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Copyright 2000 The Washington Post  
The Washington Post

September 5, 2000, Tuesday, Final Edition


LENGTH: 717 words

HEADLINE: Pay Increase Could Come With Rollback of Retirement Plan Levy

BYLINE: Stephen Barr , Washington Post Staff Writer


Although Congress returns this week to wrangle over unfinished spending bills for federal agencies and programs, most of the bread-and-butter items important to employees appear on track for approval.

Pay, naturally, is at the top of the list.

The House and Senate versions of the Treasury Department, Postal Service and general government appropriations bill for fiscal 2001 assume a 3.7 percent raise for General Schedule employees. Once the bill gets to the White House, administration officials will recommend how much of the increase will be set aside for "locality pay." The locality pay formula strives to reflect private-sector wages in urban areas, and if the trend holds, workers in the Washington-Baltimore region will get a raise slightly higher than 3.7 percent next January.

Federal unions had hoped for a higher raise, given the budget surplus and strong economy, but that seems unlikely. President Clinton recently signed the fiscal 2001 defense appropriations bill, which provides the military with a 3.7 percent increase. With the military raise locked up, federal employee advocates have little running room in which to make a case that the government's civilians deserve a higher amount.

But the Treasury-Postal bill would provide some extra pocket change for federal employees. The House and Senate bills would repeal the higher contributions toward retirement that employees have been paying since January 1999.

The higher rates were phased in as part of a balanced budget agreement, and employees currently pay 0.4 percent more of their salary toward retirement than normal. A further increase of 0.1 percent of salary was scheduled for 2001.

The Treasury-Postal bill would repeal the higher contributions in effect as well as prevent the further increase from taking place.

Because Congress appears unlikely to block an automatic 2.7 percent pay increase for members and staff, the bill would raise the pay caps for some federal employees in the Senior Executive Service and other high-level pay systems. The cap on federal executive pay would rise to $ 133,700 annually, from $ 130,200.

Other provisions of the Treasury-Postal legislation would extend the government-wide child care subsidy program, which lets agencies use budget money to help employees pay for licensed day care. The bills also would continue the general ban on abortion coverage in the Federal Employees Health Benefits Program, while requiring that FEHBP cover prescription contraceptives.

The House version would require a study to determine the potential for providing federal employees with paid parental leave. The Senate has not addressed the matter but seems likely to agree to the study proposal.

In the Senate, a separate spending bill, providing appropriations for the Departments of Labor and Health and Human Services, would create medical savings accounts in FEHBP. Similar language also appears in a patients' bill of rights bill pending in a House-Senate conference.

The tax-free accounts would let employees set aside money to pay for routine health care and would come with an insurance policy to cover major medical problems and long-term hospitalization. But federal employee and retiree groups contend that only people without health problems would find them attractive and that allowing these people to shift coverage would undermine FEHBP insurance pools and drive up its costs.

Two bills important to many retirees remain stalled in the House.

The Ways and Means Committee has signaled that it will not take up legislation to modify the "government pension offset," which reduces spousal Social Security benefits for numerous federal retirees who receive a civil service pension.

House bills to eliminate or modify the "windfall elimination provision," which reduces Social Security benefits for some retirees, have not been scheduled for a committee hearing.

Online Discussion

Daniel C. Adcock, the assistant legislative director at the National Association of Retired Federal Employees, will join us at noon tomorrow at for an online discussion of what the recently approved long-term care insurance program means for federal employees and retirees.

Stephen Barr's e-mail address is

LOAD-DATE: September 05, 2000

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