National Association of Postal Supervisors Legislative and Regulatory Update – July 31, 2008

House Approves FERS Sick Leave and Thrift Savings Reforms

The House of Representatives has approved legislation that would give employees covered under the Federal Employees Retirement System largely the same retirement credit for unused sick leave as already applies to workers covered under the older Civil Service Retirement System. Also included in the House-passed measure are improvements to the Thrift Savings Plan. The conferral of FERS sick leave credit has been a legislative goal of the National Association of Postal Supervisors.

The FERS sick leave approach approved by the House last night is more generous than that originally proposed in FERS sick leave legislation introduced earlier this year by Rep. James Moran (D-VA). Under the measure approved by the House, FERS employees who retire within three years of the bill’s enactment would receive service credit, in the computation of their pension, for 75 percent of their accrued sick leave at the time of retirement. Those who retire three years after enactment would receive 100% credit for all of their unused sick leave. Moran’s original proposal would have provided a cash payout to FERS employees of up to $10,000 for unused sick leave.

Delighted with the more generous approach approved by the House, Congressman Moran in a statement said, “Our current use-it or lose-it sick leave system for FERS employees hurts productivity and increases training costs.” “We need to be incentivizing the accrual of sick leave, not encouraging people to call in sick in the weeks leading up to retirement. With today’s passage, we’re putting FERS employees on par with their CSRS colleagues, replacing a flawed approach to sick leave with one proven to work in everybody’s favor.”

The FERS sick leave provisions were included in a larger measure approved by the House that would grant the Food and Drug Administration authority over tobacco products. The bill, the Family Smoking Prevention and Tobacco Control Act (H.R. 1110), was approved by a 326-102 vote. It would require the FDA to regulate the labeling and advertising of tobacco products and ban flavored cigarettes excluding menthol.

The tobacco measure also includes provisions that would improve the Thrift Savings Plan, including the automatic enrollment into the TSP of of newly-hired eligible federal and postal employees and members of the military. It also would authorize the Federal Thrift Retirement Investment Board to establish a Roth contribution plan and self-directed investment options within the TSP. It is the addition of the Roth contribution plan option that, under Congressional budget scoring rules, would provide additional federal revenue, making possible the more generous, CSRS-like FERS sick leave formula. The Roth revenue also offsets the loss of federal tobacco taxes from an anticipated decline in smoking.

The tobacco bill, including the FERS and TSP provisions, now moves to the Senate, where its prospects are uncertain. The bill enjoyed wide bipartisan support in the House, but few days remain in the legislative calendar, and Republican leaders and the Bush administration are opposed to the tobacco provisions. The White House has threatened to veto the bill, arguing that it would disproportionately tax low-income Americans, through user fees assessed against tobacco companies to raise funds to underwrite FDA’s regulatory efforts. The Postal Supervisors and other postal and federal employee groups will continue to push for enactment.

Bruce Moyer
Legislative Counsel, National Association of Postal Supervisors