United States. Congress. Senate. Committee on Gove.

The Federal Workforce Restructuring Act of 1993 : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, first session, on S. 1535, to amend Title 5, United States Code, to eliminate narrow restrictions on employee training, to provide a temporary vol online

. (page 1 of 9)
Online LibraryUnited States. Congress. Senate. Committee on GoveThe Federal Workforce Restructuring Act of 1993 : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, first session, on S. 1535, to amend Title 5, United States Code, to eliminate narrow restrictions on employee training, to provide a temporary vol → online text (page 1 of 9)
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^



, » . S. Hrg. 103-€83

^ THE FEDERAL WORKFORCE RESTRUCTURING

kCl OF 1993



Y 4. 74/9; S. HRG. 103-683

Tlie Federal Horkforce Restructuring...



HEARING

BEFORE THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS

FIRST SESSION

ON

S. 1535

TO AMEND TITLE 5, UNITED STATES CODE, TO ELIMINATE NARROW
RESTRICTIONS ON EMPLOYEE TRAINING, TO PROVIDE A TEMPORARY
VOLUNTARY SEPARATION INCENTIVE, AND FOR OTHER PURPOSES



OCTOBER 19, 1993



Printed for the use of the Committee on Governmental Affairs



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U.S. GOVERNMENT PRINTING OFFICE
73-697 cc WASHINGTON : 1994



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-044815-8



K7

S. Hrg. 103-€83

THE FEDERAL WORKFORCE RESTRUCTURING

AQ OF 1993



4. G 74/9; S. HRG. 103-683

» Federal Uorkforce Restructuring.



HEARING

BEFORE THE

COMMITTEE ON ,
GOVERNMENTAL AFFAlfc
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS

FIRST SESSION
ON

S. 1535

TO AMEND TITLE 5, UNITED STATES CODE, TO ELIMINATE NARROW
RESTRICTIONS ON EMPLOYEE TRAINING, TO PROVIDE A TEMPORARY
VOLUNTARY SEPARATION INCENTIVE, AND FOR OTHER PURPOSES



OCTOBER 19, 1993



Printed for the use of the Committee on Governmental Affairs










'Ooy^'-'cm



r>r^



■^ 5



U.S. GOVERNMENT PRINTING OFFICE '''^'^r



73-697 cc WASHINGTON : 1994



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-044815-8



COMMITTEE ON GOVERNMENTAL AFFAIRS

JOHN GLENN, Ohio, Chairman
SAM NUNN, Georgia WILLIAM V. ROTH, Jr., Delaware

CARL LEVIN. Michigan TED STEVENS, Alaska

JIM SASSER, Tennessee WILLIAM S. COHEN, Maine

DAVID PRYOR, Arkansas THAD COCHRAN, Mississippi

JOSEPH I. LIEBERMAN, Connecticut JOHN McCAIN, Arizona

DANIEL K. AKAKA, Hawaii ROBERT F. BENNETT, Utah

BYRON L. DORGAN, North Dakota

LeonEird Weiss, Staff Director

Jane J. McFarland, Professional Staff

Catherine Lewis, Staff Assistant

Franklin G. Polk, Minority Staff Director and Chief Counsel

Michal Sue Prosser, Chief Clerk



(II)



CONTENTS

Opening statements: „

Senator Glenn ^"^f

Senator Roth ."!!!!...."!!.!..." q

Prepared statements:

Senator Stevens o

Senator Sasser !.."!!!!!!...".." i k

Senator Pryor ...."!!!."!.."..".!!."!!!!!.!! 43

Senator Akaka "!."."!!."!."!."!!!."!"!." 73

WITNESSES
Tuesday, October 19, 1993

James B. King, Office of Personnel Management 4

Philip Lader, Deputy Director for Management, Office of Management' and
Budget " jj

^^ofDefeSse' '^^^^^^^ Secretary for Personnei'and Reaii^essiDepart'i^^^^^^

Alphabetical List of Witnesses

Dom, Edwin:

Testimony |c

Prepared statement !."!!!!!!!! 1 7

King, James B.:

Testimony .

Prepared statement 7

Lader, Philip: '

Testimony , ,

Prepared statement "••••'""1"...'""!!."!!."!.."!!."!!!..."!.!!!."!! 13

APPENDK

S.1535

Prepared statement of the Organization of Professional Empioyees "oirthe

U.ts. Department of Agriculture .... 62

Letter with attachments dated Oct. 25, 1993 toChkii^MGleMfromJaiii^^^^

B. King, Du-ector, 0PM en

Prepared Statement of Senator Akaka 73

^SSdltfo^^"^^"* °^ ^ '^^"^ ^^^'^' ^®"®^^^ Counse'CSenior Executives

Letter with enciosur^rdatedNov.''4^^^ "^^

B. King, Du-ector, 0PM 7c

Questions submitted by Senator Glenn ....!,"!."!..!!. 75

Questions submitted by Senator Pryor '. 75

Questions submitted by Senator Roth 77



(HI)



THE FEDERAL WORKFORCE RESTRUCTURING

ACT OF 1993



TUESDAY, OCTOBER 19, 1993

U.S. Senate,
Committee on Governmental Affairs,

Washington, DC.

The Committee met, pursuant to notice, at 9:43 a.m., in room
SD-342, Dirksen Senate Office Building, Hon. John Glenn, Chair-
man of the Committee, presiding.

Present: Senators Glenn, Pryor, Dorgan, Roth, Stevens, and Ben-
nett.

OPENING STATEMENT OF SENATOR GLENN

Chairman Glenn. The hearing will be in order. t u- i

We are scheduled to have a vote at 9:45 this morning, but I think
rather than delay we will go ahead because sometimes those get
put back a Uttle bit. We will get our opening statements, as far as
we can go, into the record before we have to vote.

I welcome everybody to today's hearing on S. 1535, the Federal
Workforce Restructuring Act of 1993. I am pleased to report that
two of my colleagues from the Committee, Senator Pryor and Sen-
ator Stevens, have joined me as original cosponsors of this bill. I
look forward to working with them and other Committee members
on this measure.

I would add that Senator Stevens was particularly sorry he coiild
not be here this morning. He has a conflict. The DOD appropria-
tions bill is on the floor, and he has to be on the floor with that
this morning. He particularly regretted that, and I regret he is not
here, too, because he has been particularly active in all these areas
regarding civil service Government employees during his whole
time here in the Senate. So he wanted to make sure everyone un-
derstood that he had a conflict this morning and was unavoidably
unable to be here. He does have a statement for the record. We will
enter that in the record and hope that things change over on the
floor. He may be able to join us later for the hearing because his
views on these things are sdways very insightful and very welcome.
This legislation is an initiative of the Vice President's National
Performance Review. As we all know, one of the goals of NPR is
a leaner and more responsive Federal workforce. The purpose of
this bill is to provide agency heads with downsizing tools and em-
ployee retraining initiatives to cut the fat and build the muscle of
the workforce.

Under the administration's proposal, agencies could employ vol-
untary separation incentive payments — voluntary — to encourage

(1)



employees to resign or retire from Federal service. In addition, it
would reform current law on the training of Federal employees.
Employee retraining will be increasingly necessary as we seek to
create a multi-skilled Federal workforce, adaptable to changing cir-
cumstances and changing technology.

The administration proposal would allow agencies to offer tar-
geted separation incentives — early retirement or financial pay-
ments or both — ^to selected groups of employees. The financial pay-
ments would be the lesser of $25,000 or the amount an employee
would be paid in severance pay if their jobs were being abolished.
An agency head could designate components of his or her agency,
particular locations or offices, and/or particular job grades or occu-
pations where separation incentives would be offered.

This latter point is very important because if this bill is enacted,
there are going to be some disappointed Federal employees who
find themselves ineligible for £iny separation payment. Let me
stress this is not some sort of new benefit for Government workers.
It is meant as a tool to downsize and cut fat from the Federal
workforce.

Hand in hand with the NPR's goal of downsizing is the idea of
making Government more responsive. Under the terms of this leg-
islation, agencies would have the flexibility to retrain Federal em-
ployees for new assignments and expand training programs to in-
clude improving individual and organizational performance.

This morning I hope to examine details related to this proposal.
There are still a nimiber of questions that I would Uke to get on
the record so we can set the things straight. For example, how do
we ensure that agencies cut the fat and not the muscle? What kind
of guidance will the Office of Management and Budget provide to
agencies in identifying these certain employees? How much will the
legislation cost or save?

Foremost also is addressing something that I think is highly im-
portant and that was pointed out in the report that was put out
on the National Performance Review, "Creating a Government that
Works Better and Costs Less." On page 70 of that, one of the action
items is to change the ratio of managers to employees. Out in the
business world, somewhere around 15 to 25 to 1 is considered a
pretty good ratio of management to employees. The Federal Gov-
ernment is 7 to 1 on the average. And as pointed out on page 70
and the following page, we should be trying to redress that, and
the goal is set out of trying to double that ratio within the next 5
years.

I think we need to explore exactly how this legislation is going
to provide that mechanism of getting there and what the Ukelihood
is that this will do it, or do we need something else. As I recall
from the Vice President's statements on this, he was concerned
that you could not do all this just by attrition; that while attrition
rates in the Federal workforce go up and down over a period of
time, sometimes it has been up as high as almost 9 percent per
year, and yet this year it appears to be down around 2.9 or 3 per-
cent, something like that. And so while at the lower levels of em-
ployment, the lower GS levels, attrition can probably do the job for
us with no incentives, at the middle-manager areas, the 13's, 14's,
and 15's, which is where we have some of this over-employment,



3

if you will, the question is: Can we change these ratios with this
legislation? That is something I want to address a little bit later
with some questions.

So we have the experience of the Postal Service and the Depart-
ment of Defense to look back on. They have already been through
some of this, and so I hope that we can take lessons learned as
these agencies and apply tnem to our bill. So I look forward to the
testimony of our witnesses.

Prepared Statement of Senator Glenn

Grood morning and welcome to today's hearing on S. 1535, the Federal Workforce
Restructuring Act of 1993. I am pleased to report that two of my colleagues from
the Committee, Senator Pryor and Senator Stevens, have joined me as original co-
sponsors of this bill. I look forward to working with Senator Stevens and Senator
Fryor and other Committee members on this measure.

This legislation is an initiative of the Vice President's National Performance Re-
view (NPR). As we all"-know, one of the goals of NPR is a leaner and more respon-
sive Federal workforce. The purpose of this bill is to provide agency heads with
downsizing tools and employee retraining initiatives to cut the fat and build the
muscle of the workforce.

Under the Administration's proposal, agencies could employ volvmtary separation
incentive payments to encourage employees to resign or retire from Federal service.
In addition, it would reform current law on the training of Federal employees. Em-
ployee retraining will be increasingly necessary as we seek to create a multi-skilled
Federal workforce, adaptable to changing circumstances and technology.

The Administration proposal would allow agencies to offer targeted separation in-
centives — early retirement or financial pa)Tnents or both — to selected groups of em-
ployees. The financial payments would be the lesser of $25,000 or the amovmt an
employee would be paid in severance pay if their jobs were being abolished. An
agency head could designate components of his or her agency, particular locations
or offices, and/or particular job grades or occupations where separation incentives
would be offered.

This latter point is very important because if this bill is enacted, there are going
to be some disappointed Federal employees who find themselves ineligible for any
separation pajmient. Let me stress that this is not some sort of new benefit for gov-
ernment workers. It is meant as a tool to cut fat from the workforce.

Hand in hand with the NPR's goal of downsizing, is the idea of making govern-
ment more responsive. Under the terms of the legislation, agencies would have the
flexibility to retrain Federal employees for new assignments, and expand training
programs to include improving individual and organizational performance.

Triis morning, I hope to examine the details related to this proposal. There are
still a number of questions in my mind and I would like to get the record set
straight. For example, how do we ensure that agencies cut the fat and not the mus-
cle? What kind of guidance will the Office of Management and Budget provide to
the agencies in identifying these employees? How much will this legislation cost or



save?

We have the experiences of the Postal Service and the Department of Defense to
look back on. I hope that we can take the lessons learned at these agencies and
apply them to our bUl. I look forward to the testimony of our witnesses.

Prepared Statement of Senator Stevens

Thank you, Mr. Chairman, for scheduling this hearing so quickly. As you know,
I am an original cosponsor of S. 1535. It is important, in my estimation, for this
to be a bipartisan effort and for us to all work together so that legislation passed
by the Senate accompUshes the goal of assisting agencies as they streamline the
Federal Government.

Two of our witnesses today — 0PM Director Jim King and 0MB Deputy Director
for Management Philip Lader — can expect some tough questions. While the basic
idea of this bill has merit, the devil is in the details.

It is important that we have a representative from the Department of Defense
with us today because DOD was the guinea pig — ^this proposal is the naturalpro-
gression of legislation which was enacted last year to minimize civilian layoffs at
the Department of Defense. From all accounts, the flexibility we provided has
proved to be invaluable to both management and employees.



There can be no misunderstanding — we are not creating an employee entitlement.
Agency heads must retain the authority and discretion to offer the incentives in spe-
cific locations or job classifications or whatever combination best suits the particular
agency. However, once management makes the decision about eligibility, employees
must exercise great care in making the decision to accept this offer.

Mr. Chairman, while I still have some reservations about particular provisions of
this bill, it is my hope that we will be able to work together to fine tune this pro-
posal. I do support this bill's basic concept: giving agencies the tools needed to reach
a goal — voluntary Federal workforce reduction to meet budgetary constraints.

Chairman Glenn. With that we will open with Mr. King, We
welcome you, Jim. He is the Director of the Office of Personnel
Management. We also have Philip Lader, Deputy Director for Man-
agement, Office of Management and Budget, 0MB, and Ed Dom,
Assistant Secretary for Personnel and Readiness of the Department
of Defense. So we have three highly qualified people this morning
as our witnesses.

Jim, if you would lead off, we would appreciate it.

TESTIMONY OF JAMES B. KING, DIRECTOR, OFFICE OF
PERSONNEL MANAGEMENT

Mr. King. Thank you, Mr. Chairman.

Mr. Chairman and members of the Committee, I want to thank
you for the opportunity to appear before your Committee today to
discuss the administration's legislative proposal, S. 1535.

Chairman Glenn. Pull that mike up real close to you. These are
very directional mikes.

Mr. King. Thank you. Thank you, Mr. Chairman. It is flattering
to think someone might be hstening.

The bill, S. 1535, was introduced in the Senate by yourself, Mr.
Chairman, £ind cosponsored by Senators Pryor and Stevens and
Senator Warner. I commend your Committee for its prompt consid-
eration of this very important legislation, and I am here today to
explain the administration's vital need for these management tools.

As you know, the President's National Performance Review has
recommended, in Une with the goal of moving from red tape to re-
sults to create a Government that works better and costs less, that
the size of the Federal workforce be reduced. In order to minimize
the impact of meeting this need, the President has proposed great-
er flexibilities in the training of Government employees and au-
thorization for Federal agencies to pay voluntary separation incen-
tives to those employees who choose voluntary retirement or res-
ignation.

First, let me address the Government's new emphasis on train-
ing. Commitments to shift resources from management control to
customer service, reduce supervisory and managerial layers, and
other planned changes, will have a significant impact on Federal
agencies and employees. Many employees will change jobs and,
therefore, will have to be retrained to perform their new respon-
sibilities. Therefore, employee retraining will be increasingly nec-
essary as we seek to create a multi-skilled workforce suited to rap-
idly changing technology. Greater flexibility in tredning will be es-
sential to accomplishing this.

So that the Federal Government is better positioned to carry out
its many critical missions during and following the implementation
of the National Performance Review recommendations, restrictions



on the training of Government employees must be reformed. The
President's proposal removes imnecessary and narrow restrictions
on employee training. We propose to use training to advance both
the employee's performance and organizational mission accomplish-
ment. In addition, this policy will benefit the Government by creat-
ing an environment more conducive to meeting agency goals and
missions.

Further, we propose to make available the most cost-efficient and
-effective training available, whether offered by the Government or
the non-government sector or private sector, by removing current
restrictions on the use of private sector training courses.

Now let me turn to the need for voluntary separation incentives.
Agency heads currently have a range of tools and incentives to as-
sist them in restructuring their workforce. Depending on the par-
ticular needs of the organization, they may rely on normal attrition
and, when authorized by 0PM, early retirement to reach lower em-
ployment levels.

Normal attrition rates have recently fallen each year from a high
of 8.7 per 100 employees in fiscal year 1987 to a low of only 2.9
per 100 employees in fiscal year 1993. In the last 3 years, fewer
eligible employees have elected to retire under the voluntary early
retirement option. For example, from 1983 through 1988, approxi-
mately 17 percent of ehgible employees actually retired. This figure
has declined to less than 5 percent in both fiscal years 1991 and
1992. Clearly, some inducement is needed to reverse this trend.

As a last resort, agencies may use involuntary separations
through reduction in force, better known as RIF. However, another
more humane option is possible. Voluntary separation incentives,
or buyouts, have proven very effective in reducing employment lev-
els at the Department of Defense, where such payments were au-
thorized under the National Defense Authorization Act of 1993.
Similar authority has been enacted for the Central InteUigence
Agency and for legislative branch agencies. Currently, bills to give
such authority to the National Aeronautics and Space Administra-
tion, the U.S. Forest Service, and foreign service agencies are pend-
ing in the Congress. Other Government agencies now also have an
urgent need for this tool to enable them to restructure.

No one now doubts that the deep budget reductions envisioned
by the President and the Congress will result in significant person-
nel cuts in the Federal workforce. The legislation that we are dis-
cussing today will help to achieve these necessary personnel reduc-
tions in the most humane way possible — by providing incentives to
employees who voluntarily choose to retire or resign in exchange
for a cash incentive. While it is too early to predict whether reduc-
tions in force, RIF's, would be necessary even with the use of vol-
luitary separation incentives, there is no doubt that RIF's would be
unavoidable, would be totally unavoidable, without the voluntary
separations this legislation will produce.

In order to reduce Federal personnel levels with minimal disrup-
tion and financial hardship to employees and their families. Fed-
eral agencies would be authorized to pay a voluntary separation in-
centive to employees who retire or resign during a 3-month "win-
dow." And I would like to think that would be up to 3 months, Mr.
Chairman, not a fixed 90-day period. The amount of the voluntary



separation incentive is the amount the employee would be entitled
to receive as severance pay, or $25,000, whichever is less. This is
the same amount that has been provided in the DOD and other
congressionally authorized separation incentive programs that I
cited earlier.

The 90-day window during which employees would be able to
elect to leave and receive the incentive will be designated by each
agency head and may occur at any time between the date of enact-
ment of this legislation through September 30, 1994.

Eligible employees would be those who have a permanent ap-
pointment and at least 1 full year of service. Re-employed annu-
itants and those ehgible for disability retirement would be ex-
cluded.

Agency heads would designate components of agencies, occupa-
tions, particular geographic locations, et cetera, where separation
incentives would be offered. The administration would expect agen-
cy heads to obtain approval from the Office of Management and
Budget, 0MB, of their plans for use of the volimtary separation in-
centives. Agencies would have the authority to delay separations of
particular employees for whom sepsiration incentives have been au-
thorized for up to 2 years after the end of the 90-day window where
necessary to ensure the performance of the agencj^s mission.

To ensure that the voluntary separation incentives produce ac-
tual cuts in staffing levels, employment in the executive branch
would be reduced by not less than 1 full-time equivalent position
for each two separation incentives paid. I want to stress the vol-
untary nature of this program. Employees may not be coerced to
leave against their wishes. Under implementing regulations that
0PM will issue, agencies may not use any personal basis to grant
or deny an incentive to any individual employee.

S. 1535 would require the fiill repayment of the separation incen-
tive by the recipient if she or he is re-employed by the Federal Gov-
ernment within 5 years of separation. This requirement could be
waived in exceptional circumstances related to difficulty in recruit-
ing. The bill also extends this repayment obligation to those receiv-
ing voluntary separation incentives under the DOD and CIA pro-
greims.

We envision the widespread use of the voluntary early retire-
ment authority in conjunction with the separation incentives. Cur-
rent law requires agencies to obtain the approval of 0PM to offer
their employees early retirement. To assure the complementary use
of early retirements with separation incentives, 0PM will adopt
new procedures to facilitate agency requests £uid flexibility in their
use. This will include matching the effective dates of early retire-
ment authority with the separation incentives window.

These voluntary separation incentives would be fully funded from
the agencies' existing appropriations. To make them cost-effective
in fiscal year 1994, the incentives need to be available as early as
possible in this fiscal year. More significantly, separations resulting
from the payment of incentives £ire expected to produce substemtial
savings in fiscal year 1995, helping agencies to reach that year's
budget reduction targets.

A final feature of this legislation would rectify a long-standing
problem for the Civil Service Retirement System — and that is



CSRS, as you know, Mr. Chairman— namely, the "underfunding" of
early retirements. The current annuity reduction of 2 percent for
each year the retiree is under age 55 is insufficient to cover the
added costs to the system of the early retirement. Our proposal
would require agencies to pay a one-time additional charge of 9
percent of the employee's final annual salary for each employee
who retires early under CSRS. The 9-percent charge is based on
the actual experience in paying annuities to early retirees in the
Civil Service Retirement System for the years 1975 through 1989.
The model used to evaluate this cost is the standard actuarial
model that 0PM uses for all retirement purposes. We are confident
that this is the correct adjustment and will, over time, correct the
underfunding situation. This would be a permanent change in law


1 3 4 5 6 7 8 9

Online LibraryUnited States. Congress. Senate. Committee on GoveThe Federal Workforce Restructuring Act of 1993 : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, first session, on S. 1535, to amend Title 5, United States Code, to eliminate narrow restrictions on employee training, to provide a temporary vol → online text (page 1 of 9)