Find Your Branch

Proposed FY20 Budget Targets Federal and Postal Workforce

Proposed FY20 Budget Targets Federal and Postal Workforce
By Bob Levi
Director of Legislative & Political Affairs

Spring has sprung. The robins have returned to my front lawn, the forsythia have unveiled their yellow foliage, baseball season is underway and, regrettably, budgetary attacks on postal workers and retirees have commenced.

On March 11, the second day of the NAPS Legislative Training Seminar (LTS), the White House Office of Management and Budget (OMB) unleashed the first salvo against the postal and federal workforce, submitting to Congress President Trump’s Fiscal Year 2020 budget proposal—albeit a month late due to the partial December-January government shut-down. The budget proposes cuts to the Postal Service, including its employees and retirees, of $98 billion over the next decade.

Two weeks later, Senate Budget Committee Chairman Mike Enzi (R-WY) introduced the FY20 Senate Budget Resolution, which included cuts of $15 billion over the next five years to unspecified programs under the jurisdiction of the Senate Committee on Homeland Security and Governmental Affairs. This committee has jurisdiction over the Postal Service and the earned benefits of its employees and retirees.

Fortunately, LTS delegates anticipated the budget hits and persuasively educated members of Congress of the effects such cuts would have on the Postal Service and its workforce. However, the battle over the budget has yet to be decided and may stretch into the fall. For this reason, it’s important for NAPS members to reacquaint themselves with perennial budget attacks and get familiar with the new ones. In this way, they will be better prepared to effectively deep-six these punitive attacks on NAPS members.

The $98 billion in postal cuts included in the president’s budget is a combination of service reductions, incremental privatization and cuts to postal compensation. The compensation cuts that impact postal retirees are applied to all federal and postal retirees—not just postal retirees. In large part, the postal cuts are a reflection of recommendations made by the President’s Task Force on the U.S. Postal System.

The budget recommends that the Postal Service modifies its delivery-processing standards, mode of delivery and frequency of delivery. Although not specified, it appears the proposed change could weaken delivery standards, making it longer for mail to reach its destination points. Apparently, modifying the mode of delivery refers to moving the mail delivery point, in certain locations, from the door to a centralized mail delivery point.

Finally, the reference to delivery frequency refers to reducing the number of days mail is delivered. It is important to note that these proposals bear a strong connection to the task force’s proposal to narrow the scope of the Postal Service’s universal service obligation. For example, timely, consistent, accessible and six-day mail delivery are part of the agency’s current universal service obligation.

In addition, the president’s budget proposes to expand the use of private-sector contractors to process mail, moving mail out of postal-operated mail-processing facilities. The budget also recommends replacing collective-bargaining over craft wages and benefits with the method used by other federal agencies. The White House argues that collective bargaining yields above-market compensation.

Another budget proposal would authorize private messenger companies to purchase access to residential mail boxes. The president’s budget also would provide the Postal Service a bit more latitude in pricing products that are not subject to the universal service obligation and enable post offices to provide additional government services.

Included in the $98 billion in postal cuts are postal employee and retiree pay and benefits reductions that would be applied to the entire federal/postal workforce. First, the budget would increase employee contributions to the Federal Employees Retirement System (FERS) by
1 percent a year for the next seven years.

Second, the budget proposes to eliminate the FERS cost-of-living adjustment (COLA) and reduce the Civil Service Retirement System
(CSRS) COLA by 0.5 percent.

Third, the budget suggests that retirement benefits be calculated on an employee’s high-five salary years, rather than the present high-three.

Fourth, the budget proposes to eliminate the FERS special retirement supplement for employees who retire before Social Security eligibility.

Fifth, the budget proposes the Thrift Savings Plan G Fund rate of return be based on an index that would substantially reduce the rate of return. And, sixth, the budget be-gins the process of phasing out FERS by denying FERS coverage to certain term employees of the federal gov-ernment; i.e., employees initially hired for a term of less than five years.

The Senate budget resolution proposed by Enzi was more modest. Nevertheless, it could have significant implications for specific employee benefits. For example, the $15 billion in cuts assigned to the Homeland Security and Governmental Affairs Committee was about the same amount as the savings attributed to the president’s FERS-CSRS COLA elimination-reduction proposal. In addition, with a bit of budgetary manipulation, the proposed increase in FERS employee contributions also could fit in the scope of the Senate budget resolution.

On March 28, the Senate Budget Committee approved the Enzi budget proposal on an 11-9 party-line vote. At this point in time, it is highly doubtful that the House will take up the proposals in the president’s FY20 budget or the Senate budget resolution.

However, with the White House precedent of forcing government shutdowns relating to disagreements with Congress over government-funding issues, it is crucial that NAPS remains vigilant in protecting our flank.