BULLETIN NO. 97-02
TO THE HEADS OF
EXECUTIVE DEPARTMENTS AND AGENCIES
Separation Incentives for Employees of Certain Federal Agencies
1. Purpose and Overview. Section 663 of the Treasury, Postal
Service, and General Government Appropriations Act, 1997 (Public
Law 104-208; September 30, 1996) (the Act) authorizes most Executive
branch agencies to provide voluntary separation incentives (buyouts)
to minimize the need for involuntary separations that might otherwise
be required for downsizing and restructuring the agencies. The Act
requires each agency that uses buyouts to reduce its full-time equivalent
employment (FTE) by one for each buyout separation.
Buyouts under the Act
are authorized for separations by retirement or resignation that
occur on or after October 1, 1996 and before December 31, 1997.
No delayed separations are permitted. The buyout payment is the
lesser of the amount based on an employee's severance pay calculation
or an amount to be determined by the agency head that cannot exceed
$25,000. In addition, agencies will pay into the retirement fund
15% of the final basic pay of any employee who receives a buyout
and is covered by the Civil Service Retirement System (CSRS) or
Federal Employees' Retirement System (FERS). Should a buyout recipient
be reemployed, including employment under a personal services contract,
in the Government within 5 years of separation, the entire buyout
payment must be repaid before their first day of employment. There
is no authority for waivers of repayment in the Act.
Generally, all Executive agencies not otherwise authorized in the
Act or other legislation to conduct buyouts at any time during Fiscal
Year 1997 are covered by the Section 663 authority and the guidance
in this OMB Bulletin. Excluded agencies with buyout authority under
other legislation will receive separate guidance from OMB, if required.
3. Attachment A provides
guidance on agency implementation of the Act's buyout program, including:
for key terms and provisions in the Act;
-- required agency
plan for use of buyout authority (referred to in the Act as "Agency
-- required reduction
in agency employment levels; and
-- reporting requirements.
4. Attachment B is
a copy of Section 663 from the Act.
5. The content of this
OMB Bulletin does not cancel or otherwise amend OMB guidance on
Section 5 of the Federal Workforce Restructuring Act of 1994 (FWRA)
(Public Law 103-226; March 30, 1994) contained in OMB Bulletin 94-04,
dated April 18, 1994.
Questions regarding this Bulletin should be directed to the agency's
OMB representative with primary responsibility for the account or
program. The Office of Personnel Management will provide further
human resources management guidance and assistance to agencies,
as well as instructions on payments to the retirement fund and on
Franklin D. Raines
[Note: Attachment B,
Section 663 of the Treasury-Postal Appropriations Act of 1997 is
not included in this file.]
OMB Bulletin No. 97-02
Voluntary Separation Incentives for Employees
of Certain Federal Agencies
Section 663 of the Treasury, Postal Service, and General
Government Appropriations Act, 1997
(Public Law 104-208; September 30, 1996)(the Act)
a. Employee - An employee
(as defined in section 2105 of title 5, U.S.C.) under the Act must
have been continuously employed for at least 3 years in order to
be potentially eligible for a buyout. This is unlike the buyout
authority in the Federal Workforce Restructuring Act (FWRA) which
required only a minimum of 12 months of current continuous employment.
Further, the Act disallows buyout payments to the following categories
of employees, including some not excluded in FWRA:
-- an employee
who, during the previous 24 months, received a recruiting or relocation
bonus, or within 12 months of the separation date received a retention
-- an employee completing
an additional period of service (not to exceed March 31, 1997)
to satisfy the requirements for a deferred buyout payment under
-- an employee in
receipt of a specific notice of involuntary separation for misconduct
or unacceptable performance;
-- an employee who
previously received any buyout payment by the Federal Government
and has not repaid such payment;
-- a reemployed annuitant;
-- an employee who
is or would be eligible for disability retirement; and
-- an employee with
statutory reemployment rights on transfer to another organization.
b. Agency - The Act
specifically excludes from the term "agency" (defined as Executive
agency in section 105 of title 5, U.S.C.) any agency that is authorized
by any other provision of the Act or any other Act (except the Department
of Transportation Appropriations Act, 1997) to provide voluntary
separation incentive payments during all, or any part of, Fiscal
Year 1997. Therefore, the agencies excluded from offering buyouts
under the Act are the Departments of Agriculture and Defense, Central
Intelligence Agency, Smithsonian Institution, Agency for International
Development, the National Aeronautics and Space Administration,
the Railroad Retirement Board (RRB) and the Office of the Inspector
General of the RRB. These agencies' buyout programs are governed
by other legislation. Separate guidance will be issued by OMB to
excluded agencies, if required.
c. Strategic Plan -
Before an agency may obligate any resources for buyouts, the Act
requires the agency to submit its buyout plan to the House and Senate
Committees on Appropriations and the Committee on Governmental Affairs
of the Senate and the Committee on Government Reform and Oversight
of the House of Representatives. The Act requires that the plan
outline the intended use of the buyouts and include a proposed organizational
chart for the agency once the buyout separations have been completed.
The plan must identify:
-- the positions
and functions to be reduced or eliminated, identified by organizational
unit, geographic location, occupational category, and grade level;
-- the number and
amounts of voluntary separation incentive payments to be offered;
-- a description
of how the agency will operate without the eliminated positions
The Act's use of the
term "strategic plan" is not a reference to strategic plans under
the Government Performance and Results Act (GPRA). However, agency
buyout plans are expected to support the objectives of the agency's
2. OMB Review of Agency
Plans for Use of Buyouts.
Agencies that intend
to use the buyout authority shall submit to their OMB representative
a draft of the plan or plans for buyout use prior to it being submitted
to the Congress. In addition to the above cited content requirements,
the information submitted should include:
-- the timing
of buyout offers and scheduled separation dates;
-- where appropriate,
the maximum dollar amount of buyout payments if determined by
the agency head to be less than $25,000; and
-- an estimate of
the savings to be achieved in the fiscal year(s) following the
planned buyout separations.
The agency's plan or
plans may be submitted at any time and will be reviewed and acted
on generally within 10 working days.
3. Reduction in Agency
Full-Time Equivalent Employment.
A one-for-one reduction
in an agency's funded positions, measured on an FTE basis, is required
for each employee who separates by retirement or resignation with
a buyout payment. Generally, the reductions are from department-wide
totals, but may, in special situations acceptable to OMB, come from
only the department's separate component undergoing downsizing.
For buyout separations
under this Act, the required FTE reduction will be measured as the
change from the agency's actual FTE usage in Fiscal Year 1996 to
the actual FTE usage in Fiscal Year 1998. To the extent known at
that time, the President's Fiscal Year 1998 Budget should reflect
the impact of any planned buyout separations in the FTE estimates
for Fiscal Years 1997 and 1998.
Example: If the agency's
actual FTE use in Fiscal Year 1996 was 1,000 and the agency plans
to have 100 buyout separations under the Act, the agency's estimate
of FTE usage for 1998 shown in the President's 1998 Budget, and
the resulting actual FTE usage in Fiscal Year 1998, cannot exceed
Agency heads are responsible
for ensuring compliance with the Act's requirement for FTE reductions.
OMB will monitor monthly FTE reports against the agency's plan for
use of buyouts and may direct corrective action, including a freeze
on agency hiring, should it appear at any time that agency-wide
FTE reductions will not be sufficient to offset buyout separations
by the end of Fiscal Year 1998.
4. Additional Agency
Contribution to the Retirement Fund
For each employee covered
under the Civil Service Retirement System (CSRS) or the Federal
Employees' Retirement System (FERS) who is paid a buyout, the agency
will pay into the retirement fund an amount equal to 15% of that
employee's final basic pay. Final basic pay is defined in the Act.
This payment to the retirement fund is the amount determined by
the Congressional Budget Office as the required offset to meet the
"pay-as-you-go" (PAYGO) requirement in the Budget Enforcement Act
of 1990. The Office of Personnel Management (OPM) will advise agencies
on the procedures for making these payments.
5. Reporting Requirements.
Although the Act does
not include specific reporting requirements, OMB has asked OPM to
gather information on buyout activity under the Act. This data will
be needed to meet Congressional and other information requirements.
Agencies will be asked by OPM to submit quarterly reports that provide,
at a minimum:
-- the number
of employees who received buyouts under the Act for each type of
separation involved and for each geographic location;
-- the average amount
of the buyouts that were paid;
-- the average grade
or pay level of the employees who received buyouts; and
-- other information
that OMB and OPM may require.
In addition, OMB offices
will review agency implementation of buyout plans to monitor accomplishment
of planned FTE reductions and restructuring of the agency. Agencies
are advised to maintain current data on accomplishments in relation
to the agency's buyout plan.
OPM will issue separate
guidance on reporting requirements under the Act. OPM currently
collects information on buyout separations under FWRA that have
been deferred to not later than March 31, 1997. Agencies are reminded
to ensure that information is accurately maintained and reported
to distinguish between buyouts under FWRA and the new authority
in the Act.