[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
RETIREES RETURNING TO THE RESCUE: REEMPLOYING ANNUITANTS IN TIMES OF
NATIONAL NEED
=======================================================================
HEARING
before the
SUBCOMMITTEE ON THE FEDERAL WORKFORCE
AND AGENCY ORGANIZATION
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
JULY 25, 2006
__________
Serial No. 109-235
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
U.S. GOVERNMENT PRINTING OFFICE
34-772 PDF WASHINGTON DC: 2008
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
JON C. PORTER, Nevada C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia ELEANOR HOLMES NORTON, District of
PATRICK T. McHENRY, North Carolina Columbia
CHARLES W. DENT, Pennsylvania ------
VIRGINIA FOXX, North Carolina BERNARD SANDERS, Vermont
JEAN SCHMIDT, Ohio (Independent)
BRIAN P. BILBRAY, California
David Marin, Staff Director
Lawrence Halloran, Deputy Staff Director
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on the Federal Workforce and Agency Organization
JON C. PORTER, Nevada, Chairman
JOHN L. MICA, Florida DANNY K. DAVIS, Illinois
TOM DAVIS, Virginia MAJOR R. OWENS, New York
DARRELL E. ISSA, California ELEANOR HOLMES NORTON, District of
KENNY MARCHANT, Texas Columbia
PATRICK T. McHENRY, North Carolina ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio CHRIS VAN HOLLEN, Maryland
Ex Officio
HENRY A. WAXMAN, California
Ron Martinson, Staff Director
Shannon Meade, Professional Staff Member
Alex Cooper, Clerk
Tania Shand, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on July 25, 2006.................................... 1
Statement of:
Fallis, Charles, president, National Active and Retired
Federal Employees Association; and Duncan Templeton,
national legislative vice president, Federal Law
Enforcement Officers Association........................... 55
Fallis, Charles.......................................... 55
Templeton, Duncan........................................ 65
Kichak, Nancy, Associate Director for Strategic Human
Resources Policy Division, Office of Personnel Management;
Patricia Bradshaw, Deputy Under Secretary of Defense,
Civilian Personnel Policy, Department of Defense; Barbara
Panther, Associate Deputy Assistant Secretary for Human
Resources and Management, Department of Veterans Affairs,
accompanied by Donna Schroeder, Director, Compensation and
Classification Service, Department of Veterans Affairs; and
Ronald Sanders, CHief Human Capital Officer, Office of the
Director of National Intelligence.......................... 13
Bradshaw, Patricia....................................... 21
Kichak, Nancy............................................ 13
Panther, Barbara......................................... 34
Sanders, Ronald.......................................... 42
Letters, statements, etc., submitted for the record by:
Bradshaw, Patricia, Deputy Under Secretary of Defense,
Civilian Personnel Policy, Department of Defense, prepared
statement of............................................... 25
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 76
Davis, Hon. Danny K., a Representative in Congress from the
State of Illinois, prepared statement of................... 11
Fallis, Charles, president, National Active and Retired
Federal Employees Association, prepared statement of....... 57
Kichak, Nancy, Associate Director for Strategic Human
Resources Policy Division, Office of Personnel Management,
prepared statement of...................................... 16
Panther, Barbara, Associate Deputy Assistant Secretary for
Human Resources and Management, Department of Veterans
Affairs, prepared statement of............................. 36
Porter, Hon. Jon C., a Representative in Congress from the
State of Nevada, prepared statement of..................... 7
Sanders, Ronald, CHief Human Capital Officer, Office of the
Director of National Intelligence, prepared statement of... 45
Templeton, Duncan, national legislative vice president,
Federal Law Enforcement Officers Association, prepared
statement of............................................... 68
RETIREES RETURNING TO THE RESCUE: REEMPLOYING ANNUITANTS IN TIMES OF
NATIONAL NEED
----------
TUESDAY, JULY 25, 2006
House of Representatives,
Subcommittee on Federal Workforce and Agency
Organization,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 2 p.m., in
room 2247, Rayburn House Office Building, Hon. Jon C. Porter
(chairman of the subcommittee) presiding.
Present: Representatives Porter, Schmidt, Davis of
Illinois, Norton, and Cummings.
Staff present: Ronald Martinson, staff director; Chad
Bungard, deputy staff director/chief counsel; Jessica Johnson,
OPM detailee; Shannon Meade, professional staff member; Alex
Cooper, legislative assistant; Tania Shand, minority
professional staff member; and Teresa Coufal, minority
assistant clerk.
Mr. Porter. I would like to bring the meeting to order. We
are going to continue on an initiative that I began last week
that is recognizing some unsung heroes that are part of the
Federal family. But unlike last week's recipient, today we are
going to pay tribute to Mr. John Euler, who is connected to us
via satellite from his duty station in Iraq where I understand
it's about 10 p.m.
We appreciate you being with us.
Mr. Euler is a Vietnam veteran and retired U.S. marine;
went on to a distinguished career at the U.S. Department of
Justice from which he retired after 26 years of service. But
his sense of duty could not allow him to stay retired. In
January 2004, he volunteered to go to Iraq, where he served as
Director of International Council. Here he faced the daunting
task of building a new legal system for the country from the
ground up. He overcame the loss of legal records destroyed by
war, established a new court system, and helped Iraq defend
itself in over 70 international cases.
He returned home upon the completion of his mission, but
his strong passion for public service overcame his personal
interests, and he recently volunteered again to return to Iraq
where he is serving as deputy legal counsel for the U.S.
Embassy.
Mr. Euler's bravery, his compassion and his dedication are
an inspiration for all of us, and it is a privilege to say
thank you.
Mr. Euler, I am not sure of the time lag if you can hear
OK. But again, I want you to know that there is about a 5-
second delay from what I say to you reaches Iraq.
But again, I want to say thank you very, very much for your
dedication to the Federal Government; more importantly, your
dedication to every man, woman and child in this country. So it
is the least that I can do to honor you in a small way as a
Member of Congress we are able to place into the Congressional
Record individuals that we think exemplify the great American
spirit. So I have entered into the record your history and
those things that you have done to make our world and our
country a safer place, and we will be getting you a copy of the
statement of the Record which is dated July 25, 2006. And I do
believe that with us today, Jerry is going to be accepting the
plaque on your behalf.
So, John, congratulations, and again thank you for all that
you have done for the United States of America. Thank you.
Mr. Euler. Mr. Chairman, I want to thank you very much for
this honor. I am very honored and gratified, and particularly
thank you and the subcommittee for this wonderful initiative in
recognizing some of the contributions of Federal public
servants.
I think that one of the significant and good stories and
untold stories about Iraq are the thousands of public servants
who have indeed volunteered to come over here to help try to
develop this democracy and the freedom of this new nation, and
I think several people have probably come in to the government
just to do that kind of mission because they are inspired by
the challenge and the promise. So I want to thank you again,
and really I accept this tribute and this recognition on behalf
of all of them. So thank you very much.
The Chairman. Thank you.
Mr. Davis.
Mr. Davis of Illinois. Thank you, Mr. Chairman. Let me just
commend you, first of all, for your creativity and sensitivity
in initiating and implementing this program. I, like you, feel
that far too often there are many individuals who contribute
significantly to the further development of our country, and
indeed to our world, who go unrecognized. So I join with you in
recognizing the contributions of Mr. Euler and also praise him
for being willing to come out of retirement to go into
obviously a dangerous, in many ways, situation, and yet
continue to give of himself in such a way that he uses his
experiences and all of his ingenuity to try to help make not
only Iraq, but the world a better place in which to live. I
commend you, Mr. Euler.
I thank you very much, Mr. Chairman, and commend you for
your creativity.
Mr. Porter. And understanding that you are just a few miles
away from home, we would like to make this presentation to a
friend of yours. Jerry is here today. I would like to make the
presentation to Jerry.
I'll come down there, Jerry. I don't know if you can see us
from here, John, but we could probably make this a roast. Maybe
there are some things that you need to know.
Mr. Shaw. I would be happy.
Mr. Porter. Jerry wants to say a few things, so maybe there
are some stories you can share with us. Is there anything you
want the say about John?
Mr. Shaw. Well, besides being a great marine and a great
public servant, he is also a great minister of his church. He
is a leader that all of us have looked up to for years, and
other than being a marine, he is probably the most intelligent,
well-adjusted one we have ever met.
So, John, congratulations to you. It's an honor to be able
to accept this award on your behalf. Thank you very much.
Mr. Euler. Thank you, Jerry, and thank you very much, Mr.
Chairman.
Mr. Porter. Before I begin the hearing, there are a few
folks that I would like to thank that have worked very hard to
put this satellite connection in place. We have Mr. Bill
Bransford; Mr. Mitch Herckis of the Senior Executives
Association; staff of the State Department including their
video conference coordinator Sandra Bruckner. I thank you very,
very much; and, of course, our own staff here at Government
Reform Committee, and I appreciate all that has gone into this
today.
Again, we are here today to actually talk about something
that probably is very appropriate. John, you are welcome to
stick it out for a couple of hours and listen if you would
like, but it has to do with encouraging folks to be able to
return from retirement to Federal service, so that is what
today is all about. Again, I know you are a few miles away, but
again, thank you very much for your time.
Mr. Euler. Thank you, Mr. Chairman. It is 10:30 at night
here. So with your kind permission, I think I will let these
good folks who have helped so much be on their way as well. I
want to thank all of you and all of the subcommittee. This is a
great honor.
Mr. Porter. You can take the rest of the day off. No
problem.
Retirees returning to the rescue: Reemploying annuitants in
times of national need, and again, I would like to thank
everyone for being here today on this all-important topic.
All too often Federal Government loses experience in highly
qualified retirees not just to quiet, private life, but to the
private sector where they get their full earned annuity, and
many times, top salary. Work shortages highlight the need for
management flexibilities that permit agencies to bring back the
right people to fill an important need. We don't have to look
further than to recover from Hurricane Katrina last year to
demonstrate how important it is to deploy experienced Federal
employees without delay in times of national crises. In the
final report of the House Select Bipartisan Committee to
Investigate the Preparation for and Responses to Hurricane
Katrina, ``A Failure of Initiative,'' the committee found that
both the Department of Homeland Security and the Federal
Emergency Management Agency lacked adequate training and
experienced staff for the Katrina response.
We are here to today to examine whether existing
flexibilities are enough to bring back valuable retirees to
Federal service in a timely manner to fill voids, and whether
additional flexibilities should be established that allow
experienced Federal employees to phase into part-time service
without negatively affecting our annuity so we don't
unnecessarily incentivize them to leave government service
prematurely.
There has been much attention given lately to the
anticipated retirement wave which is projected that roughly 60
percent of the Federal work force is eligible to retire in the
next 10 years. The baby boomer trend seems to be that many of
those Federal annuitants return to work past retirement, and I
would hope that the Federal Government would be their Federal--
be their employer of choice. The Federal Government has lost
and will continue to lose our more seasoned employees. Perhaps
more can be done to facilitate a return to Federal service by
retirees in times of national need.
There are several provisions under the law that allow
annuitants to be reemployed in the Federal sector; however,
several barriers exist. There is evidence that the current law
on reemployed annuitants is not accommodating the national need
or not being implemented wisely. One problem associated with
reemploying annuitants is even being felt in my home district
of southern Nevada and in Las Vegas where we are fortunate to
have a quality veterans hospital. Unfortunately, this VA
hospital is facing a nursing shortage. To counteract this
shortage, the VA hospital has contracted with staffing
companies that recruit licensed nurses on behalf of the
hospital.
Considering these conditions, I want to relate a story of
how our current system of reemploying retired annuitants is
hurting the Federal Government. A nurse in my district retired
from the VA and began receiving her annuity. After a few years
of retirement, this woman felt that she had more to offer, and,
hearing of the nursing shortage, attempted to return to the job
at the hospital. Unfortunately, because she was receiving her
annuity payments, she was discouraged from returning to work
because her salary would be offset by the amount of her hard-
earned annuity.
Not easily thwarted, this determined woman contacted a
private staffing company that had a contact with the VA
hospital, and because of her immense experience and talent, was
immediately hired and placed back in the veterans hospital.
Now on the surface this may seem like a logical solution.
However, the woman earned $35 per hour as a Federal employee.
The bill rate to the hospital from the staffing company was $55
per hour for the exact same service she performed 2 years
prior, and she could continue to receive her annuity. In a time
when the nursing shortage was at its most critical.
If the hospital had returned her to service and requested a
waiver so she could receive both the full amount of her annuity
and salary, the government could have saved $20 an hour, or it
should have made an extra $20 going to the employee. In
addition to the savings in salary, the government would save by
hiring a retired nurse because the hospital would not have to
make any additional retirement contributions and would avoid
the training cost associated with hiring a new employee.
This is just one example that highlights where there is a
need for enhanced flexibilities to reemploy annuitants and for
a greater willingness to recognize retirees as truly valuable
human capital resources.
Another example, just 2 weeks ago I had an opportunity to
travel to Nogales, Arizona, to visit the border between Arizona
and Mexico. I met an individual who is in the Border Patrol
that is soon going to have to retire, who specializes in
technology as a law enforcement agent. His hobby and background
is technology. Well, as we traveled and visited the border
security, the very law enforcement officers that are charged
with protecting our borders are changing tires, are building
fences, are repairing vehicles because we have a shortage of
staff on our borders between here and Mexico. So the very same
people that we would want to spend time in law enforcement are
literally having to repair vehicles.
Now, on the surface that doesn't seem like a bad idea if,
in fact, we had plenty of people that were available. But we
don't. This individual literally is being forced to retire,
would like to come back and stay in the system and do some of
the clerical work that currently law enforcement agents are
having to do because of a shortage. That is just another
example.
Another example is the option that was available to former
retired Federal agents to return to work for the Federal
Government as Federal law enforcement instructors. Under the
first scenario, the former Federal agent receives her regular
salary minus the amount of her annuity. The result of this
reemployment system is that it is difficult to attract and
retain Federal law enforcement personnel most experienced in
working in the Federal law enforcement system to be Federal law
enforcement instructors. Contrast this with a former retired
State or local law enforcement officer who takes the same
Federal law enforcement instructor position and continues to
receive his or her State or local retirement with no penalty.
Under the second scenario, a former retired Federal agent
returns to work for the Federal Government as a Federal law
enforcement instructor with a waiver of the offset requirement.
This former Federal agent receives both her annuity and salary
while teaching. She brings to her new employment 20-plus years
in Federal law enforcement experience and training. Added to
her career as a Federal law enforcement officer is the
teaching, training and experience gained over the 4 years as a
Federal law enforcement instructor. However, this highly
trained and experienced Federal law enforcement instructor has
to leave the job when her 4-year limited appointment comes to
an end.
At present, the effect of this restriction is to discourage
America's most qualified former Federal law enforcement
officers from returning to Federal service. It is an
unnecessary loss of potential antiterrorist resources at a time
of war, and in these troubled times it seems logical to want
our best and brightest in the field of law enforcement and
intelligence to be readily available to assist in areas of
critical need. Unfortunately, many of our best and brightest
are already retired or quickly nearing retirement age.
Seasoned Federal employees on the brink of retirement have
much to offer: Incomparable technical skills, vast
institutional knowledge, wisdom, maturity, and a principled
commitment to public service. In a market where we are
competing with the private sector for limited talent and
expertise, we must not ignore those experienced professionals
that are eager to work longer in part-time service or come out
of retirement and lend their expertise to the Federal
Government.
So to address the current unintended adverse effects on
employees who perform part-term service at the ends of their
careers, and to eliminate a disincentive for employees nearing
the end of their careers who would like to phase into
retirement by working part-time schedules, I will be
introducing legislation as proposed in the President's fiscal
year 2007 budget that would allow agencies to keep senior staff
on board as part of a succession planning effort. This is a
much needed fix that has been a long time coming.
As you know, there was a day when 55 was the goal, or 65
was the goal for retirement. Literally today 65 is not unlike
55 of decades ago. So I really believe that we need to
encourage and find incentives for our soon-to-retire or those
who have retired as a way to get back into the Federal system.
We need their talent. We need their abilities.
So having said all of that, again, I want to thank you all
for being here.
[The prepared statement of Hon. Jon C. Porter follows:]
[GRAPHIC] [TIFF OMITTED] T4772.001
[GRAPHIC] [TIFF OMITTED] T4772.002
[GRAPHIC] [TIFF OMITTED] T4772.003
Mr. Porter. I would like to recognize our ranking minority
member, Mr. Davis.
Mr. Davis of Illinois. Thank you very much, Mr. Chairman,
and as one who is approaching the age, I want to thank you for
calling this hearing.
Under the current law, a retired Federal employee who is
reemployed by the Federal Government may not simultaneously
receive a Federal retirement annuity and a Federal salary. The
Civil Service Retirement System and Federal Employees
Retirement System of title 5 stipulate that the Civil Service
Retirement and Disability Fund annuity amount a reemployed
Federal employee receives shall be deducted from his or her
pay.
There are exceptions to this regulation. In cases of
emergencies that pose an immediate and direct threat to life
and property or result from unusual circumstances, the Office
of Personnel Management has the authority to grant waivers to
the dual compensation ban on a case-by-case basis or to
delegate waiver authority to agencies.
Federal agencies should be able to hire Federal retirees
without penalizing retirees; however, we must understand the
impact of the reemployment of annuitants on new hires and
whether or not agencies are effectively using human capital
strategies to ensure that they have a work force in place to
accomplish the goals and missions of the agency.
I hope that the witnesses today will be able to provide us
with insight on these matters related to reemployment of
retirees, and thank them for taking the time to testify before
this subcommittee about this issue.
I thank you, Mr. Chairman, and yield back the balance of my
time.
Mr. Porter. Thank you, Mr. Davis.
[The prepared statement of Hon. Danny K. Davis follows:]
[GRAPHIC] [TIFF OMITTED] T4772.004
Mr. Porter. Congresswoman.
Ms. Norton. Well, Mr. Chairman, I appreciate this hearing.
We are presented with an unusual situation, it seems to me.
Federal employment is not what it was when we were young and
foolish. And, therefore, many of the best and brightest--I am
speaking for myself, Mr. Chairman. I understand that you are
both still young and still foolish, and I won't tell you which
of those I still am. But seriously, Mr. Chairman, the
competition for the very highly qualified Federal work force
that we have on board now not--is awesome, so awesome. There is
every incentive to leave early with early retirement, not to
mention the many employees who came in at the prime of their
careers and are leaving already for usual retirement. Then let
us take the new group of young people for whom Federal employee
is one of many options, and very, very often not the most
attractive when you consider all the career options and other
benefits that come with Federal--with private employment of
very highly skilled, often rarely skilled people.
So as we look now at what amounts to a mixed message, yes,
we will hire you under some circumstances, but at the same time
we are going to penalize you through your annuity. We have to
somehow come to grips with what is our message. Do we want to
be able to hire these Americans who once worked for the Federal
Government? When you consider the skill levels and occupations
of many of them, I think the answer would be clear. We
certainly have to look at the total picture. But as we look at
the baby-boom generation and how huge it is, and how many of
them were a part of the best and the brightest Federal work
force we have ever seen, and see them offload often not to go
home, but to go to work somewhere else, we have to be very,
very clear when we need them and how we attract them.
That, I think, is as much a problem as anything,
particularly in occupations where I would be most concerned.
And those are occupations where it is easiest for the trained
Federal employees, people in whom we have heavily invested, to
leave an occupation where we would want under some
circumstances at the same time to have an annuitant reemployed
because of the scarcity of labor.
So I think what we have now before us, for most agencies at
least, is a product of the old Civil Service, and among these
things we have been trying to do in this, you know, double
dipping and making sure that we make room for new people. What
new people? New people that we still are not attracting in
nearly the same levels and in nearly the same occupations as we
once did. And we have to look with fresh eyes at the annuity
question especially when we consider some of the occupations
involved.
Look at the DOD experience, and I think of a governmentwide
policy on particularly what to do when we need people and how
to attract them and how to make it possible for them to make a
decision that is consistent with their own future and
consistent with the needs of the Federal Government.
So I thank you, Mr. Chairman, once again.
Mr. Porter. Thank you very much. And I understand since you
are 29, there is a long time before you have to worry about
that.
Ms. Norton. I'll take that.
Mr. Porter. Thank you very much.
The first thing I would like to do is some procedural
matters, and ask unanimous consent that all Members have 5
legislative days to submit written statements and questions for
the hearing record. Any answers to the written questions
provided by the witnesses will also be included in the record.
Without objection, it is so ordered.
I ask unanimous consent all exhibits, documents, other
materials referred to by the committee members and the
witnesses may be included in the hearing record; all Members be
permitted to revise and extend their remarks. Without
objection, so ordered.
And as I think most of you know, it is the practice of this
committee to administer the oath. I know you wanted to do it
earlier, but I thought you could rest for a little bit. So
would you please stand.
[Witnesses sworn.]
Mr. Porter. The record will reflect that all have answered
in the affirmative.
Now we have the first panel. They will begin today. As you
know, you have approximately 5 minutes, and, of course, you can
add fuller statements to the record as you wish.
And again, I know some of you are experienced at the
committee process. Some of our Members will probably come and
go because of different hearings. So understand that all
information is made available to all of those Members.
On our first panel today we have Nancy Kichak, Patricia
Bradshaw, Barbara Panther and Dr. Ronald Sanders.
Ms. Kichak is Associate Director for Strategic Human
Resources Policy Division at the U.S. Office of Personnel
Management. Mrs. Bradshaw is the Deputy Under Secretary of
Defense for Civilian Policy and Personnel with the Department
of Defense. Ms. Panther is Associate Deputy Assistant Secretary
for Human Resources and Management with Department of Veterans
Affairs, and Dr. Sanders is Chief Human Capital Officer for the
Office of Director of National Intelligence.
So again, welcome. We appreciate you being here.
Ms. Kichak.
STATEMENTS OF NANCY KICHAK, ASSOCIATE DIRECTOR FOR STRATEGIC
HUMAN RESOURCES POLICY DIVISION, OFFICE OF PERSONNEL
MANAGEMENT; PATRICIA BRADSHAW, DEPUTY UNDER SECRETARY OF
DEFENSE, CIVILIAN PERSONNEL POLICY, DEPARTMENT OF DEFENSE;
BARBARA PANTHER, ASSOCIATE DEPUTY ASSISTANT SECRETARY FOR HUMAN
RESOURCES AND MANAGEMENT, DEPARTMENT OF VETERANS AFFAIRS,
ACCOMPANIED BY DONNA SCHROEDER, DIRECTOR, COMPENSATION AND
CLASSIFICATION SERVICE, DEPARTMENT OF VETERANS AFFAIRS; AND
RONALD SANDERS, CHIEF HUMAN CAPITAL OFFICER, OFFICE OF THE
DIRECTOR OF NATIONAL INTELLIGENCE
STATEMENT OF NANCY KICHAK
Ms. Kichak. Mr. Chairman and members of the subcommittee, I
appreciate the opportunity to represent the Office of Personnel
Management and Director Linda Springer for this discussion of
how retirees might be used to assist the Federal Government in
times of national need.
Reemployed annuitants can and do make major contributions
to ensuring that the vital work of the Federal Government can
be carried out effectively. As you mentioned in your opening
statement, the demographics of the work force show that
approximately 60 percent of the government's 1.6 million white-
collar employees and 90 percent of the 6,000 Federal executives
will be eligible for retirement over the next 10 years. OPM is
working closely with Federal agencies to assure that if its
valued employees choose to retire, the work of agencies can
continue uninterrupted.
We have worked with agencies to develop sound human capital
strategies including work force planning, succession planning
and leadership development. The steady focus on the strategic
management of human capital is helping agencies identify and
close skill gaps, meet mission needs and plan for the future.
Despite the best planning efforts, there are times when the
services of the men and women who have retired from the Federal
work force are needed to increase work force effectiveness.
Currently agencies other than the Department of Defense may
rehire an annuitant at any time with the salary offset. Under
limited circumstances, non-DOD agencies may request a waiver to
the salary offset. The statute provides that OPM may grant a
waiver to agencies faced with emergencies, exceptional
difficulties in recruiting or retaining qualified individuals,
or emergencies from other unusual circumstances.
In 1998, OPM reminded agencies of this authority to waive
the salary offset to hire critical computer specialists for the
Y2K conversion efforts, and OPM quickly approved 16 delegations
to meet this need. More recently, agencies have successfully
used this authority to deal with the September 11th attacks,
Katrina, and the tsunami. And we recently approved a delegation
to allow Border Patrol agents to come back for training, as you
mentioned.
There are also people, reemployed annuitants now with the
Department of Agriculture working to prepare for the avian flu
outbreak if it occurs. OPM dual compensation regulations tie
emergencies and unusual circumstances together, the result
being that delegations can only be granted in emergencies.
On Friday, July 21st, we published a proposed change to the
rule to allow for OPM to grant such waivers in situations
resulting from emergencies or situations resulting from unusual
circumstances that do not involve an emergency. The comments we
receive from those proposed regulations will be very helpful in
shaping the final regulations on salary offset waivers. As we
modernize the regulations, we will be mindful that because
waivers result in compensation from both the retirement fund
and salary, they must be used judiciously.
Last month OPM introduced the new Career Patterns approach
for hiring. In recognition of the changes in career patterns in
the work place, OPM is studying a broad range of options that
will encourage employees to extend their careers with part-time
employment. These options will include a proposal to reemploy
annuitants without salary offset on a part-time basis.
In addition, we have included provisions in the Federal
Employees Retirement Improvement Act that would remove the
penalty to the calculations of the high three salary upon which
annuities are based that result from part-time service at the
end of the career.
OPM values contributions that annuitants make in support of
the work of the Federal Government. We welcome the opportunity
to continue the dialog with this committee to review options to
improve the use of retirees to meet the Nation's needs. I am
happy to answer any questions you may have.
Mr. Porter. Thank you very much.
[The prepared statement of Ms. Kichak follows:]
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Mr. Porter. Ms. Bradshaw is next. Approximately 5 minutes.
STATEMENT OF PATRICIA BRADSHAW
Ms. Bradshaw. Good afternoon, Mr. Chairman and members of
the subcommittee. I am very pleased to be here today on behalf
of the Department of Defense to discuss the reemployment of
annuitants within DOD.
On behalf of the Department, I am very grateful and
appreciative of the flexibility that Congress has granted DOD
with regard to managing its civilian resources. The National
Defense Authorization Act for fiscal year 2004 actually
provided us with the authority to reemploy Federal retirees
without requiring that their salaries be reduced as a result of
their annuity payments. Our goal in asking for this authority
was to give us rapid access to critical skills for both
emergencies and ongoing critical needs.
Balancing the infusion of new talent at all levels with
access to critical knowledge and expertise that will be lost as
the aging work force retires, the authority was intended as an
additional tool for the Secretary of Defense to use judiciously
to support the defense mission.
I would like to provide just a little background.
After one leaves Federal service, reemployment within the
Federal sector can be much less attractive than private sector
employment, as has been noted. A Federal retiree working for
the private sector receives a full salary commensurate with the
level of work he or she is expected to perform, and there is no
impact on one's Federal annuity payment. Contrast that with
reemployment with the Federal Government where prior to
enactment of our authority, an employee's salary was typically
reduced, sometimes significantly, by the amount of that
annuity.
Prior to the enactment of the NDAA, fiscal year 2004 saw
all Civil Service retirees were subject to a salary offset
unless a specific waiver had been granted by the Office of
Personnel Management. And until September 11, 2001, virtually
all of the Department's reemployed annuitants were subject to
that offset.
After 9/11, OPM took a very proactive approach to
identifying flexibility that would be useful in combating the
new threat. Among the flexibilities that OPM granted was a
waiver of the salary offset restriction for retirees whose
skills were critical to address 9/11 issues.
This policy proved to be very helpful. In the 2 years after
9/11, we hired approximately 400 annuitants, and all but 8
percent of those were subject to the offset. In the 2 years
after the 9/11 authority, we hired more than 800 annuitants; 34
percent of those annuitants were not subject to a reduction.
However, the OPM 9/11 waiver could only be used to fill
positions and functions directly related to the aftermath of 9/
11. We believed it was still necessary for the Department to
seek OPM approval for waiver of salary offset to hire
annuitants to fill any other urgent defense personnel need.
In the NDAA fiscal year 2004, Congress also recognized that
need for DOD to have its own authority. The authority and
flexibility granted by Public Law 109-108 provides the
Department of Defense with the unique ability to quickly
attract a pool of experienced candidates to meet critical and
emerging needs. This authority is a key tool in ensuring the
Department's ability to recapture skills that were developed
through government employment and government expense.
Additionally, with almost 30 percent of the DOD Federal
work force eligible for retirement by 2011, it provides a
method for managing the resulting loss of skills and corporate
history without disruption to the mission.
The Department is continuing with its transformation to
meet the threat of the future, and we recognize that succession
planning is critical to ensure leadership continuity for all
key positions. But we see this tool as a crucial method to
support our efforts.
The Department was very grateful to receive the authority
and mindful of the need to use it appropriately. We established
Department policy that allows its use only in certain
circumstances, such as for hard-to-fill or critical positions,
positions requiring unique or unusual qualifications when
necessary, to provide continuity during transitions and for
mentoring.
From November 2003, when we received the authority, until
May 31, 2006, we have hired more than 1,500 annuitants using
the authority. As expected, this number represents a very small
portion, actually less than 1 percent, of our total hires
during the same time period. Approximately 50 percent of these
annuitants were placed in critical or hard-to-fill positions.
Approximately 25 percent were placed in positions requiring
unique skills or qualifications. And the remainder were used
for mentoring and providing continuity for leadership during
organizational transition.
We believe this authority is working well for us. It
enables the Department to attract the services of highly
qualified annuitants who might otherwise have been deterred by
the salary offset. We believe that perhaps the greatest benefit
of authority will be seen in connection with the base
realignment and closure, the upcoming BRACS, that we will be
executing when the services of reemployed annuitants will
ensure continuity of operations and result in organizational
stability at our closing sites.
Although the Department has used this tool effectively, we
believe that one change to the law would make it even more
effective. As currently written, any annuitant hired by the
Department is entitled to receive both full salary and annuity.
Since the payment of both salary and annuity becomes mandatory
once an annuitant is employed, the Department has been managing
use of the authority via policy that limits the reemployment of
annuitants to specific situations which I have outlined.
We believe it would be more appropriate to manage the
authority by limiting the application of the salary offset
rather than limiting the actual employment of any annuitant who
would like to come back to the Department of Defense. This
change would enable the Department to use the waiver of the
salary offset as a discretionary recruitment tool without
generally limiting when retirees are given the opportunity to
work for the government.
Providing discretionary authority to the Secretary would
also allow us to address unintended consequences of our current
law. For some of our annuitants, receiving full salary in
addition to their annuities is actually disadvantageous. Under
current law, any reemployed annuitant who receives full salary
is excluded from the retirement provisions of title 5 and
therefore cannot continue to contribute to the retirement
system, cannot earn additional service credit no matter how
long they are employed.
While this may not affect employees who have voluntarily
retired, employees forced into early retirement as a result of
an voluntary separation such as reduction in force frequently
receive significantly reduced annuities. This category includes
employees that are separated by reduction in force. In these
cases, it may be more beneficial for the employee to actually
be covered by the retirement provisions of title 5 than to
receive a full salary and annuity.
Let me give you a quick example, a hypothetical situation.
It's not hypothetical. It happened. A 48-year-old CSRS
annuitant takes early retirement because his position is
abolished. His annuity is reduced by 14 percent because he is
subject to an age reduction by the law. He applies for our
Priority Placement Program within the Department of Defense and
is matched with a position and is rehired. However, upon
reemployment, his annuity continued as required, and he was not
able to make additional contributions to the retirement system.
He was also ineligible to make TSP contributions. Had he been
reemployed in another agency other than DOD, his annuity would
have terminated, he would have been covered by the retirement
system and been able to make TSP contributions unless the
agency had sought a waiver on his behalf from OPM. Upon his
second retirement, he would have received his full annuity with
no reduction, and he could have significantly more earnings in
the TSP fund.
For FERS employees, the situation can be even more
problematic. As you recall, there are three components of the
FERS retirement plan: the FERS annuity benefit, which is
significantly less than the CSRS annuity benefit; Social
Security benefits; and the Thrift Savings Plan, TSP. In some
instances such as RIF, employees are forced to retire early.
When this happens, first benefits are reduced, and the employee
may not yet be eligible to receive TSP or Social Security
benefits. If reemployed under the current DOD law, these
employees are unable to increase their benefits on either FERS
or TSP.
Another hypothetical example. The position of a 57-year-old
FERS employee with 12 years of service is eliminated because of
BRAC. Because of the retirement eligibility structure under
FERS, the employee was only eligible for about 75 percent of
her full annuity and accepted that annuity with the reduction
in order to maintain her health benefits. The employee was
later reemployed within a DOD component and worked for an
additional 5 years. However, due to our law, she was not
eligible to earn additional retirement credit or have
additional government contributions made to the TSP. Prior to
our law, she would have been eligible for a redetermined
annuity after reemployment. And at the age of 62, her new
annuity would no longer be subject to age reduction, plus she
could have significantly more TSP funds for her second
retirement.
If the laws were revised to provide the Department
discretionary authority, our intent would be to allow employees
the flexibility to determine whether a salary offset is in
their best interest when they are being offered a position
meeting our salary offset waiver criteria. We would continue to
apply the criteria we use today in determining whether a salary
offset waiver is in the best interest of the Department.
Annuitants who did not meet that criteria would be free to
accept positions under the terms available in the rest of the
Federal Government; that is, with the salary offset comparable
to their annuity payment. As the Department positions itself to
deal with the current BRAC, the revision of the current
authority would meet both the needs of the Department and our
employees.
Thank you for the opportunity to discuss this important
tool available to the Department. I'll be happy to answer any
questions that you have.
Mr. Porter. Thank you very much.
[The prepared statement of Ms. Bradshaw follows:]
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Mr. Porter. Next Barbara Panther, Associate Deputy
Assistant Secretary for Human Resources Management, Department
of VA.
STATEMENT OF BARBARA PANTHER
Ms. Panther. Thank you, Mr. Chairman. Good afternoon. First
I would like to introduce Ms. Donna Schroeder, who is
accompanying me today. She is the Director of our Compensation
and Classification Service and is our program expert on how
annuities are affected by the offset.
Thank you for the invitation to appear before you this
afternoon, and I request that the written testimony be entered
into the record.
Before I describe VA's experience with reemployment of
annuitants, I would like to note the emphasis that this
Department places upon work force planning. Since 2003, VA has
operated according to a Strategic Human Capital Plan that
aligns with our departmental Strategic Plan as well as the
President's Management Agenda. VA has created and implemented a
departmentwide system that ensures that work force planning
activities are conducted throughout all levels of the
organization.
VA success in attracting, developing and retaining top
talent has resulted in numerous benefits to veterans. Outside
sources are giving kudos for services and products that
demonstrate the quality of VA's work force. For example, VA
recently was awarded the prestigious 2006 Innovations in
American Government award for its electronic patient records
data base. This award, sponsored by Harvard University's Ash
Institute for Democratic Governance and Innovation at the
Kennedy School of Government, honors excellence and creativity
in the public sector. On July 17, 2006, VA's superior health
care was highlighted in a Business Week article entitled ``The
Best Medical Care in the U.S.'' These accolades recognize the
work of employees who have a special dedication and commitment
to serving veterans. More likely than not, it is this sense of
dedication to the unique and honorable VA mission that would
encourage retirees to reconsider reemployment with VA.
There are a number of instances when VA has sought to
reemploy annuitants in order to better serve veterans. In the
Veterans Benefits Administration, retired veterans service
representatives are required to provide training, to mentor,
and to transfer institutional knowledge which was gained over
the course of decades of service. In 2005, VA needed additional
healthcare professionals to provide care to veterans who were
displaced from New Orleans and Mississippi when Hurricanes
Katrina and Rita hit the Gulf Coast.
There are two primary reasons for reemploying annuitants in
VA. First: to facilitate and complement succession planning. VA
retirees with institutional and professional knowledge are
reemployed to transfer that knowledge to the next generation of
employees, to train and monitor them, allowing regular staff to
focus on their workload.
The second primary purpose for rehiring annuitants is for
true critical immediate needs ranging from shift coverage, to
IAEA, to assisting in VA's fourth mission of support to the
Nation during emergencies.
From 2000 to the present, VA has hired 434 retired
annuitants, with 92 in the nursing field, including registered
nurses, licensed practical nurses and nursing assistants. We
currently have 201 annuitants employed at VA facilities with
the dual waived for 44, including 14 nurses.
VA has received OPM's approval to waive the salary offset
for certain occupations on several occasions. In 2001, OPM
delegated to VA the authority to waive the reduction for up to
250 veteran service representatives in the Veterans Benefit
Administration. In 2002, VA received delegated authority to
waive the offset for RNs. In 2003, VA was given the authority
to waive the offset in certain other medical occupations within
that Veterans Health Administration. In addition, VA has
requested two waivers from OPM for particular individuals with
unique qualifications.
The need for waivers of the salary offset varies with the
development and resolution of emergency situations, the market
for specific professions, and individual retirees' personal
situations. In general, the waiver of the offset facilitates
the employment of retirees, especially those with highly sought
skills. However waivers are not always needed and do not always
result in retirees returning to work for VA.
Of the 201 current annuitants at VA, only 44 have been
approved for a waiver of the offset. The remaining 157
annuitants have their salaries offset by the amount of their
annuities.
Mr. Chairman, thank you again for the opportunity to be
here today, and I am prepared to respond to any questions the
Members may have.
Mr. Porter. Thank you very much.
[The prepared statement of Ms. Panther follows:]
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Mr. Porter. Next, Dr. Ronald Sanders, Chief Human Capital
Officer, Office of National Intelligence.
STATEMENT OF RONALD SANDERS
Mr. Sanders. I do appreciate the opportunity to appear
before you today to address this important and urgent topic:
reemploying Federal retirees in times of national need by
allowing them in certain circumstances to return to the public
service without any penalty. The Intelligence Community [IC],
has some experience in this regard as well as some special
authorities, and both may help inform the subcommittee as it
considers ways to better leverage the skills and talents of
former Feds, a critical but, I believe, underutilized national
resource.
The ability to reemploy retirees to meet mission exigencies
has proved increasingly critical to the IC in large part
because of our demographics. The OPM Director Linda Springer
talks about the retirement tsunami, and the metaphor is apt.
Our work force is literally shaped like a wave front. On the
one hand the majority of our work force has more than 20 years
of service. By 2010, more than half of our employees will be
eligible to retire, with even greater percentages among our
senior technical experts, managers, professionals and
executives. On the other hand, 30 percent or more of our work
force has less than 5 years of Federal service, the result of
our post-9/11 hiring surge, and that percentage is growing.
Our growth is intended in part to cover the capability we
lost during the downsizing of the 1990's in part to deal with
the brutal operating tempo that our current mission demands. In
between those two steep population peaks is a substantial
trough at our middle grades, precisely where we would look for
our next generation of senior analysts, case officers,
technical experts and leaders.
Rebuilding our bench strength is made even more difficult
by the nature of our work. Operational and analytical
tradecraft is far more art than science. It literally takes
years of experience and training to develop a single seasoned
intelligence analyst or case officer, and even longer to
prepare someone to lead them effectively. Yet the seasoned
professionals who can teach our next generations those
operational and analytical arts are ready to retire.
The ability to bring back some of those artisans without
penalty is critical to our human capital recovery plan, and
parts of the IC have already seen the benefit of this
flexibility, albeit in limited fashion. For example, those IC
agencies under the Department of Defense have had dual
compensation waiver authority since 2004 and have used it to
great effect. The NSA has been especially strategic in
employment of retirees. The CIA has exercised similar
authority, but only with respect to those former Agency
employees who retired under a special retirement system. For
all other annuitants, including its own, the CIA is set to rely
on authority delegated by OPM. And while Congress gave the FBI
the flexibility to do something similar as part of the
Intelligence Reform Act, it may only reemploy its former
employees. These various authorities limitations are
problematic when one is trying to integrate and strengthen the
Intelligence Community as a whole.
The Congress recognized this when it also included section
1053 of the Intelligence Reform Act. That section provides the
Director of National Intelligence authority to establish a
National Intelligence Reserve Corps, NIRC, for the temporary
reemployment on a voluntary basis of former civilian employees
of elements of the IC during periods of emergency as determined
by the Director of National Intelligence.
The statute further ensures that the salary of a former
employee appointed to the Reserve Corps who is receiving an
annuity under the Civil Service and Disability fund will not be
offset. In other words, the Intelligence Reform Act granted
dual compensation waivers to those retirees reemployed under
the auspices of the Reserve Corps. And in that regard, it is
discretionary under DOD, we can also reemploy a retiree outside
of the confines of the Corps and avoid some of the
complications that Pat Bradshaw mentioned.
Thus under the statutory authority I have described, the
FBI can reemploy a CIA retiree and vice versa, leveraging the
individual expertise of our former employees for the good of
the entire Intelligence Community and the Nation as a whole.
When you're trying to integrate the talents of current and
former intelligence professionals in 16 separate intelligence
agencies and 6 different Cabinet departments, an IC-wide
Reserve Corps has the potential to become one of our most
powerful human capital tools. Accordingly, I am pleased to
announce that just yesterday Ambassador Negroponte took
official action to establish that Reserve Corps, issuing a
policy memorandum governing use of this authority across the
Intelligence Community. In so doing, the Director has also
determined that a period of emergency exists for the
Intelligence Community, as required by the law, and has
delegated authority to make appointments to the Reserve Corps
to the heads of our IC agencies under certain limited
conditions and subject to certain mission-based criteria.
For example, the authority requires the head of one of our
agencies to make a specific written determination that the
appointment of a reemployed annuitant to the Reserve Corps will
meet a requirement critical to the agency's mission during the
period of the emergency. It also requires the agency head to
notify my office in writing of every such determination.
In order to build a robust communitywide talent pool to
support the Reserve Corps, the DNI has also required each IC
agency to provide employees who separate with an opportunity to
place their names on a roster of volunteers. However, former
employees who are not on that roster may also be reemployed if
they are otherwise eligible and the agency's head determines,
again in writing, that they meet a mission-critical need. The
policy does not allow a retired employee to be brought back to
his or her former position except under extremely narrow
circumstances, nor does it permit a former employee to come
back at a higher General Schedule grade or step. The policy
also excludes employees who were separated for cause, who
resign upon notice of proposed separation for cause, or who are
terminated upon revocation of their security clearance. And it
provides that an individual appointment may be terminated at
any time and for any reason by the head of the agency or the
DNI.
In establishing the National Intelligence Reserve Corps, we
seek to reemploy exceptional people to meet exceptional
circumstances, to leverage their priceless experience and
intellectual capacity without having to ask them to suffer a
financial penalty to the salary we pay for additional service
or the annuity that they earned for past. In so doing, we
believe our former employees can continue to make valuable
contributions to the U.S. Intelligence Community's agile, all-
source work force of military, civilian and contractor
personnel as we prosecute the global war on terror.
Mr. Chairman, that concludes my testimony. I would be happy
to answer any questions you may have. Thank you.
Mr. Porter. Thank you very much for your testimony.
[The prepared statement of Mr. Sanders follows:]
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Mr. Porter. A staggering statistic that I failed to mention
in my opening comments that really helped drive my interests in
this issue is that we are going to be short 800,000 civilian
nurses in the next 10 years; 800,000, which, if I bring it
closer to home in Nevada, which started my investigation and my
research, we are short 1,000 healthcare professionals today in
the nursing field. We hire about 2,500 new teachers a year.
Some of you may have heard me talking about our challenges
of growth, but some of our issues specific to growth are not
related just to Nevada, and that is, as I looked at the nursing
shortage, also spent some time in the Middle East meeting with
healthcare professionals that were in the different branches of
service, and some volunteering their time around the world, and
what we could do to keep nurses in the Federal service, you
know, prior to going into the civilian corps.
So I guess it's been a rude awakening. I think tsunami is
well said. Not only do we have a shortage in the Federal
Government of qualified new employees, we are having a problem
keeping them within the system. And as we look at the
competition today for the private sector, if we are--we need
800,000 civilian nurses in the next 10 years. Imagine the
pressure that is going to be putting on our Federal employees
to jump ship and to go into the civilian work force.
So today as we have heard from each of you in your specific
areas, some of your challenges and some of your support and
some ideas--Patricia, I know you mentioned that you really lack
flexibility when it comes to the program is one size fits all,
and it sounds like you would prefer that if and when this is
available, as it is in some cases, that you have some
flexibility, correct? Would that help you in recruiting and/or
keeping folks to stay in the system?
Ms. Bradshaw. Yes, Mr. Chairman. We believe that if we had
the flexibility that I described, we would have access to other
employees that would prefer to come back and be able to add to
their annuity stream for the future. It is one of those costs
of opportunity here. We just don't know how many people know
about the DOD policy, and so therefore they don't even bother
to inquire about opportunity or make themselves available
because they go to a Federal agency where they can be hired
back; especially if you have been continued, you can go back as
a regular employee and start contributing back into the
retirement system and into your TSP account. So that is the
kind of flexibility that we would like to have.
Mr. Porter. And this is really for all of you. Do you find
that a lot of these folks don't understand or do not know of
some of the options that are currently available? Do you find
that to be part of the problem? Because it sounds like there
are areas where they fit into the right box. Are you finding
that they need to understand? Is that one of the challenges?
Mr. Sanders. I think the rules have been so deeply embedded
that, generally speaking, you are going to have a salary offset
unless there is an exception to the rule granted by OPM or
granted by law, and I think that may inherently discourage
employees.
One of the things that the FBI has done about its own
Reserve Corps is it literally posts vacancy announcements on
its Web site looking specifically for retired law enforcement
officers, and they've had great success in that regard.
Mr. Porter. Well, if I were to ask each of you to give me
one solution--Patricia, you already have, because you have
given us one, so you have to come up with a second one--what
would you suggest that we do to fix this?
Ms. Kichak.
Ms. Kichak. We think the great need that we want to address
is to allow people to transition in--to stay in the workplace
longer by transitioning to part-time work instead of retiring.
So we are looking for a way to use this authority to encourage
people to stay with us on a part-time basis.
Mr. Porter. OK. That is good.
Do you need a moment Patricia? We will come back if you
like.
Ms. Bradshaw. I would second that. We would support that. I
think it is absolutely critical to find a way to help people
transition. I think when you reach that--an interesting number,
we discovered, is that 20 percent of people who become eligible
within DOD actually retire. They actually tend to stay about 3
years on average beyond their eligibility date. And I think
that is about the point that people really start to burn out.
And so if we know that as a number, if we had a tool that would
say, OK, we know that you are about to move on at some point,
how can we make that transition easy for you, and allow us to
use those individuals for mentoring, organizational, transition
on a part-time basis, I think that would be most helpful to us.
Mr. Porter. Ms. Panther.
Ms. Panther. I, too, would have to agree with Nancy's
proposals, particularly the proposal that she described with
regard to annuitants who come back on a part-time work schedule
automatically getting a waiver of the offset. That would be
particularly helpful because we do have many retirees who
aren't interested in work full time; they are really only
interested in coming back on a part-time basis. And that
particular proposal from OPM would be very helpful.
Mr. Porter. Doctor.
Mr. Sanders. Ditto, ditto, on the part time and the
discretion to offer this or not. And I am also going to be
presumptuous as a member of the OPM alumni association to
encourage OPM to establish criteria for the delegation of this
authority; I think if agencies are going to make this a
permanent part of their strategic human capital planning, they
need to be able to count on it. OPM should say, these will be
the conditions under which we will grant the delegation and
then they ought to be able to get that delegation for an
extended period so they can use it over time. That is in
addition to the one-time emergency use, but for the unusual
circumstances, the longer term, I think more predictability in
that delegation of authority would be useful.
Mr. Porter. And I alluded to it earlier, but this is not
just a problem for Federal employees. It is a problem
nationwide in many specialized areas, as I mentioned, in
healthcare. And I would like, as I am preparing legislation, a
lot of it, it really is what OPM is suggesting and the language
we are working on. If we could find a model, although the
civilian work force is different than Federal, but if we could
find a model that could be used in the private sector also
because they are experiencing the very same challenge as far as
this wealth of talent that is retiring. And I am not an
actuary. I know a little bit about annuities, but I am
certainly not an expert, but it seems to me we could even
establish a separate annuity process for those retirees who
want to come back in the system. Because I know the first
system is established with certain actuarial scales and certain
dollars. I would like to look at setting up a simplified
retirement program that retirees could use, separate, of
course, in the private and public but maybe the model could be
used in both. So thank you very much.
Mr. Davis.
Mr. Davis of Illinois. Well, thank you very much, Mr.
Chairman.
I must confess that this is somewhat of a perplexing
problem, and I find it perplexing because it deals with some of
what I consider to be the great contradictions in our society.
I mean, here we are on one hand talking about, how do we let
individuals who have worked, developed, gained experience,
continue to work without punishing them, and then on the other
hand, we talk about the unemployment rate that exists, and we
talk about other individuals who can't find a job. I mean, this
seems to be one of the real paradoxes. I live in a community,
for example, where unemployment in many instances is 25, 30
percent. And there are thousands of people in our society, who
for all practical purposes, will never work and will never have
a meaningful job at all. And on the other hand, we have not
found a way to make sure that those individuals have access to
the workplace and make sure that they have the kind of
training, the kind of education and develop the skills to make
them an integral part of work force and workplace development.
And on the other hand, I remember a few years ago, when we
were talking about the whole question and the whole issue of
leisure time activity, because there were people who thought
that individuals were going to have too much leisure time and
were going to retire, everybody when they were 55, and they
wouldn't have anything to do with themselves after that. So we
needed to create all of these additional opportunities.
Let me ask if any of the agencies have given--is there a
way to mix the conversation that we are having right now with
the development of approaches to generating the personnel that
we would need so we wouldn't have to have this kind of
discussion?
Ms. Bradshaw. I will take a crack. Sir, I would offer that
your observation is a very legitimate one in that we see that
there are multiple ways in which we need to be preparing for
the future. Succession planning is key. We see that using
reemployed annuitants is but one source for a critical emerging
need because the pipeline has not provided for us perhaps the
talent that is immediately--that we need immediately.
On the other hand, that is part of our responsibility to
ensure that we only use this authority appropriately so that we
do not inhibit the development opportunity, that we ensure that
we are tapping into the work force that is not employed that is
available and bringing them into the work force, training them
so that we are building the pipeline. So we have absolutely had
conversations with DOD around that delicate balance between
ensuring that you are using all the multiple tools available to
you, targeting new hires, ensuring that you have developmental
programs in place, building that pipeline so that, as you watch
for the tsunami to hit, you have people in the pipeline. But
oh, by the way, we have so many emerging needs within DOD, that
is not always possible and because we are still competing with
the private sector for these opportunities, we may need those
people immediately, and we are willing to pay the offset and
the salary for those individuals. So we see that you are
absolutely right. There are multiple ways to address our
emerging needs, and that is certainly part of the discussion
that we have within DOD.
Mr. Davis of Illinois. And I certainly appreciate that
because I think the comprehensiveness of planning--I mean, I
can think of school districts, for example, that developed
incentives for their more experienced teachers to retire so
they would have more money left, and then they could hire
people at lower rates of pay. I can also think of some
businesses and industries that have done essentially the same
thing; that is, try and usher out those individuals at the high
end of the pay scale so that there is more room. Of course, you
sacrifice quality. You sacrifice experience. You jeopardize
other kinds of things at the same time. And it seems to me that
we really have some serious, serious challenges.
And then there are those individuals who seemingly are
afraid that, if we have the wrong kind of immigration policies,
that we are going to have just a flood of individuals in our
country, and there is not going to be enough work opportunities
for them. Granted that individuals often come in at the lower
end of things, but then, you know, they manage to go to college
and learn some things and get some skills and develop and get
an opportunity to move up. And so it seems to me that we need
to always be thinking comprehensively about these issues when
we are trying to plan for continuous development.
And, Mr. Chairman, if I could just ask one additional
question. For example, with DOD, if we are going to hire the
same individuals in some instances, I am saying individuals,
have we made some determinations of, relative to cost
effectiveness, what would be most cost efficient, is the most
cost-efficient way to handle this and try and get the same
level of productivity while keeping costs down--I hate to use
the term minimum--but keeping the cost at the point where we
would most likely want it to be?
Ms. Bradshaw. Yes, sir. Part of our policy and the reason
we have put policy in place, even though the law is very broad
in the authority it granted the Secretary, our policy is very
specific about the circumstances in which you may use this
authority to reemploy someone, and part of the reason we did
that was to ensure that we are not bringing back people into
positions where we could fill it with someone that is already
in-house that has been growing and just promote that person or
move that person into the job or that we couldn't perhaps
recruit someone from the outside at a lower salary. So we are
very conscious of being judicious in our use of this authority
for one of those reasons.
Mr. Davis of Illinois. Well, thank you very much.
And Mr. Chairman, let me thank you. Because I am afraid it
seems to me that we are creating a society where we are going
to have a bunch of people up here, and we are going to have a
bunch of other people down here, and a lot of other people
floating in between. And I think that we have to find ways to
try and ensure and make sure that does not happen and that we
don't end up in a situation where, in my community, we often
talk about whether we are helping the needy or the greedy. And
I think we have to keep people out of that needy category and
keep others from becoming too greedy. I mean, I have friends
who have retired from places and all, and then they just decide
to go back to work, and of course, when they go back to work,
they prevent other younger, less experienced people, I think,
from having the opportunity to do so.
So I thank you very much, Mr. Chairman.
Mr. Porter. And along that line, what we are finding is
that in entry level in the work force, we have a lot of young
folks that have chosen not to study math and science, for
whatever reason, whether it be their choice or a lack of
parental involvement or encouragement. So we are trying to find
incentives to get people into the work force in specialized
areas, whether it be math, science instructors, nurses. So I
know, in Congress, we are trying to find ways to encourage
folks to go into these different areas. There is another reason
we want to keep----
Mr. Davis of Illinois. I am not running out on you. I just
have to go manage a bill.
Mr. Porter. Go take care of it. We can talk about you. That
is OK. We need to find a way to encourage them into the work
force, and in the meantime, we have this talent in the private
and public sector, especially in those areas that are leaving.
So it is another reason why today is so important.
Having said all that, thank you very much for your
testimony. We appreciate your being here and look forward to
working with you in the future. Thank you.
And we do have a second panel.
Charles and Duncan, will you join us, please?
I am not sure if you guys stood for the swearing in. I am
not sure. Why don't we do the formal portion here? Please raise
your right hands.
[Witnesses sworn.]
Mr. Porter. Let the record reflect that the respondents
have agreed in the affirmative.
Thank you, gentlemen, for being here.
In our second panel, we have Mr. Duncan Templeton, national
legislative vice president, Federal Law Enforcement Officers
Association; and Mr. Charles Fallis, president of the National
Active and Retired Federal Employees Association.
Welcome, gentlemen. I have a list of about 300 questions
for you, so get prepared. No, not really.
Charles, please.
STATEMENTS OF CHARLES FALLIS, PRESIDENT, NATIONAL ACTIVE AND
RETIRED FEDERAL EMPLOYEES ASSOCIATION; AND DUNCAN TEMPLETON,
NATIONAL LEGISLATIVE VICE PRESIDENT, FEDERAL LAW ENFORCEMENT
OFFICERS ASSOCIATION
STATEMENT OF CHARLES FALLIS
Mr. Fallis. Mr. Chairman, members of the subcommittee, I am
Charles L. Fallis, President of NARFE, and I am very pleased to
be here today to testify on behalf of the members of our
association, and I want to thank you for inviting us to
testify. NARFE has long held that Federal retirees returning to
government service should receive the full salary of their new
job without any offset against the retirement annuities they
earned through prior Federal service.
Under current law, the wages of reemployed annuitants are
generally offset by the amount of their annuity. However, OPM
and certain Federal agencies can offer waivers, which allows
select returning retirees with critical or crucial skills to
keep both sources of earned income. The needs of the war on
terror and homeland security underscore their importance. While
no one complains about receiving a waiver, the inability to add
retirement credit from their reemployment often creates
dissatisfaction. Without a waiver, many retirees will not
consider reemployment since the offset of their Federal pay
would make their reemployed salary unacceptable.
As a practical matter, many of them would be working for
free. Sometimes we hear that waivers are not applied equitably.
Indeed, the real challenge of recruitment and retention is
whether incentives are used fairly. As you know, many Federal
workers with crucial skills avoid the waiver process by working
for a government contractor where their Federal annuities
present no barrier to being paid full salary. Additionally,
working for a contractor means one can earn more quarters in
Social Security, and that is Social Security covered
employment, thus mitigating the reduction of their Social
Security benefits by the unfair and arbitrary Windfall
Elimination Provision. In addition to reemployment, we are
pleased, Mr. Chairman, that you are examining the application
of the 1986 COBRA budget law which unfairly reduces the
annuities of thousands of Federal employees who worked part
time in the final years of their careers. This reduction occurs
when actual part-time wages instead of full-time equivalent
salaries are used to calculate the employee's highest 3 years
of salary. President Bush's 2007 budget recognized this
inequity and proposes using full-time equivalent salary to
compute the annuities of future retirees who work part time. We
agree part-time work near retirement encourages skilled,
talented and experienced workers to remain employed.
Unfortunately, the President's proposal does not remedy the
inequity for current retirees whose annuities were lowered. For
that reason, NARFE supports Representative Jim Moran's bill,
H.R. 480, which would modify the President's proposal to
include and correct the annuities of current affected retirees
and survivors. H.R. 480 would alleviate any potential
administrative complication in several ways. First, it would
put the burden on annuitants to identify themselves as eligible
for the correction rather than directing OPM to go out and find
them. Upon enactment, annuitants would have 18 months to apply
to OPM for a prospective, and that is a prospective calculation
of their annuities. H.R. 480 would require that the newly
calculated annuity amount become effective after the annuitant
applied for a recomputation.
Equity is also warranted for certain Veterans
Administration nurses, and you mentioned that earlier, Mr.
Chairman, nurses whose annuities were unfairly reduced by their
part-time service. Before 1986, the Veterans Administration
promised full-time retirement credit for part-time work to
satisfy nurse staffing shortages. They have made that promise.
Unfortunately, the VA did not keep that promise. Perhaps they
couldn't, but they didn't keep that promise. Some nurses have
never received their promised full-time retirement credit. This
inequity was corrected prospectively in 2002 by the 107th
Congress, but the new law did not extend full-time credit to VA
nurses who retired between April 6, 1986, and January 23, 2002.
Now, in this connection, NARFE supports Representative Tammy
Baldwin's legislation, H.R. 4298, which would fix this
inequity.
Mr. Chairman, NARFE urges that in any part-time retirement
computation, in any bill that the subcommittee addresses, we
urge that you please include, No. 1, equity for all retired VA
nurses and, two, fairness for all current retirees whose
annuities were wrongly reduced because of their part-time
service.
Finally, Mr. Chairman, we commend you for your interest in
enabling Federal annuitants to continue making critical
contributions. Thank you for inviting us to testify, and if you
have questions, I would be glad to address them.
[The prepared statement of Mr. Fallis follows:]
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Mr. Porter. Thank you very much.
Mr. Templeton.
STATEMENT OF DUNCAN TEMPLETON
Mr. Templeton. Chairman Porter, I want to thank you for the
opportunity to appear before you today to testify about the
need for Federal law enforcement to utilize an invaluable
resource commonly referred to as retired annuitants.
My name is Duncan Templeton, and I am currently the
National Legislative Vice President of the Federal Law
Enforcement Officers Association [FLEOA]. I am here today on
the part of ART Gordon, FLEOA's National President.
FLEOA is the largest nonpartisan professional association
exclusively representing Federal law enforcement officers. I am
here today representing over 25,000 Federal agents from over 50
different agencies. Some of our members are rehired annuitants
who are currently employed by the Transportation Security
Administration and the Federal Air Marshal Service. All FLEOA
national officers, like myself, are full-time Federal law
enforcement officers who conduct FLEOA business on their own
time. I am a criminal investigator with the U.S. Department of
Justice, but I am here today on annual leave representing
members of FLEOA.
Ever since the tragic events of September 11, 2001, it is
obvious that rehired annuitants have and continue to play a
critical role within Federal law enforcement. Both the
Transportation Security Administration, TSA, and the Federal
Air Marshal Service, FAMS, utilize many experienced Federal law
enforcement personnel, retired annuitants, to initially set up
and operate these two new and important Federal agencies. Many
retired annuitants currently occupy critical management
positions within both TSA and FAMS. These positions include
Federal security directors and assistant Federal security
directors for the law enforcement within TSA as well as most
middle level, upper level and executive level management
positions within the FAMS. Since both TSA and the FAMS have
only existed for 4 years, the loss of these key management
personnel retired annuitants within these agencies and the lack
of experienced personnel to fill this void will have a
devastating effect upon public safety.
OPM encourages agencies to utilize retired annuitants, and
Congress recently passed legislation to enable the Defense
Department to take advantage of this unique personnel practice.
Since most other departments were already utilizing this
valuable resource, this personnel practice actually saves the
agencies money. Since they don't have to pay any fringe
benefits to retired annuitants, it saves about 40 percent or
$40,000 per employee and bridges the knowledge and skills gap
between the newer employees and the highly experienced
employees.
FLEOA recently urged Secretary Chertoff to act now and
authorize a 2-year extension for all retired annuitants within
TSA and FAMS to avert major problems resulting from the
potential loss of over 100 retired annuitants within these two
agencies. This is just one example of how effective it was and
continues to be to utilize retired annuitants within the
Federal law enforcement agencies. Some Department of Justice
agencies have sporadically utilized retired annuitants to fill
the void within critical areas of their agencies as well. Most
Federal law enforcement officers retire at age 50 with over 20
years of dedicated law enforcement service and are not allowed
to return to the Federal work force unless they have received
dual compensation waivers for a specific period of time,
usually no more than 3 years.
These Federal agents have received thousands of hours of
training during their careers and honed their investigative
skills over many years while conducting complex investigations.
These talented individuals then take their skills and expertise
with them and move on to the private sector in higher-paying
positions within Homeland Security, crisis management, forensic
investigations, private security or with a State or local law
enforcement agency. This is necessary because they are
prohibited from starting a second career within the Federal
Government.
However, it should be noted that there is one exception to
this rule of dual compensation and rehired annuitants. Over the
past 20 years, hundreds of U.S. Secret Service agents have
retired from Federal law enforcement service and retired under
the Washington Metropolitan Police retirement system and,
therefore, are allowed to start a second Federal law
enforcement career with another Federal agency. They are not
required to get dual compensation waivers. There are hundreds
of retired Secret Service agents currently employed by TSA,
FAMS, Department of Defense, Department of Justice and many of
the Inspector General offices. FLEOA would like to see these
same benefits, the same benefits reaped by Secret Service
agents, extended to all Federal law enforcement retirees.
Currently, the law regarding waivers appears to be
implemented differently by agency and by position for different
periods of time. There does not seem to be any uniformity.
Indeed, within the entire Federal law enforcement community,
the need for rehired annuitants is great, and the need for more
widely utilized--and the need to be more widely utilized if we
plan to continue to beef up Homeland Security agencies and to
develop a higher level of intelligence gathering that relates
to potential terrorist attacks or groups wishing to harm our
great Nation.
The skills of experienced criminal investigators and
intelligence analysts take many years to develop and cannot
simply be taught in a classroom environment. These assets
cannot continue to be ignored. Dual compensation waivers for
retired annuitants should become the norm within Federal law
enforcement until each agency is satisfied that we have
adequately highly skilled and trained personnel to adequately
perform their mission.
This becomes even more critically important when you get
into the management ranks of the Federal law enforcement
agencies. Inexperienced leaders within Federal law enforcement
can result in disastrous consequences for the safety and
security of our Nation. Competent law enforcement leaders are
bred over a period of many years. They move up through the
ranks of their respective agencies. With newly created agencies
like TSA and FAMS, this is not possible. So the use of retired
annuitants is a necessity. The waivers should be based on the
demonstrated skills of the individuals, law enforcement retiree
and the needs of the agency. Timeliness should not be set for
the waivers. However, uniform policies need to be established.
FLEOA has proposed a Federal law enforcement reserve force
to be utilized in times of extreme agency emergency to
supplement Federal law enforcement resources. This proposal has
previously been submitted by FLEOA to Congress and the
administration but has never been implemented. This is
feasible, since the Law Enforcement Officers Safety Act of 2004
authorizes retired Federal law enforcement officers to carry
firearms anywhere in the country as long as they qualify with
the firearm annually.
FLEOA President Gordon has asked that I attach a copy of
his letter to DHS Secretary Chertoff dated February 12, 2006,
regarding the issue of rehired annuitants within the Department
of Homeland Security. To date, no action has been taken by DHS
on this request. In addition, FLEOA President Gordon has asked
that I provide this committee with a copy of FLEOA's proposal
for a U.S. Homeland Security reserve force. Thank you for
allowing me to testify today, and I would be happy to take any
questions as well.
[The prepared statement of Mr. Templeton follows:]
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Mr. Porter. Thank you very much.
First, Mr. Templeton, just reiterate my agreement that the
current pay benefits situation really is a hodgepodge, and that
is part of what is driving my concern and comprehensive review
in developing policy. So I appreciate your comments again, and
I look forward to some more ideas from your groups as we move
forward because it absolutely is a hodgepodge, and I understand
that something must be done. So as we move forward looking at
retirees, getting them back in the system or remaining, know
that the primary goal of mine is to see if we can correct some
of that problem. It is very confusing. And we are doing
everything we can to correct that.
From a question perspective, I guess if you could both just
share with me some of the trends that you are seeing. What is
happening with the retirees, Charles? And what is happening as
far as wanting to get back to work or choosing not to? Are you
seeing an increase in those that want to come back into the
work force? And if so, do they want to come back full time or
part time, or what are you sensing happening?
Mr. Fallis. We have had concerns expressed to us about
people who want to go back to work, but there are barriers in
coming back to work for the Federal Government, that is the
issue we are talking about now. There are also barriers that
face those who want to go back and work in the private sector.
And that falls into the WEP situation, Windfall Elimination
Provision. We have people who will only work if they are paid
under the table. They do not want to contribute into a fund,
which in this case, it is Social Security from which they have
no hope of receiving any benefit, or if they do receive a
benefit, it will be a reduced benefit. And so that is the
concern we see. I am sure that we have members who would be
happy to go back to work if the conditions were right.
I must say, though, that as far as I am concerned, it is
not a burning issue. I can't say that, you know, I get calls
every day on this. Our people, for the most part, are happy to
be retired. I might be the exception. I retired 21 years ago,
and I was retired for 14 years before I came back to work.
Mr. Porter. You should know better.
Mr. Fallis. I should know better, right. But I happened
also to be one of those folks who was eligible to retire before
January 1, 1986. And so I am exempt from the ravages of WEP.
Mr. Porter. And Duncan, what do you sense? What are you
hearing?
Mr. Templeton. Well, the Federal law enforcement system is
unique in that you can retire with 20 years of service at age
50. Also in that, you have to retire by age 57 regardless,
unless you get a waiver. You could get a 1-year waiver to stay
1 extra year. I think people, you know, are desiring to--I know
people who are retired and are desiring to come back and work
in a law enforcement function. It is a passion for them, not
just a financial issue. And I can speak for myself
specifically. At this point, I have 19 years of service. In a
year, I will be totally vested with 20 years. I can continue to
contribute at 1 percent to my retirement after that, but I
currently contribute at 1.7. If they were to increase that, it
would make it more attractive for me to stay, but I am eligible
to retire myself in 3 years. I certainly won't be ready to stop
at that point, but I think that our retired Federal law
enforcement officers have a lot to offer and should be given a
chance to come back and contribute for all of us.
Mr. Porter. Where are you finding a lot of the law
enforcement officers going after their retirement?
Mr. Templeton. I think predominantly to the private sector,
to banking investigative positions, internal banking
investigative positions, private investigation positions, that
kind of thing, from my experience. To go to a--you know,
realistically, to go to a local law enforcement position where
you would be an officer for a person of retirement age is not
that realistic, but there is a wealth of knowledge there and an
incredible brain drain from all the people who are retiring and
not being replaced by as experienced employees.
Mr. Porter. Charles, I would like to talk for a moment
about the nurses and those that retired between April 1986 and
January 2002. So that group was left out of a correction, or
what happened?
Mr. Fallis. There was--it was fixed, as I indicated,
prospectively. There was no retrospective coverage. So they
left that 16 years between 1986 and 2002. Those nurses still
have received nothing even though they were promised that they
would receive full credit for their part-time work because they
had a critical shortage problem. They persuaded them to stay on
with this promise, and they took that in good faith. They
really did. And they are terribly, terribly disappointed today
in the Federal Government that they have fallen short of that
promise.
Mr. Porter. So, Charles, these were folks that could have
retired and chose, because of the need, to stay on in a part-
time basis or full time or both?
Mr. Fallis. Yes. Some, both, yes.
Mr. Porter. And they weren't able to contribute at all into
the retirement system or just partially?
Mr. Fallis. Well, I think they might have been able to
contribute into the retirement system, but it was on--when they
figured their retirement, they didn't include what--let's say,
you know, the full salary for the position. These people were
working part time. They worked part time, but they were not
given full-time credit for the time that they worked, and that
was what they were promised. They said, if you will come back
and work 4, 6, 7, anything short of 8 hours a day, we will see
that you get full credit on your retirement, full-time credit
for the time and the hours and the days and the months and the
years that you put in. And then it was not delivered.
Mr. Porter. Have there been numbers run on what effect,
what the impact is financially? Is there like--I don't know if
the term is scoring in this case, but has there been
information available on the cost to correct these problems?
Mr. Fallis. These nurses have been valiant in pressing for
justice here, but they are small in number. Normally, the
Congress responds to situations that involve millions of
people. We have small numbers now, and they have not been able
to generate the kind of support for the legislation that they
would like to see passed to make them whole.
Mr. Porter. And that is Tammy Baldwin's H.R. 4298?
Mr. Fallis. That is it, yes.
Mr. Porter. And it corrects the problem?
Mr. Fallis. It does.
Mr. Porter. So after 2002 then, they made a correction for
anyone that is in that capacity? Or what happened after----
Mr. Fallis. Prospectively, the nurses from 2002 are taken
care of. Those before 1982 back to--I mean, before 2002, back
to 1986 are the victims.
Mr. Porter. And the H.R. 480, you mention Mr. Moran's, that
has to do with not having a waiver or--if you could explain to
me what we are trying to fix with that, with Mr. Moran's? What
does it do?
Mr. Fallis. Well, Mr. Moran's bill is bill No. 480. It is a
bill that we support, and it would modify the President's
proposal that came out in his 2007 budget. His proposal, you
know, recognized that we had an inequity here as opposed to
using full-time equivalent salary to compute the annuities of
future retirees who would work part time. But it fell short of
the mark, and the inequity that was left there is covered by
Representative Jim Moran's bill, H.R. 480, it would modify the
President's proposal to include and correct the annuities of
current affected retirees. It is the retirees who would be left
out in terms of the President's proposal. Here, again, we are
talking about fixing it prospectively, but not fixing it
retrospectively because there are victims here who are--I won't
call them victims. There are people here who have been
penalized unfairly.
Mr. Porter. Like my mom who is a notch baby. I hear----
Mr. Fallis. These are all notch people. That's exactly it.
Mr. Porter. Well said. I want to thank you very much for
your testimony. I appreciate you both being here and to the
other members of the panel. And with that, we will adjourn the
meeting. Thank you very much.
[Whereupon, at 3:52 p.m., the committee was adjourned.]
[The prepared statement of Hon. Elijah E. Cummings and
additional information submitted for the hearing record
follow:]
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