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

HEARING
BEFORE THE

SUBCOMMITTEE ON FEDERAL WORKFORCE,

POSTAL SERVICE, AND THE DISTRICT
OF COLUMBIA
OF THE

COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
MAY 20, 2008

Serial No. 110140

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

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

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WASHINGTON

48242 PDF

2009

For sale by the Superintendent of Documents, U.S. Government Printing Office

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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

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

PHIL SCHILIRO, Chief of Staff
PHIL BARNETT, Staff Director
EARLEY GREEN, Chief Clerk
LAWRENCE HALLORAN, Minority Staff Director

SUBCOMMITTEE

ON

FEDERAL WORKFORCE, POSTAL SERVICE,

COLUMBIA

AND THE

DISTRICT

OF

DANNY K. DAVIS, Illinois

ELEANOR HOLMES NORTON, District of
KENNY MARCHANT, Texas
Columbia
JOHN M. MCHUGH, NEW YORK
JOHN L. MICA, Florida
JOHN P. SARBANES, Maryland
DARRELL E. ISSA, California
ELIJAH E. CUMMINGS, Maryland
JIM JORDAN, Ohio
DENNIS J. KUCINICH, Ohio, Chairman
WM. LACY CLAY, Missouri
STEPHEN F. LYNCH, Massachusetts
TANIA SHAND, Staff Director

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CONTENTS
Page

Hearing held on May 20, 2008 ...............................................................................

Statement of:
Gilman, Maureen, legislative director, National Treasury Employees
Union; and Daniel C. Adcock, assistant legislative director, National
Active and Retired Employees Association .................................................
Adcock, Daniel C. ......................................................................................
Gilman, Maureen ......................................................................................
Kichak, Nancy H., Associate Director for Strategic Human Resources
Policy, U.S. Office of Personnel Management ............................................
Purcell, Patrick, Specialist in Income Security, Domestic Social Policy
Division, Congressional Research Service ..................................................
Letters, statements, etc., submitted for the record by:
Adcock, Daniel C., assistant legislative director, National Active and Retired Employees Association, prepared statement of .................................
Davis, Hon. Danny K., a Representative in Congress from the State
of Illinois, prepared statement of ................................................................
Davis, Hon. Tom, a Representative in Congress from the State of Virginia, prepared statement of ........................................................................
Gilman, Maureen, legislative director, National Treasury Employees
Union, prepared statement of ......................................................................
Kichak, Nancy H., Associate Director for Strategic Human Resources
Policy, U.S. Office of Personnel Management, prepared statement of .....
Lynch, Hon. Stephen F., a Representative in Congress from the State
of Massachusetts, prepared statement of ...................................................
Marchant, Hon. Kenny, a Representative in Congress from the State
of Texas, prepared statement of ..................................................................
Purcell, Patrick, Specialist in Income Security, Domestic Social Policy
Division, Congressional Research Service, prepared statement of ...........

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52
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THE COST AND BENEFITS OF THE REEMPLOYMENT OF FEDERAL PART-TIME ANNUITANTS

TUESDAY, MAY 20, 2008

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

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6
Mr. MARCHANT. Thank you, Mr. Chairman. Thank you for holding this hearing today at the request of Mr. Davis, of the minority.
Political gridlock seems to be the status quo these days, so it is refreshing to see teamwork, compromise and bipartisanship whenever possible.
Mr. Chairman, I think we may be facing a crisis in Federal employment and Congress needs to be working to find a solution. As
we look at the number of current Federal employees who are eligible to retire in the next 5 years, we must consider how we intend
to replace those employees.
I believe that Ranking Member Davis bill, H.R. 3579, could be
a major part of the solution. The legislation would allow agencies
to waive the salary offset requirement with respect to any Federal
annuitant who is employed on a part-time basis. I am proud to be
an original co-sponsor of this legislation.
While the reemployed annuitants would receive both salary and
annuity payments, they would not be considered employees for purposes of retirement and would receive no additional retirement
benefits based on their service. To demonstrate the importance of
having this bill, the State Department recently had a nationwide
backlog of issued passports which extended the expected turnaround time from the normal 6 weeks to a snails pace that was
anyones guess for when the individual would receive a passport.
These delays greatly impacted thousands of business travelers and
planned vacations.
In spite of its best efforts, the State Department was dealing
with record levels of retirement and an unprecedented 44 percent
increase in passport demand. To make matters worse, all new applicants must undergo background check and training of about a
year for new hires. The fastest solution was to bring in recent hires
who have the expertise and required minimal new training. But
the State Department lacked the statutory authority to do this on
a temporary basis. It took legislation action by Congress to bring
back State Department employees to its offices.
Needless to say, this was not the most efficient way to address
the problem. It resulted in several additional months of backlogs
before these employees were back to work at the State Department,
finally helping to make some headway on the backlog of passport
applications. This sort of inefficiency is the kind of thing that we
have to avoid and responsibly crafted legislation like Ranking
Member Davis bill is something we should look to and something
I fully support.
Thank you again, Mr. Chairman, for giving the minority this
hearing on this important issue.
[The prepared statement of Hon. Kenny Marchant follows:]

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Mr. MARCHANT. I would also like to have permission, Mr. Chairman, to enter Ranking Member Davis statement into the record.
Mr. DAVIS OF ILLINOIS. Without objection, so ordered.
[The prepared statement of Hon. Tom Davis follows:]

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13
Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Marchant.
Now we will actually go to our first witness. Ms. Nancy Kichak
was named Associate Director for the Human Resources Policy Division in September 2005. In this position, she leads the design, development and implementation of innovative, flexible and meritbased human resource policies.
Thank you very much, Ms. Kichak. If you would stand and be
sworn in.
[Witness sworn.]
Mr. DAVIS OF ILLINOIS. The record will show that the witness answered in the affirmative.
We thank you very much for being here with us this afternoon
to testify. If you would give us your 5-minute statement and of
course, the yellow light means you have 1 minute left, and red
means that the 5-minutes are up. We thank you very much and
will then go to questions.
STATEMENT OF NANCY H. KICHAK, ASSOCIATE DIRECTOR
FOR STRATEGIC HUMAN RESOURCES POLICY, U.S. OFFICE
OF PERSONNEL MANAGEMENT

Ms. KICHAK. Chairman Davis, Representative Marchant, thank

you for holding this hearing to examine proposals to facilitate reemployment of Federal retirees. I appreciate the opportunity to be
here today to discuss the importance of these policies.
Because of the demographic makeup of the Federal work force,
the Office of Personnel Management projects a substantial number
of retirements in the coming years. We have put succession plans
in place that will help ease the impact of the loss of expertise. But
we need limited access to the departing skilled workers to help
make the transition to new workers as seamless as possible.
Currently, retirees who become reemployed by the Federal Government must have their salaries reduced. However, if that same
employee would go to work for a contractor, they would be able to
collect an annuity and salary. Or if a private sector retiree is hired
by the Government, that employee receives an annuity and salary.
The law allows OPM to grant salary offset waivers on a case by
case basis to agencies experiencing exceptional difficulties in recruiting or retaining qualified individuals or in unusual circumstances. OPM may also delegate this authority to agencies
faced with emergencies or other unusual circumstances that do not
involve an emergency.
This authority has been used to help agencies in the aftermath
of the terrorist attacks of September 11th as well as to respond to
Hurricane Katrina. However, none of these regulatory authorities
provide the ability to waive the offset for such short-term needs as
mentoring new employees or providing short-term assistance with
critical projects.
OPM submitted a legislative proposal to Congress in March of
last year that would allow agencies, without coming to OPM for approval, to rehire annuitants under certain conditions without a salary offset. This proposal is substantially similar to H.R. 3579, introduced last fall by Representative Tom Davis. H.R. 3579 would
cover only executive branch agencies while OPMs proposal would
also apply to the legislative and judicial branches.

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14
H.R. 3579 would permit Federal agencies to reemploy retired
Federal employees without offsetting annuity from salary for a
maximum of 520 hours in the first 6 months following retirement,
a maximum of 1,040 hours in any 12-month period, and a total of
6,240 hours for any individual. While those re-employed under this
authority would receive both salary and annuity payments, they
would earn no additional retirement benefits based on the reemployment.
The legislation would make reemployment both attractive to annuitants and easy for agencies to use and it is designed to avoid
abuse. This will encourage individuals who otherwise would leave
Government permanently or provide their services to a contractor
to return to work for the Government part-time. Amending the law
in this way will also go a long way toward eliminating the inequity
in the treatment of reemployed Federal retirees compared to private sector retirees, who continue to collect their pensions and full
salaries when they are hired by the Federal Government.
I also want to thank Congressman Moran for introducing H.R.
2780, a bill to remove the penalty under the Civil Service Retirement System, which results from part-time service at the end of a
career. And I want to thank members of the subcommittee, along
with members of the Committee on Oversight and Government Reform, who supported passage of the bill out of committee on March
13, 2008.
Similar legislation has been introduced by Senators Conrad and
Smith as part of their broader efforts to assist older workers in the
private and public sectors. Together, both of these legislative initiatives are important to our efforts to have the right people with the
right skills in place, so that agencies are able to meet their mission
goals.
I want to especially thank you, Representative Davis, and Representative Marchant, for your interest in this important issue.
Thank you for inviting me here today and I would be glad to answer any questions.
[The prepared statement of Ms. Kichak follows:]

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17
Mr. DAVIS OF ILLINOIS. Thank you very much. We appreciate
your testimony.
I will begin. Ms. Maureen Gilman, legislative director for the National Treasury Employees Union, and a witness on the third
panel, states in her testimony for the record that the lack of qualified employees is due to the funding and the contracting out of critical expertise to private businesses. I have a two-part question.
One, can current staffing shortages be attributed to a lack of
funding, and if so, why not hire staff now that can be trained by
more experienced workers before they retire? Then I will go to the
other part.
Ms. KICHAK. I think it is fair to say that the Government is trying to be as efficient as possible, and therefore does not fund a position that is not needed if somebody else is there doing the job. So
if money were unlimited and you could double-encumber certain
positions and give people a long training period, that would certainly help. There is no question about that.
On the other hand, we work with our agencies. At OPM we have
human capital officers assigned to every agency to do succession
planning, to make sure there are people training behind the folks
in place. So it is not strictly a funding issue. We do train people,
but unexpected things occur. People leave before you expect them
to, folks that arent able to retire, folks get sick and folks decide
to change jobs. So even if we had more money, we couldnt guarantee that we would put the right person in the right place to anticipate a problem in the future.
Mr. DAVIS OF ILLINOIS. Strategic planning suggests that work
forces plan for the future in order to meet staffing needs. Wouldnt
proper planning and preparation by the agencies alleviate staffing
and training concerns if there was enough planning taking place
before we get to the point where there is a need?
Ms. KICHAK. I think there is a lot of planning taking place.
Again, you identify the people where you expect you might have
shortages and you start to build succession plans around those
areas. But unexpected things do happen.
The other problem you have is that no matter how much you put
down in documentation of a position and work with the next person, they would really like to have somebody they could talk to and
work with when it absolutely falls in their lap. There is no substitute for the person who is the most experienced at that job being
available as the new person takes over to answer questions.
Our proposal is for a part-time job. It is really not for full-time
employment. So it is just to be able to access people and rely on
them for help in limited circumstances. It is not to do the job.
Mr. DAVIS OF ILLINOIS. Let me ask you, are there provisions in
H.R. 3579 to address concerns that agencies would be required to
re-hire Federal annuitants with no benefits versus new hires and
current employees that are entitled to benefits, thereby saving the
agency money?
Ms. KICHAK. I think there are many provisions in that piece of
legislation. The first one is the limitation on the hours that can be
worked immediately after retirement. It is very clear that immediately after retirement, you can only work 600 hours of the first

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6 months. What that means is that you cannot let somebody retire
and immediately come back to work.
So there is going to be some kind of break there where the person is not going to be available to you full-time. Then there is also
the limitation that you can only work half the hours in a year,
which means that an agency which has a very vital job is really
going to have to find somebody who can handle that full-time, and
then again there is the provision of the 6,000 hours in a lifetime.
So again, that person is only going to be available for a limited
amount of time and an agency has to plan to replace them.
As far as the issue of these folks not earning benefits while they
are retired, it would be, OPM also administers the Civil Service Retirement System. It would not be good management of that fund
to allow reemployed annuitants to increase their pensions while
they are retired. Planning for your retirement and building for your
pension is something you need to do when you are working. It
wouldnt be good business or good pension sense to build that while
you are retired.
Mr. DAVIS OF ILLINOIS. Thank you very much. We will go to Mr.
Marchant.
Mr. MARCHANT. Thank you.
I have a few questions about just how this bill would work mechanically. Would an annuitant be able to go to work for any Federal agency?
Ms. KICHAK. Yes.
Mr. MARCHANT. So it wouldnt necessarily be the agency that
they retired from?
Ms. KICHAK. That is right.
Mr. MARCHANT. That is not limited in any way?
Ms. KICHAK. That is right.
Mr. MARCHANT. Is the agency bound to offer what the annuitant
was making as his or her last salary?
Ms. KICHAK. No, they are not.
Mr. MARCHANT. Is it an open, we post this job, we are looking
for a part-time person?
Ms. KICHAK. The person who is going to be retired is going to be
required to meet the requirements of the job. In other words, if you
hire somebody as a physician, they are going to have to be a physician. If you hire somebody as a police officer, they are going to have
to have those skills.
So their pay will also be set based on the job they are hired to
do, not necessarily the salary they were earning at the time they
left.
Mr. MARCHANT. Would an agency then be required to pay the
amount of money that job paid, currently paid at the level that
they hired them?
Ms. KICHAK. The agency would set the pay based on the responsibilities the person would have and the job they are being hired
into. One example would be, and it is an unlikely one, but if you
had somebody who was operating at a very high level and you
wanted them to come back and do some administrative work, to organize some files, you could set that job as an administrative person and they could have a lower grade than what they were making when they left.

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Mr. MARCHANT. There are several bills that are floating around
now in committee, on the House floor and maybe some that are
even out of the House that are proposing what I would consider to
be a very generous leave program for adoptive parents, newborns,
for both the husband and the wife. We were told, we had testimony
that said basically there was sufficient workplace in force to fill
those holes if someone left for 8 or 10 weeks.
Do you think that if this becomes law, and this becomes policy,
where it could extend, I think up to 12 weeks, is this a situation
where an annuitant could be used to come in and fill in?
Ms. KICHAK. Absolutely. One very good use of this bill would be
if somebody had an unexpected absence and they were coming
back. And a maternity is a good one.
On the bills on the leave, we do have good leave policies for our
folks so they can take a long period of time off. But it would be
a very good use of this bill to bring people, reemployed annuitants
back to fill in that gap.
Mr. MARCHANT. Thank you, Mr. Chairman.
Mr. DAVIS OF ILLINOIS. Thank you very much.
Let me just ask you, are there any other flexibilities that you can
think of that perhaps could be used to retain older workers, such
as maybe teleworking, flexible schedules, part-time work or any
other things that might be used to arrive at the same goal?
Ms. KICHAK. We absolutely support the Moran bill that fixes the
problem with the high three salary for CSRS employees, that penalizes them if they go to part-time at the end of their career. So
we think part-time service at the end of a career is a very good
thing to do.
We are strong advocates of telework and we work very hard to
get policies in place so that managers can offer telework to their
employees. We believe in flexible work schedules. So all of those
things are great tools.
But there are also instances where this is the only kind of thing
that would work. Because in the instance that Representative
Marchant just described, where somebody is on maternity leave,
that person is gone. And you have to fill that need. Allowing somebody to telework that is already gone wouldnt really do that.
So all of those things are good ideas.
Mr. DAVIS OF ILLINOIS. Are there any other questions?
Thank you very much. We appreciate your being here.
We will go to our second panel. Mr. Patrick Purcell is a Specialist
in Income Security with the Congressional Research Service. He
works on issues related to Federal employee retirement benefits,
private sector pensions, 401(k) plans and individual retirement accounts. Mr. Purcell, if you would raise your right hand.
[Witness sworn.]
Mr. DAVIS OF ILLINOIS. The record will show that the witness answered in the affirmative. We thank you for being here and if you
would summarize your testimony in 5 minutes, the full testimony
is in the record. The yellow light indicates you have a minute and
red means the time is up.

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

Mr. PURCELL. Thank you, Mr. Chairman and Ranking Member

Marchant, for inviting me here to speak to you today on reemployment of Federal annuitants. As you mentioned, Mr. Chairman, I
have submitted a written statement for the record, so I am only
going to focus on a few points concerning the current law and the
proposed legislation.
As you are aware, under the Federal Employee Pay Comparability Act of 1990, the Director of OPM can waive the prohibition on
concurrent receipt of a salary and a retirement annuity on a case
by case basis if an agency is unable to retain or recruit qualified
employees. The 1990 law also allows the Director of OPM to delegate to the head of a Federal agency authority to grant waivers on
a case by case basis for employees serving on temporary appointments if the agency is facing an emergency.
While the individual is employed under these waivers, they do
not earn additional retirement benefits except Social Security.
Under H.R. 3579, agency heads would be allowed to hire Federal
annuitants on a temporary basis without reducing their salaries by
the amount of their retirement annuities and without seeking the
approval of OPM. The authority of an agency head to grant a waiver would be limited, as was mentioned earlier, to 520 hours in the
6 months following the starting date of the annuity; 1,040 hours of
service in any 12-month period, 6,240 hours over the individuals
lifetime.
In recent years, the number of reemployed Federal annuitants
has increased, but they are a still a small fraction of all Federal
employees. Between 2000 and 2007, the number of reemployed annuitants doubled from roughly 2,700 to 5,400. This is still less than
one-third of 1 percent of all executive branch Federal employees.
Over this same 7-year period, the percentage of reemployed annuitants subject to salary offset fell, and the percentage who were reemployed under waivers that allow concurrent receipt of a salary
annuity increased.
In 2000, 75 percent of reemployed annuitants were subject to salary offset and 25 percent were employed under waivers. By 2007,
40 percent of reemployed annuitants were subject to salary offset,
60 percent were employed under waivers that allowed concurrent
receipt of salary and annuity.
Many Federal employees are going to be eligible to retire over
the next 10 years. More than 40 percent of the Federal work force
is over age 50 and 35 percent have already completed more than
20 years of service. Because these employees have skills that are
needed for Federal agencies to carry out their missions, managers
in the Federal Government are seeking tools to delay retirement of
employees and to induce some retirees to return to work.
In 1990, Congress approved one such tool by granting the Director of OPM authority to waive in certain cases the law that prohibits concurrent receipt of a Federal salary and an annuity. H.R.
3579 would give agency heads more flexibility in hiring retired
Federal employees and to temporary employment by allowing them

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to grant waivers to the salary offset without seeking the approval
of OPM.
Providing Federal agencies with the authority they need to recruit and retain skilled workers is an important issue before Congress. However, the prohibition on concurrent receipt of a retirement annuity and full salary reflects the judgment of previous Congresses that Federal employment policies should not encourage
workers to retire and then seek reemployment in a Federal job in
which they can receive both a salary and an annuity.
Without the prohibition on concurrent receipt of a salary and annuity, there would be a financial incentive for employees to retire
and seek reemployment with the Government. Because H.R. 3579
limits the waiver authority to temporary employment, it would substantially mitigate the possibility that this would occur.
However, it is worth noting that in 2006, the Assistant Director
of OPM testified before this committee, that because waivers result in compensation from the retirement fund and salary, they
must be used judiciously.
This concludes my testimony and I would be happy to answer
any questions that members of the subcommittee might have.
[The prepared statement of Mr. Purcell follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much. I will begin.
Mr. Purcell, you testified that H.R. 3579 would allow the head
of a Federal agency to hire a Federal annuitant on a temporary
basis without reducing the annuitants salary by the amount of his
retirement annuity. You also testified that such a measure could
create an incentive for some employees to retire and seek reemployment which would encourage retirement.
Are there provisions in H.R. 3579 to prevent agencies from abusing this authority and the early retirement of Federal employees?
Mr. PURCELL. Yes, there are. The limitation on employment to
500 hours in the first 6 months, 1,000 hours in any 12-month period and 6,000 hours over a lifetime is a key element of this bill.
Because an individual could only count on appointment to a temporary job, it would substantially mitigate the possibility that an
employee who knows he or she has a valuable skill and would be
likely to be reemployed from attempting to game the system, which
does occur.
If I could just refer briefly to an article in News Day, May 10th,
about a school district employee in New York State who retired on
a pension of $100,000 a year, was rehired the next day at a salary
of $175,000 a year, raising his total compensation to $275,000 a
year, this occasionally has happened in State and local governments that have allowed retirees to be reemployed and collect both
a salary and an annuity. My experience reading about these stories
in the past is they generally elicit a uniformly negative response
from the public. [Laughter.]
Mr. DAVIS OF ILLINOIS. I was wondering if the person may have
had some clout. Not a bad plan.
Let me ask, are there any other suggestions or recommendations
that you might have that would help assure that there is no misuse of this concept?
Mr. PURCELL. When reading the bill, I noticed that it would be
a permanent change to the statute. One possibility might be to
make this change for a period of 5 or 10 years and evaluate how
agencies and individuals respond. Another, somewhat more drastic
measure, might be to put in an absolute ceiling, say, no more than,
well, let me backtrack.
I believe right now about three-tenths of a percent of Federal
workers are reemployed annuitants, the largest share in the Department of Defense, which has an entirely separate authority
under the National Defense Authority Act of 2004. But a ceiling of
a half a percent, three-fourths of a percent should be ample room
for an agency to fill positions for, as Ms. Kichak said, training and
mentoring and bringing the newer group of Federal employees up
to speed.
Mr. DAVIS OF ILLINOIS. Thank you very much.
Mr. Marchant.
Mr. MARCHANT. I am in one of those States that, when I was in
the State legislature, this came before Texas as a solution. And it
was not very long before the mis-use appeared. Then we had to
take another action to keep that from happening.
Is it possible to put a cap salary in there or a cap pay in there?
Mr. PURCELL. It would be possible to say that, I am just going
to make a number up here, that the combined annuity and salary

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shall not exceed 100 and X percent of somewhere in the general
schedule. You could do it. You would have to give it some thought.
You wouldnt want to make it so constraining that people wouldnt
go for it, and you wouldnt want to make it so broad that it is ineffective.
Mr. MARCHANT. But you could make it a functional thing?
Mr. PURCELL. Yes, it could be based on the combined annuity
and some level of the general schedule.
Mr. MARCHANT. I am sure no one contemplates that at this point.
But there are people who spend 24 hours a day thinking about
stuff like this.
The other question I have about it is, have you given some consideration, with this early retirement argument where it incentives
an early retirement, the way the retirement system is set up, the
sooner you retire then you are cutting the amount of your monthly
annuity over a long period of time.
Mr. PURCELL. That is true.
Mr. MARCHANT. So you have an offsetting, the fund itself has an
offsetting compensation. So the fund itself, the quicker someone retires, once it gets to a threshold and they retire, they are going to
receive a diminished benefit
Mr. PURCELL. Forever.
Mr. MARCHANT [continuing]. From their retirement. Yet you have
the temporary employment capped over here, as best I can tell, at
five half years, five or six half years. So that if you incentivize
someone to retire at age 55, that could have worked until 65, then
their benefit at 65 from the fund would be much higher and a person 55 could take a significantly less amount. Then it would be
fairly shortsighted on that persons part to limit himself to five half
years for his total exposure to Government pay, with no additional
benefit.
Mr. PURCELL. True. The way this legislation is drafted, I think
it is very significant that, for instance, the 6,240 hour cap, which
is equal to three full years, the way this is written, you couldnt
work three full consecutive years, because you are limited to halftime in any 12 month period. If that werent there, if the only limit
were, say, 6,240 hours, I think the bill would present problems in
creating adverse incentives for people to retire to 56, 57, whatever
their minimum age is, begin the pension and go back to work.
The way this is crafted, that would be difficult to do, because in
most cases, you would have to have a gap. You could, I suppose,
work part-time, because actually it is a limit on hours.
Mr. MARCHANT. Yes, they could string it out over
Mr. PURCELL. You could string out part-time work over a longer
period of time. That is one reason I was suggesting that perhaps
a time limit initially for OPM to figure out if that is happening,
come back in five or 10 years and say, we need to tweak this, because something is happening we didnt expect.
The way it is crafted now, it does at least limit the possibility
that somebody would say, ah, I know I have this rare skill that
they need, I am going to retire tomorrow and come back and collect
both.

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Mr. MARCHANT. Mr. Chairman, my last question will be, even
though I am very much for this, the other thing that I think is a
potential abuse is for someone to come back as a consultant.
Mr. PURCELL. Which they can do now. As far as I know, if you
retire from the Federal Government, come back on, say, a personal
services contract, you will be collecting both that contract money
and your pension. I may be wrong about that, but I think you can
do that.
Mr. MARCHANT. But I mean, the job description in itself under
this structure would just be to consult.
Mr. PURCELL. Yes.
Mr. MARCHANT. Not a specific job title where you are coming in
and plugging this hole or doing this. I think if there is any potential abuse there, this general description of what that person does,
management consultant, training or something like that.
Mr. PURCELL. Perhaps some of these issues could be dealt with,
the last section of the bill, director of Office of Personnel Management shall prescribe regulations, perhaps some of those potential
issues could be dealt with in the regulations accompanying it, or
written after the bill was passed.
Mr. MARCHANT. I recall that our reaction to fix the problem was
very extreme. So if those regulations dont
Mr. PURCELL. Actually, if I could just inject one last thought. In
some nearby States, Maryland and Virginia, for instance, that recently experienced teacher shortages, the legislature has authorized rehiring retired teachers and saying, you can simultaneously
collect pension and annuity, with strict time limits. You can do this
for 2 years or something. And if we still have an emergency the
legislature will deal with it at a later date.
Mr. MARCHANT. Thank you, Mr. Chairman.
Mr. DAVIS OF ILLINOIS. Thank you very much.
I thank you very much, Mr. Purcell.
We will go to our third panel, which will be composed of Ms.
Maureen Gilman, who is the legislative director of the National
Treasury Employees Union. Prior to working for the NTEU, she
was the chief of staff and legislative director for Representative
Sam Gejdenson from Connecticut. We also have Mr. Daniel Adcock.
He is assistant legislative director for the National Active and Retired Federal Employees Association [NARFEA]. Prior to working
for NARFEA, he served as Executive Assistant to Assistant Secretary for Aging, Jeannette C. Takamura.
If you would both stand and raise your right hands to be sworn
in.
[Witnesses sworn.]
Mr. DAVIS OF ILLINOIS. The record will show that the witnesses
answered in the affirmative.
Of course we are delighted to have you both. We have your written statement for the record. If you would take 5 minutes and summarize your statement, the green light indicates that the full time
is available, the yellow light means you have 1 minute and the red
light means that your time is up.
We will begin with you, Ms. Gilman. Thank you very much.

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

Ms. GILMAN. Thank you, Chairman Davis, Ranking Member

Marchant, for the opportunity to express the views of the National
Treasury Employees Union on H.R. 3579.
This bill has been suggested as a solution for an anticipated lack
of qualified Federal employees needed to effectively accomplish the
important missions of the Federal Government. Many Federal
agencies today are woefully understaffed and the training, mentoring and promotional opportunities needed to have experienced employees in place, should we see large numbers of retirements in the
next few years, is not being adequately addressed.
The primary reason for this is not a lack of qualified employees
or applicants, but a lack of funding. In addition, much critical expertise has been contracted out to private businesses. NTEU believes that the real solution to current and future personnel concerns is to focus now on the recruitment and retention of talented
employees. Fundamental to this process is providing fair pay, adequate benefits, job security and rewarding work. GAO has found
that the use of current flexibilities, such as part-time work, flexible
schedules and flexi-place options improve recruitment and retention efforts, especially among older workers. NTEU strongly supports the expanded use of these options throughout the Federal
work force.
We also support Congressman Morans bill, H.R. 2780, to make
sure there is no penalty in terms of pension calculation if an employee moves to a part-time schedule near retirement. In addition,
NTEU believes that legislation introduced by Chairman Davis,
H.R. 5550, that would allow FEHBP to cover dependent children
to age 25, rather than age 22, would be a strong recruitment and
retention tool for parents of young adults, the kind of experienced
workers that the Federal Government needs.
One of the best recruitment and retention benefits that the Federal Government provides that is especially attractive to older
workers is the ability to continue in the FEHBP program with the
Government continuing to contribute toward premium costs upon
retirement. Yet the administration proposed to limit this FEHBP
option in its last several budget submissions. NTEU strongly opposed this proposal and we are pleased that the Congress took no
action on it.
While NTEU does not oppose the Federal Governments use of
reemployed annuitants, we do have some concerns with regard to
H.R. 3579, which would significantly change the rules on this practice. Currently, most agencies are allowed to waive statutory prohibitions on dual compensation or paying salaries at the same time
pension benefits are being received, under certain circumstances,
with the approval of Office of Personnel Management. These circumstances include an emergency hiring need, severe recruiting
difficulty and the need to retain a particular individual. last fall,

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regulations were amended to expand the ability to waive the dual
compensation rules for unusual circumstances.
Under H.R. 3579, OPM will have no approval authority, but
rather, agencies will be free to act without outside review. In addition, the bill does not set forth any standards that must be met in
order for agencies to reemploy annuitants without pension offsets.
It is also not clear that these appointments would follow standard
competitive hiring practices that protect merit principles and veterans preference.
Under current pension rules and the limited time appointments
prescribed under H.R. 3579, most benefits provided to other Federal employees will not be available to reemployed annuitants. Rehired annuitants would not be eligible for FEHBP coverage as employees and if they retained coverage as retirees, OPM accounts,
not the employing agency, would pay the Governmentss share of
their premiums. They would not be eligible to earn additional retirement credit or participate in the thrift savings plan, so agencies
would incur no costs for those benefits. This cost-shifting would
provide agencies powerful budgetary incentives to maximize the
use of part-time short-term annuitants, rather than hiring and promoting the full-time permanent employees needed to successfully
steer agencies through the challenging times ahead.
NTEU is not aware of any serious problems with the current
rules that allow for reemployment of annuitants. We are concerned,
however, that the proposal under consideration, while certainly intended to be used judiciously, could easily be subject to abuse, especially due to the financial incentives it will provide agencies, the
lack of standards and the elimination of OPM approval.
Thank you for the opportunity to present this statement. I will
be happy to answer any questions you might have.
[The prepared statement of Ms. Gilman follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much. We will proceed
to Mr. Adcock.
STATEMENT OF DANIEL C. ADCOCK

Mr. ADCOCK. Thank you, Mr. Chairman and members of the subcommittee. I am Dan Adcock, assistant legislative director of
NARFE.
NARFE has long held that Federal retirees who are interested
in returning to Government service ought to be able to receive the
full salary of their new job without any offset as a result of the retirement annuity they earned through prior Federal service.
NARFEs annuitant members count among our ranks agency managers, line supervisors, security specialists, computer programmers,
air traffic controllers, and law enforcement personnel.
At a time when the Nation faces critical challenges and our Federal Government faces an unprecedented brain drain, we should
not ignore my side of ready, willing, able and proud men and
women who have dedicated their careers and service to our Nation.
Indeed, the reality of our current skill shortages demonstrates the
critical roles played by civilian employees of the Government, thousands of whom are working alongside their uniformed colleagues in
locations like Iraq and Afghanistan.
After serving full careers in public service, most Federal retirees
want to stay retired. However, there is a growing number who
want to return to public service for several reasons. Some are paying for their childrens or grandchildrens soaring college costs. All
annuitants are paying higher out of pocket health care expenses
and mounting daily living expenses, including energy costs. Others
are replacing Social Security benefits lost as a result of the application of the unfair and arbitrary Government Pension Offset and
Windfall Elimination Provision.
But it is not always about money. Some retirees appreciate the
value of remaining professionally, mentally and physically engaged
through reemployment. In addition, more and more no longer care
to be bystanders with what is going on in the Middle East and with
homeland security, and they want to answer the call to public service at a time when our Nation needs their unique skills and talents.
So what is stopping them? Under current law, the wages of those
reemployed annuitants are generally offset by the amount of their
annuity. However, OPM and certain Federal agencies have the authority to allow some returning retirees to avoid the offset when
serving in positions for which there is exceptional difficulty in recruiting and retaining a qualified employee and in jobs critical to
accomplishment of the agencys mission.
Unfortunately, not all qualified retirees with in-demand skills receive a wavier. Indeed, they tell us that they would not consider
reemployment since the offset of their Federal pay by the amount
of their annuity would make their reemployed salary uneconomical.
Absent a waiver, some would be working for free, as a practical
matter, if their annuity was the same or higher than jobs that pay
a lower salary.
In fact, many crucial Federal workers avoid the red tape of the
waiver process by going to work for a Government contractor where

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the Federal annuity presents no barrier to being paid full salary
at the new job. Working for a contractor also allows Federal retirees to earn more quarters in Social Security-covered employment in
an effort to mitigate the reduction of their Social Security benefits
by the windfall elimination provision.
Should the Federal Government continue to deny itself access to
this pool of experienced professionals at these critical times? Why
pay a premium to a contractor when you can get skills of a seasoned professional basically at cost?
One way of making reemployment with the Federal Government
more attractive to skilled and motivated retirees is H.R. 3579, legislation introduced by Ranking Members Tom Davis and Kenny
Marchant, which will allow Federal agencies to reemploy Federal
retirees on a limited, part-time basis without offset of annuity from
salary. It is our intention that agencies use this authority to supplement and not supplant the current work force and to find annuitants with specific skills that are not presently available for hard
to fill positions.
The flexibility of working part-time is appealing to many retirees
interested in going back to work, since they are not trying to buildup their careers. What is more important for them is not missing
certain life events for work.
Additionally, some Federal annuitants, for certain aging and
physical reasons, will not consider taking full-time employment.
And some, H.R. 3579 removes many obstacles preventing or discouraging the reemployment of Federal annuitants, and it enables
the Government to hire workers with skills and talents in short
supply.
For these reasons, NARFE urges you, Mr. Chairman and members of the subcommittee, to approve this needed and crucial legislation. We commend you for your interest in enabling Federal annuitants to continue to make crucial contributions.
Thank you for inviting us to testify and for your able leadership
of the subcommittee.
[The prepared statement of Mr. Adcock follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Adcock. We
will now go into some questions.
Ms. Gilman, let me begin with you. Do you think that the Office
of Personnel Management and Federal agencies are doing enough
to recruit and retain staff to address staffing needs?
Ms. GILMAN. No, I dont, Mr. Chairman. I think that is the real
problem that we should be focused on today. There is a need to
make sure that we have talented people in place and that we are
planning for the future. I dont think enough is being done. Some
of the flexibilities that I mentioned in my testimony were recently
pointed out in a GAO report, like allowing current employees more
options to work part-time schedules, work flexi-place. Other kinds
of job options that are not being really used by the agencies would
do a lot, I think, to both recruit the talented people we need and
to retain those who might be thinking about retiring.
Mr. DAVIS OF ILLINOIS. Let me ask you also, why should Federal
retirees be subject to the dual compensation rule when private sector employees are not?
Ms. GILMAN. Mr. Chairman, if it were up to me, I wouldnt have
them subject to it. But I think Congress has put that in place to
potentially avoid abuse by retirees leaving and coming back and
getting a full salary while they are also collecting their pension. I
have heard the argument, why should they be put at a disadvantage to a private sector employee who wants to come back, but they
are still at a disadvantage if they are given the dual compensation
waiver in terms of other benefits.
Also, onboard employees are at a disadvantage because their
benefit levels that have to be paid by the agencies are going to be
higher than a reemployed annuitant. If you put the two applicants
for the job side by side, and they are going to be paid exactly the
same salary, the agency will have to put in much less money to pay
the retired annuitant than the onboard employee, because they
dont pay in anything for their benefits.
Mr. DAVIS OF ILLINOIS. Is there anything that you would, well,
let me ask you this. Do you think that this practice impacts negatively on employees who are currently working relative to opportunities for advancement or movement in any way?
Ms. GILMAN. I think it could, Mr. Chairman. One area that has
been mentioned is to bring back retirees for training purposes and
mentoring. Sometimes that can work. Sometimes if a retiree has
been out of the work force for a while, their skills and their information may not be as up to date as an onboard employee.
Also, onboard employees look at opportunities to be able to provide training or mentoring as one of the biggest opportunities to
gain experience in terms of competing for promotion. So if you are
going to give more training and mentoring opportunities to retirees,
there may not be as much available for onboard employees.
Mr. DAVIS OF ILLINOIS. Thank you very much.
Mr. Adcock, let me ask, you testified that Representative Tom
Davis bill does not end the existing dual compensation rule, but
would extend it by giving agency heads the authority to waive the
restriction for retirees who return to work part-time. Do you think
that Federal agencies are capable of policing themselves to the extent that there would be either no or low abuse or must we have

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authority etched in law to try and make sure that this would not
happen?
Mr. ADCOCK. I think the main way that abuse will be prevented
is through the fact that these workers will be working on a parttime basis for a temporary duration. So I think those issues will
be taken care of.
But you know, when we talk about whether or not, for instance,
someone who is being brought in to do mentoring has the skill set
or the current skill set. All these things have to be case by case
decisions, as any hiring decision is. At the decisionmaking level,
some of that has to be left to the Federal agency to have that kind
of discretion. But to answer your question, I think the fact that the
appointments would be temporary, under special circumstances,
and of limited duration, should take care of that issue.
Mr. DAVIS OF ILLINOIS. Thank you very much.
Mr. Marchant.
Mr. MARCHANT. Thank you, Mr. Chairman.
Looking at the OPM projections for retirements over the next 10
years, Ms. Gilman, this is obviously some information that you
have had a chance to look at, do you believe under the current system that we have that they are going to be able to successfully recruit this many new employees?
Ms. GILMAN. I would hope that they would be planning for that,
and that they would be beginning to deal with it, both to recruit
and to retain enough qualified employees to do that work. But I
also think that if there is a need to bring back annuitants that
there should be some standards, similar to what are in place today.
If an agency can demonstrate that it has unusual circumstances or
particular needs, they can go to OPM, get a waiver and bring employees back if they need to.
But if we give them a blank check, even if it is to bring back employees part-time, if there are no standards and no outside review,
our concern is that will become a first option instead of maybe a
second or third option.
Mr. MARCHANT. So the previous testimony we heard that this
would not even represent more than one-third of 1 percent of the
work force, are you thinking that is not correct, or that is too low
of a projection? Because when you are talking about 60,000 people
that are next year expected to retire in 2007 [sic], 61,000 in 2002
[sic] you dont view this as a valuable tool to keep the workplace
going?
Ms. GILMAN. I think it is a tool that has been used effectively
under the current rules. I think if there is a need that can be demonstrated by an agency that the rules in place now would allow
them to rehire an annuitant. I frankly didnt hear anything in the
OPM testimony that pointed to any significant problem with the
rules that are in place now. I know they talked about this would
prevent abuse because of the part-time or short-term duration.
It is our view that if the agency has an emergency or a severe
need, they shouldnt be limited by part-time or the amount of time.
If there is one person that can do a job at the Centers for Disease
Control, I dont think we should be limiting bringing them back for
maximum 6 months at a time. If the need is there, they should be
able to come back and serve.

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But if there isnt a special need, I also dont see why the doors
should be completely flung open to bring back annuitants without
any need, any specific need.
Mr. MARCHANT. Thank you, Mr. Chairman.
Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Marchant.
Ms. Norton.
Ms. NORTON. I appreciate the testimony of both of you, offering
some insight into this issue that is not always apparent on the surface. I have to tell you, I have a hard time understanding why anybody would come back now, when you have to give up your annuity. And if it is hard to find employees, maybe you can help me out.
First, let me say I understand the search for the solutions. I dont
want to say this is off the top of my head not a good solution.
I do agree with Mr. Marchant, the way in which Federal employees are pouring out of here, I can guarantee you this, you are not
going to replace them as easily with the baby-boom quality generation. Because their opportunities throughout the private sector are
so much broader and often more attractive. So I do think this presents a very serious problem for the Federal Government. We have
had hearings on it. And I must say, nothing even approaching a
satisfactory solution has come forward. I think this is an attempt
to try to do something to shore up, at least shore up the Federal
work force. Then we have to look beneath the surface for the details.
My own sense, I wonder what your experience has been, for hard
to find positions, I dont know why anybody who has that level of
skill would want to bring it back to the Federal Government rather
than, you mentioned, contractors. I can think of a dozen places
right off hand that if you have a hard to fill position, that it must
be a position that is desired both by the Federal Government and
the private sector. Are we talking about a ghost work force here?
In your experience, you who represent retirees and Federal workers, are these hard to find workers which now requires a waiver
coming back to the Federal Government, seeking employment with
the Federal Government at all, rather than using other options,
where you dont even have to worry about keeping your annuity,
etc., which is of course when they retire, which is what they want
to do in the first place?
Who is doing this?
Mr. ADCOCK. Congresswoman, I think what happens for many
annuitants is that obviously, if they cant get the waiver, then it
is a no-brainer, they are going to go to a contractor.
Ms. NORTON. Well, just a moment. My question is why would you
want to come, you have your annuity, you have your benefits. If
you are in a hard to find employee position, why would your first
option be the Federal Government, rather than a dozen other options, which dont raise the same issues?
Mr. ADCOCK. Well, I think that part, money is obviously, compensation is a large consideration. But I think sometimes people
are led back to the Federal Government because they see what is
going on in the world and they want to do something about it.
Ms. NORTON. For love, not money, maybe.
Mr. ADCOCK. Right. I think that is a legitimate motivation why
people will do it.

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Ms. NORTON. And with the baby-boom generation, I am sure you
can find some of that. I must say, when Federal employees retire,
now we have them retiring early. It doesnt cross my mind that
they would any time soon be looking for reemployment here. It may
be as workers get older and as you indicated, Mr. Adcock, this was,
and it often is, very satisfying work, they want to come back and
do that work. But I really wonder if what we are playing with here,
I must say that I do agree with you, Mr. Gilman, while this may
be a stop-gap measure that at least we ought to try, we are fooling
ourselves if we think that the Federal Government can lumber
along, providing, for example, the same health benefit ratio that it
did whenever the program was set up, and the rest of it, and still
get the quality of work force you need in a post-9/11 work force,
I dont know what it will take to make us understand.
But let me ask you about the part of your testimony that talks
about other options, as part of what we are talking about here
when we talk about benefits, and all of what we are talking about
is costs. You mentioned flexible schedules, for that matter, parttime work and flexi-place options. Is it your impression that those
arent available today, generally, in the Federal Government?
Ms. GILMAN. It is my understanding that the authority for agencies to use those options is currently available. It is a question of
agencies using them. In some cases, agencies will say they dont
have adequate funding. But for many of those potions, there is
really no increase in funding. It is a question of just trying to think
of new ways to do things, using telework, allowing employees to
work from home.
Ms. NORTON. What about flexible schedules?
Ms. GILMAN. Flexible schedules, the availability of that is there
for agencies today. It is very attractive to employees and especially,
as I understand, a recent GAO report found, to older employees
who may be trying to decide whether they are going to retire or
not. I think everyone would agree that it would be more cost-efficient and beneficial to everybody if they decided to stay on as an
employee rather than retire and then face whether or not agencies
had to do a compensation wavier to bring them back. If we could
provide them with incentives to stay on, I think everybody would
agree that would be the best way to do it. They have said flexible
schedules, part-time work and working from home are some of the
things they are very interested in pursuing.
Ms. NORTON. With those, are the benefits the same with flexible
schedules?
Ms. GILMAN. Yes.
Ms. NORTON. Part-time work?
Ms. GILMAN. Yes, as I understand it, they are.
Ms. NORTON. One then is left to wonder, Mr. Chairman, I would
wonder and perhaps staff could do some groundwork on this, the
extent to which flexible schedules, we know about telework or flexiplace. But flexible schedules, part-time work, in a world where we
know we are losing out on many women, very highly educated
women, who given the child care situation in the United States, the
only advanced country that does not provide educational child care
as a matter of course, do decide to stay home, some considerable

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number of them, for some considerable years of their early years
of a childhood, early childhood years.
I do think the subcommittee should explore the use of, for example, part-time work and flexible schedules and how much it is being
used, and for that matter, how much is being promoted by OPM.
Yes, part of the reason people are retiring early is they say, hey,
look, in this job I not only give my all, I give much more than 9
to 5. So the notion of retaining these employees in which we have
invested so much, rather than have them go out on early retirement, work as you say, for a contractor or somebody else, that
seemed to me to be penny-wise and pound foolish.
I should think that while this may be one option available to us,
I want to know why they are not using more part-time work and
flexible schedules. I know that they have promoted, because this
subcommittee has promoted so-called flexi-place options, the congestion of the roads, lots of things recommend that.
But I certainly would like to know more about flexible schedules
a part-time work, considering parents, I mentioned women, but I
am not only talking about women by any means.
I am also very concerned about bringing to the Federal work
force one of the most contentious issues in the private sector work
force, and that is essentially a two-tier work force, a work force
that gets paid and has benefits and a work force that does not.
Now, we know that these retirees got certain benefits all along, and
they certainly are in the same position as the private sector employees at Safeway, where they now have two-tier. But I am concerned about those kinds of controversies.
I am also concerned as to whether or not this has ever been done
or perhaps should be done on a pilot basis to see if it does any
good. Because it is hard for me to find, to understand why the
agencies and certainly why the retirees would go here as a first option. OK, they come back, lets say we dont any longer have to,
what makes it impossible to come back now, not receiving your annuity, but essentially no benefits, not thrift savings, not apparently
any of the benefits. Maybe they dont need the health benefits because they get Medicare.
I can see what the benefit is to the Government. It is certainly
going to save a lot of money. I am certainly not against that. The
question is cost benefit, where are you going to put your money,
are you building a Federal work force?
I would like to ask you, Ms. Gilman, what do you mean by standards? Because I certainly am not convinced that if they could, agencies would not go to this option if it affected their budgets at a time
of very tight budgets. And look, it is going to be that way. We have
a huge deficit, an ongoing war, it is going to be that way. So when
you say standards, I would like to spell that out a little bit. Standards that would prevent abuse, would prevent saying, we will do
this just to save some money, I dont care if this whole unit is parttime, my job is not to build this unit in the Federal work force, for
example, I am just here to get the job done.
Ms. GILMAN. I would see standards being some kind of special
need. There are standards
Ms. NORTON. That is what we have now, Ms. Gilman.

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Ms. GILMAN. It could be broader than now. But as I said, I
havent heard
Ms. NORTON. Well, now it is hard to fill jobs. So if it is not hard
to fill jobs, do you have any suggestions on what kind of special
need might keep abuse from occurring, or it is simply being used
to save money without anybody caring about the job to be done or
the need to build a Federal work force in the particular positions?
Ms. GILMAN. One of the things that I did not hear OPM say, and
I havent heard in the argument, is that they are having a hard
time hiring particular people. Yes, there is
Ms. NORTON. You did not hear them say that?
Ms. GILMAN. I did not hear them say that. That is something
that I would be
Ms. NORTON. No examples were given of the kinds of positions
that are being filled with annuitants, with waivers?
Ms. GILMAN. The kinds of positions that they would like to use
these waivers for, I have not heard that. Yes, we are expecting the
possibility of a large number of retirees in the future. But as I said,
we havent heard what exactly the problems are with the current
situation. That is something that I would be interested in hearing,
is specific problems with the program that is in effect today.
Ms. NORTON. Mr. Chairman, I understand the Department of Defense already has this and can do it without
Ms. GILMAN. And they have standards, they have their own
standards similar, they dont have to go to OPM, but they have to
have a particularized need for a particularized kind of skill or employe.
Ms. NORTON. So a hard to fill?
Ms. GILMAN. That is part of it, yes.
Ms. NORTON. So we trust them, because there may be a number
of DOD jobs that are hard to fill.
Ms. GILMAN. Yes.
Ms. NORTON. And of course DOD knows they are going to go
through a contractor, knows where to find them if they leave.
Mr. Chairman, I dont know if we have any information on the
DOD experience. But one of the problems I have with this bill is
we already have an agency that can do it. At least they have the
waiver authority, they would certainly have hard to fill positions.
I would feel more comfortable knowing something about the experience that we already perhaps have, and anything DOD could tell
us about the kinds of positions they might have filled if they
werent hard to fill.
We also could find out from them whether they have abused the
matter, by looking at what is happening to them. I dont know if
a GAO report has ever been done on what GAO does.
But this may be the only answer that is available now. But to
the extent that we have any experience, it does seem to me that
we would want to document that experience before moving forward
with this bill.
Thank you very much, Mr. Chairman.
Mr. DAVIS OF ILLINOIS. Thank you very much. Let me just ask,
are we finding that with people living longer, having a different
health status in terms of health status improvement, and early retirement, that there is a greater desire on the part of people who

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retire to have something else to do after they have retired which
may be work or may be something else?
Mr. ADCOCK. Speaking for our members, I know that once they
retire, most of them want to stay that way. It is something that
they have earned, they are looking forward to it, they want to
spend time with their grandchildren and enjoy the good life.
But I think that what happens for many people is they go from
working 1 day, basically going from 60 to zero and being retired
the next day, and trying to figure out, what are they going to do
with the rest of their life. I think maybe some of them over a number of years decide, well, there are really things that I really miss
about work. The idea of coming back on a temporary part-time
basis is something that is really appealing, particularly if there is
something that they have some sort of special skill that is in demand or that addresses some national crisis or priority that we
have right now. I think those are situations in which more retirees
are interested in coming back to work.
Ms. GILMAN. I would add that I think that is probably the case
that some retirees want to stay retired, others may want to go back
to work. Or some may want to do something in between, like work
part-time.
Mr. DAVIS OF ILLINOIS. Do you think that there are many who
are driven now by the state of the economy? I hear individuals suggest that they have a need, quite frankly, to earn additional money,
in addition to what they are receiving as annuities.
Mr. ADCOCK. I know that for retirees, that is especially true.
When you look at what their costs are, if you are in Blue Cross
Blue Shields standard option family plan, they are paying $3,400
in premiums every year. If they are in Medicare Part B they are
paying upwards of, I think it is about $98 a month now for that
premium. Then you pile on whatever out of pocket expenses they
have. Then if they are hit by the Government Pension Offset and
Windfall Elimination provision, they are not receiving any Social
Security benefits.
You get down to, there is a woman we had testify at the Ways
and Means Social Subcommittee who was affected by both the
Windfall Elimination provision and the Government Pension Offset. She had a very low annuity to start with. You are essentially
forcing people to go back and work at Wal-Mart in order to basically survive.
I think especially when we are talking about people who are on
the lower to mid-end of the annuity scale, who are really struggling
to pay a lot of these expenses, like health care expenses and now
of course energy costs, that work is not just something that is optional, it is something they have to do.
Ms. GILMAN. I would agree with that.
Mr. DAVIS OF ILLINOIS. Mr. Marchant, did you have any other
questions?
Mr. MARCHANT. No, sir.
Mr. DAVIS OF ILLINOIS. Thank you all very much.
Ms. NORTON. Could I just say one more thing?
I think Mr. Adcock makes an important case. We think of annuitants in terms of the people we see around us, this is what, a 2
million work force? I do think anybody who would want to come

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back, even under the waiver authority we are talking about, almost
certainly would be a very valuable employee. Because I believe that
there are other options for the most part. I would hate to deny
those people the opportunity to come back.
My sense is they may be very few. They may be so few that it
may do no harm if the agencies do not abuse the waiver and essentially use it in ways that would worsen our work force problem.
The way I am talking about worsening our work force problem
is leaving huge gaps of employee places that you dont try to fill
any more. Because the agency has developed the habit of, maybe
lets see if we can find an annuitant. And yet where it is our belief,
it would be the belief of perhaps the agencies that have full-time
employees who carry over from year to year would be most important.
So I think the standards part is very important. If they are not
hard to fill positions, and many agencies dont have hard to fill positions, frankly, in fact, most agencies dont have positions that are
hard to fill, I certainly believe that you need only look at the statistics on people going back to work, and even before we got to near
recession conditions, to know that many people are going back to
work to live, that the combined cost that retirees face now, even
with the pharmaceutical bill, even with Medicare, have put a real
hurt on many of them.
That is why I am very interested in who would be interested. My
own hypothesis is that they would not come out of the woodwork,
and those who did would probably be the best of the best, because
they would be coming because they loved their work in the Federal
Government. There are many, many Federal employees like that.
This has been the great and important, great wonder of our work
force. Despite all of the very bad and undeserved rap that has been
on them, it is an extraordinary work force.
The one thing I would ask the subcommittee to get is, whatever
summary of the DOD experience can help us understand what we
are talking about, or perhaps other agencies as well. But since
DOD has been able to do it, it seems to me you have a perfect laboratory right there. I guess they were supposed to do it only in
hard to fill positions. But we could then see what that meant in
some setting. I certainly think that if there are retirees who want
to come back, and I would love to see you, Mr. Adcock, or somebody
who had the capacity to do it, do a survey. If you could return, if
there were this waiver, would you do so? I should think OPM
would have done that before coming forward with this bill.
Thank you, Mr. Chairman.
Mr. DAVIS OF ILLINOIS. Thank you very much. I thank you both.
This hearing is adjourned.
[Whereupon, at 3:35 p.m., the subcommittee was adjourned.]
[The prepared statement of Hon. Stephen F. Lynch and additional information submitted for the hearing record follow:]

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