contributions to Medicare. Finally, this 
subsection provides that the Office of Personnel Management, 
the Department of Homeland Security, the Social Security 
Administration, and the Thrift Savings Board shall take the 
necessary actions to implement S. 1862.
    Subsection (d) provides that S. 1862 shall take effect on 
the first day of the first applicable pay period that begins 
180 days after the date of enactment of this Act. The election 
of coverage pursuant to subsection (b) and the provisions under 
subsection (c)(1) and (c)(3) shall take effect on the date of 
enactment of this Act.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of S. 1862. The Congressional 
Budget Office states that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandate Reform Act and would impose no costs on state, 
local, or tribal governments, or private entities. The 
enactment of this legislation will not have significant 
regulatory impact.

             VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, December 3, 2009.
Hon. Joseph I. Lieberman,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1862, the U.S. 
Secret Service Retirement Act of 2009.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Santiago 
Vallinas.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

S. 1862--United States Secret Service Retirement Act of 2009

    Summary: S. 1862 would provide a 60-day period after 
enactment of the bill during which certain employees of the 
U.S. Secret Service hired between January 1, 1984, and December 
31, 1986, could elect to receive coverage under the District of 
Columbia Police and Firefighter Retirement and Disability 
System (DC system). Such a transition would increase benefit 
payments as well as affect individual and agency contributions 
to Social Security and the Thrift Savings Plan (TSP).
    CBO estimates that enacting S. 1862 would, on net, increase 
direct spending by $12 million over the 2010-2019 period, 
mostly as a result of additional retirement benefits paid to 
the affected employees. The bill also would eliminate employee 
contributions to the Federal Employee Retirement System (FERS) 
and Social Security by those employees, reducing revenues by $2 
million over the 2010-2019 period. On balance, CBO estimates 
that enacting S. 1862 would increase the deficit by $14 million 
over the 2010-2019 period, consisting of a $15 million increase 
in the on-budget deficit and a $1 million reduction in the off-
budget deficit (Social Security effects are classified as off-
budget).
    CBO also estimates that implementing the bill would lower 
discretionary spending by $13 million over the 2010-2019 
period, because agency contributions to Social Security, FERS, 
and TSP on behalf of those employees would cease. Such 
reductions assume discretionary spending would be reduced by 
the estimated amounts. The bill contains no intergovernmental 
or private-sector mandates as defined in the Unfunded Mandates 
Reform Act (UMRA) and would not affect the budgets of state, 
local, or tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1862 is shown in the following table. 
The direct spending impacts of the bill fall within budget 
functions 600 (income security), 650 (Social Security). The 
discretionary costs fall within budget function 750 
(administration of justice).

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                                                                             By fiscal year, in millions of dollars--
                                         ---------------------------------------------------------------------------------------------------------------
                                            2010     2011     2012     2013     2014     2015     2016     2017     2018     2019   2010-2014  2010-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          CHANGES IN DIRECT SPENDING (OUTLAYS)Total Changes in Direct Spending........        *        *        *        1        1        2        2        2        2        2         2         12
    On-Budget Spending..................        *        *        *        1        1        2        2        2        2        2         2         14
    Off-Budget Spending.................        0        0        0        0        *        *        *        *       -1       -1         *         -2                                                                   CHANGES IN REVENUESTotal Changes in Revenues...............        *       -1       -1        *        *        *        0        0        0        0        -2         -2
     On-Budget Revenues.................        *        *        *        *        *        *        0        0        0        0        -1         -1
    Off-Budget Revenues.................        *       -1        *        *        *        0        0        0        0        0        -1         -1                                               NET IMPACT ON THE DEFICIT FROM REVENUES AND DIRECT SPENDINGNet Effect on Deficit\1\................        1        1        1        1        1        2        2        2        2        2         4         14
    On-Budget Effects...................        *        1        *        1        1        2        2        2        2        2         3         15
    Off-Budget Effects..................        *        1        *        *        *        *        *        *       -1       -1         1         -1                                                CHANGES IN SPENDING SUBJECT TO APPROPRIATION (ON-BUDGET)Estimated Authorization Level...........        *       -2       -5       -3       -2       -1        0        0        0        0       -12        -13
Estimated Outlays.......................        *       -2       -5       -3       -2       -1        0        0        0        0       -12        -13
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Memorandum:
Total Intragovernmental Collections from        *        2        4        3        2        1        0        0        0        0        10         11
 Agency Contributions...................
    On-Budget...........................        0        1        4        2        2        1        0        0        0        0         9         10
    Off-Budget..........................        *        1        *        *        *        0        0        0        0        0         1         1
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\1\Negative numbers represent decreases in the deficit; positive numbers indicate increases in the deficit.
\2\Agency contributions are intragovernmental transactions that do not affect the deficit.
Notes: Components may not sum to totals because of rounding.
      Off-budget effects reflect changes in revenues and spending in Social Security.
      * = between -$500,000 and $500,000.

    Basis of estimate: Based on information from the Department 
of Homeland Security, CBO estimates that 180 employees of the 
Secret Service would be eligible to transfer to the DC system 
under S. 1862, and that 90 percent of them would choose to 
transfer. For this estimate CBO assumes that S. 1862 will be 
enacted early in calendar year 2010.

Direct spending

    Because the DC system provides a higher basic pension than 
FERS, the current retirement plan for those Secret Service 
employees, CBO estimates that enacting the bill would result in 
additional spending of about $18 million for benefit payments 
to employees who transfer over the 2010-2019 period. (The DC 
system is run by the Washington, DC, government, but receives a 
payment from the federal government to cover certain 
employees.) That additional spending would be partially offset 
by $4 million in contributions that transitioning employees 
would make to the DC system. In addition, the bill stipulates 
that employees who elect to change to the DC system would 
forfeit any Social Security benefits that would be based on 
their earnings as employees of the Secret Service. That 
provision would reduce direct spending on Social Security 
benefits by $2 million (off-budget) over the 10-year period. 
CBO estimates that, in total, those changes would lead to a net 
increase in direct spending of $12 million over the 2010-2019 
period.

Revenues

    CBO estimates that enacting S. 1862 would reduce revenues 
over the 2010-2019 period by $2 million because individuals who 
elect to transfer to the DC system under the bill would no 
longer contribute to Social Security or FERS. Those 
contributions are recorded on the budget as revenues. The 
reduction in Social Security revenues ($1 million) would be 
off-budget.

Spending subject to appropriation

    Under S. 1862 the Secret Service would no longer make 
contributions to FERS, TSP, or Social Security for employees 
who move to the DC system. CBO estimates that spending subject 
to appropriation for the Secret Service thus would decline by 
$13 million over the 2010-2019 period. Such reductions in 
discretionary spending assume appropriations would be reduced 
by the estimated amounts. Contributions to FERS and Social 
Security are intragovernmental transactions that are recorded 
as offsetting receipts elsewhere in the budget. CBO estimates 
that those forgone contributions would total about $11 million 
over the 2010-2019 period.
    Intergovernmental and private-sector impact: S. 1510 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal costs: Retirement--Santiago 
Vallinas and Jared Brewster Social Security--Sheila Dacey; 
Impact on state, local, and tribal governments: Elizabeth Cove 
Delisle; Impact on the private sector: Brian Prest.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

      VIII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    Because this legislation would not repeal or amend any 
provision of current law, it would make no changes in existing 
law within the meaning of clauses (a) and (b) of paragraph 12 
of rule XXVI of the Standing Rules of the Senate.

                                  
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