Monthly Archives

August 2019

Lawmakers Question “401k” Federal Savings Plan Foreign Investment Decisions, and More

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Senators from both parties this week called on the agency that administers the federal government’s 401(k)-style retirement savings program to reconsider its decision to shift the “401k” Federal Savings Plan ’s international (I) Fund to an index that invests in Chinese companies.

Sens. Marco Rubio, R-Fla., and Jeanne Shaheen, D-N.H., sent a letter Monday to Michael Kennedy, chairman of the Federal Retirement Thrift Investment Board, asking the agency to reverse its 2017 decision to base the I Fund’s investments on a stock index that includes companies from a broader swath of countries, including China. Rubio and Shaheen objected to the change based on the Chinese government’s history of human rights abuses and other national security concerns.

“The FRTIB’s decision to track this [new] index constitutes a decision to invest in China-based companies, including many firms that are involved in the Chinese government’s military, espionage, human rights abuses and ‘Made in China 2025’ industrial policy, and therefore poses fundamental questions about the board’s statutory and fiduciary responsibilities to American public servants who invest in federal retirement plans,” the senators wrote. “This change, which is expected to be implemented next year, will expose nearly $50 billion in retirement assets of federal government employees, including members of the U.S. Armed Forces, to severe and undisclosed material risks associated with many of the Chinese companies listed on this index.”

The lawmakers noted that several companies included in the new index produce weapons systems for the Chinese military, surveillance cameras used to monitor Uighur Muslims in Xinjiang province, and that some companies have been barred from operating in the United States or have been targeted by U.S. sanctions.

“Were the members of the board aware at the time of the motion to adopt the new index for the I Fund that constituent firms of this index were previously subject to U.S. government sanctions?” the senators asked. “Since the board’s November 2017 vote, the U.S. government has censured constituent firms of the [index]—or the controlling shareholders of such firms—through such measures as designation to the Entity List and federal procurement prohibitions.”

“401k” Federal Savings Plan spokeswoman Kim Weaver said in an email that the agency has received the letter.

“We are reviewing it and we will respond in a timely manner,” Weaver said.

Elsewhere on Capitol Hill, senators representing Maryland and Virginia on Tuesday joined the growing outcry from lawmakers regarding the recent decision by the Agriculture Department to reduce the buyout and early retirement payments offered to Economic Research Service and National Institute of Food and Agriculture employees who declined orders to relocate to Kansas City by the end of September.

Democratic Senators Mark Warner and Tim Kaine of Virginia, and Ben Cardin and Chris Van Hollen of Maryland blasted the department for failing to inform employees who had applied for Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments that maximum buyouts would be $10,000 rather than the originally offered $25,000 until one week before the acceptance deadline.

“USDA has stated that its decision to reduce the amount per VSIP was made in order to accommodate all employees who were eligible to receive the buyout,” they wrote. “However, USDA has failed to explain why employees were not notified earlier that VSIP offers would be significantly less than $25,000, considering the agency already knew that more than half of ERS and NIFA employees had declined to relocate by the time VSIP applications were due. We are troubled that USDA did not relay this information to its employees sooner considering the impacts this decision can have on an individual career.”

The senators asked Agriculture Secretary Sonny Perdue how much the department budgeted for VSIP and VERA payments, how the department came to the decision to reduce the maximum buyout payment, and why officials waited until a week before the August 26 deadline to inform employees of the change.

The letter was published just one day after Government Executive reported that, in order to cope with the mass exodus of employees who refuse to move to Kansas City, the department is looking to hire retired former employees on a part-time basis to preserve continuity of service. Those hired under the Reemployed Annuitants program would work from the Washington, D.C., area and receive both a salary prorated to what they made before they retired and their full defined-benefit annuity payments.

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Why did USDA reduce buyouts with so little notice?

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Senators representing states surrounding the U.S. capital called on the U.S. Department of Agriculture Aug. 27 to explain not only why it decided to dramatically reduce the buyout amount offered to departing research agency employees, but also why it gave them very little time to accept that amount.

USDA announced June 13 that it planned to move its Economic Research Service and National Institute of Food and Agriculture from their current offices in Washington, D.C., to Kansas City.

Employees that notified USDA that they would rather leave federal service than move with the agency were eligible for a voluntary separation incentive payment, which the agency initially said would be offered on a limited basis at the $25,000 maximum allowed by federal policy.

Employees had from July 22 to July 29 to notify the agency whether they planned to accept the payment, which prohibits them from working for the federal government for five years.

USDA sent employees formal documentation of their planned VSIP payments Aug. 20, at which point employees were informed that they would be receiving $10,000, rather than the $25,000 initially offered. Employees were given until Aug. 26 to notify the agency of whether they still planned to accept the lower payment.

“USDA has stated that its decision to reduce the amount per VSIP was made in order to accommodate all employees who were eligible to receive the buyout,” Sens. Mark Warner, D-Va., Ben Cardin, D-Md., Chris Van Hollen, D-Md., and Tim Kaine, D-Va., wrote in a letter to USDA Secretary Sonny Purdue.

“However, USDA has failed to explain why employees were not notified earlier that VSIP offers would be significantly less than $25,000, considering the agency already knew that more than half of ERS and NIFA employees had declined to relocate by the time VSIP applications were due. We are troubled that USDA did not relay this information to its employees sooner considering the impacts this decision can have on an individual’s career.”

The senators also questioned where the agency was getting the funds for the VSIP payments and how much total they had budgeted for those payments.

Agencies generally tend to offer the maximum allowed for VSIP payments, as the nearly 37,000 employees receiving VSIP between fiscal years 2012 and 2017 averaged $24,470 per payment.

The senators wrote that while they in general opposed the ERS and NIFA move, they at the least hope that the agency will reconsider their VSIP offers and opt to provide the maximum allowable for departing employees.

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Pay & Benefits USDA Slashes Buyout Payments for Scientific Agency Employees By 60 Percent Ahead of Relocation

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The Agriculture Department this week informed employees at two scientific agencies who applied for buyouts following their decision not to relocate to Kansas City that they would receive significantly less money than originally promised.
In June, USDA officials told employees at the Economic Research Service and the National Institute of Food and Agriculture that it would offer “a limited number” of Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments to those who declined to move to Kansas City by the end of September. VSIP payments would be capped at $25,000, the maximum allowed by law, the department said in a memo.
When employees accept buyouts, they receive a lump sum equal to the amount offered by the agency, or their total severance pay, whichever is less. Additionally, employees who accept buyouts cannot work for the federal government for at least five years, or they will be required to repay the government the entire amount of their VSIP payment.
But this week, the department sent employees their VSIP acceptance letters, which noted that the maximum buyout payment would be only $10,000, a 60% cut from what was initially offered. Employees have until August 26 to decide whether to accept the buyout.
Due to the volume of applications and in an effort to afford all employees who applied the opportunity to receive the incentive payment, the amount provided for all applicants has changed from $25,000 to $10,000, USDA wrote.
ERS and NIFA employees had until July 15 to tell the department their initial intentions regarding whether they would agree to relocate to Kansas City, although they have until the end of September to make a final decision. Employees interested in early retirement or buyout payments were required to apply between July 22 and July 29.
It is unclear why the department did not announce a decrease in the maximum buyout payment ahead of that window, given that officials knew that more than half of ERS and NIFA employees already either declined to relocate or did not respond to their relocation orders.
An Agriculture Department spokesperson told Government Executive that the department decided it would be more equitable to allow all employees who applied to receive a buyout, rather than offering a larger sum to fewer people on a first-come first-served basis.
“The department maintained we would offer a limited amount of VSIPs and ultimately decided to offer a VSIP to every employee who applied and were found to be eligible to receive a VSIP,” the spokesperson said.
The department did not answer questions about how much was budgeted for VERA and VSIP, when it realized the volume of buyouts would be higher than could be accommodated at the $25,000 level, or why officials did not inform employees until this week.
The spokesperson said that although the VSIP acceptance form is due on August 26, employees can change their mind “and decline the VSIP payment up until their separation or retirement date.” Employees also are still able to change their mind and accept relocation orders.
In a statement, American Federation of Government Employees National President J. David Cox, whose union represents ERS and NIFA workers, sharply criticized the department’s handling of buyout payments. The department’s VSIP process began prior to USDA’s recognition of the agencies’s bargaining units and thus was not part of the agreement reached between the parties earlier this month to ease the impacts of the planned relocation.
“It’s no secret that employees are extremely upset by USDA’s decision to relocate these two agencies halfway across the country,” Cox said. “Two-thirds of employees rejected the agency’s orders to move by Sept. 30, so USDA should have planned better for that reality and budgeted accordingly. Employees now have less than a week to decide whether to accept the reduced buyout, which also bars them from working at another federal agency for five years. Many of these employees have spent their careers devoted to agricultural research and furthering their agencies’s missions, and they deserve to be treated better than this.”

USDA

USDA Office Relocations Are Illegal, IG Says

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The Agriculture Department is in violation of spending laws by relocating employees out of the Washington, D.C., area, according to a new watchdog report.

USDA is in the process of moving the employees at two of its components—the Economic Research Service and the National Institutes of Food and Agriculture—to Kansas City. The USDA inspector general found those moves violate a 2018 appropriations law, which included language preventing the department from implementing any reorganization efforts without prior approval from appropriations committees in Congress. The law specifically prohibited spending money on any effort that “relocates an office or employees.”

The same language was included in a fiscal 2019 spending law and a House-passed Agriculture appropriations bill for fiscal 2020.

The auditors instructed USDA to “take appropriate action” for any violations of the Antideficiency Act, the law that prohibits federal agencies from spending funds that have not been appropriated. In October 2018, USDA entered into a $340,000 contract for reviewing potential destinations for the new headquarters locations.

The IG recommended USDA go back to Congress and to get approval for the moves before spending any additional money on them.

The department said it would not punish anyone for Antideficiency Act violations, citing a decision from its general counsel last month that USDA had complied with applicable parts of the law and the “committee approval” requirements “are unconstitutional and are without legal effect.” In the general counsel review, USDA said the Supreme Court, the Government Accountability Office and the Justice Department’s Office of Legal Counsel have all previously agreed with that assessment.

“The department’s actions comply fully with all applicable laws,” USDA General Counsel Stephen Vaden said in response to the report. “OIG’s suggestion otherwise ignores these precedents dating back nearly 40 years.”

The IG noted, however, that USDA itself has interpreted the appropriations language differently when it was included in previous spending bills.

“Such provisions have been included in relevant appropriations acts since 2015, and the department has previously taken the position that provisions…are binding upon the department,” the IG said.

The auditors instructed USDA to communicate the department’s new interpretation to its components to ensure consistency. The IG also said the department’s internal guidance requires certain steps before relocating employees, such as a cost-benefit analysis, but USDA said those provisions are waived if the relocation is initiated by the secretary.

While the IG accepted this reasoning, it said USDA would be better served by additional analysis.

“We believe that adopting the approach outlined within the regulation would be beneficial for all such proposed actions going forward because it is intended to provide a structured process to facilitate the implementation of organizational changes throughout the department,” the IG said.

Trump administration officials have generally said moving Agriculture Department offices to Kansas City would get federal employees closer to the constituents they serve and save taxpayer dollars. During a Republican party event in his home state of South Carolina on Friday, however, acting White House Chief of Staff Mick Mulvaney said the relocations would help the administration attain another goal: shedding federal employees.

More than half of ERS and NIFA employees have not accepted their relocation orders.

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Pay Raises Coming for 130K Postal Employees, Along With Higher Health Care Costs

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A union representing 131,000 employees has ratified its contract with the U.S. Postal Service, providing a 4.2% pay increase for the workers but shifting more of their health care costs onto them.

The National Rural Letter Carriers Association ratified the new three-year contract after reaching a tentative deal in May. The union called the contract “fair and reasonable,” while postal management stressed it would rein in labor costs and expand the use of part-time, non-career employees. The contract is retroactive to May 2018 and will expire in May 2021.

The rural letter carriers will receive a 1.3% pay raise retroactively and three additional increases over the life of the agreement. They will also receive cost-of-living adjustments on top of those wage increases. The Postal Service, however, will drop its contributions to employees’s health care from 73% of premiums to 72%. The contract will boost health benefits for non-career rural carriers as well.

The agreement will make it easier for the Postal Service to use non-career carriers for routes outside their normal post offices. The contract also will create a task force to address the hiring and retention of the non-career employees. The two sides agreed to develop a “joint workforce improvement process” to improve the relationship between management and rural carriers while creating a safer work environment.

“Overall, this contract results in continued restraint of rural carrier labor costs while giving the parties the opportunity to focus on implementing new engineered work standards for rural carrier employees,” said Doug Tulino, USPS labor relations vice president.

Ronnie Stutts, the NRLCA president, told his members the talks with President Trump’s postal task force, the 2018 midterm elections and the Postal Service’s ongoing efforts to “rightsize” its workforce delayed negotiations and led to the expiration of the previous contract.

Eighty-six percent of union members who returned their ballots voted to ratify the contract.

NRLCA’s urban counterpart, the National Association of Letter Carriers, also avoided arbitration by reaching a voluntary agreement for its 213,000 members with the Postal Service in 2017. The American Postal Workers Union meanwhile, which represents clerks, mechanics, drivers, custodians and others, remains at an impasse with the Postal Service. The two sides are heading to a third-party arbitrator after the Federal Mediation and Conciliation Service deemed them too far apart to help. USPS has sought to limit layoff protections and is offering a one-time lump-sum stipend rather than wage increases, the union said.