April 2015, Volume 29, Number 2
House and Senate Pass Budgets Cutting Federal Benefits
Recently, the House and Senate approved budget resolutions that include cuts to federal benefits.
Both chambers will try to reach a unified budget through a conference committee and then approve a final resolution. However, President Obama has vowed to veto any spending measure, once the appropriations process is completed, that continues sequestration spending cuts.
Congress may be unable to pass every appropriations bill before the start of the fiscal year on October 1. This would mean that Congress must pass a continuing resolution (CR) to provide stopgap funding for agencies and discretionary programs, which has been the case every year since 2002.
The House budget resolution assumes $318 billion in savings over 10 years from federal employees and retirees.
The Senate budget resolution assumes $170 billion in savings over 10 years from federal employees and retirees.
The House budget proposes these measures, among others:
- An increase of roughly 6 percent in retirement contributions for all current federal employees;
- A 10-percent reduction of the federal workforce through attrition;
- A decrease in the rate of return on the Thrift Savings Plan’s Government Securities Fund (G Fund);
- Increasing some federal retirees’ share of their health insurance premiums by basing the government contribution on their years of service;
- Increasing employees’ Federal Employees Health Benefits Program (FEHBP) premiums by tying the government’s employer contribution to inflation, rather than the average cost of the plans; and
- Eliminating the Social Security Annuity Supplement.
The Senate budget proposes recommendations based, in part, on the suggestions of the National Commission on Fiscal Responsibility and Reform, most commonly known as the Simpson-Bowles Commission.
- The savings would result from a reduction in the federal workforce through attrition.
- A provision to create a 50-50 split in federal employee and agency contributions to pensions. This would mean all current federal employees contributing 6 percent of their paychecks toward their pensions.
- Lastly, the budget proposes changes to the FEHBP to make it more affordable for the government by reducing the agency contribution. This reduction in employer contribution to FEHBP would be passed on to employees and retirees, resulting in higher health care costs.
AFSA has signed a letter sent to the House of Representatives by the Federal-Postal Coalition opposing the House budget resolution.
You can read the letter at www.afsa.org/Portals/0/fedpostal032415.pdf. In it, AFSA argues that there has been no shared sacrifice, and it is time Congress find other ways to construct the budget beyond attacking federal employees who have dedicated their lives to serving the American people.
We will continue to fight against the attacks on federal employees and their hard-earned benefits.
Cut to G Fund Interest Rates
One of the House budget proposals that could have a big impact on retirees is to make the most popular employee investment fund in the Thrift Savings Plan– the G Fund—worthless.
The House proposes changing the fund’s interest rate calculation to save $32 billion over 10 years, because, “those who participate in the G Fund are rewarded with a long-term rate on what is essentially a short-term security,” according to a report from the House Budget Committee.
The House is saying that the G Fund pays more interest to TSP investors than is required to be paid because there is no risk of default. The G Fund’s current annualized interest rate is 1.88 percent, and adopting the House plan would drop the interest rate to 0.01 percent, according to the TSP.
Roughly 4.3 million people, current and retired federal employees and members of the military, are invested in the G Fund.
Such a change would make the G Fund virtually worthless for TSP investors, as account growth would not keep up with inflation.
House Passes “Doc Fix” Bill
On March 26, the House passed bill H.R. 2, by a vote of 392-37, to permanently repeal and replace the Medicare sustainable growth rate (SGR) formula, which determines how much doctors are reimbursed for providing care to patients covered by Medicare.
Under the SGR formula, doctors would face a 21-percent cut in payments for treating Medicare patients, which could lead to doctors refusing to accept those patients.
H.R. 2 would permanently repeal the SGR formula, after 12 years of Congress passing short-term “doc fix” measures to prevent those cuts. The bill provides a modest 0.5 percent increase in payments for the next four years, and transitions to a performance-based payment formula.
To partially offset the cost, the bill will increase premiums for higher-income Part B and Part D participants starting in 2018. Premiums would increase by up to 15 percent for individuals with income around $133,500 ($267,000 for a couple).
FEHBP “Self Plus One” Option
Federal employees and retirees covering only two individuals in a self-and-family plan under FEHBP should be able to reduce their health insurance premiums beginning in 2016 by switching to self-plus-one coverage.
In its annual “call letter” to FEHBP plans, the Office of Personnel Management stated that insurance providers cannot charge higher premium rates in 2016 for the self-plus-one option than the rates for the self-and-family option. The actual premium rates won’t be known until Open Season this fall.
Furthermore, catastrophic limits and deductibles must be less than or equal to those in self-and-family plans. Copays and coinsurance amounts cannot vary by enrollment type. In other words, lower premiums cannot be offset by higher out-of-pocket costs.
Currently, FEHBP offers self-only and self-and-family coverage; those enrollees with spouses and no dependents must choose the self-and-family plan if they want coverage extended to their spouse. After years of pressure, the government has agreed to a third option: the self-plus-one plan.
Some FEHBP experts believe future premiums of self-plus-one plans could go up if a large number of retirees move into them (by how much will depend on the enrollment patterns). Retirees are generally considered “heavy users” of health insurance because their medical bills are higher than younger employees and most likely higher than when they were younger.
If larger numbers of retirees shift over to the self-plus-one plan, their premiums would be adjusted upward each year and it is possible that, over time, the self-plus one plan could carry higher premiums than some family plans.
Regardless, next year, according to OPM, the self-plus-one plan cannot be higher than the self-and-family plan, so it will be a good idea to take advantage of the lower premiums while you can!
Vote in the AFSA Governing Board Election
The 2015 elections of AFSA officers and constituency representatives is underway. Details about the election, including the rules, and proposed AFSA Bylaw Amendment, can be found at www.afsa.org/elections.
Candidates’ campaign literature, along with a ballot, has been made available to members on the AFSA website. Campaigning through employer email by any member is prohibited (with the exception of the three pre-approved candidate email blasts).
Ballots were distributed on April 15 by email if you have a valid email address on file with AFSA, or by printed ballot via the U.S. Postal Service. If you do not receive a ballot by May 6, please contact firstname.lastname@example.org.
On June 4, at 8 a.m. EST, the printed ballots will be picked up from the post office in Washington, D.C. Online voting will also be available until June 4, at 8 a.m. EST, when the voting site will close.
Here is the list of 2015 Candidates:
Matthew K. Asada **
Barbara Stephenson *
Bill Haugh *
Charles A. Ford *
State VP (1)
Angie Bryan *
USAID VP (1)
FCS VP (1)
Retiree VP (1)
Charles A. Ray **
State Representative (11)
Brynn C. Bennett **
Lawrence Casselle *
Ronnie S. Catipon
John Dinkelman *
Eric Geelan *
Josh Glazeroff *
Margaret Hawthorne *
Steven M. Jones
Pat Kabra **
Philip G. Laidlaw *
Neeru Lal **
Ronita Macklin **
Steve McCain **
Homeyra Mokhtarzada **
Peter Neisuler *
Erin O’Connor *
Leah Pease *
Dan Spokojny **
Sam Thielman *
Tricia Wingerter *
Joel Wisner **
USAID Representative (2)
FCS Representative (1)
Retiree Representative (4)
Patricia Butenis *
Dean Haas *
Alphonse F. La Porta *
* Member of the Strong Diplomacy slate
** Member of the Future Forward AFSA slate
Retiree Spotlight: Interview with Bruce Byers
Born in Texas and raised in a U.S. Air Force family, Byers went to high school in Albuquerque, college in Munich and graduate school in College Park, Md. He served in Tehran, Mumbai, Vienna, Kabul, Bonn, Warsaw, Manila and D.C. From 1995 to 1996, he served as AFSA’s USIA vice president. He retired in 2000 and worked as a WAE. In 2009, he retired fully and focused on writing. Byers married his Munich sweetheart while attending university there. The couple have three children and live in Northern Virginia.
AFSA: What got you into writing and culture?
As an Air Force family, we moved around a lot. I read adventure and science fiction books and wrote about what I read. My teen years in Albuquerque were very involved in Scouts. Unsettled in high school, my French teacher saw something in me and got me to join the French club, which opened my eyes to different cultures. She also challenged me to read serious books; Homer’s Odyssey was a favorite due to our frequent moves and adjusting to new locales. A young FSO at a career day opened my eyes to a diplomatic career. After graduation, I moved to London and traveled Europe to find a college program that would accept me. UMD had a 2-year program in Munich; I started there in fall 1961. In 1963, I transferred to the Ludwig Maximilian University to study history, Latin and German. In 1965, UMD connections got me to College Park Md for graduate school.
AFSA: What influenced your career choice?
At UMD, Prof. Gordon Prange, Gen. Douglas MacArthur’s chief historian in Japan and author of Tora! Tora! Tora!, was my adviser; he urged me to use my knowledge of Germany and its history. I wrote a thesis on the German Communist Party, spending long hours in the Library of Congress doing research. In 1966 I took the Foreign Service exam but didn’t pass; I figured I’d been out of the U.S. too long. But I loved research and landed a job as an intern at NASA. From 1967 to 1970, I researched and wrote a history of the final reconnaissance program prior to the Apollo lunar landings, which NASA published: Destination Moon: A History of the Lunar Orbiter Program. In 1971, I passed the FS exam. NASA also offered me a job that I had to accept by June 30. By fortunate accident I met USIA’s deputy director during a conference at UMD. I explained my job dilemma to him, and my “sign on” date at USIA was moved up to June 21, resolving the dilemma.
AFSA: Did you keep writing?
My writing had been technical, based on historical research; but on my first assignment to Tehran, I wrote descriptive letters to my parents, all of which have been saved. In Mumbai, I wrote about a multiethnic, multilingual country as vast and culturally diverse as Europe. I also wrote a dystopian novel featuring my alter ego; depicting a future America where government exerts its influence through electronic media via “tuning,” presaging today’s social media and electronic monitoring. In 1979, I was press attaché in Kabul when Amb. “Spike” Dubs was killed. I served in Warsaw from 1990 to 1993, a fascinating time. In the mid-90s I served as USIA AFSA vice president, and after a last overseas posting to Manila, I retired from State in 2000. Freed from government work, I wrote short stories about what I had experienced in foreign cultures. From 2001 to 2008, I did WAE work supporting IVP visitors programming and critiquing historic cables. I retired, retired in late 2009.
AFSA: Retired, retired?
Now I focus on writing and gardening. In 2013, I returned to Albuquerque for my French teacher’s induction into the Silver Horizons Senior Hall of Fame for her decades of work in education. It was our first meeting in 52 years. Now in her 80s, she was still helping Hispanic and Native American students prepare for college. I thanked her for the profound role she played in guiding my own life’s trajectory. The visit inspired me to write about my cross-country adventure on a bus to Montreal and the voyage to Europe with 640 other students in 1960. The result is my novel, The Extraordinary Journey of Harry Forth. I chose to self-publish my book and I signed a contract with Author House. This gave me control of the entire process: I paid for their publishing services—to date about $3,500. Sales are not guaranteed, but royalties can be up to four times the traditional six percent most publishers offer. I welcome readers to visit me at www.harryforthsadventure.com or email me at email@example.com to address writing and authoring issues. I look forward to participating in AFSA’s second annual Book Market on November 19, where I will discuss my novel, research and writing experiences.
$950,000 Gift Made to the AFSA Scholarship Fund
In March 2015, the AFSA Scholarship Fund celebrated a $950,000 memorial gift from Linda K. Fitzgerald, a Foreign Service employee from 1962 to 1983.
This is the largest bequest ever received by the AFSA Scholarship Fund, and the funds have been deposited into the AFSA Scholarship Fund’s portfolio. The endowment now stands at $7.3 million dollars, all of which comes from generous contributions. No AFSA member dues go toward the Scholarship Fund.
This extremely robust and beneficial program has disbursed more than $4 million to 2,200 students in the last 25 years—all children of Foreign Service personnel and AFSA members.
A Commemorative Lunch
On March 31, AFSA hosted a commemorative lunch to celebrate this gift, Fitzgerald’s life and the AFSA Scholarship Program’s success.
Ms. Fitzgerald’s gift will be used as college aid in her name, bestowed on children of Foreign Service employees whose parents are AFSA members.
Specifically, it will be used to establish a more substantive $2,000 Community Service Award in her name under AFSA’s Merit Awards Program to be bestowed on high school seniors with Foreign Service parents. In addition, approximately six new memorial scholarships ranging from $3,000 to $5,000 each under the need-based Financial Aid Scholarship Program for Foreign Service college undergraduates will be awarded in her name.
Ms. Fitzgerald’s first assignment was with the Department of State, as secretary to the DCM and political section in Tehran. Two years later, she transferred to the U. S. Information Agency and worked there until her retirement. Other overseas postings included Helsinki, Paris, Saigon, Tokyo, Tunis and Warsaw. She provided all aspects of management support from finance, personnel, contracts and leasing to security and logistics. Ms. Fitzgerald was raised in Hamilton, Ohio, and retired there. She never married and passed away in December 2013.
Denise Herrmann, a 25-year friend of Linda Fitzgerald, attended the AFSA lunch and will act as the scholarship contact for the Linda K. Fitzgerald Memorial Scholarships. “I am happy that Linda gave back to the profession that she so dearly loved,” she stated, adding, “It will be an honor to display the AFSA Foreign Service Medallion on Linda’s burial headstone that shows everyone she was a proud member of the Foreign Service.”
May 1 Reception at AFSA
On May 1, during AFSA’s Foreign Affairs Day reception in honor of the Foreign Service, we will recognize some of this year’s winners of the AFSA merit awards and the donors who make the awards possible. The high school seniors, all children of AFSA members, were selected for their outstanding academic and art achievements.
The reception will take place at AFSA headquarters, 2101 E Street NW, from 3:00 to 5:00 p.m. If you are attending Foreign Affairs Day this year, we hope that you will be able to join us for this reception. Please RSVP to firstname.lastname@example.org if you are able to attend.
For more information on applying for an AFSA college aid or establishing a scholarship, please contact AFSA Scholarship Director Lori Dec at (202) 944-5504 or email@example.com.
For more information on the AFSA Foreign Service Medallion, contact Retiree Counselor Matt Sumrak at (202) 719-9718 or firstname.lastname@example.org.
AFSA Speakers Bureau
In February, we printed the article, “AFSA Needs Domestic Diplomats,” and the response has been amazing. The AFSA Speakers Bureau has since doubled in size to more than 300 members.
But, we aren’t just passively waiting for the public to ask AFSA for speakers; we are asking AFSA members to seek out groups and venues. Already, we’ve received new requests for speakers to present to high school students, university clubs, alumni groups, civic and religious groups, and professional associations. We have more than 220 Speakers Bureau members in the Washington, D.C. area, and encourage members throughout the country to participate.
So, especially if you live outside the D.C. area, please go to www.afsa.org/speakers to sign up. We will send speakers an electronic information packet with basic information on AFSA and the Foreign Service. To introduce or suggest a venue for an AFSA speaker, email email@example.com and include “Speakers Bureau Opportunity” in the subject line. We look forward to continuing to grow support for the Speakers Bureau, a privilege of AFSA membership, which builds our Foreign Service legacy.
AFSA Memorial Tribute Site
You served together, representing U.S. diplomatic interests in often difficult and dangerous circumstances. The online AFSA Memorial Tribute honors the service to their country of all deceased Foreign Service members. They are a part of the Foreign Service family, and AFSA wishes to honor their memory by creating a lasting memorial for them.
The memorial will become even more meaningful as AFSA members share their fondest memories and stories of their deceased colleagues, family members and friends. Pictures and biographical information can be submitted by sending information firstname.lastname@example.org with the subject line “Online AFSA Memorial Tribute.”
To visit the Memorial Tribute page, go to www.afsa.org/tribute, log in using the same username and password you use to access the members-only pages of the AFSA website. We invite you to learn more about those who have served in the U.S. Foreign Service and join us in respecting, honoring and remembering them.
AFSA Online Community
Just in time for the upcoming AFSA Governing Board elections and the proposed bylaws amendment to right-size the Governing Board, the new AFSA Online Community provides an unprecedented opportunity to engage on these and other issues with fellow AFSA members.
Participate in the community at www.afsa.org. Click on “Login” (at the top right of the page). Once on your member profile page, click on the “AFSA Community” tab.
The home page gives you an overview of the latest discussions, most active members and announcements. Check out the “Code of Conduct” on the top right of the page. The website is broken into sections: “Communities” lets you see what various groups are discussing; “Network” helps you connect with other members; “Browse” lets you review discussion threads; and “Participate” enables you to post a message or join a community.
Log on and play around. The AFSA Online Community is a powerful new communication and networking tool for AFSA members, with more than 1,400 members already participating!
Want to Join the Foreign Service Retirees Investment Club?
The Foreign Service Retirees Investment Club has openings now for new members. The club members study stocks and make investments.
They meet the fourth Monday evening of each month in McLean, Va. at the Dolley Madison Library.
Those interested should call Louise Crane at (301) 942-2692 or email her at email@example.com.
Please direct any questions that you may have to our in-house expert on retirement issues: