Home Legislative Action Congressional Testimony 21st Century Ideas for the 20th Century Federal Civil Service

21st Century Ideas for the 20th Century Federal Civil Service

5/20/2015

Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management

Chairman Lankford and Ranking Member Heitkamp, thank you for the opportunity to share my views with the Subcommittee. As National President of the National Treasury Employees Union, I have the honor of representing over 150,000 federal employees at dozens of federal agencies. While our members perform a wide variety of functions and hold diverse positions—as bank examiners, scientists, attorneys, administrative personnel, and Customs and Border Protection officers, all of these federal workers share the same goal—to support the federal government in its delivery and implementation of services and programs for the American public. However, inadequate funding and overall uncertainty with the funding process has created an environment that is making it increasingly difficult for agencies and workers to accomplish both their missions and day-to-day tasks.

SHUTDOWN

The sixteen day government shutdown that occurred in October 2013 greatly impacted the federal workforce, and to this day continues to reverberate within agencies and amongst employees. In the immediate run-up to the shutdown, agencies were required to draw up and implement plans to furlough employees that also included reducing staffing for call centers and other assistance centers that the public rely on heavily. So, rather than focus on the jobs they are hired to perform, agency leaders and front-line employees spent countless hours preparing internally for the shutdown, and closing down operations, knowing that once the shutdown was over, employees would be faced with a mountain of work that built up during those weeks of ceased operations. At the Internal Revenue Service (IRS), the shutdown forced a delay in the start of the 2014 filing season by one to two weeks, affecting every taxpayer in the country. And, during the 16-day shutdown, approximately 90 percent of the IRS workforce was furloughed, including revenue agents, revenue officers and other employees involved in the collection work that helps the IRS bring in approximately 93 percent of federal government receipts.

The shutdown required agencies to make determinations and notifications of which personnel would remain on the job, and which individuals would remain at home, creating a challenging morale atmosphere in the workplace. While agencies are to rely on guidance based on appropriations law that dictates whom to retain versus furlough, furloughed employees begin to question their place and role in the office, and wonder whether the work they do matters. Not surprisingly morale suffers. Added to this, is the fact that approximately two million federal workers immediately suffered the consequences of not being paid—whether they are required to still continue to report to work or stay at home, none are paid during a shutdown. However, mortgage and credit card companies and rent still have to be paid on time, and federal employees, like all workers, rely on their scheduled pay dates to satisfy their bills. Federal workers do not know how long a shutdown may last when it starts, and once the first paycheck is missed, fear and uncertainly spread.

While the 2013 government shutdown may be a distant memory for some, significant and long-lasting damage occurred in the workplace through the exposure of such frailty within the system. Federal workers remain concerned and frustrated over whether they can count on their next pay check, and the one after that, and the one after the upcoming fiscal year, and the one at the end of the next calendar year, and after the next congressionally-imposed deadline. Coupled with the constant lack of ability for agencies and offices to be able to plan, derived from lurching from Continuing Resolution (CR) to CR with little to no funding levels assured, federal employees are left in a unwelcome state of limbo, unable to execute key programs and decisions, pervading the system with program inefficiencies, backlogs, and impossible timeframes.

SEQUESTRATION

As you know, sequestration, resulting from the Budget Control Act of 2011 and from Congress’ inability to reach agreement on a long-term deficit reduction plan, is also greatly impacting agencies and the federal workforce. At the time of its enactment, it was believed that the sequester cuts would be so severe, it would force lawmakers to compromise, but as we know it did not. As originally enacted, the sequester required $1.2 trillion in cuts to government spending over the years 2013 to 2021. This translated into a requirement that OMB sequester over $100 billion from projected spending each of these years. While the more recent Bipartisan Budget Act of 2013 changed the amounts for 2014 and 2015, cuts are required again starting in 2016. Unless the sequester is ended, it will cripple the ability of the government to deliver services to the American public.

As an example of the kind of impact sequestration is having on federal agencies, U.S. Customs and Border Protection (CBP) at the Department of Homeland Security, began by planning to furlough all of its employees for fourteen calendar days. While additional funding included in the Fiscal Year 2013 CR and the authority to reprogram funds ultimately allowed CBP to avoid furloughs, CBP remained particularly hard-hit by the sequester. CBP had to continue a hiring freeze for non-frontline personnel, reduce funding for training and limit overtime hours available for frontline personnel, even as it recognized the adverse impact these actions would have on its vital missions of helping secure our nation’s borders and facilitating vital trade. Sufficient CBP staffing is critical to ensure security at our nation’s ports of entry and mitigate prolonged wait times at the air, sea and land ports of entry. There is perhaps no greater roadblock to legitimate trade and travel efficiency than the lack of sufficient staff at the ports. Understaffed ports leads to long delays in our commercial lanes as cargo waits to enter U.S. commerce, negatively impacting the private sector. These delays result in real losses to the U.S. economy. According to the Department of Commerce, border delays are estimated by 2017 to cost the U.S. more than 54,000 jobs and $12 billion in output, $3 billion in wages and $1.2 billion in tax revenues annually. The cumulative loss in output due to border delays over the next ten years is estimated to be $86 billion.

At the IRS, cuts mandated by sequestration forced the IRS to furlough all of its employees for three days in Fiscal Year 2014. According to the IRS, the sequester cuts to operating expenses and furloughs of employees resulted in the inability of millions of taxpayers to get answers from IRS call centers and taxpayer assistance centers and significantly delayed IRS responses to taxpayer letters. Since Fiscal Year 2010, IRS funding has been cut by almost $1.2 billion, or 17 percent after adjusting for inflation. The funding reductions from the sequester and other cuts have forced the IRS to operate under an exception-only hiring freeze since December 2010, and will have forced the Service to reduce the total number of full-time, permanent employees by 17,000 by the end of Fiscal Year 2015. The lack of sufficient staffing has strained IRS’ capacity to carry out its important taxpayer service and enforcement missions. The U.S. Government Accountability Office’s (GAO) 2014 report on sequestration, “2013 Sequestration: Agencies Reduced Some Services and Investments, While Taking Certain Actions to Mitigate Effects”, provides a detailed and devastating account of how just one year of sequestration had already affected the federal government and its workforce. CBP had to cancel training classes, including those related to detecting potential terrorists and high-risk cargo. Greater backlogs and delays were experienced by citizens at the Social Security Administration and the Office of Personnel Management. The Department of Justice filed 1,600 fewer criminal and civil cases. Treasury indicated that reductions at the IRS would likely result in billions of dollars in lost revenue. GAO noted that many officials, at agencies that furloughed employees and at agencies that did not, expressed concerns about how sequestration affected the morale of current employees, as well as affecting their ability to recruit personnel with appropriate skills. GAO’s report also stated that agencies believed that sequestration negatively affects strategic workforce planning, an issue that federal agencies already struggle with. It makes sense that it’s difficult to align your workforce needs with your mission when the amount you have to spend shrinks significantly, and particularly when agencies have to maintain arbitrary blanket hiring freezes, like at the IRS, which bars them from bringing in needed skilled employees. Sequestration was a bad idea from its very beginning. It is not possible to run an effective government under its constraints. Sequestration must end and Congress must return to a more reasonable budgeting policy.

PAY & BENEFITS

Federal employees have had their pay and benefits diminished by $159 billion in the name of deficit reduction. They are the only group in the country to have been singled out for such disproportionate cuts.

President Obama has recommended a 1.3% pay raise for calendar year 2016. As the President noted in his Fiscal Year 2015 Budget Proposal’s chapter on Improving the Federal Workforce, “Taking into account both the recent pay freezes and the changes in retirement contributions, earnings for new Federal employees have fallen 10 percentage points relative to the private sector between 2009 and 2014.” In the last five years, federal workers have endured a three-year pay freeze, followed by two years of one percent across-the-board pay raises, and no increase in locality pay. Notably, increases in federal wages lag private sector raises by 6.3% over these last five years. Department of Labor September 2014 data reflects an annual 2.3% growth in private sector workers’ wages and salaries--the highest since 2008—and is evidence of the economic recovery and tightening labor markets.

Federal agencies need to be able to respond to this overall, healthier job market by being in a position to provide sufficient pay raises—both for recruitment and retention purposes. Agencies must ensure they can hire and maintain a professional workforce that is charged with administering and implementing our nation’s law and programs. Federal IT workers in particular have fallen far behind their private sector counterparts. For 2015 alone, Robert Half International, the world’s largest specialized staffing firm, reports that private sector IT employees will see an average 5.7% salary increase in 2015. The proposed 1.3% percent pay raise is insufficient. Federal employees need their salaries to keep up with inflation, as they, like all Americans, face rising food, health, and other day-to-day living costs. We have recommended that Congress pass a meaningful 3.8% pay raise for 2016, and are supporting the FAIR Act legislation, S. 164 and H.R. 304, introduced by Senators Brian Schatz (D-HI) and Ben Cardin (D-MD) and Congressman Gerry Connolly (D-VA).

At the same time federal employees have seen their pay fall further and further behind, they have also seen their benefit programs diminished in the name of deficit reduction. In recent years, legislation has been introduced seeking significant increases in federal employee contributions to the federal retirement program, ending the FERS supplement for those who retire before age 62, changing the retirement formula from high three to high five, eliminating the FERS defined benefit entirely, and reducing the COLA increase each year for annuities by using the “chained” CPI as the benchmark. Discussions leading up to passage of the Bipartisan Budget Act and the recent budget included similar proposals. This kind of assault contributes significantly to the low morale in the federal workforce.

As a result of the Bipartisan Budget Act a new federal employee is regularly contributing a minimum of 15.05% out of each paycheck, including for the Thrift Savings Plan. 4.4% of that amount is a contribution to the FERS retirement system. The FERS system was a result of two years of work by Congress in the late 1980s. The original FERS contribution of 0.8% was determined to be a reasonable employee contribution amount for the modest defined pension offered through FERS, which is a fully funded pension system. Purely because Congress needed to find revenue, federal employees are paying an unreasonable amount into FERS. Congress must scale back FERS employee contributions to its original formula of 0.8% as called for under Congresswoman Donna Edwards’s (D-MD) legislation, H.R. 785. Still, the 2015 budget passed just a few weeks ago by Congress calls for another $193 billion in cuts for federal employees. It is simply not possible to maintain morale in the federal workforce when that workforce endures years of stagnant wages and lives under constant attack and targeting of their employee benefit programs. It also leads to increased stress on workers, particularly those nearing retirement, who become concerned that years of planning for their income security in retirement may now be in jeopardy at the end of their careers. NTEU cannot state strongly enough that defined benefit pensions are what created a middle class in this country. The only way we can begin to strengthen the middle class again is to provide decent wages and decent, guaranteed pension benefits. We need more Americans making livable wages with a modest guaranteed pension. The current notion, popular in some circles, that such benefits should be removed from the two million workers in the civil service simply makes no sense.

TRAINING, CAREER ADVANCEMENT & PAID PARENTAL LEAVE

For several years, the Partnership for Public Service has taken data from OPM’s Federal Employee Viewpoint Survey (FEVS) and issued a report called “Best Places to Work in the Federal Government”. Although the majority of respondents continue to indicate that they like the work they do, it is clear from the survey that federal employee morale is at an all-time low. Not surprisingly, satisfaction with pay has declined significantly, and other big drops can be seen in training and development opportunities, rewards and advancements. Employees have seen training opportunities disappear, at times replaced with an emailed Power Point presentation, making it difficult for these individuals to gain new skill sets, and to keep up with advancements in IT and other specialized industries such as medicine and science, including at the U.S. Food and Drug Administration and the Department of Agriculture.

Another area of significant concern is lack of mobility as a result of lower agency funding. As employees depart, positions are simply eliminated, meaning that lower-level employees who may have long been preparing and waiting for an opportunity to apply for a more senior positon as a way to advance their careers, now find that there is no way to move ahead. To face a future at an agency after being told that there is simply no chance of advancement, despite performance or skill-set, is daunting and unsurprisingly deals a devastating blow to morale. The agency may be unable to retain such an employee, losing this employee to another agency, or to the private-sector, leading to higher turn-over costs. Younger employees can be particularly impacted by a lack of potential career advancement, at a time when the average age at agencies stands at 47, compared to 42 in the private sector, according to the Department of Labor.

Access to paid parental leave is another benefit that is particularly of interest to younger workers who are interested in raising a family while working full-time. In order to compete with companies for workers that are offering paid parental leave and other flexible benefits in this area, Congress needs to advance Representative Carolyn Maloney’s (D-NY) legislation, H.R. 532, which would provide federal employees with six weeks of paid parental leave. Additionally, to ensure agencies can recruit and retain the skilled workers they need for ever more complex programs, NTEU urges continued support for the Public Sector Loan Forgiveness Program. This program requires graduates from professional programs such as law or medicine to work for ten years in the public sector, including the federal government, to make payments on their student loans without missing a payment, and at the end of ten years, their student loans are forgiven. The first loans forgiven by this program will start in 2017. NTEU members report to us that they could not afford to work for the federal government without this vital program.

CONCLUSION

Lack of adequate and predictable funding, including the sixteen-day shutdown and sequestration have made it more challenging for the federal workforce to do its job. If you want a well-functioning government, the people who staff that government must be skilled, compensated fairly, and provided with sufficient resources to operate and administer programs. NTEU members—like all federal workers—continue to demonstrate their resilience and commitment to their agencies. However, as captured in the annual FEVS surveys, major indices continue to fall –including job satisfaction, organization satisfaction, work experience, and whether an individual would recommend federal employment. The key items needed to turn things around are proper funding and respect for the workforce---all items I would note that occurred for the most part during the 20th Century, in response to this hearing’s title. The first years of this new century have not been kind to the civil service, and our nation’s leaders should take heed that in the 21st Century—as in the last Century--the American people continue to want a responsive government that has the capacity to deliver. However, it will fail to do so if left by Congress without the people to ensure that it succeeds.