President Trump’s budget proposal raises the prospect of massive layoffs across the federal government. While his proposals must be approved by Congress, the magnitude of the proposed cuts has put the dreaded acronym RIF — otherwise known as reduction in force — back in the Washington vocabulary.
Q: What is a RIF?
Yoder: A RIF is a government layoff. Agencies use a pecking order that favors some employees over others to save money by shrinking their workforces. RIFs, however, can be disruptive, expensive and complicated and drag on for many months, which is why agencies try to avoid them or at least minimize them.
Q: What can agencies do to avoid RIFs?
Yoder: They can cut spending in other ways, such as by putting off purchases, equipment maintenance and other overhead expenses. Travel and training also are common targets because they are paid from the same accounts that disburse employees’ salaries. They also can order unpaid furloughs of their employee — scheduled days off without pay — although that process itself can be complex. But these measures are not likely to be enough to cover the cost of the budget cuts should they survive.
Agency officials can also look to normal attrition, or turnover. However, attrition has its limits: employees don’t necessarily leave from the same jobs that managers want to eliminate and some positions simply must be filled.
One way agencies create more turnover is by offering buyouts.
Q: What’s a buyout?
Yoder: A buyout—also called a voluntary separation incentive payment or VSIP—is a cash payment to entice a federal employee to leave voluntarily. The maximum in most cases is $25,000 per person, although the payment is taxable, reducing its take-home value by several thousand dollars at least.
Employees accepting a buyout must leave by a specific date and can’t return to federal employment within five years unless they repaid the entire, pre-tax buyout amount.
The $25,000 figure has been unchanged since buyouts started in the government in the 1990s. Last year Congress allowed the Defense Department to offer payments of up to $40,000. However, under the Trump administration budget that department is set to grow substantially, making it less likely to offer buyouts.
Commonly, buyouts are paired with early retirement offers.
Q: What is early retirement?
Yoder: Voluntary Early Retirement Authority (VERA), in federal lingo, allows federal employees to retire before they hit the standard combinations of age and years of service. There are two main federal retirement systems, one called the Civil Service Retirement System and the other the Federal Employees Retirement System. The former generally applies to those first hired before 1984, now less than a tenth of the workforce—but that also means they are older and closer to retirement on average.
Under the CSRS system, employees may retire at age 62 with five years of service, age 60 with 20 years, or at 55 with 30 years. Under FERS, the first two combinations also apply. FERS employees also may retire on reaching a “minimum retirement age”—currently 56—with as little as 10 years of service, although benefits are reduced if they have fewer than 30 years of tenure, under that combination.
Early retirement offers allow employees under either system to retire at age 50 with 20 years of service or any age with 25 years, potentially subject to a reduction in benefits.
Q: If buyouts and early retirement offers don’t reduce the workforce enough to meet an agency’s budget, how does a RIF work?
Yoder: Employees within defined geographical areas are ranked according to four factors – tenure, veterans status, years of service and performance ratings, in that order. Performance ratings can be used to effectively boost the years of service credited to the employee.
Note: At the Defense Department, performance ratings are the first factor, not the last.
Employees who miss the final cut have the right to appeal. If a union represents employees at an agency, the agency must comply with terms of that contract. Such contracts can’t prevent agencies from conducting RIFs but do require them to bargain over how the RIF will be carried out and the effect on employees—so-called “impact and implementation” bargaining.
Some employees might be demoted during the RIF process, but they are eligible to retain the higher pay rate of their previous position under certain circumstances.
Employees who lose their jobs are eligible for severance pay of up to one year of salary, unemployment compensation benefits, retirement benefits if eligible, and priority placement for other federal jobs.
