O C T O B E R 2 7 , 2 0 1 4 • V O L . 6 4 , N O. 1 5 PHIL PIEMONTE, MANAGING EDITOR • E-MAIL: [email protected] FEDERAL EMPLOYEES NEWS DIGEST Retiree advocates decry small COLA FEDERAL RETIREES WILL RECEIVE a mere 1.7 percent cost-of-living increase in their pensions, the government announced last week—a scant raise that disappointed What’s Inside44 Salary Council calls for new localities... 2 Congress addresses GSA leave report.... 3 Informed Investor........................ 6 Federal Benefits Q&A.................... 7 retirees, federal employees’ unions and many pension policy experts alike. The COLA, which applies to both federal civilian annuities and Social Security benefits, is based on a measure of inflation calculated by the Bureau of Labor Statistics called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. Like several other federal employee unions, the American Federation of Government Employees assailed the COLA as insufficient—and inaccurate. Instead of a 1.7 percent rise, the union maintains that a much more substantial rise would be more representative of the actual inflationary pressure weighing on seniors’ limited funds. “More than 2.5 million federal retirees will receive a 1.7 percent increase in their retirement checks in January due to the annual cost-of-living adjustment, while retirees under the newer Federal Employees Retirement System will see the same increase in their Social Security checks,” AFGE president J. David Cox said in a statement. “This is the third consecutive year, and the fifth time in six years, that the increase will be less than 2 percentage points.” “This is unfortunate,” he said, “especially since the costs for items that most seniors spend their money on—health care and groceries—are rising faster than the overall inflation rate as measured by the government. For instance, premiums for retirees and current employees in the federal health insurance program will rise 3.8 percent next year.” “While any increase is better than no increase, the fact of the matter is that for millions of seniors, retirees and federal employees, these annual increases will be gone before most even receive them,” he said. The retiree advocacy group National Active and Retired Federal Employees Association also weighed in against what it sees as an insufficient COLA. “[Despite] the partial relief this 1.7 percent COLA will provide, the announcement is a reminder that our method for calculating the increasing cost of goods and servic- INSIGHT B Y M I K E C A U S E Y Come on, get happy IN THE LATE 1920s, singer and bandleader Ted Lewis became famous in a movie (one of the first talkies) where he introduced a song called “Is Everybody Happy?” It was a great hit and became his trademark for the next 30 years. Later, David Hasselhoff of Baywatch fame made an album which included the song. Fast forward to the 21st Century, a time when we measure, quantify, calculate and analyze things. All the time. So how about the question of job satisfaction, which is a critical form of happiness? According to recent survey analyses by the government, the Partnership for Public Service and other good-government groups, feds have rarely been less happy with their work, their bosses and their careers. The most recent survey by the Partnership concluded that in 2013 feds were less satisfied with their jobs, i.e., less happy than in 2012. And in 2012 they were less satisfied than the year before. You get the picture. All of the above, the misery of feds, makes some people wonder if it can get any worse. How low can it go? And some people ask the question: Is this really true? Or are people saying it because they think it is the desired answer? Or maybe they are not all that unhappy, but just want to fire a shot across the bow to let politicians know they are upset about shutdowns, furloughs and peanut pay raises. Which prompted a friend (we were 4 4 PAGE 2 F o r m o r e n e w s . . . s e e F e d e r a l D a i l y a t w w w. F e d e r a l S o u p . c o m 4 4 PAGE 8 2 7 PAGE 1 es is out of sync with the reality faced by millions of federal annuitants, Social Security recipients and military retirees, who spend more than twice as much on medical care than the population measured by the current CPI-W formula,” Joseph A. Beaudoin, president of NARFE, said in the group’s COLA statement. BETTER MEASURES “There’s a very strange thing about the CPI-W, as far as using it for retirees is concerned,” Monique Morrissey, an economist and retirement security expert with the Economic Policy Institute, told FEND. “It’s based on the spending of working age people.” The use of CPI-W to calculate COLAs is really an historic artifact, Morrissey said. “When the government began adjusting benefits for inflation, the CPI-W was basically what was available,” Morrissey said. “There are better measures now, especially with respect to retirees, their spending and how it is affected by inflation.” “The CPI-U—which is technically for urban wage-earners—is actually the most commonly cited and used index for other [related measurements], and considered more accurate, now,” she told FEND. “It’s the overall standard that is used.” But it’s another measure called the CPI-E that some unions, including AFGE, are pressing to be applied instead of the CPI-W. “The CPI-E is based on the CPI-U and the whole population, including retirees,” Morrissey told FEND. “It is a better measure.” Morrissey also explained why federal unions and other retiree advocates have been so vehement in rejecting numerous proposals to switch COLA indexing away from the CPI-W to the so-called “chained CPI.” “Contrary to popular belief, all of the existing indexes and measures—including the CPI-W, which is used, already take into account some substitutions people make when some items’ prices rise and fall,” she said. “That already is happen- ing. The problem with the ‘chained CPI,’ as it is proposed, is that it would do significantly more of this than at present, and across different categories of spending. In any case, the problem with this is that, in fact, it has a tendency to lower the costof-living adjustment for retirees.” Morrissey explained that the net effect of this is an indexed rise of approximately 0.3 percent less per year—which over a long retirement makes for a very large reduction in COLAs for federal and other retirees. POLITICIZATION MIGHT BE GOOD “Politicization of the issue, in my view, can be a good thing,” Morrissey told FEND. “That’s because the CPI that’s used has been sold as just a ‘technical fix,’ but if you use an inaccurate one, it’s not.” “It always has been political. Even if you believe that chained CPI is an improvement, to implement that fix without a lot of others that are needed actually shows bias. As I said, the CPI-W doesn’t look at seniors—so focusing on the one fix that tends to cut benefits shows that there has always been a political element.” “I and many others wouldn’t be opposed to ‘chaining’ the CPI, if it accurately included more lower income and older people [and their spending behaviors],” Morrissey added. ANOTHER VIEW Olivia Mitchell, a professor of business economics at the Wharton School of Business, is an advocate—with some stipulations—of using the chained CPI. “From a theoretical point of view, you’d like to get the best idea of how people’s consumption and expenditures are changing over time,” Mitchell told FEND. “This is something that changes over time— we’re not buying horse-drawn buggies and buggy whips anymore, and so their pricing is irrelevant to us now. You have to always change your consumption bundle, and make it representative.” “In general, I’m a supporter of using the CPI with a chained approach,” she said. “It is a very complex issue. As long as we are using the CPI-W for Social Security, though—that is the way we ought to go for all of these retirement pensions.” But Morrissey noted that the CPI-E and some other measures are better because they take into account the higher proportion of income retirees spend on necessities in general, and health care in particular, making the measures more accurate in depicting inflationary pressures hitting older Americans year-over-year. Or as NARFE’s Beaudoin put it, “We need a cost-of-living formula that doesn’t force these Americans to take one step forward, then two steps back.” Federal Salary Council reiterates call for new pay localities THE FEDERAL SALARY COUNCIL —a group of union representatives and pay experts who examine salary statistics collected by the federal government—in a report released this month called on the administration to implement the panel’s earlier recommendation to create 12 new pay localities. The President’s Pay Agent, an advisory group composed of three top officials—the secretary of labor and the directors of the Office of Management and Budget and the Office of Personnel Management—in May 2013 tentatively approved creation of the new localities. But the White House has not yet acted on the recommendation and the localities have yet to be established. The 12 metro areas where the new localities would be created include Albany, N.Y.; Albuquerque, N.M.; Austin, Texas; Charlotte, N.C.; Colorado Springs, 4 4 PAGE 3 Don’t miss our discussion of weekly news topics. Discuss these stories and more with your fellow federal workers at www.FederalSoup.com. V i s i t u s o n t h e I n t e r n e t a t w w w. F e d e r a l S o u p . c o m O C TO B E R 2 7 , 2 0 1 4 • VO L . 6 4 , N O. 1 5 3 7 PAGE 2 Co.; Davenport, Iowa; Harrisburg, Pa.; Laredo, Texas; Las Vegas, Nev.; Palm Bay, Fla.; St. Louis, Mo.; and Tucson, Ariz. “While the Pay Agent tentatively approved establishment of the 12 new locality pay areas, it did not complete the needed regulations, presumably due to the President’s alternative pay plans for 2014 and 2015, which hold locality pay percentages at 2013 levels,” the council’s report stated. The council voted to advise the Pay Agent to publish the necessary regulation to implement the new locality pay areas, and recommended the creation of one more locality, Kansas City, bringing the total to 13. The purpose of locality pay is to close some of the gap between the public and private-sector pay. According to the council’s most recent analysis, taking into account existing locality pay rates, federal employees overall still currently earn 35.18 percent less than private-sec- tor employees performing similar work. The American Federation of Government Employees urged the administration to move on creating the new localities. “Here we are in October 2014 and the administration is still being coy, saying it cannot move forward just yet,” said AFGE National President J. David Cox Sr., who accused the White House of fearing the backlash that could result from the pay increase. “They are scared to find out what might happen if they actually do something positive for federal employees, worried that anti-government extremists will somehow hurt them,” Cox charged. “It is time for this administration to conquer its ridiculous fears and do the right thing.” “The administration cannot say with a straight face that they’re still working on the regulations,” Cox said. “We know that they were written long ago. The delay is unconscionable. The 12 new localities need to be created right away.” Lawmakers zero in on paid administrative leave NUMBER OF LAWMAKERS have latched onto findings contained in a new Government Accountability Office report which they say illustrate agencies’ profligate use of paid administrative leave. GAO found, for example, that the federal government paid an estimated $31 million over a three-year period to 263 employees who charged between one and three years of paid administrative leave. “Given the GAO’s report showing the incredible amount of money being spent on leave, Congress must know how it is possible that agencies’ current processes result in gross overuse A 4 4 PAGE 4 FEARLESS IS SMILING WITHOUT COVERING YOUR MOUTH. Now there’s FEP BlueDental®, a dental plan by Blue Cross and Blue Shield for Federal Employees that includes orthodontia coverage. For more benefits that will make you smile, call 1-855-504-BLUE. Orthodontia coverage and much more. Learn more and enroll at getfepbluedental.org Open Season runs 11/10 – 12/8. FEP BlueDental® is part of the Federal Employee Dental and Vision Insurance Program (FEDVIP) V i s i t u s o n t h e I n t e r n e t a t w w w. F e d e r a l S o u p . c o m O C TO B E R 2 7 , 2 0 1 4 • VO L . 6 4 , N O. 1 5 4 7 PAGE 3 of paid administrative leave, wasting taxpayer funds,” said House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.). Issa and Sen. Chuck Grassley (R-Iowa), ranking member of the Senate Judiciary Committee, sent letters to 17 agencies cited in the report to demand more information about their use of paid administrative leave. Agency officials told GAO that personnel matters—such as investigations into alleged misconduct—was the most common reason those employees received such large amounts of paid administrative leave. Most employees charged far less than the most extreme example. About $858 million of the $3.1 billion in paid administrative leave charged by employees from fiscal 2011 through fiscal 2013 went to 944,441 employees who charged two to five days of such leave. Another $855 million went to 385,970 employees who took six to 10 days. Over the three years, about 97 percent of employees charged 20 days or less, according to the GAO report. “Of the $3.1 billion in estimated salary costs, 77 percent of salary cost estimates are associated with federal employees who charged 20 days or less of paid administrative leave,” the report stated. “While 3 percent of federal employees charged between 1 month and 3 years of paid administrative leave across three fiscal years, that same amount of paid administrative leave accounted for 23 percent of the estimated salary cost of paid administrative leave.” Agencies have authority to grant paid administrative leave and to set policies governing its use. To get a better look at those policies, GAO reviewed five agencies for the report— Departments of Defense, Interior and Veterans Affairs, the General Services Administration and the U.S. Agency for International Development (USAID). While the agencies’ policies and guidance listed several common activities for granting paid administrative leave—such as voting and blood donations—there were variations depending on agency mission and how leave was categorized in agency policy, GAO said. USAID and DOD officials told GAO that they grant paid administrative leave for rest and recuperation to employees serving six months or more in Afghanistan, for example. Among employees who received large amounts of paid administrative leave at the five agencies, the most common reasons for the leave were personnel matters such as investigations into alleged misconduct or criminal actions, physical fitness-related activities, and periods of rest and recuperation for employees working in overseas locations. GAO recommended that the Office 4 4 PAGE 7 SHIPPING FEBRUARY 2015 2015 FEDERAL EMPLOYEES ALMANAC The Almanac is your one-stop resource on federal policy information — used annually by thousands of federal employees to reference the latest 2015 rules, regulations, and procedures. Reserve by Nov. 30, 2014 to save $3 per print copy — Federal Soup subscribers save an additional 10%! FederalSoup.com/FedStore • 800-989-3363 V i s i t u s o n t h e I n t e r n e t a t w w w. F e d e r a l S o u p . c o m O C TO B E R 2 7 , 2 0 1 4 • VO L . 6 4 , N O. 1 5 NETWORK ACCESS FOR OVER 99% OF FEDVIP DENTAL MEMBERS WITH AFFORDABLE RATES AND BENEFITS FOR ALL. United Concordia’s FEDVIP dental plan is better than ever. With impressive orthodontic benefits, an annual maximum benefit of $10,000, and affordable rates, you and your family simply get more value. And because our network reaches over 99% of federal employees and annuitants nationwide, you can be sure you’ll find a dentist near you. If you want the plan that has it all, contact us today. Protecting More Than Just Your Smile.™ ADV-0141(0913) FEDVIP Open Season: November 10–December 8, 2014 | uccifedvip.com 6 Informed Investor CREATE AN ONLINE SOCIAL SECURITY ACCOUNT THE SOCIAL SECURITY ADMINISTRATION (SSA) announced last month that it will resume mailing benefit statements every five years to most working individuals. At the same time, the SSA encourages all working individuals to create personalized Social Security accounts online at www.socialsecurity.gov. Those with online SSA accounts are able to access and check their benefit information at any time. In September 2014, SSA started mailing statements to workers aged 25, 30, 35, 40, 45, 50, 55 and 60 and who have not registered for a “My Social Security” online account. These statements are due to arrive in the mail about three months before a worker’s birthday. After age 60, individuals will receive a statement every year. SSA expects to send nearly 48 million statements out annually. SSA began mailing annual estimated benefit statements to workers age 25 and older starting in 1999. The paper statements became an important planning tool that provided individuals with details about future retirement income. Most importantly, the statements served as a reminder for all individual to save more for their retirement. In mid-2011, SSA stopped mailing statements as a cost-saving measure and switched to online digital delivery. While the switch saved the federal government $20 million annually in printing and postage, it proved to be unpopular. That is why SSA resumed mailing out statements starting in September to individuals who had not set up online accounts. In spite of the fact that SSA has resumed mailing statements to those who have not established online accounts, SSA encourages all individuals to create online accounts. The following table is a sample benefits statement. In addition to showing what an individual’s benefits and their family’s ben- YOU HAVE EARNED ENOUGH CREDITS TO QUALIFY FOR BENEFITS. AT YOUR CURRENT EARNINGS RATE, IF YOU STOP WORKING AND START RECEIVING BENEFITS Retirement At age 62, your payment would be about $940 a month If you continue working until your full retirement age (67 years), your payment $1,343 a month would be about At age 70 your payment would be $1,665 a month Disability You have earned enough credits to qualify for benefits. If you become disabled $1,248 a month right now, your payment would be about Family If you get retirement or disability benefits, your spouse and children also may qualify for benefits. You have earned enough credits for your family to receive survivors’ benefits. If you die this year, certain members of your family may qualify for the following benefits: Survivors Your child $972 a month Your spouse who is caring for your child $972 a month Your spouse, if benefits start at full retirement age $1,343 a month Total family benefits cannot be more than $2,386 a month Your spouse or minor child may be eligible for a special one-time death benefit of $255. efits will be, the statement shows the individual’s earnings history during his or her working years. The earnings history is obtained from the individual’s W2 statement sent to the SSA by his or her employer. It is from the earnings information that the SSA is able to generate the individual’s monthly benefits information. Individuals are highly encouraged to check their Social Security statements for errors. In particular, they should check their earnings history for accuracy, and should contact the SSA to correct any errors in their earnings information. Any person age 18 and older can create an online account by providing a Social Security number, mailing address and a valid email address. In addition, in order to protect privacy, individuals must answer questions that only they are likely to know and that match the information on file will the SSA and on one’s credit report. For example, some of the questions asked involve: (1) the names of former employers, and (2) former mailing addresses. These types of questions are called “out of the wallet” questions, meaning that if an individual lost their wallet containing credit cards and a V i s i t u s o n t h e I n t e r n e t a t w w w. F e d e r a l S o u p . c o m Social Security number, a fraudster would most likely not be able to answer these questions. Note that if an individual has a security freeze, a fraud alert, or both on their Experian credit statement, they will not be able to create a “My Social Security” account online. The recent credit card breach at Home Depot and the debit card breach at Target Co. has resulted in security freezes and fraud alerts on an individuals’ Experian credit accounts. The freeze and fraud alert must be removed before an online SSA account can be set up. The alternative to creating a personalized SSA account online without removing the security freeze is to visit a local Social Security office and ask to set up an SSA account in person. Edward A. Zurndorfer is a Certified Financial Planner and Enrolled Agent in Silver Spring, MD. He is also a registered representative with FSC Securities Corporation, branch address: 833 Bromley St. - Suite A, Silver Spring, MD 20902. Phone: (301) 681-1652. Securities offered through FSC Securities Corporation, member FINRA/SIPC. EZ Accounting and Financial Services and FSC are independent companies. O C TO B E R 2 7 , 2 0 1 4 • VO L . 6 4 , N O. 1 5 7 Federal Benefits Q&A QUESTION: “I am a Civil Service Retirement System retiree. My husband is a non-federal retiree who is currently receiving Social Security benefits. If he predeceases me, do I get survivor benefits from his Social Security?” ANSWER: As a CSRS annuitant, you are subject to the Social Security’s Government Pension Offset (GPO) which reduces—in most cases, eliminates—any type of spousal or former spousal Social Security benefit or widow/widower benefit. Readers are encouraged to ask questions related to general employee benefits—such as CSRS, FERS, the Thrift Savings Plan, tax and estate planning, insurance, Social Security and Medicare—at the “Federal Benefits Q&A” at www.FederalSoup.com. 7 PAGE production line from as many as four to one and authorizes a 400 percent increase in the maximum line speed per inspector from 35 birds per minute to 140 birds per minute.” The union said the sole federal inspector will need to examine about 2.3 carcasses per second. “The USDA’s new inspection process flies in the face of reality and will allow potentially contaminated and diseased poultry to be sold to American consumers,” said AFGE National President J. David Cox Sr. AFGE said that under the new rule, USDA inspectors examine carcasses only after they have been eviscerated, sorted, trimmed and reprocessed by employees. “The new inspection system will impair the ability of federal inspectors to detect unwholesome and adulterated chickens because they will no longer be presented with the viscera of each carcass,” the union said. Moreover, AFGE said, the viscera—or giblets— will receive an official USDA inspection legend even though they have not been inspected for wholesomeness by a federal inspector. The union filed the lawsuit Oct. 20 in the U.S. District Court for the District of Columbia. 4 of Personnel Management “develop agency and payroll provider guidance regarding the recording and reporting of paid administrative leave.” OPM agreed to update its guidance on the matter. To see more, go to: www.gao.gov/ products/GAO-15-79. Lawsuit targets new USDA poultry inspection rules THE AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES last week sued the Department of Agriculture in an effort to block implementation of a new poultry inspection system that replaces most federal inspectors with processing plant employees. The lawsuit charges that the system, which went into effect Oct. 20, will hinder federal inspection of chicken and turkey carcasses, and could result in tainted poultry making its way to consumers. Under new inspection rules, poultry processors—rather than federal inspectors—assume primary responsibility for carcass inspection. According to AFGE, “the new rule simultaneously reduces the number of federal inspectors on the Thrift Savings Plan Share Prices Funds Oct. 22 G Fund F Fund C Fund S Fund I Fund Lifecycle Funds L Income L 2020 L 2030 L 2040 L 2050 14.5572 16.7131 25.3167 33.6333 24.1746 17.2005 22.2553 23.9345 25.3170 14.3007 One Month Ago One Year Ago 14.5297 16.4514 26.1594 34.7369 25.8296 14.2268 15.8875 22.5645 32.2562 25.2659 17.2978 22.7028 24.5688 26.0974 14.8166 16.6269 21.3046 22.8142 24.0660 13.5850 Register free to get rates of return and other TSP info at: www.FederalSoup.com/pages/resources/thrift-savings-plan.aspx V i s i t u s o n t h e I n t e r n e t a t w w w. F e d e r a l S o u p . c o m O C TO B E R 2 7 , 2 0 1 4 • VO L . 6 4 , N O. 1 5 8 7 PAGE SUBSCRIPTION INFORMATION 1 newspaper reporters at the same paper back in the day) to remember some other surveys. We loved them back then. It gave us something to write about. Somebody else had done most of the work, and it was credentialed. And it was bad news. Which is good in the news business. He remembered, for instance, that in the 1960 election in Virginia, Richard Nixon won the popular vote and the state’s 12 electoral votes. Nixon got 404,521, or 52.44 percent of the popular vote. JFK got 362,327 votes, or 46.9 percent of the Old Dominion’s vote. Virginia then, as now, was chock full of federal workers, military personnel and retirees from the civilian and military branches. Kennedy barely squeaked by nationally. He was elected with just over 303 electoral votes and got 49.72 percent of the popular vote. Yet in 1962, following the Cuban Missile Crises, JFK was given—according to every poll—a record-high approval rating by the public. In fact, 70.1 percent of respondents said he was doing an excellent job. At the peak of his approval rating, somebody took another survey of Virginia voters. In it, more than 60 percent of respondents said they had voted for him, even though the official total was less than 47 percent. So what happened? Was the election rigged? Was he cheated out of Virginia’s 12 electoral votes? Or were people having second thoughts? Did many who actually voted for Nixon WISH they had voted for Kennedy? Did they, retroactively and mentally, change their votes? My friend recalled another survey which we ran with and loved. This one was about how people got most of their news. TV was tops, then newspapers. But a lot said their primary source of information was magazines. The survey asked which ones they read on a regular basis. According to recent survey analyses by the government, the Partnership for Public Service and other good-government groups, feds have rarely been less happy with their work, their bosses and their careers. The top 10 magazines—the ones people said they read weekly or monthly (according to the publication cycles)—included three that had not been printed in several years. They had gone out of business. One was Collier’s, which folded in 1957. But of the top 10 sources of news and information indicated by respondents, three did not exist. So what does that say about surveys? And the people who take them? And those who report on these surveys, get reaction and make a living doing it? I don’t know about you, but I’ve never been happier. But how about you? Are you nervous in the civil service? Are things worse, and going downhill? Is there light at the end of the tunnel and if so, is that your destination when all that is good will be revealed? Or is that light a train speeding toward you at 70 mph to squash you? We should have the definitive answer to the morale question soon. I understand next month’s issue of Collier’s will have a full report. Personally, I can’t wait. V i s i t u s o n t h e I n t e r n e t a t w w w. F e d e r a l S o u p . c o m (800) 989-3363, M-F, 5 a.m.-5 p.m. PT [email protected] Site license assistance: [email protected] Federal Employees News Digest is included as part of a Federal Soup subscription. 1 year - $39 Published weekly except first week in January and last week in December, 50 issues per year. Reprints: (212) 221-9595 or [email protected] Federal Tax ID 20-4583700 DUNS #612031414 ©2014 by 1105 Media, Inc. All rights reserved. Reproductions or distribution in whole or part prohibited except by site license or reprint purchase. PUBLISHED BY 1105 PUBLIC SECTOR MEDIA GROUP Henry Allain, President Anne Armstrong, Co-President 1105 Media, Inc. Neal Vitale, CEO www.1105media.com STAFF Kristi Dougherty General Manager Phil Piemonte Managing Editor Sherkiya Wedgeworth Online Managing Editor Becky Fenton Audience Development Director Mary Keenan Media Sales Consultant CONTRIBUTORS: Nathan Abse, Mike Causey, Mathew B. Tully, Ed Zurndorfer The information in this newsletter has not undergone any formal testing by 1105 Media, Inc. and is distributed without any warranty expressed or implied. Implementation or use of any information contained herein is the reader’s sole responsibility. While the information has been reviewed for accuracy, there is no guarantee that the same or similar results may be achieved in all environments. Technical inaccuracies may result from printing errors and/or new developments in the industry. O C TO B E R 2 7 , 2 0 1 4 • VO L . 6 4 , N O. 1 5
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