Obama's fiscal 2013 budget would slightly thaw pay freeze

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The president's fiscal 2013 budget request to Congress would end the 2-year cost of living pay freeze by increasing worker pay by 0.5 percent for civilian workers and 1.7 percent for military personnel. The budget, which arrived on Capitol Hill Feb. 13, says a continuing a pay freeze would be "unsustainable," while noting that the increase is below the typical yearly increase for the private sector.

Sticking to a "modest" pay increase would allow the government to avoid approximately $28 billion in expenses over 10 years, according to the budget.

The president's budget request also would increase federal employees' contribution to their retirement plans. This aligns with a September 2011 deficit-reduction plan in which the White House proposed to increase federal civilian employees' contribution to retirement by .4 percentage points per year for 3 years beginning in 2013, reaching a 1.2 percentage-point increase in 2015. Employees hired since the mid-1980's are enrolled in the Federal Employees Retirement System and currently contribute .8 percent of compensation to their defined benefit retirement plan. In 2013 their new contribution level would be 2 percent.

"This change in employee contribution levels would not change the amount of each Federal employee's pension benefit, but would result in $21 billion over 10 years in mandatory savings," said the Obama administration's request.

The budget also highlights federal human capital challenges, such as an aging workforce and an outdated personnel system. The budget proposes that members of Congress, representatives from the President's National Council on Federal Labor-Management Relations, members of the private sector, and academics form a Commission on Federal Public Service Reform. The commission would recommend reforms--within fiscal restraints--to improve personnel policies, compensation structure and performance measurement, among others, says the request.

The budget request says workforce numbers will remain flat in fiscal 2013, with employement levels only expected to increase by 0.1 percent from fiscal 2012 to 2013. Only four agencies or departments will see employment increases more than 1 percent: the departments of Veterans Affairs, Commerce, Health and Human Services and Treasury. The White House attributes increases at VA to increased demand for veterans' medical services. The Homeland Security Department, a close fifth in the list of agencies with slight hiring increases, will increase hiring due to a "continued emphasis on strengthening air travel safety and border protection."

For more:
- download the budget's Performance and Management appendix (.pdf)

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