[House Hearing, 110 Congress]
[From the U.S. Government Printing Office]



 
    THE COST AND BENEFITS OF THE REEMPLOYMENT OF FEDERAL PART-TIME 
                               ANNUITANTS

=======================================================================



                                HEARING

                               before the

                   SUBCOMMITTEE ON FEDERAL WORKFORCE,
                    POSTAL SERVICE, AND THE DISTRICT
                              OF COLUMBIA

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 20, 2008

                               __________

                           Serial No. 110-140

                               __________

Printed for the use of the Committee on Oversight and Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform



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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
EDOLPHUS TOWNS, New York             TOM DAVIS, Virginia
PAUL E. KANJORSKI, Pennsylvania      DAN BURTON, Indiana
CAROLYN B. MALONEY, New York         CHRISTOPHER SHAYS, Connecticut
ELIJAH E. CUMMINGS, Maryland         JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio             JOHN L. MICA, Florida
DANNY K. DAVIS, Illinois             MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts       TODD RUSSELL PLATTS, Pennsylvania
WM. LACY CLAY, Missouri              CHRIS CANNON, Utah
DIANE E. WATSON, California          JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts      MICHAEL R. TURNER, Ohio
BRIAN HIGGINS, New York              DARRELL E. ISSA, California
JOHN A. YARMUTH, Kentucky            KENNY MARCHANT, Texas
BRUCE L. BRALEY, Iowa                LYNN A. WESTMORELAND, Georgia
ELEANOR HOLMES NORTON, District of   PATRICK T. McHENRY, North Carolina
    Columbia                         VIRGINIA FOXX, North Carolina
BETTY McCOLLUM, Minnesota            BRIAN P. BILBRAY, California
JIM COOPER, Tennessee                BILL SALI, Idaho
CHRIS VAN HOLLEN, Maryland           JIM JORDAN, Ohio
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont
------ ------

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
               Lawrence Halloran, Minority Staff Director

Subcommittee on Federal Workforce, Postal Service, and the District of 
                                Columbia

                        DANNY K. DAVIS, Illinois
ELEANOR HOLMES NORTON, District of   KENNY MARCHANT, Texas
    Columbia                         JOHN M. McHUGH, New York
JOHN P. SARBANES, Maryland           JOHN L. MICA, Florida
ELIJAH E. CUMMINGS, Maryland         DARRELL E. ISSA, California
DENNIS J. KUCINICH, Ohio, Chairman   JIM JORDAN, Ohio
WM. LACY CLAY, Missouri
STEPHEN F. LYNCH, Massachusetts
                      Tania Shand, Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 20, 2008.....................................     1
Statement of:
    Gilman, Maureen, legislative director, National Treasury 
      Employees Union; and Daniel C. Adcock, assistant 
      legislative director, National Active and Retired Employees 
      Association................................................    29
        Adcock, Daniel C.........................................    36
        Gilman, Maureen..........................................    29
    Kichak, Nancy H., Associate Director for Strategic Human 
      Resources Policy, U.S. Office of Personnel Management......    13
    Purcell, Patrick, Specialist in Income Security, Domestic 
      Social Policy Division, Congressional Research Service.....    20
Letters, statements, etc., submitted for the record by:
    Adcock, Daniel C., assistant legislative director, National 
      Active and Retired Employees Association, prepared 
      statement of...............................................    38
    Davis, Hon. Danny K., a Representative in Congress from the 
      State of Illinois, prepared statement of...................     3
    Davis, Hon. Tom, a Representative in Congress from the State 
      of Virginia, prepared statement of.........................    11
    Gilman, Maureen, legislative director, National Treasury 
      Employees Union, prepared statement of.....................    31
    Kichak, Nancy H., Associate Director for Strategic Human 
      Resources Policy, U.S. Office of Personnel Management, 
      prepared statement of......................................    15
    Lynch, Hon. Stephen F., a Representative in Congress from the 
      State of Massachusetts, prepared statement of..............    52
    Marchant, Hon. Kenny, a Representative in Congress from the 
      State of Texas, prepared statement of......................     7
    Purcell, Patrick, Specialist in Income Security, Domestic 
      Social Policy Division, Congressional Research Service, 
      prepared statement of......................................    22


    THE COST AND BENEFITS OF THE REEMPLOYMENT OF FEDERAL PART-TIME 
                               ANNUITANTS

                              ----------                              


                         TUESDAY, MAY 20, 2008

                  House of Representatives,
Subcommittee on Federal Workforce, Postal Service, 
                      and the District of Columbia,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2 p.m., in 
room 2247, Rayburn House Office Building, Hon. Danny K. Davis 
(chairman of the committee) presiding.
    Present: Representatives Davis of Illinois, Marchant, and 
Norton.
    Staff present: Lori Hayman, counsel; William A. Miles, 
professional staff member; Marcus A. Williams, clerk; and Jim 
Moore, minority counsel.
    Mr. Davis of Illinois. Good morning, and thank you all very 
much. The subcommittee will come to order.
    Today's hearing on Cost and Benefits of Reemployment of 
Federal Part-Time Annuitants is about striking a balance 
between agencies, meeting their staffing needs and ensuring 
that promotion and work opportunities for new and current 
employees are not stymied by returning Federal retirees.
    Federal law prohibits annuitants from being dually 
compensated. Federal retirees who are reemployed by the 
Government are not permitted to simultaneously receive a 
Federal salary and a Federal retirement annuity. The dual 
compensation rule can create a financial disincentive for 
retirees wishing to return to Federal service.
    However, the Office of Personnel Management [OPM], may 
grant waivers allowing agencies to fill hard to fill positions 
with re-hired Federal annuitants without offsetting the 
salaries by the amount of the annuity. Agencies can request 
waivers on a case by case basis for positions that are 
extremely difficult to fill, or for emergencies of any unusual 
circumstances. On September 19, 2007, the full committee 
ranking member, Tom Davis, along with the subcommittee ranking 
member, Kenny Marchant, introduced H.R. 3579 to facilitate the 
temporary re-employment of Federal annuitants. H.R. 3579 would 
permit Federal agencies to reemploy retired Federal employees 
on a temporary basis without the consent of the director of 
OPM.
    The testimony of today's witnesses will help us to 
ascertain what course of action is in the best interests of the 
Government and its employees. I will now yield to Ranking 
Member Marchant for an opening statement.

    [The prepared statement of Hon. Danny K. Davis follows:]

    [GRAPHIC] [TIFF OMITTED] 48242.001
    
    [GRAPHIC] [TIFF OMITTED] 48242.002
    
    [GRAPHIC] [TIFF OMITTED] 48242.003
    
    Mr. Marchant. Thank you, Mr. Chairman. Thank you for 
holding this hearing today at the request of Mr. Davis, of the 
minority. Political gridlock seems to be the status quo these 
days, so it is refreshing to see teamwork, compromise and 
bipartisanship whenever possible.
    Mr. Chairman, I think we may be facing a crisis in Federal 
employment and Congress needs to be working to find a solution. 
As we look at the number of current Federal employees who are 
eligible to retire in the next 5 years, we must consider how we 
intend to replace those employees.
    I believe that Ranking Member Davis' bill, H.R. 3579, could 
be a major part of the solution. The legislation would allow 
agencies to waive the salary offset requirement with respect to 
any Federal annuitant who is employed on a part-time basis. I 
am proud to be an original co-sponsor of this legislation.
    While the reemployed annuitants would receive both salary 
and annuity payments, they would not be considered employees 
for purposes of retirement and would receive no additional 
retirement benefits based on their service. To demonstrate the 
importance of having this bill, the State Department recently 
had a nationwide backlog of issued passports which extended the 
expected turnaround time from the normal 6 weeks to a snail's 
pace that was anyone's guess for when the individual would 
receive a passport. These delays greatly impacted thousands of 
business travelers and planned vacations.
    In spite of its best efforts, the State Department was 
dealing with record levels of retirement and an unprecedented 
44 percent increase in passport demand. To make matters worse, 
all new applicants must undergo background check and training 
of about a year for new hires. The fastest solution was to 
bring in recent hires who have the expertise and required 
minimal new training. But the State Department lacked the 
statutory authority to do this on a temporary basis. It took 
legislation action by Congress to bring back State Department 
employees to its offices.
    Needless to say, this was not the most efficient way to 
address the problem. It resulted in several additional months 
of backlogs before these employees were back to work at the 
State Department, finally helping to make some headway on the 
backlog of passport applications. This sort of inefficiency is 
the kind of thing that we have to avoid and responsibly crafted 
legislation like Ranking Member Davis' bill is something we 
should look to and something I fully support.
    Thank you again, Mr. Chairman, for giving the minority this 
hearing on this important issue.
    [The prepared statement of Hon. Kenny Marchant follows:]
    [GRAPHIC] [TIFF OMITTED] 48242.004
    
    [GRAPHIC] [TIFF OMITTED] 48242.005
    
    [GRAPHIC] [TIFF OMITTED] 48242.007
    
    Mr. Marchant. I would also like to have permission, Mr. 
Chairman, to enter Ranking Member Davis' statement into the 
record.
    Mr. Davis of Illinois. Without objection, so ordered.
    [The prepared statement of Hon. Tom Davis follows:]
    [GRAPHIC] [TIFF OMITTED] 48242.008
    
    [GRAPHIC] [TIFF OMITTED] 48242.009
    
    Mr. Davis of Illinois. Thank you very much, Mr. Marchant.
    Now we will actually go to our first witness. Ms. Nancy 
Kichak was named Associate Director for the Human Resources 
Policy Division in September 2005. In this position, she leads 
the design, development and implementation of innovative, 
flexible and merit-based human resource policies.
    Thank you very much, Ms. Kichak. If you would stand and be 
sworn in.
    [Witness sworn.]
    Mr. Davis of Illinois. The record will show that the 
witness answered in the affirmative.
    We thank you very much for being here with us this 
afternoon to testify. If you would give us your 5-minute 
statement and of course, the yellow light means you have 1 
minute left, and red means that the 5-minutes are up. We thank 
you very much and will then go to questions.

STATEMENT OF NANCY H. KICHAK, ASSOCIATE DIRECTOR FOR STRATEGIC 
  HUMAN RESOURCES POLICY, U.S. OFFICE OF PERSONNEL MANAGEMENT

    Ms. Kichak. Chairman Davis, Representative Marchant, thank 
you for holding this hearing to examine proposals to facilitate 
reemployment of Federal retirees. I appreciate the opportunity 
to be here today to discuss the importance of these policies.
    Because of the demographic makeup of the Federal work 
force, the Office of Personnel Management projects a 
substantial number of retirements in the coming years. We have 
put succession plans in place that will help ease the impact of 
the loss of expertise. But we need limited access to the 
departing skilled workers to help make the transition to new 
workers as seamless as possible.
    Currently, retirees who become reemployed by the Federal 
Government must have their salaries reduced. However, if that 
same employee would go to work for a contractor, they would be 
able to collect an annuity and salary. Or if a private sector 
retiree is hired by the Government, that employee receives an 
annuity and salary.
    The law allows OPM to grant salary offset waivers on a case 
by case basis to agencies experiencing exceptional difficulties 
in recruiting or retaining qualified individuals or in unusual 
circumstances. OPM may also delegate this authority to agencies 
faced with emergencies or other unusual circumstances that do 
not involve an emergency.
    This authority has been used to help agencies in the 
aftermath of the terrorist attacks of September 11th as well as 
to respond to Hurricane Katrina. However, none of these 
regulatory authorities provide the ability to waive the offset 
for such short-term needs as mentoring new employees or 
providing short-term assistance with critical projects.
    OPM submitted a legislative proposal to Congress in March 
of last year that would allow agencies, without coming to OPM 
for approval, to rehire annuitants under certain conditions 
without a salary offset. This proposal is substantially similar 
to H.R. 3579, introduced last fall by Representative Tom Davis. 
H.R. 3579 would cover only executive branch agencies while 
OPM's proposal would also apply to the legislative and judicial 
branches.
    H.R. 3579 would permit Federal agencies to reemploy retired 
Federal employees without offsetting annuity from salary for a 
maximum of 520 hours in the first 6 months following 
retirement, a maximum of 1,040 hours in any 12-month period, 
and a total of 6,240 hours for any individual. While those re-
employed under this authority would receive both salary and 
annuity payments, they would earn no additional retirement 
benefits based on the reemployment.
    The legislation would make reemployment both attractive to 
annuitants and easy for agencies to use and it is designed to 
avoid abuse. This will encourage individuals who otherwise 
would leave Government permanently or provide their services to 
a contractor to return to work for the Government part-time. 
Amending the law in this way will also go a long way toward 
eliminating the inequity in the treatment of reemployed Federal 
retirees compared to private sector retirees, who continue to 
collect their pensions and full salaries when they are hired by 
the Federal Government.
    I also want to thank Congressman Moran for introducing H.R. 
2780, a bill to remove the penalty under the Civil Service 
Retirement System, which results from part-time service at the 
end of a career. And I want to thank members of the 
subcommittee, along with members of the Committee on Oversight 
and Government Reform, who supported passage of the bill out of 
committee on March 13, 2008.
    Similar legislation has been introduced by Senators Conrad 
and Smith as part of their broader efforts to assist older 
workers in the private and public sectors. Together, both of 
these legislative initiatives are important to our efforts to 
have the right people with the right skills in place, so that 
agencies are able to meet their mission goals.
    I want to especially thank you, Representative Davis, and 
Representative Marchant, for your interest in this important 
issue. Thank you for inviting me here today and I would be glad 
to answer any questions.
    [The prepared statement of Ms. Kichak follows:]
    [GRAPHIC] [TIFF OMITTED] 48242.010
    
    [GRAPHIC] [TIFF OMITTED] 48242.011
    
    Mr. Davis of Illinois. Thank you very much. We appreciate 
your testimony.
    I will begin. Ms. Maureen Gilman, legislative director for 
the National Treasury Employees Union, and a witness on the 
third panel, states in her testimony for the record that the 
lack of qualified employees is due to the funding and the 
contracting out of critical expertise to private businesses. I 
have a two-part question.
    One, can current staffing shortages be attributed to a lack 
of funding, and if so, why not hire staff now that can be 
trained by more experienced workers before they retire? Then I 
will go to the other part.
    Ms. Kichak. I think it is fair to say that the Government 
is trying to be as efficient as possible, and therefore does 
not fund a position that is not needed if somebody else is 
there doing the job. So if money were unlimited and you could 
double-encumber certain positions and give people a long 
training period, that would certainly help. There is no 
question about that.
    On the other hand, we work with our agencies. At OPM we 
have human capital officers assigned to every agency to do 
succession planning, to make sure there are people training 
behind the folks in place. So it is not strictly a funding 
issue. We do train people, but unexpected things occur. People 
leave before you expect them to, folks that aren't able to 
retire, folks get sick and folks decide to change jobs. So even 
if we had more money, we couldn't guarantee that we would put 
the right person in the right place to anticipate a problem in 
the future.
    Mr. Davis of Illinois. Strategic planning suggests that 
work forces plan for the future in order to meet staffing 
needs. Wouldn't proper planning and preparation by the agencies 
alleviate staffing and training concerns if there was enough 
planning taking place before we get to the point where there is 
a need?
    Ms. Kichak. I think there is a lot of planning taking 
place. Again, you identify the people where you expect you 
might have shortages and you start to build succession plans 
around those areas. But unexpected things do happen.
    The other problem you have is that no matter how much you 
put down in documentation of a position and work with the next 
person, they would really like to have somebody they could talk 
to and work with when it absolutely falls in their lap. There 
is no substitute for the person who is the most experienced at 
that job being available as the new person takes over to answer 
questions.
    Our proposal is for a part-time job. It is really not for 
full-time employment. So it is just to be able to access people 
and rely on them for help in limited circumstances. It is not 
to do the job.
    Mr. Davis of Illinois. Let me ask you, are there provisions 
in H.R. 3579 to address concerns that agencies would be 
required to re-hire Federal annuitants with no benefits versus 
new hires and current employees that are entitled to benefits, 
thereby saving the agency money?
    Ms. Kichak. I think there are many provisions in that piece 
of legislation. The first one is the limitation on the hours 
that can be worked immediately after retirement. It is very 
clear that immediately after retirement, you can only work 600 
hours of the first 6 months. What that means is that you cannot 
let somebody retire and immediately come back to work.
    So there is going to be some kind of break there where the 
person is not going to be available to you full-time. Then 
there is also the limitation that you can only work half the 
hours in a year, which means that an agency which has a very 
vital job is really going to have to find somebody who can 
handle that full-time, and then again there is the provision of 
the 6,000 hours in a lifetime. So again, that person is only 
going to be available for a limited amount of time and an 
agency has to plan to replace them.
    As far as the issue of these folks not earning benefits 
while they are retired, it would be, OPM also administers the 
Civil Service Retirement System. It would not be good 
management of that fund to allow reemployed annuitants to 
increase their pensions while they are retired. Planning for 
your retirement and building for your pension is something you 
need to do when you are working. It wouldn't be good business 
or good pension sense to build that while you are retired.
    Mr. Davis of Illinois. Thank you very much. We will go to 
Mr. Marchant.
    Mr. Marchant. Thank you.
    I have a few questions about just how this bill would work 
mechanically. Would an annuitant be able to go to work for any 
Federal agency?
    Ms. Kichak. Yes.
    Mr. Marchant. So it wouldn't necessarily be the agency that 
they retired from?
    Ms. Kichak. That is right.
    Mr. Marchant. That is not limited in any way?
    Ms. Kichak. That is right.
    Mr. Marchant. Is the agency bound to offer what the 
annuitant was making as his or her last salary?
    Ms. Kichak. No, they are not.
    Mr. Marchant. Is it an open, we post this job, we are 
looking for a part-time person?
    Ms. Kichak. The person who is going to be retired is going 
to be required to meet the requirements of the job. In other 
words, if you hire somebody as a physician, they are going to 
have to be a physician. If you hire somebody as a police 
officer, they are going to have to have those skills.
    So their pay will also be set based on the job they are 
hired to do, not necessarily the salary they were earning at 
the time they left.
    Mr. Marchant. Would an agency then be required to pay the 
amount of money that job paid, currently paid at the level that 
they hired them?
    Ms. Kichak. The agency would set the pay based on the 
responsibilities the person would have and the job they are 
being hired into. One example would be, and it is an unlikely 
one, but if you had somebody who was operating at a very high 
level and you wanted them to come back and do some 
administrative work, to organize some files, you could set that 
job as an administrative person and they could have a lower 
grade than what they were making when they left.
    Mr. Marchant. There are several bills that are floating 
around now in committee, on the House floor and maybe some that 
are even out of the House that are proposing what I would 
consider to be a very generous leave program for adoptive 
parents, newborns, for both the husband and the wife. We were 
told, we had testimony that said basically there was sufficient 
workplace in force to fill those holes if someone left for 8 or 
10 weeks.
    Do you think that if this becomes law, and this becomes 
policy, where it could extend, I think up to 12 weeks, is this 
a situation where an annuitant could be used to come in and 
fill in?
    Ms. Kichak. Absolutely. One very good use of this bill 
would be if somebody had an unexpected absence and they were 
coming back. And a maternity is a good one.
    On the bills on the leave, we do have good leave policies 
for our folks so they can take a long period of time off. But 
it would be a very good use of this bill to bring people, 
reemployed annuitants back to fill in that gap.
    Mr. Marchant. Thank you, Mr. Chairman.
    Mr. Davis of Illinois. Thank you very much.
    Let me just ask you, are there any other flexibilities that 
you can think of that perhaps could be used to retain older 
workers, such as maybe teleworking, flexible schedules, part-
time work or any other things that might be used to arrive at 
the same goal?
    Ms. Kichak. We absolutely support the Moran bill that fixes 
the problem with the high three salary for CSRS employees, that 
penalizes them if they go to part-time at the end of their 
career. So we think part-time service at the end of a career is 
a very good thing to do.
    We are strong advocates of telework and we work very hard 
to get policies in place so that managers can offer telework to 
their employees. We believe in flexible work schedules. So all 
of those things are great tools.
    But there are also instances where this is the only kind of 
thing that would work. Because in the instance that 
Representative Marchant just described, where somebody is on 
maternity leave, that person is gone. And you have to fill that 
need. Allowing somebody to telework that is already gone 
wouldn't really do that.
    So all of those things are good ideas.
    Mr. Davis of Illinois. Are there any other questions?
    Thank you very much. We appreciate your being here.
    We will go to our second panel. Mr. Patrick Purcell is a 
Specialist in Income Security with the Congressional Research 
Service. He works on issues related to Federal employee 
retirement benefits, private sector pensions, 401(k) plans and 
individual retirement accounts. Mr. Purcell, if you would raise 
your right hand.
    [Witness sworn.]
    Mr. Davis of Illinois. The record will show that the 
witness answered in the affirmative. We thank you for being 
here and if you would summarize your testimony in 5 minutes, 
the full testimony is in the record. The yellow light indicates 
you have a minute and red means the time is up.

 STATEMENT OF PATRICK PURCELL, SPECIALIST IN INCOME SECURITY, 
DOMESTIC SOCIAL POLICY DIVISION, CONGRESSIONAL RESEARCH SERVICE

    Mr. Purcell. Thank you, Mr. Chairman and Ranking Member 
Marchant, for inviting me here to speak to you today on 
reemployment of Federal annuitants. As you mentioned, Mr. 
Chairman, I have submitted a written statement for the record, 
so I am only going to focus on a few points concerning the 
current law and the proposed legislation.
    As you are aware, under the Federal Employee Pay 
Comparability Act of 1990, the Director of OPM can waive the 
prohibition on concurrent receipt of a salary and a retirement 
annuity on a case by case basis if an agency is unable to 
retain or recruit qualified employees. The 1990 law also allows 
the Director of OPM to delegate to the head of a Federal agency 
authority to grant waivers on a case by case basis for 
employees serving on temporary appointments if the agency is 
facing an emergency.
    While the individual is employed under these waivers, they 
do not earn additional retirement benefits except Social 
Security.
    Under H.R. 3579, agency heads would be allowed to hire 
Federal annuitants on a temporary basis without reducing their 
salaries by the amount of their retirement annuities and 
without seeking the approval of OPM. The authority of an agency 
head to grant a waiver would be limited, as was mentioned 
earlier, to 520 hours in the 6 months following the starting 
date of the annuity; 1,040 hours of service in any 12-month 
period, 6,240 hours over the individual's lifetime.
    In recent years, the number of reemployed Federal 
annuitants has increased, but they are a still a small fraction 
of all Federal employees. Between 2000 and 2007, the number of 
reemployed annuitants doubled from roughly 2,700 to 5,400. This 
is still less than one-third of 1 percent of all executive 
branch Federal employees. Over this same 7-year period, the 
percentage of reemployed annuitants subject to salary offset 
fell, and the percentage who were reemployed under waivers that 
allow concurrent receipt of a salary annuity increased.
    In 2000, 75 percent of reemployed annuitants were subject 
to salary offset and 25 percent were employed under waivers. By 
2007, 40 percent of reemployed annuitants were subject to 
salary offset, 60 percent were employed under waivers that 
allowed concurrent receipt of salary and annuity.
    Many Federal employees are going to be eligible to retire 
over the next 10 years. More than 40 percent of the Federal 
work force is over age 50 and 35 percent have already completed 
more than 20 years of service. Because these employees have 
skills that are needed for Federal agencies to carry out their 
missions, managers in the Federal Government are seeking tools 
to delay retirement of employees and to induce some retirees to 
return to work.
    In 1990, Congress approved one such tool by granting the 
Director of OPM authority to waive in certain cases the law 
that prohibits concurrent receipt of a Federal salary and an 
annuity. H.R. 3579 would give agency heads more flexibility in 
hiring retired Federal employees and to temporary employment by 
allowing them to grant waivers to the salary offset without 
seeking the approval of OPM.
    Providing Federal agencies with the authority they need to 
recruit and retain skilled workers is an important issue before 
Congress. However, the prohibition on concurrent receipt of a 
retirement annuity and full salary reflects the judgment of 
previous Congresses that Federal employment policies should not 
encourage workers to retire and then seek reemployment in a 
Federal job in which they can receive both a salary and an 
annuity.
    Without the prohibition on concurrent receipt of a salary 
and annuity, there would be a financial incentive for employees 
to retire and seek reemployment with the Government. Because 
H.R. 3579 limits the waiver authority to temporary employment, 
it would substantially mitigate the possibility that this would 
occur.
    However, it is worth noting that in 2006, the Assistant 
Director of OPM testified before this committee, ``that because 
waivers result in compensation from the retirement fund and 
salary, they must be used judiciously.''
    This concludes my testimony and I would be happy to answer 
any questions that members of the subcommittee might have.
    [The prepared statement of Mr. Purcell follows:]
    [GRAPHIC] [TIFF OMITTED] 48242.012
    
    [GRAPHIC] [TIFF OMITTED] 48242.013
    
    [GRAPHIC] [TIFF OMITTED] 48242.014
    
    [GRAPHIC] [TIFF OMITTED] 48242.015
    
    Mr. Davis of Illinois. Thank you very much. I will begin.
    Mr. Purcell, you testified that H.R. 3579 would allow the 
head of a Federal agency to hire a Federal annuitant on a 
temporary basis without reducing the annuitant's salary by the 
amount of his retirement annuity. You also testified that such 
a measure could create an incentive for some employees to 
retire and seek reemployment which would encourage retirement.
    Are there provisions in H.R. 3579 to prevent agencies from 
abusing this authority and the early retirement of Federal 
employees?
    Mr. Purcell. Yes, there are. The limitation on employment 
to 500 hours in the first 6 months, 1,000 hours in any 12-month 
period and 6,000 hours over a lifetime is a key element of this 
bill. Because an individual could only count on appointment to 
a temporary job, it would substantially mitigate the 
possibility that an employee who knows he or she has a valuable 
skill and would be likely to be reemployed from attempting to 
game the system, which does occur.
    If I could just refer briefly to an article in News Day, 
May 10th, about a school district employee in New York State 
who retired on a pension of $100,000 a year, was rehired the 
next day at a salary of $175,000 a year, raising his total 
compensation to $275,000 a year, this occasionally has happened 
in State and local governments that have allowed retirees to be 
reemployed and collect both a salary and an annuity. My 
experience reading about these stories in the past is they 
generally elicit a uniformly negative response from the public. 
[Laughter.]
    Mr. Davis of Illinois. I was wondering if the person may 
have had some clout. Not a bad plan.
    Let me ask, are there any other suggestions or 
recommendations that you might have that would help assure that 
there is no mis-use of this concept?
    Mr. Purcell. When reading the bill, I noticed that it would 
be a permanent change to the statute. One possibility might be 
to make this change for a period of 5 or 10 years and evaluate 
how agencies and individuals respond. Another, somewhat more 
drastic measure, might be to put in an absolute ceiling, say, 
no more than, well, let me backtrack.
    I believe right now about three-tenths of a percent of 
Federal workers are reemployed annuitants, the largest share in 
the Department of Defense, which has an entirely separate 
authority under the National Defense Authority Act of 2004. But 
a ceiling of a half a percent, three-fourths of a percent 
should be ample room for an agency to fill positions for, as 
Ms. Kichak said, training and mentoring and bringing the newer 
group of Federal employees up to speed.
    Mr. Davis of Illinois. Thank you very much.
    Mr. Marchant.
    Mr. Marchant. I am in one of those States that, when I was 
in the State legislature, this came before Texas as a solution. 
And it was not very long before the mis-use appeared. Then we 
had to take another action to keep that from happening.
    Is it possible to put a cap salary in there or a cap pay in 
there?
    Mr. Purcell. It would be possible to say that, I am just 
going to make a number up here, that the combined annuity and 
salary shall not exceed 100 and X percent of somewhere in the 
general schedule. You could do it. You would have to give it 
some thought. You wouldn't want to make it so constraining that 
people wouldn't go for it, and you wouldn't want to make it so 
broad that it is ineffective.
    Mr. Marchant. But you could make it a functional thing?
    Mr. Purcell. Yes, it could be based on the combined annuity 
and some level of the general schedule.
    Mr. Marchant. I am sure no one contemplates that at this 
point. But there are people who spend 24 hours a day thinking 
about stuff like this.
    The other question I have about it is, have you given some 
consideration, with this early retirement argument where it 
incentives an early retirement, the way the retirement system 
is set up, the sooner you retire then you are cutting the 
amount of your monthly annuity over a long period of time.
    Mr. Purcell. That is true.
    Mr. Marchant. So you have an offsetting, the fund itself 
has an offsetting compensation. So the fund itself, the quicker 
someone retires, once it gets to a threshold and they retire, 
they are going to receive a diminished benefit----
    Mr. Purcell. Forever.
    Mr. Marchant [continuing]. From their retirement. Yet you 
have the temporary employment capped over here, as best I can 
tell, at five half years, five or six half years. So that if 
you incentivize someone to retire at age 55, that could have 
worked until 65, then their benefit at 65 from the fund would 
be much higher and a person 55 could take a significantly less 
amount. Then it would be fairly shortsighted on that person's 
part to limit himself to five half years for his total exposure 
to Government pay, with no additional benefit.
    Mr. Purcell. True. The way this legislation is drafted, I 
think it is very significant that, for instance, the 6,240 hour 
cap, which is equal to three full years, the way this is 
written, you couldn't work three full consecutive years, 
because you are limited to half-time in any 12 month period. If 
that weren't there, if the only limit were, say, 6,240 hours, I 
think the bill would present problems in creating adverse 
incentives for people to retire to 56, 57, whatever their 
minimum age is, begin the pension and go back to work.
    The way this is crafted, that would be difficult to do, 
because in most cases, you would have to have a gap. You could, 
I suppose, work part-time, because actually it is a limit on 
hours.
    Mr. Marchant. Yes, they could string it out over----
    Mr. Purcell. You could string out part-time work over a 
longer period of time. That is one reason I was suggesting that 
perhaps a time limit initially for OPM to figure out if that is 
happening, come back in five or 10 years and say, we need to 
tweak this, because something is happening we didn't expect.
    The way it is crafted now, it does at least limit the 
possibility that somebody would say, ah, I know I have this 
rare skill that they need, I am going to retire tomorrow and 
come back and collect both.
    Mr. Marchant. Mr. Chairman, my last question will be, even 
though I am very much for this, the other thing that I think is 
a potential abuse is for someone to come back as a consultant.
    Mr. Purcell. Which they can do now. As far as I know, if 
you retire from the Federal Government, come back on, say, a 
personal services contract, you will be collecting both that 
contract money and your pension. I may be wrong about that, but 
I think you can do that.
    Mr. Marchant. But I mean, the job description in itself 
under this structure would just be to consult.
    Mr. Purcell. Yes.
    Mr. Marchant. Not a specific job title where you are coming 
in and plugging this hole or doing this. I think if there is 
any potential abuse there, this general description of what 
that person does, management consultant, training or something 
like that.
    Mr. Purcell. Perhaps some of these issues could be dealt 
with, the last section of the bill, director of Office of 
Personnel Management shall prescribe regulations, perhaps some 
of those potential issues could be dealt with in the 
regulations accompanying it, or written after the bill was 
passed.
    Mr. Marchant. I recall that our reaction to fix the problem 
was very extreme. So if those regulations don't----
    Mr. Purcell. Actually, if I could just inject one last 
thought. In some nearby States, Maryland and Virginia, for 
instance, that recently experienced teacher shortages, the 
legislature has authorized rehiring retired teachers and 
saying, you can simultaneously collect pension and annuity, 
with strict time limits. You can do this for 2 years or 
something. And if we still have an emergency the legislature 
will deal with it at a later date.
    Mr. Marchant. Thank you, Mr. Chairman.
    Mr. Davis of Illinois. Thank you very much.
    I thank you very much, Mr. Purcell.
    We will go to our third panel, which will be composed of 
Ms. Maureen Gilman, who is the legislative director of the 
National Treasury Employees Union. Prior to working for the 
NTEU, she was the chief of staff and legislative director for 
Representative Sam Gejdenson from Connecticut. We also have Mr. 
Daniel Adcock. He is assistant legislative director for the 
National Active and Retired Federal Employees Association 
[NARFEA]. Prior to working for NARFEA, he served as Executive 
Assistant to Assistant Secretary for Aging, Jeannette C. 
Takamura.
    If you would both stand and raise your right hands to be 
sworn in.
    [Witnesses sworn.]
    Mr. Davis of Illinois. The record will show that the 
witnesses answered in the affirmative.
    Of course we are delighted to have you both. We have your 
written statement for the record. If you would take 5 minutes 
and summarize your statement, the green light indicates that 
the full time is available, the yellow light means you have 1 
minute and the red light means that your time is up.
    We will begin with you, Ms. Gilman. Thank you very much.

 STATEMENTS OF MAUREEN GILMAN, LEGISLATIVE DIRECTOR, NATIONAL 
   TREASURY EMPLOYEES UNION; AND DANIEL C. ADCOCK, ASSISTANT 
  LEGISLATIVE DIRECTOR, NATIONAL ACTIVE AND RETIRED EMPLOYEES 
                          ASSOCIATION

                  STATEMENT OF MAUREEN GILMAN

    Ms. Gilman. Thank you, Chairman Davis, Ranking Member 
Marchant, for the opportunity to express the views of the 
National Treasury Employees Union on H.R. 3579.
    This bill has been suggested as a solution for an 
anticipated lack of qualified Federal employees needed to 
effectively accomplish the important missions of the Federal 
Government. Many Federal agencies today are woefully 
understaffed and the training, mentoring and promotional 
opportunities needed to have experienced employees in place, 
should we see large numbers of retirements in the next few 
years, is not being adequately addressed.
    The primary reason for this is not a lack of qualified 
employees or applicants, but a lack of funding. In addition, 
much critical expertise has been contracted out to private 
businesses. NTEU believes that the real solution to current and 
future personnel concerns is to focus now on the recruitment 
and retention of talented employees. Fundamental to this 
process is providing fair pay, adequate benefits, job security 
and rewarding work. GAO has found that the use of current 
flexibilities, such as part-time work, flexible schedules and 
flexi-place options improve recruitment and retention efforts, 
especially among older workers. NTEU strongly supports the 
expanded use of these options throughout the Federal work 
force.
    We also support Congressman Moran's bill, H.R. 2780, to 
make sure there is no penalty in terms of pension calculation 
if an employee moves to a part-time schedule near retirement. 
In addition, NTEU believes that legislation introduced by 
Chairman Davis, H.R. 5550, that would allow FEHBP to cover 
dependent children to age 25, rather than age 22, would be a 
strong recruitment and retention tool for parents of young 
adults, the kind of experienced workers that the Federal 
Government needs.
    One of the best recruitment and retention benefits that the 
Federal Government provides that is especially attractive to 
older workers is the ability to continue in the FEHBP program 
with the Government continuing to contribute toward premium 
costs upon retirement. Yet the administration proposed to limit 
this FEHBP option in its last several budget submissions. NTEU 
strongly opposed this proposal and we are pleased that the 
Congress took no action on it.
    While NTEU does not oppose the Federal Government's use of 
reemployed annuitants, we do have some concerns with regard to 
H.R. 3579, which would significantly change the rules on this 
practice. Currently, most agencies are allowed to waive 
statutory prohibitions on dual compensation or paying salaries 
at the same time pension benefits are being received, under 
certain circumstances, with the approval of Office of Personnel 
Management. These circumstances include an emergency hiring 
need, severe recruiting difficulty and the need to retain a 
particular individual. last fall, regulations were amended to 
expand the ability to waive the dual compensation rules for 
unusual circumstances.
    Under H.R. 3579, OPM will have no approval authority, but 
rather, agencies will be free to act without outside review. In 
addition, the bill does not set forth any standards that must 
be met in order for agencies to reemploy annuitants without 
pension offsets. It is also not clear that these appointments 
would follow standard competitive hiring practices that protect 
merit principles and veterans' preference.
    Under current pension rules and the limited time 
appointments prescribed under H.R. 3579, most benefits provided 
to other Federal employees will not be available to reemployed 
annuitants. Rehired annuitants would not be eligible for FEHBP 
coverage as employees and if they retained coverage as 
retirees, OPM accounts, not the employing agency, would pay the 
Governments's share of their premiums. They would not be 
eligible to earn additional retirement credit or participate in 
the thrift savings plan, so agencies would incur no costs for 
those benefits. This cost-shifting would provide agencies 
powerful budgetary incentives to maximize the use of part-time 
short-term annuitants, rather than hiring and promoting the 
full-time permanent employees needed to successfully steer 
agencies through the challenging times ahead.
    NTEU is not aware of any serious problems with the current 
rules that allow for reemployment of annuitants. We are 
concerned, however, that the proposal under consideration, 
while certainly intended to be used judiciously, could easily 
be subject to abuse, especially due to the financial incentives 
it will provide agencies, the lack of standards and the 
elimination of OPM approval.
    Thank you for the opportunity to present this statement. I 
will be happy to answer any questions you might have.

    [The prepared statement of Ms. Gilman follows:]


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    Mr. Davis of Illinois. Thank you very much. We will proceed 
to Mr. Adcock.

                 STATEMENT OF DANIEL C. ADCOCK

    Mr. Adcock. Thank you, Mr. Chairman and members of the 
subcommittee. I am Dan Adcock, assistant legislative director 
of NARFE.
    NARFE has long held that Federal retirees who are 
interested in returning to Government service ought to be able 
to receive the full salary of their new job without any offset 
as a result of the retirement annuity they earned through prior 
Federal service. NARFE's annuitant members count among our 
ranks agency managers, line supervisors, security specialists, 
computer programmers, air traffic controllers, and law 
enforcement personnel.
    At a time when the Nation faces critical challenges and our 
Federal Government faces an unprecedented brain drain, we 
should not ignore my side of ready, willing, able and proud men 
and women who have dedicated their careers and service to our 
Nation. Indeed, the reality of our current skill shortages 
demonstrates the critical roles played by civilian employees of 
the Government, thousands of whom are working alongside their 
uniformed colleagues in locations like Iraq and Afghanistan.
    After serving full careers in public service, most Federal 
retirees want to stay retired. However, there is a growing 
number who want to return to public service for several 
reasons. Some are paying for their children's or 
grandchildren's soaring college costs. All annuitants are 
paying higher out of pocket health care expenses and mounting 
daily living expenses, including energy costs. Others are 
replacing Social Security benefits lost as a result of the 
application of the unfair and arbitrary Government Pension 
Offset and Windfall Elimination Provision.
    But it is not always about money. Some retirees appreciate 
the value of remaining professionally, mentally and physically 
engaged through reemployment. In addition, more and more no 
longer care to be bystanders with what is going on in the 
Middle East and with homeland security, and they want to answer 
the call to public service at a time when our Nation needs 
their unique skills and talents.
    So what is stopping them? Under current law, the wages of 
those reemployed annuitants are generally offset by the amount 
of their annuity. However, OPM and certain Federal agencies 
have the authority to allow some returning retirees to avoid 
the offset when serving in positions for which there is 
exceptional difficulty in recruiting and retaining a qualified 
employee and in jobs critical to accomplishment of the agency's 
mission.
    Unfortunately, not all qualified retirees with in-demand 
skills receive a wavier. Indeed, they tell us that they would 
not consider reemployment since the offset of their Federal pay 
by the amount of their annuity would make their reemployed 
salary uneconomical. Absent a waiver, some would be working for 
free, as a practical matter, if their annuity was the same or 
higher than jobs that pay a lower salary.
    In fact, many crucial Federal workers avoid the red tape of 
the waiver process by going to work for a Government contractor 
where the Federal annuity presents no barrier to being paid 
full salary at the new job. Working for a contractor also 
allows Federal retirees to earn more quarters in Social 
Security-covered employment in an effort to mitigate the 
reduction of their Social Security benefits by the windfall 
elimination provision.
    Should the Federal Government continue to deny itself 
access to this pool of experienced professionals at these 
critical times? Why pay a premium to a contractor when you can 
get skills of a seasoned professional basically at cost?
    One way of making reemployment with the Federal Government 
more attractive to skilled and motivated retirees is H.R. 3579, 
legislation introduced by Ranking Members Tom Davis and Kenny 
Marchant, which will allow Federal agencies to reemploy Federal 
retirees on a limited, part-time basis without offset of 
annuity from salary. It is our intention that agencies use this 
authority to supplement and not supplant the current work force 
and to find annuitants with specific skills that are not 
presently available for hard to fill positions.
    The flexibility of working part-time is appealing to many 
retirees interested in going back to work, since they are not 
trying to buildup their careers. What is more important for 
them is not missing certain life events for work.
    Additionally, some Federal annuitants, for certain aging 
and physical reasons, will not consider taking full-time 
employment. And some, H.R. 3579 removes many obstacles 
preventing or discouraging the reemployment of Federal 
annuitants, and it enables the Government to hire workers with 
skills and talents in short supply.
    For these reasons, NARFE urges you, Mr. Chairman and 
members of the subcommittee, to approve this needed and crucial 
legislation. We commend you for your interest in enabling 
Federal annuitants to continue to make crucial contributions.
    Thank you for inviting us to testify and for your able 
leadership of the subcommittee.
    [The prepared statement of Mr. Adcock follows:]

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    Mr. Davis of Illinois. Thank you very much, Mr. Adcock. We 
will now go into some questions.
    Ms. Gilman, let me begin with you. Do you think that the 
Office of Personnel Management and Federal agencies are doing 
enough to recruit and retain staff to address staffing needs?
    Ms. Gilman. No, I don't, Mr. Chairman. I think that is the 
real problem that we should be focused on today. There is a 
need to make sure that we have talented people in place and 
that we are planning for the future. I don't think enough is 
being done. Some of the flexibilities that I mentioned in my 
testimony were recently pointed out in a GAO report, like 
allowing current employees more options to work part-time 
schedules, work flexi-place. Other kinds of job options that 
are not being really used by the agencies would do a lot, I 
think, to both recruit the talented people we need and to 
retain those who might be thinking about retiring.
    Mr. Davis of Illinois. Let me ask you also, why should 
Federal retirees be subject to the dual compensation rule when 
private sector employees are not?
    Ms. Gilman. Mr. Chairman, if it were up to me, I wouldn't 
have them subject to it. But I think Congress has put that in 
place to potentially avoid abuse by retirees leaving and coming 
back and getting a full salary while they are also collecting 
their pension. I have heard the argument, why should they be 
put at a disadvantage to a private sector employee who wants to 
come back, but they are still at a disadvantage if they are 
given the dual compensation waiver in terms of other benefits.
    Also, onboard employees are at a disadvantage because their 
benefit levels that have to be paid by the agencies are going 
to be higher than a reemployed annuitant. If you put the two 
applicants for the job side by side, and they are going to be 
paid exactly the same salary, the agency will have to put in 
much less money to pay the retired annuitant than the onboard 
employee, because they don't pay in anything for their 
benefits.
    Mr. Davis of Illinois. Is there anything that you would, 
well, let me ask you this. Do you think that this practice 
impacts negatively on employees who are currently working 
relative to opportunities for advancement or movement in any 
way?
    Ms. Gilman. I think it could, Mr. Chairman. One area that 
has been mentioned is to bring back retirees for training 
purposes and mentoring. Sometimes that can work. Sometimes if a 
retiree has been out of the work force for a while, their 
skills and their information may not be as up to date as an 
onboard employee.
    Also, onboard employees look at opportunities to be able to 
provide training or mentoring as one of the biggest 
opportunities to gain experience in terms of competing for 
promotion. So if you are going to give more training and 
mentoring opportunities to retirees, there may not be as much 
available for onboard employees.
    Mr. Davis of Illinois. Thank you very much.
    Mr. Adcock, let me ask, you testified that Representative 
Tom Davis' bill does not end the existing dual compensation 
rule, but would extend it by giving agency heads the authority 
to waive the restriction for retirees who return to work part-
time. Do you think that Federal agencies are capable of 
policing themselves to the extent that there would be either no 
or low abuse or must we have authority etched in law to try and 
make sure that this would not happen?
    Mr. Adcock. I think the main way that abuse will be 
prevented is through the fact that these workers will be 
working on a part-time basis for a temporary duration. So I 
think those issues will be taken care of.
    But you know, when we talk about whether or not, for 
instance, someone who is being brought in to do mentoring has 
the skill set or the current skill set. All these things have 
to be case by case decisions, as any hiring decision is. At the 
decisionmaking level, some of that has to be left to the 
Federal agency to have that kind of discretion. But to answer 
your question, I think the fact that the appointments would be 
temporary, under special circumstances, and of limited 
duration, should take care of that issue.
    Mr. Davis of Illinois. Thank you very much.
    Mr. Marchant.
    Mr. Marchant. Thank you, Mr. Chairman.
    Looking at the OPM projections for retirements over the 
next 10 years, Ms. Gilman, this is obviously some information 
that you have had a chance to look at, do you believe under the 
current system that we have that they are going to be able to 
successfully recruit this many new employees?
    Ms. Gilman. I would hope that they would be planning for 
that, and that they would be beginning to deal with it, both to 
recruit and to retain enough qualified employees to do that 
work. But I also think that if there is a need to bring back 
annuitants that there should be some standards, similar to what 
are in place today. If an agency can demonstrate that it has 
unusual circumstances or particular needs, they can go to OPM, 
get a waiver and bring employees back if they need to.
    But if we give them a blank check, even if it is to bring 
back employees part-time, if there are no standards and no 
outside review, our concern is that will become a first option 
instead of maybe a second or third option.
    Mr. Marchant. So the previous testimony we heard that this 
would not even represent more than one-third of 1 percent of 
the work force, are you thinking that is not correct, or that 
is too low of a projection? Because when you are talking about 
60,000 people that are next year expected to retire in 2007 
[sic], 61,000 in 2002 [sic] you don't view this as a valuable 
tool to keep the workplace going?
    Ms. Gilman. I think it is a tool that has been used 
effectively under the current rules. I think if there is a need 
that can be demonstrated by an agency that the rules in place 
now would allow them to rehire an annuitant. I frankly didn't 
hear anything in the OPM testimony that pointed to any 
significant problem with the rules that are in place now. I 
know they talked about this would prevent abuse because of the 
part-time or short-term duration.
    It is our view that if the agency has an emergency or a 
severe need, they shouldn't be limited by part-time or the 
amount of time. If there is one person that can do a job at the 
Centers for Disease Control, I don't think we should be 
limiting bringing them back for maximum 6 months at a time. If 
the need is there, they should be able to come back and serve.
    But if there isn't a special need, I also don't see why the 
doors should be completely flung open to bring back annuitants 
without any need, any specific need.
    Mr. Marchant. Thank you, Mr. Chairman.
    Mr. Davis of Illinois. Thank you very much, Mr. Marchant.
    Ms. Norton.
    Ms. Norton. I appreciate the testimony of both of you, 
offering some insight into this issue that is not always 
apparent on the surface. I have to tell you, I have a hard time 
understanding why anybody would come back now, when you have to 
give up your annuity. And if it is hard to find employees, 
maybe you can help me out. First, let me say I understand the 
search for the solutions. I don't want to say this is off the 
top of my head not a good solution.
    I do agree with Mr. Marchant, the way in which Federal 
employees are pouring out of here, I can guarantee you this, 
you are not going to replace them as easily with the baby-boom 
quality generation. Because their opportunities throughout the 
private sector are so much broader and often more attractive. 
So I do think this presents a very serious problem for the 
Federal Government. We have had hearings on it. And I must say, 
nothing even approaching a satisfactory solution has come 
forward. I think this is an attempt to try to do something to 
shore up, at least shore up the Federal work force. Then we 
have to look beneath the surface for the details.
    My own sense, I wonder what your experience has been, for 
hard to find positions, I don't know why anybody who has that 
level of skill would want to bring it back to the Federal 
Government rather than, you mentioned, contractors. I can think 
of a dozen places right off hand that if you have a hard to 
fill position, that it must be a position that is desired both 
by the Federal Government and the private sector. Are we 
talking about a ghost work force here? In your experience, you 
who represent retirees and Federal workers, are these hard to 
find workers which now requires a waiver coming back to the 
Federal Government, seeking employment with the Federal 
Government at all, rather than using other options, where you 
don't even have to worry about keeping your annuity, etc., 
which is of course when they retire, which is what they want to 
do in the first place?
    Who is doing this?
    Mr. Adcock. Congresswoman, I think what happens for many 
annuitants is that obviously, if they can't get the waiver, 
then it is a no-brainer, they are going to go to a contractor.
    Ms. Norton. Well, just a moment. My question is why would 
you want to come, you have your annuity, you have your 
benefits. If you are in a hard to find employee position, why 
would your first option be the Federal Government, rather than 
a dozen other options, which don't raise the same issues?
    Mr. Adcock. Well, I think that part, money is obviously, 
compensation is a large consideration. But I think sometimes 
people are led back to the Federal Government because they see 
what is going on in the world and they want to do something 
about it.
    Ms. Norton. For love, not money, maybe.
    Mr. Adcock. Right. I think that is a legitimate motivation 
why people will do it.
    Ms. Norton. And with the baby-boom generation, I am sure 
you can find some of that. I must say, when Federal employees 
retire, now we have them retiring early. It doesn't cross my 
mind that they would any time soon be looking for reemployment 
here. It may be as workers get older and as you indicated, Mr. 
Adcock, this was, and it often is, very satisfying work, they 
want to come back and do that work. But I really wonder if what 
we are playing with here, I must say that I do agree with you, 
Mr. Gilman, while this may be a stop-gap measure that at least 
we ought to try, we are fooling ourselves if we think that the 
Federal Government can lumber along, providing, for example, 
the same health benefit ratio that it did whenever the program 
was set up, and the rest of it, and still get the quality of 
work force you need in a post-9/11 work force, I don't know 
what it will take to make us understand.
    But let me ask you about the part of your testimony that 
talks about other options, as part of what we are talking about 
here when we talk about benefits, and all of what we are 
talking about is costs. You mentioned flexible schedules, for 
that matter, part-time work and flexi-place options. Is it your 
impression that those aren't available today, generally, in the 
Federal Government?
    Ms. Gilman. It is my understanding that the authority for 
agencies to use those options is currently available. It is a 
question of agencies using them. In some cases, agencies will 
say they don't have adequate funding. But for many of those 
potions, there is really no increase in funding. It is a 
question of just trying to think of new ways to do things, 
using telework, allowing employees to work from home.
    Ms. Norton. What about flexible schedules?
    Ms. Gilman. Flexible schedules, the availability of that is 
there for agencies today. It is very attractive to employees 
and especially, as I understand, a recent GAO report found, to 
older employees who may be trying to decide whether they are 
going to retire or not. I think everyone would agree that it 
would be more cost-efficient and beneficial to everybody if 
they decided to stay on as an employee rather than retire and 
then face whether or not agencies had to do a compensation 
wavier to bring them back. If we could provide them with 
incentives to stay on, I think everybody would agree that would 
be the best way to do it. They have said flexible schedules, 
part-time work and working from home are some of the things 
they are very interested in pursuing.
    Ms. Norton. With those, are the benefits the same with 
flexible schedules?
    Ms. Gilman. Yes.
    Ms. Norton. Part-time work?
    Ms. Gilman. Yes, as I understand it, they are.
    Ms. Norton. One then is left to wonder, Mr. Chairman, I 
would wonder and perhaps staff could do some groundwork on 
this, the extent to which flexible schedules, we know about 
telework or flexi-place. But flexible schedules, part-time 
work, in a world where we know we are losing out on many women, 
very highly educated women, who given the child care situation 
in the United States, the only advanced country that does not 
provide educational child care as a matter of course, do decide 
to stay home, some considerable number of them, for some 
considerable years of their early years of a childhood, early 
childhood years.
    I do think the subcommittee should explore the use of, for 
example, part-time work and flexible schedules and how much it 
is being used, and for that matter, how much is being promoted 
by OPM. Yes, part of the reason people are retiring early is 
they say, hey, look, in this job I not only give my all, I give 
much more than 9 to 5. So the notion of retaining these 
employees in which we have invested so much, rather than have 
them go out on early retirement, work as you say, for a 
contractor or somebody else, that seemed to me to be penny-wise 
and pound foolish.
    I should think that while this may be one option available 
to us, I want to know why they are not using more part-time 
work and flexible schedules. I know that they have promoted, 
because this subcommittee has promoted so-called flexi-place 
options, the congestion of the roads, lots of things recommend 
that.
    But I certainly would like to know more about flexible 
schedules a part-time work, considering parents, I mentioned 
women, but I am not only talking about women by any means.
    I am also very concerned about bringing to the Federal work 
force one of the most contentious issues in the private sector 
work force, and that is essentially a two-tier work force, a 
work force that gets paid and has benefits and a work force 
that does not. Now, we know that these retirees got certain 
benefits all along, and they certainly are in the same position 
as the private sector employees at Safeway, where they now have 
two-tier. But I am concerned about those kinds of 
controversies.
    I am also concerned as to whether or not this has ever been 
done or perhaps should be done on a pilot basis to see if it 
does any good. Because it is hard for me to find, to understand 
why the agencies and certainly why the retirees would go here 
as a first option. OK, they come back, let's say we don't any 
longer have to, what makes it impossible to come back now, not 
receiving your annuity, but essentially no benefits, not thrift 
savings, not apparently any of the benefits. Maybe they don't 
need the health benefits because they get Medicare.
    I can see what the benefit is to the Government. It is 
certainly going to save a lot of money. I am certainly not 
against that. The question is cost benefit, where are you going 
to put your money, are you building a Federal work force?
    I would like to ask you, Ms. Gilman, what do you mean by 
standards? Because I certainly am not convinced that if they 
could, agencies would not go to this option if it affected 
their budgets at a time of very tight budgets. And look, it is 
going to be that way. We have a huge deficit, an ongoing war, 
it is going to be that way. So when you say standards, I would 
like to spell that out a little bit. Standards that would 
prevent abuse, would prevent saying, we will do this just to 
save some money, I don't care if this whole unit is part-time, 
my job is not to build this unit in the Federal work force, for 
example, I am just here to get the job done.
    Ms. Gilman. I would see standards being some kind of 
special need. There are standards----
    Ms. Norton. That is what we have now, Ms. Gilman.
    Ms. Gilman. It could be broader than now. But as I said, I 
haven't heard----
    Ms. Norton. Well, now it is hard to fill jobs. So if it is 
not hard to fill jobs, do you have any suggestions on what kind 
of special need might keep abuse from occurring, or it is 
simply being used to save money without anybody caring about 
the job to be done or the need to build a Federal work force in 
the particular positions?
    Ms. Gilman. One of the things that I did not hear OPM say, 
and I haven't heard in the argument, is that they are having a 
hard time hiring particular people. Yes, there is----
    Ms. Norton. You did not hear them say that?
    Ms. Gilman. I did not hear them say that. That is something 
that I would be----
    Ms. Norton. No examples were given of the kinds of 
positions that are being filled with annuitants, with waivers?
    Ms. Gilman. The kinds of positions that they would like to 
use these waivers for, I have not heard that. Yes, we are 
expecting the possibility of a large number of retirees in the 
future. But as I said, we haven't heard what exactly the 
problems are with the current situation. That is something that 
I would be interested in hearing, is specific problems with the 
program that is in effect today.
    Ms. Norton. Mr. Chairman, I understand the Department of 
Defense already has this and can do it without----
    Ms. Gilman. And they have standards, they have their own 
standards similar, they don't have to go to OPM, but they have 
to have a particularized need for a particularized kind of 
skill or employe.
    Ms. Norton. So a hard to fill?
    Ms. Gilman. That is part of it, yes.
    Ms. Norton. So we trust them, because there may be a number 
of DOD jobs that are hard to fill.
    Ms. Gilman. Yes.
    Ms. Norton. And of course DOD knows they are going to go 
through a contractor, knows where to find them if they leave.
    Mr. Chairman, I don't know if we have any information on 
the DOD experience. But one of the problems I have with this 
bill is we already have an agency that can do it. At least they 
have the waiver authority, they would certainly have hard to 
fill positions. I would feel more comfortable knowing something 
about the experience that we already perhaps have, and anything 
DOD could tell us about the kinds of positions they might have 
filled if they weren't hard to fill.
    We also could find out from them whether they have abused 
the matter, by looking at what is happening to them. I don't 
know if a GAO report has ever been done on what GAO does.
    But this may be the only answer that is available now. But 
to the extent that we have any experience, it does seem to me 
that we would want to document that experience before moving 
forward with this bill.
    Thank you very much, Mr. Chairman.
    Mr. Davis of Illinois. Thank you very much. Let me just 
ask, are we finding that with people living longer, having a 
different health status in terms of health status improvement, 
and early retirement, that there is a greater desire on the 
part of people who retire to have something else to do after 
they have retired which may be work or may be something else?
    Mr. Adcock. Speaking for our members, I know that once they 
retire, most of them want to stay that way. It is something 
that they have earned, they are looking forward to it, they 
want to spend time with their grandchildren and enjoy the good 
life.
    But I think that what happens for many people is they go 
from working 1 day, basically going from 60 to zero and being 
retired the next day, and trying to figure out, what are they 
going to do with the rest of their life. I think maybe some of 
them over a number of years decide, well, there are really 
things that I really miss about work. The idea of coming back 
on a temporary part-time basis is something that is really 
appealing, particularly if there is something that they have 
some sort of special skill that is in demand or that addresses 
some national crisis or priority that we have right now. I 
think those are situations in which more retirees are 
interested in coming back to work.
    Ms. Gilman. I would add that I think that is probably the 
case that some retirees want to stay retired, others may want 
to go back to work. Or some may want to do something in 
between, like work part-time.
    Mr. Davis of Illinois. Do you think that there are many who 
are driven now by the state of the economy? I hear individuals 
suggest that they have a need, quite frankly, to earn 
additional money, in addition to what they are receiving as 
annuities.
    Mr. Adcock. I know that for retirees, that is especially 
true. When you look at what their costs are, if you are in Blue 
Cross Blue Shield's standard option family plan, they are 
paying $3,400 in premiums every year. If they are in Medicare 
Part B they are paying upwards of, I think it is about $98 a 
month now for that premium. Then you pile on whatever out of 
pocket expenses they have. Then if they are hit by the 
Government Pension Offset and Windfall Elimination provision, 
they are not receiving any Social Security benefits.
    You get down to, there is a woman we had testify at the 
Ways and Means Social Subcommittee who was affected by both the 
Windfall Elimination provision and the Government Pension 
Offset. She had a very low annuity to start with. You are 
essentially forcing people to go back and work at Wal-Mart in 
order to basically survive.
    I think especially when we are talking about people who are 
on the lower to mid-end of the annuity scale, who are really 
struggling to pay a lot of these expenses, like health care 
expenses and now of course energy costs, that work is not just 
something that is optional, it is something they have to do.
    Ms. Gilman. I would agree with that.
    Mr. Davis of Illinois. Mr. Marchant, did you have any other 
questions?
    Mr. Marchant. No, sir.
    Mr. Davis of Illinois. Thank you all very much.
    Ms. Norton. Could I just say one more thing?
    I think Mr. Adcock makes an important case. We think of 
annuitants in terms of the people we see around us, this is 
what, a 2 million work force? I do think anybody who would want 
to come back, even under the waiver authority we are talking 
about, almost certainly would be a very valuable employee. 
Because I believe that there are other options for the most 
part. I would hate to deny those people the opportunity to come 
back.
    My sense is they may be very few. They may be so few that 
it may do no harm if the agencies do not abuse the waiver and 
essentially use it in ways that would worsen our work force 
problem.
    The way I am talking about worsening our work force problem 
is leaving huge gaps of employee places that you don't try to 
fill any more. Because the agency has developed the habit of, 
maybe let's see if we can find an annuitant. And yet where it 
is our belief, it would be the belief of perhaps the agencies 
that have full-time employees who carry over from year to year 
would be most important.
    So I think the standards part is very important. If they 
are not hard to fill positions, and many agencies don't have 
hard to fill positions, frankly, in fact, most agencies don't 
have positions that are ``hard to fill,'' I certainly believe 
that you need only look at the statistics on people going back 
to work, and even before we got to near recession conditions, 
to know that many people are going back to work to live, that 
the combined cost that retirees face now, even with the 
pharmaceutical bill, even with Medicare, have put a real hurt 
on many of them.
    That is why I am very interested in who would be 
interested. My own hypothesis is that they would not come out 
of the woodwork, and those who did would probably be the best 
of the best, because they would be coming because they loved 
their work in the Federal Government. There are many, many 
Federal employees like that. This has been the great and 
important, great wonder of our work force. Despite all of the 
very bad and undeserved rap that has been on them, it is an 
extraordinary work force.
    The one thing I would ask the subcommittee to get is, 
whatever summary of the DOD experience can help us understand 
what we are talking about, or perhaps other agencies as well. 
But since DOD has been able to do it, it seems to me you have a 
perfect laboratory right there. I guess they were supposed to 
do it only in hard to fill positions. But we could then see 
what that meant in some setting. I certainly think that if 
there are retirees who want to come back, and I would love to 
see you, Mr. Adcock, or somebody who had the capacity to do it, 
do a survey. If you could return, if there were this waiver, 
would you do so? I should think OPM would have done that before 
coming forward with this bill.
    Thank you, Mr. Chairman.
    Mr. Davis of Illinois. Thank you very much. I thank you 
both.
    This hearing is adjourned.
    [Whereupon, at 3:35 p.m., the subcommittee was adjourned.]
    [The prepared statement of Hon. Stephen F. Lynch and 
additional information submitted for the hearing record 
follow:]
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