Presidents 2020 Budget Request Testimony

3/27/2019

House Appropriations Committee Subcommittee on Financial Services and General Government

Chairman Quigley, Ranking Member Graves and members of the Subcommittee, thank you for allowing NTEU to share its thoughts on the President’s Fiscal Year (FY) 2020 Budget Request and funding for the agencies and programs funded by this Subcommittee. As National President of NTEU, I represent nearly 150,000 federal employees in 33 agencies and I appreciate the opportunity to discuss these important issues.

Following the 35-day partial government shutdown, which demonstrated the critical services provided by federal employees, I had hoped that our government leaders would, in recognition of this, submit proposals to retain these dedicated workers and attract new hires. However, the Administration’s budget request for FY 2020 once again lays out a multitude of funding and policy proposals that cut government services and constitute nothing less than an all-out assault on the pay, benefits, and rights of federal workers.

PAY

NTEU opposes the Administration’s proposal to implement another pay freeze for federal workers in 2020 and to slow the frequency of within grade step increases. In addition, the Administration plans to issue guidance to agencies to change the way they allocate performance awards so that they are given to their most critical employees with the best performance instead of to all employees, regardless of occupation, that perform outstanding work. By focusing on the “most critical employees” for pay increases, we fear that agencies will focus on high demand skill sets, but ignore critical jobs needed to make agencies work, risking an increase in the number of career federal employees who leave the government and take their institutional knowledge with them. A pay system that limits compensation to randomly-selected occupations will prohibit agencies from executing a whole-of-government approach to operations and will threaten agency performance.

Under current law (the Federal Employee Pay Comparability Act), federal employees should receive a 2.6% across-the-board pay increase in January 2020, prior to any amount being provided for locality pay rates. In recent years, the federal workforce has endured multi-year pay freezes and five years of below-market pay raises, and federal employees, like all other Americans, face rising food, utility, college, and health care costs. NTEU supports the FAIR Act, S. 426 and H.R. 1073, providing employees a 3.6% pay increase for 2020 which would help address years of below-market pay increases. Federal employees, and their families, deserve a fair pay raise in 2020.

BENEFITS

The President’s budget proposal once again asks federal employees to pay for unrelated funding decisions by paying more for their benefits while simultaneously reducing the value of those benefits. NTEU opposes proposals that would impact federal employee retirement benefits including proposals to: (1) significantly increase Federal Employee Retirement System (FERS) employee contributions by about 1 percentage point each year until they equal the agency contribution rate, resulting in a 6 percent pay cut (2) base future CSRS and FERS retirement benefits on the average of the high five years of salary instead of the current high three, thereby lowering the value of the benefit (3) eliminate the FERS supplement which approximates the value of Social Security benefits for those who retire before age 62, including for those who must retire early due to their law enforcement work (4) eliminate the annual cost of living adjustments (COLA) for the pensions of current and future FERS retirees and significantly reducing the COLA for the pensions of current and future CSRS retirees by about 0.5 percent annually, and (5) reduce the G Fund interest rate under the Thrift Savings Plan, thereby lowering the value of this TSP option.

The average federal employee cannot absorb the six to seven percent pay cut they would see with the increased retirement contributions and annuitants need their COLA to keep up with the cost of living when on a fixed income. These are middle class workers who cannot afford a retirement benefit that fails to keep up with inflation and will require them to work long into their senior years.

NTEU also opposes the Administration’s proposal to change the Federal Employees Health Benefits Program (FEHBP) by significantly modifying the government contribution rate by tying it to each plan’s performance rating. For many FEHBP enrollees, this will mean that the government’s overall contribution rate will be lower than it is now, requiring enrollees to pay significantly higher premiums. Such a change will force employees to drop coverage or move to cheaper plans that provide less coverage and fail to meet the health care needs of their families.

In addition, NTEU opposes the Administration’s proposal to convert paid federal holidays, earned sick and annual leave days into general ‘paid time off’ and reduce the total number of leave days. This proposal also includes adding a short-term disability insurance policy to protect employees with a serious medical situation, which would require an employee contribution.

A robust paid leave program helps to attract top talent and reduce turnover. Paid leave programs impact engagement because the benefit helps employees feel they’re being supported by the employer. That engagement is expressed through hard work, which improves productivity. That is one of the many reasons why NTEU supports expanding federal employee leave benefits and supports the Federal Employee Paid Leave Act, H.R. 1534, which would provide 12 weeks of paid Family Medical Leave Act leave to care for a new child or a critically ill family member. Few employees can go weeks without pay and no one should be forced to choose between caring for a loved one and a paycheck. The Administration should get behind the Federal Employee Paid Leave Act instead of proposing these cuts which will only make the federal government less competitive for talented workers.

RIGHTS AND PROTECTIONS

Following last year’s Executive Orders aimed at rolling back employee due process and collective bargaining rights, the President’s budget request for FY 2020 attempts to implement similar changes via legislation. NTEU opposes these efforts to undermine the process for taking an adverse or performance-based action on the basis of unacceptable performance by shortening the length of certain notice and response periods and providing agencies with additional flexibility to use longer probationary periods, making those employees essentially at-will. Shortening time frames for taking adverse action increases the likelihood of agency final decisions that do not fairly consider all relevant information. This is particularly true in cases involving factually complex allegations of misconduct.

NTEU also opposes all efforts to roll back the limited rights provided to federal labor unions, including limits on official time. The President’s budget request includes a number of proposals that would undermine employees’ rights in the grievance process and give greater deference to agency management in disputes. Federal law clearly states that the right of employees to organize, bargain collectively, and participate through labor organizations in decisions which affect them safeguards the public interest and contributes to the effective conduct of public business. Front-line employees and their union representatives have ideas and information that are essential to improving the delivery of quality government services to the public and through the collective bargaining process and the use of pre-decisional involvement, employees can have meaningful input resulting in better quality decision-making, more support for decisions, timelier implementation, and better results for the American people. It is important that these rights are maintained and employees continue to have a voice in their workplace.

That is why NTEU is supporting the Federal Labor-Management Partnership Act, H.R. 1316 and S. 530, which would reinstate the National Labor Relations Council and agency-level forums disbanded by the President’s September 2017 EO (which revoked the 2009 EO 13522). The Council and agency forums allow frontline employees to share their perspective and the reality on the ground with agency leadership. The President’s proposals to eliminate key bargaining rights and the right to use the grievance process in many instances eliminates the ability of federal employees to use a less costly process and takes away their ability to have affordable representation to challenge personal vendettas, agendas, and retaliation.

OUTSOURCING FEDERAL WORK

NTEU remains opposed to new outsourcing initiatives, which will only cost taxpayers more money and provide the public with less transparency and accountability. Reliance on contractors has already eroded the government’s ability to perform essential tasks in-house and has caused the federal government to spend more than it should to get the job done for the American public. NTEU supports the continuation of the ban on new A-76 competitions.

OFFICE OF PERSONNEL MANAGEMENT

The President’s request assumes that last year’s reorganization proposal to eliminate the Office of Personnel Management (OPM) by moving core employee policy divisions to the White House and the majority of the agency’s functions to the General Services Administration (GSA) will take place in 2020. NTEU remains concerned about this proposal, namely eliminating OPM’s independent authority to ensure a non-partisan career civil service and GSA’s lack of experience with retirement and health care policy and administration. NTEU is also concerned that additional information has not yet been provided regarding a cost-benefit analysis for this proposal or whether this reorganization can take place without congressional approval.

INTERNAL REVENUE SERVICE

The Administration’s budget request includes a total of $11.4 billion in base funding for the Internal Revenue Service in FY 2020, which is a small increase over FY 2019. However, NTEU believes the administration’s request for this minimal increase in funding is wholly inadequate and will do little to help the IRS reverse the adverse impact of previous budget reductions. Indeed, despite calling for an overall increase in funding, the administration’s request is projected to reduce overall staffing at the IRS by more than 1,600 FTEs.

As you know, the IRS has absorbed almost $845 million in cuts since FY 2010 which has resulted in the loss of more than 22,000 full-time employees, including many frontline customer service and enforcement personnel. The lack of sufficient staffing has strained the IRS’s ability to serve taxpayers and enforce our nation’s tax laws. Without increased and sustained funding, taxpayers could experience a degradation of services, including longer wait times to receive assistance over the telephone, the inability to assist victims of identity theft and other types of fraud in a timely manner and a decreased ability to collect additional revenue. We request that Congress provides the IRS with the resources it needs to accomplish its mission.

SECURITIES AND EXCHANGE COMMISSION

The Administration has requested an appropriation of $1.746 billion for the Securities and Exchange Commission (SEC). As you know, since SEC funding is fully funded by fees paid by the industry, this funding is deficit neutral. American investors benefit from the highly skilled employees at SEC and NTEU believes this level of funding is insufficient to recruit and retain the workforce skill levels needed at the agency. SEC competes with high paying Wall Street firms for the best and the brightest in their profession. For 2019, SEC management has proposed merit and cost of living pay adjustments that are one the lowest in the history of SEC’s pay system. Therefore, NTEU believes an increase in funding is required. For each $10 million in additional funding over the Administration’s request, SEC could improve compensation by 1%. It is NTEU’s position that any such additional funds should be applied to SEC’s merit pay.

Without properly compensated SEC staff, we will see an increasing number of Americans at risk of being cheated out of their retirement savings and investments. American investors should not lose their retirement or savings to dishonest firms because of an understaffed or weak SEC.

CONCLUSION

Thank you again for the opportunity to share my views with you. Once again, the Administration has put forward untenable proposals that decimate employee pay, benefits, rights and protections and makes the federal government a less attractive place to work. I urge this Subcommittee to provide adequate funding for agencies within your jurisdiction, reject these anti-worker proposals and provide employees with a fair pay increase in 2020.