The Foreign Service Journal, April 2008

R ecently, the State Department’s Office of the Inspector General released a sensitive but unclassified report that included a frank appraisal of the Office of Retirement. It notes that HR/RET has long been known for poor and incon- sistent customer service due to a number of factors, including an inadequate, outdated IT capability and longstanding weak- nesses inoffice staffing, organization andoperations. According to the OIG, these weaknesses include inadequate or lack of staff training, supervision and accountability; lack of standard oper- ating procedures and business practices; and workload man- agement andperformanceproblems. Theseweaknesses are aggra- vated by an increasing workload and chronic vacancies. The IGpointedout that, with the support of the director gen- eral, the HR/RET director was addressing these problems with the addition of positions (in particular, deputy, supervisory and support systempersonnel) and the introduction of a structured trainingprogram, standardoperatingprocedures anda case-track- ing system. The report recommended that the planned RET reforms and improvements be implementedandprogress reports be provided to customers and management. In its key judgments, the report concluded that if these efforts fail toproduce results, the department shouldassess the feasibility of transferring the function to a shared services center, whether inside or outside the department. The IG commented that out- sourcingneednotmean eliminating retirement services fromthe State Department; a scaled-down office could remain, as is like- ly needed, to provide in-person counseling and other services, such as assisting with the most complicated cases. Finally, the report recommended that the department determinewhether it is advantageous to revisit the possibility of drawing funds from the ForeignServiceRetirement Trust Fund topay for these func- tions, such as developing andmaintaining a new IT system, and to seek reimbursement, if due, fromother agencies forHR/RET services. The problems inHR/REThave persisteddespite efforts by its directors and,more recently, newconsumer and supervisoryper- sonnel, and the development of the “R-Net” online retiree infor- mation service. What has been lacking is a department com- mitment to first-class retirement services and the willingness to make the essential management decisions and provide the nec- essary level of resources and support to make this happen. The 20-year failure to institute an IT system for annuity calculations speaks for itself. Retiree counselors continue to performmany annuity calculations by hand, a state of affairs that invites human error and staff demoralization. TransferringHR/RET functions to another entitywould sim- ply shift the problem. If the office were moved to Charleston, access to services would become even more remote for retirees. If theOffice of PersonnelManagement—which administers the Civil Service retirement systems and a wide variety of other sys- tems —were to take over our retiree functions, there could be a temptation for Congress to conclude that there is no need for a separate Foreign Service Retirement System. The distinctions between the ForeignService andCivil Service couldbeobscureddespite very real practical differences. Themost significant is the use of different formulas to calculate annuities for Civil Service employees, whomay work until age 65, and for ForeignService employees, who are subject to anup-or-out pro- motion system. Outsourcing to aprivate companywouldbe evenmore prob- lematic. Howcould the department ensure that such a firmhad the expertiseandexperience toadministerour complicatedForeign Service retirement systems and do so with the appropriate level of concern for, and willingness to deal with, annuitants? The suggestion that the department ask Congress to permit it to use the Foreign Service Retirement Fund to pay adminis- trative andoperating costs for retiree services should alsobe con- sidered with caution. At present, those costs are funded by the department’s diplomatic and consular affairs account. As a prac- tical matter — and in all likelihood—OMB would reduce the department’s budget by any amount taken fromthe fund. While there would be few objections to a proposal to use the fund in a well-defined and transparent way to fund real improvements in retiree services, there would rightly be concern about diminish- ing trust funds simply to defray routine department costs. Using trust funds to meet HR/RET expenses raises another issue, as well: that is, identifying the costs of different adminis- trative services. Fund assets canonly be expended for the admin- istrationof the ForeignService pension systems andnot for other functions of the department, such as FEHB, FEGLI and Civil Service counseling. If functions are combined, then costswould have tobe apportioned appropriately, as is done byOPM, which receives revenue from the FEGLI and FEHB Funds. Improving retiree services isn’t rocket science. It is simplygood management. But it would require the department to commit wholeheartedly toproviding first-class retiree services and topro- viding the considerable support and resources for HR/RET to do the job. This should be a transparent process, one in which the department formulates awell-designedplan formaking sys- temic improvements to its procedures, personnel, organization and technical capacity, and explains what resources and funds will be made available for these purposes. V.P. VOICE: RETIREE BY ROBERT “BILL” FARRAND AND RETIREE AFFAIRS COORDINATOR BONNIE BROWN Needed: A Commitment to First-Class Retiree Services 56 F OR E I GN S E R V I C E J OU R N A L / A P R I L 2 0 0 8 A F S A N E W S