Federal workers may be told to contribute more to pensions Provision included in compromise on budget called likely to pass

October 21, 1995|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON -- As part of their drive to balance the budget, Republican congressional leaders have agreed on a plan to require federal workers to contribute more money toward their pensions.

In addition, the plan would delay by three months each year the annual cost-of-living increases in federal pensions.

The compromise plan, included in House and Senate budget proposals unveiled yesterday, would also end subsidized federal parking -- a benefit prized especially by the 360,000 federal employees in the Washington area.

In all, the Republican plan would save $10 billion over seven years.

With support from Republicans in both chambers -- and probably little resistance from President Clinton -- the package seems all but certain to become law.

"Unless there is a thunderbolt from Mount Olympus, or something, I think this is going to go through," said Rep. Constance A. Morella, a Montgomery County Republican who was active in negotiations this week. "At least it's a little less onerous than the original proposals."

Republican lawmakers from Maryland, where 300,000 federal workers live, and elsewhere were able to fend off other measures that would have cut federal retirement and health benefits.

The Republicans' budget proposals, including the federal employee provisions, are scheduled to be voted on by both the House and Senate next week and then sent to Mr. Clinton.

Even so, House Democrats complained at a news conference yesterday that the employees of Uncle Sam were being unfairly targeted as a source of money to help finance the Republicans' proposed $245 billion tax cut.

"Federal workers and retirees are being treated like a cash cow to pay for the tax cuts," said Rep. Steny H. Hoyer, a Democrat who represents Southern Maryland.

Eleanor Holmes Norton, the Democratic nonvoting delegate for the District of Columbia, noted that federal workers have already lost out this year on cost-of-living pay raises that were scheduled be about 6 percent.

At the recommendation of the Clinton administration, those raises will instead average about 2.5 percent.

In addition, Mrs. Norton noted, 33,000 federal workers in the Washington area have lost their jobs during the Clinton administration because of cost-cutting by the president and Congress.

But GOP leaders contend that federal benefit programs, which grow automatically each year regardless of the money available to pay for them, contribute significantly to the federal deficit.

Such benefits, Republicans argue, should be scaled back so that they are more comparable to benefits typically offered in the private sector.

The federal pension fund has a $1 trillion liability -- twice the size of its assets. Taxpayers will have to make up the difference.

The Republican proposal would raise federal workers' contributions to the fund to 7.5 percent, from the current 7 percent, over three years.

House leaders had also proposed to change the basis for figuring federal pensions to the top five salary years from the top three, a change that would have meant smaller pensions for many retirees. But that provision was dropped in the compromise.

Advocates for federal workers instead argued successfully for a Senate proposal to slow cost-of-living increases for retirees.

Under that proposal, which is in the GOP compromise, increases that usually take effect in January each year would be delayed until April.

The GOP plan also calls for federal workers to pay the going commercial rate for parking, even in federally owned lots.

The increase in parking fees disproportionately affects workers in the Washington area because about 75 percent of the federally subsidized lots are in the nation's capital.

Mrs. Morella said she was relieved, however, that she and her colleagues were able to squelch a proposal by the House Republican leadership to change the health insurance program.

Under their plan, the 9 million people covered would have been given a fixed amount to spend each year for insurance and told to shop around for the best deal.

"Workers might actually save money in the first year or two, but after that they would lose as health care costs rise higher than their fixed allotment," Mrs. Morella said.

Federal employee unions are still unhappy, though, because the compromise plan calls for medical savings accounts to be included among the health care options.

For those who use such accounts, insurance pays only for catastrophic illnesses. Routine medical expenses come from the savings.

If there is money left over at the end of the year, beneficiaries can spend it as they like.

"We're afraid young and healthy workers would choose the medical savings accounts, driving up the costs for comprehensive insurance for everybody else," said Beth Moten, a lobbyist for the American Federal of Government Employees.

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