Administration Budget for 2013 Includes Pay and Benefits Proposals Previously Put Forth


 2/14/12: The Administration’s 2013 Budget includes pay and benefit provisions similar to those proposed by the President in September as part of his Plan for Economic Growth and Deficit Reduction. Specifically, the President proposes to increase employee contributions to all federal employee retirement systems by 0.4% each year for three years, making permanent an increase of 1.2% after three years. The President also proposes eliminating the FERS annuity supplement for new hires who retire before age 62, except those with mandatory early retirement. (Note that this is different from a provision in both HR 3813, introduced by Rep. Dennis Ross (R-FL) and in HR 7, the transportation and infrastructure bill. Those bills both contain a provision that eliminates the FERS supplement for all employees who retire before age 62 after December 31, 2012. ) The President’s budget also includes a 0.5% pay increase for 2013 for all federal employees. 

 “I am glad to see a strong call for shared sacrifice among all Americans, particularly millionaires and billionaires,” said NTEU President Colleen M. Kelley regarding the budget proposal. “However, I find it disappointing that the proposal includes an increase by federal employees to their pensions of 1.2 percent over three years. While this proposal is similar to the one submitted by the White House to the super committee last fall, it nonetheless fails to recognize the $60 billion contribution to deficit reduction already being made by the federal workforce through the two-year pay freeze.”  President Kelley also noted the importance of ending the two-year federal pay freeze, which, she said, “is continuing to take a heavy toll on the men and women who have dedicated themselves to public service.”

The President's budget calls for an SEC budget of $1.566 billion, up from this year's $1.321 budget. The SEC's budget do3es not increase the federal deficit, because it is funded through transactional fees that exceed its budget. Under the President's proposal, the SEC would be authorized to spend up to $50 million from reserves to start developing a multibillion dollar system to reconstruct stock trades, as well as to make improvements to its website and Edgar corporate disclosure system.

The budget also contains a provision which NTEU supports aimed at lowering prescription drug costs in the Federal Employees Health Benefits Program (FEHBP).  Prescription drug prices are currently negotiated by middlemen, known as pharmacy benefit managers, (PBMs) who obtain drugs at discounted rates and then retain rebates and discounts from the drug manufacturers, instead of returning those savings to OPM to keep FEHBP costs down.  The Administration’s proposal would give OPM the ability to contract directly for pharmacy benefit management services, allowing them to obtain a better deal on prescription drugs for FEHBP enrollees.

NTEU was also glad to see that the President’s budget would continue the moratorium on new A-76 private-public competitions for outsourcing government work, which NTEU has fought hard to preserve since it was first instituted in the Omnibus Appropriations Act for FY 2009.  Specifically, the proposal would prohibit the use of funds to begin new public-private Circular A-76 competitions.

As we noted in September when many of these provisions were first proposed, the annuity supplement is a crucial component of FERS and we oppose its elimination, especially for current employees, as is currently under consideration in H.R 3813 and H.R. 7.  We also oppose increases in pension contributions and will fight for a higher pay raise.  The President’s budget does, at least contain the notion of “shared sacrifice”, requiring the wealthiest Americans and corporations to pay more, unlike many of the Congressional proposals that are attempting to solve every possible budget problem on the backs of federal employees.

Yesterday, President Kelley emphasized that NTEU will continue to press for shared sacrifice—including increased contributions from the wealthy—as well as cuts in exorbitant reimbursement rates for government contractors. “These avenues should be addressed before federal workers are asked to contribute any more through pay and benefit cuts to resolve an economic crisis not of their making,” Kelley said.