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Key developments in the world of federal employee benefits: health, pay, and much more.

Hitting the Ceiling

The ongoing threat of government shutdown this year has sparked talk of furloughs and concern over federal pay. But there's another crisis looming that temporarily could affect employees' benefits -- the creep toward the debt ceiling.

When the federal government's spending outstrips its revenue, the Treasury can borrow money by selling bonds to the public; these bonds comprise the public debt of the United States. But when that debt increases toward the maximum allowed by current law, Congress either must reduce the debt or raise its ceiling. To avoid exceeding the ceiling, the Treasury secretary is authorized to temporarily suspend investment of amounts in the Civil Service Retirement and Disability Fund, and in the Thrift Savings Plan's government securities (G) fund, the most stable offering in TSP's portfolio of retirement investments. The G Fund is invested in interest-bearing Treasury securities -- bonds -- that comprise the public debt. The Civil Service Retirement Fund finances benefit payments under the Civil Service Retirement System and the basic retirement annuity of the Federal Employees' Retirement System, and those investments are made up of securities also considered part of the public debt.

The government will hit the congressionally mandated debt limit of $14.3 trillion sometime between April 15 and May 31, and so far Congress has not made much headway staving off that potential mess. House Speaker John Boehner, R-Ohio, has expressed resistance to raising the debt ceiling if more spending cuts don't materialize in the next iteration of the continuing resolution.

So what does this mean for feds? Not much, actually. Federal law (Sections 8348 and 8438 of U.S. Code Title 5) requires the Treasury secretary to refill the coffers of the G Fund and the CSRF once the issue of the debt ceiling is resolved, and to make up, in addition, for any interest lost on those investments during the suspension. This is what happened during the 1995-96 debt ceiling crisis.

"No one who has invested TSP contributions in the G Fund can suffer any reduction in assets or loss of interest income as a result of the actions taken by the secretary of the Treasury," stated a 2002 memo from the Congressional Research Service on federal employee retirement funds and the public debt limit.

In other words, you'll still get your money, even if Congress can't get it together to raise the debt ceiling in the near future.

Bargaining Bill

Earlier this week, Sen. Sherrod Brown, D-Ohio, reintroduced a bill (S. 572) that would expand Veterans Affairs Department health care professionals' collective bargaining rights relating to compensation.

Current law prohibits VA health care professionals from negotiating with management on a range of compensation issues. VA health workers, for instance, cannot collectively bargain when management withholds overtime, weekend premium pay or wage survey data.

Brown's bill would give VA workers the right to bargain over some of those issues, but not allow them to negotiate on basic pay. He introduced similar legislation in 2010.


Kellie Lunney covers federal pay and benefits issues, the budget process and financial management. After starting her career in journalism at Government Executive in 2000, she returned in 2008 after four years at sister publication National Journal writing profiles of influential Washingtonians. In 2006, she received a fellowship at the Ohio State University through the Kiplinger Public Affairs in Journalism program, where she worked on a project that looked at rebuilding affordable housing in Mississippi after Hurricane Katrina. She has appeared on C-SPAN’s Washington Journal, NPR and Feature Story News, where she participated in a weekly radio roundtable on the 2008 presidential campaign. In the late 1990s, she worked at the Housing and Urban Development Department as a career employee. She is a graduate of Colgate University.

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