Obama Expected to Propose 1% Raise for 2014

Published Apr 2, 2013. By Sean Reilly.

President Obama will likely call for a 1 percent federal pay raise in his fiscal 2014 budget request set for release next week, according to unions and other federal employee advocates.

But employee groups are worried that the administration may also propose to hike employee pension contributions and eliminate a retirement supplement for future participants in the Federal Employees Retirement System.

“If past behavior is any indication of future behavior, then that’s what we’re looking at,” said Jessica Klement, legislative director of the National Active and Retired Federal Employees Association. With a salary freeze now in its third year, she said, the effect of such measures would look like a pay cut.

The White House will send the request to Congress on April 10, a spokesman said last week. That’s more than two months later than the Feb. 4 due date. The White House has blamed the delay on uncertainties created by repeated budget standoffs.

The administration told union leaders in February that Obama would seek the 1 percent across-the-board increase, which would take effect in January if lawmakers go along. Base federal pay has been frozen since January 2011.

At the National Federation of Federal Employees, President William Dougan was hopeful that lawmakers wouldn’t block a pay increase for next year. Given the length of the current freeze, “we’ve seen some interest of some in Congress to end that practice,” Dougan said, noting that many federal employees also face lost wages because of sequester-related furloughs.

But Dougan added that any administration bid to revive a plan for raising federal employee pension contributions would be “misguided.”

In its request last year, the White House proposed increasing the contribution rate for both FERS and Civil Service Retirement System employees by 1.2 percent over three years. For FERS participants, that would have meant a boost in their contribution rate from 0.8 percent of salary to 2 percent. CSRS employees would have seen their pension contributions grow from 7 percent to 8.2 percent.

Also under last year’s White House proposal, future workers would have lost a supplemental payment that current FERS retirees not yet eligible for Social Security receive.

None of those proposals won congressional approval, although lawmakers did agree to increase FERS contributions for federal workers hired since January.

In its recently passed 2014 budget blueprint, the Republican-run House aims to go much further in terms of cuts to federal pay, benefits and staffing. The blueprint, approved by the House on March 21, would:

• Cut the federal workforce by 10 percent, or roughly 210,000 employees, through attrition by 2015.

• Reform federal employees’ pay levels, pay raises and benefits “to better align with those of their private-sector counterparts.”

• Increase the amounts of income that federal employees, lawmakers and congressional staffers contribute to their pensions. House Budget Committee Chairman Paul Ryan, R-Wis., said the increases should be similar to the Simpson-Bowles commission’s recommendations, which call for making FERS employees pitch in the same amount that federal agencies contribute on their behalf. This would increase FERS employees’ contributions by roughly 5.5 percentage points to about 6.3 percent.

By contrast, a 2014 budget proposal passed by the Senate on March 23 states that federal employees “have borne the brunt of recent deficit reduction efforts” and proposes no changes to pay and benefits. “A smarter approach to savings,” the document says, would involve reviewing contractor compensation and seeking to make better use of the government’s buying power.

For lawmakers, the next step could be an attempt to reconcile differences in a joint budget resolution, said Robert Bixby, executive director at the nonpartisan Concord Coalition, which advocates for responsible fiscal policy.