UPDATED: Retirement systems are top priority

Editor's Note: This story was updated at 11:10 a.m. Feb. 14, 2006. The Office of Personnel Management added a comment Feb. 14 to clarify that the federal retirement systems modernization project will be funded partly through no-year funds, which refer to any unspent funds that are carried forward from one year to another. OPM has budgeted $43.2 million in fiscal 2007 for modernizing the federal government’s retirement systems. That $43.2 million includes a new budget request for $26.7 million and $16.5 million carried over from fiscal 2006, OPM spokesman Michael Orenstein said.

Modernizing the federal government’s retirement benefit systems is the Office of Personnel Management’s No. 1 systems priority in fiscal 2007 and beyond, OPM officials said at a recent budget briefing. The estimated completion date for the multiyear retirement systems modernization project is 2009. OPM officials estimated its cost at $162 million.

In fiscal 2007, OPM officials requested $26.7 million for the modernization project and $1.5 million to hire additional employees to speed up the current manual processing of retirement benefits. “This allows us to hire additional employees to continue to work the backlog while we bring the automated system online,” said Clarence Crawford, OPM’s chief financial officer.

OPM processes retirement benefits for about 5 million employees of the federal executive, legislative and judicial branches and the U.S. Postal Service. “It’s a very important system to get up and running,” Crawford said.

OPM has awarded no contracts yet. “We expect that to happen very shortly,” said Robert Danbeck, the agency’s chief human capital officer.

The agency now stores all federal employee retirement documents in Boyers, Pa. “It’s a huge facility, and there are thousands of cabinets,” Danbeck said. “If you were to lay them end-to-end, they would go from Washington, D.C., to Baltimore and start to come back.”

At their budget briefing, OPM officials also highlighted a $2.1 million request for performance-based management activities as groundwork for the Bush administration’s proposal to change the federal employee pay system. “We are going to be focused on training and getting agencies doing the performance analysis we think is necessary for future legislation,” said Nancy Kichak, associate director for strategic human resources policy at OPM.

No lawmakers have sponsored the proposed legislation, known as the Working for America Act. But OPM officials described a provision in the president’s fiscal 2007 budget that resembles a piece of that pay-for-performance proposal. A 2.2 percent civilian pay increase in the president’s fiscal 2007 budget includes a request to use part of that overall increase for a special rate increase for targeted purposes.

The budget proposal asks that the total 2.2 percent increase be divided three ways among a base pay increase, a locality pay increase and a special rate increase, said Donald Winstead, deputy associate director for pay and policy at OPM. “That’s a change from the past where the overall increase typically has been divided only between a base pay increase and a locality pay increase,” he said.

Winstead said the special rate request reflects the administration’s desire to have pay flexibility for hiring and retaining employees. “The idea here is to send a signal that the administration believes that we need to be adjusting pay in a smarter way by being more strategic and by giving the president the flexibility to adjust pay by occupation, by grade level and by location where we have significant recruitment and retention problems,” he said.

OPM officials highlighted some of the themes in the administration’s fiscal 2007 budget request. Those themes include:

  • Implementing personnel reform and improving performance management.

  • Improving retirement benefits administration.

  • Introducing a dental and vision benefits program.

  • Preparing to attract employees to the federal workforce of the future.

  • Continuing to improve the hiring process.

  • Expanding e-government capabilities.

  • Meeting goals for security clearances as set forth in the Intelligence Reform Act.

  • Enhancing outreach to stakeholders and constituents.

  • Improving OPM’s internal management by stressing better customer service, greater professional development and increased employee satisfaction.

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