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Key developments in the world of federal employee benefits: health, pay, and much more.
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Defense Would Get the Most Mileage From Trimming Pay, Benefits

Thanks to sequestration, the Defense Department will have to reduce its spending by $500 billion over the next 10 years.

Despite congressional resistance, Pentagon leaders -- up to and including the commander in chief -- have repeatedly sought to rein in compensation for military members and retirees in order to reach the reduced spending level.

A new report from the Congressional Budget Office underscored this point, noting non-pay and benefits changes -- such as using existing or cheaper weapons systems -- would only achieve a fraction of the necessary cuts.

The most significant compensation reduction option, CBO found, would come from cutting retirement pay for veterans already receiving disability payments from the Veterans Affairs Department. Prior to 2004, military retirees -- former personnel with 20 years of service -- had their retirement pay reduced by the amount of any VA disability compensation they also received. Moving back to that system would save Defense $108 billion over the next decade, according to CBO.

The non-partisan budget office said the current system compensates disabled veterans twice for their service, but the two payments reward “different characteristics of military service.”

Cutting compensation for veterans has proven nearly impossible in Congress. The 2013 Bipartisan Budget Act cut $6 billion from ...

Agencies, Congress Work to Ensure Government Isn’t Overpaying Employees

The next paycheck for some federal contractors will be a lot a smaller. Or at least the portion paid by Uncle Sam.

The Defense Department, General Services Administration and NASA issued an interim rule on Tuesday to lower the maximum reimbursable pay for federal contractors by nearly half. The rule goes into effect immediately.

Congress passed the new cap as part of the 2013 Bipartisan Budget Act, enacted late last year to set the spending levels for fiscal years 2014 and 2015. The law reduced the cap from $952,308 to $487,000, a 49 percent decrease. All new contracts signed, or costs incurred on old contracts, on or after Tuesday will only reimburse private employees at the new rate. Contracted companies can pay their employees more, but must do so on their own dime.

The reduction is coupled with a recently finalized rule that expanded the cap to all contract employees working with Defense, GSA and NASA, rather than just the five highest paid executives. That rule drew the ire of the federal contracting community -- in part because it was retroactive to 2012. The new reduction also angered contractors.

The cap spiked to its recent $952,308 figure at ...

COLA On Track to Be Bigger in 2015

Federal and military retirees are on track to receive the largest cost-of-living adjustment that they’ve seen in a few years.

The exact cost-of-living adjustment for 2015 won’t be known until October when all the numbers are in, but plugging into the formula the latest available data results in a 1.7 percent increase. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which the COLA is based on, rose 0.3 percent in May, and if trends continue, will increase during the next four months. The CPI-W measures price changes in food, housing, gas and other goods and services; it could drop during the third quarter, but it’s unlikely, meaning retirees could receive a COLA bump next year that is more than 1.7 percent.

The Bureau of Labor Statistics released the May CPI numbers on June 17. The agency will release the June numbers on July 22.

The average of the 2014 July, August and September consumer price numbers, along with the average figure from the third quarter of 2013, will be used to calculate the 2015 COLA. The annual COLAs are based on the percentage increase (if any) in the average Consumer ...

Retirement Claims Backlog Could Be Eliminated by Year’s End

The Office of Personnel Management continued to chip away at the retirement claims backlog last month, decreasing it by 12 percent between April and May, and processing more applications than expected.

The backlog at the end of May was 14,551 claims -- the lowest it has been since December 2013, when there were 12,637 applications in the queue. The agency typically receives an influx of new retirement claims at the beginning of the year on top of the current backlog. OPM also received 1,631 more new claims in May than it expected, and processed a total of 10,498 applications last month, 1,498 more claims than its projected goal.  

Since January, the agency has processed a total of 50,803 retirement claims.

It is possible OPM will come close to eliminating the decades-old backlog by the end of the year; it’s only June and the backlog is already down around where it was in October and November of last year. OPM originally attempted to eliminate the backlog by the summer of 2013, but sequestration forced the agency to scale back its ambitions.

In March, a bipartisan group of senators blasted OPM for wasting taxpayer dollars by ...

A VA Fix That Goes Beyond Banning Bonuses

Lawmakers, advocates and bystanders alike have proclaimed myriad reasons to explain the Veterans Affairs Department’s delays in health care and ensuing cover up scandal.

Poor management, lazy bureaucrats and a general complacency toward veterans have been popular pabulums voiced by the outraged-at-large.

Another prevailing explanation is even simpler: money.

VA critics have said performance awards, or bonuses, were granted to those who kept wait lists down. This implicitly encouraged agency employees to alter wait time data, or keep them secret altogether.

“As the reports [into the VA scandal] make painfully obvious, the environment in today’s Veterans Health Administration is one in which some VA health officials are so driven in their quest for performance bonuses, promotions and power that they are willing to lie, cheat and put the health of the veterans they were hired to serve at risk,” wrote Rep. Jeff Miller, R-Fla., chairman of the House Veterans’ Affairs Committee, in an op-ed earlier this week.

The VA itself supported this notion, finding in its “phase one” audit that a measurable, outcome-driven performance management system created an incentive for deceptions.

“When tied to rewards” internal agency auditors wrote, “measurement of system performance runs the risk of engendering ...