Federal Employment: Impact of the President's Budget on Federal Employees

GAO discussed the President's budget proposals affecting federal employees, focusing on: (1) the 1995 pay increase limit; (2) the reduction of the federal workforce; and (3) charging federal agencies the full share of accruing costs of the Civil Service Retirement System. GAO noted that: (1) the President's proposal would limit the 1995 pay increase to 1.6 percent, which will delay full implementation of the 1990 federal pay reform law; (2) limiting pay increases could inhibit the government's recruitment and retention of high-caliber employees, but deficit reduction could necessitate such a limit; (3) the President's proposal would reduce the federal workforce by 252,000 positions by 1999; (4) any employee reductions should be strategically planned to avoid impacts on service delivery; (5) downsizing decisions should be based on efficiency and managerial spans of control; (6) the President's proposal to charge agencies the full share of accruing retirement costs is consistent with a GAO recommendation to recognize the full cost of providing unfunded retirement benefits; and (7) that accounting change would not increase the deficit, since federal retirement funds are adequately funded.