The Senate Armed Services Committee’s version of the fiscal 2025 National Defense Authorization Act last week showed support for a 2% raise for DoD civilian workers and a 4.5% raise for military members. In a vote of 22-3 on June 13, committee lawmakers advanced the 2025 NDAA to the full Senate for consideration. The House passed its version of the NDAA last week.

Although the NDAA’s provisions only apply to Defense Department employees, both civilian DoD workers and the rest of the civilian federal workforce on the General Schedule would see the same percentage added to their paychecks, if the raise is enacted.

In House appropriations legislation, committee lawmakers remained silent on the topic of the federal pay raise, indicating a likely alignment with the president’s raise proposal. The GOP-led committee advanced legislation for a fiscal 2025 spending package last week along party lines. The Senate Appropriations Committee has not yet released its versions of fiscal 2025 spending legislation.

President Joe Biden’s request of a 2% pay raise for most civilian federal employees on the General Schedule, if enacted, would be the smallest annual raise for feds since Biden took office. The 2% proposal comes in contrast to the 5.2% federal pay raise for 2024, which was the largest raise for feds since the Carter administration.

Biden’s initial raise proposal in March, contained in the fiscal 2025 budget request, did not indicate a breakdown between base pay and locality pay. But in most years, presidents typically set aside 0.5% for locality pay and leave the remainder for the across-the-board raise.

For the federal pay raise, nothing is set in stone until Biden signs an executive order to enact it, which usually happens in December. Ahead of that finalization, federal unions and other employee organizations have spoken out in favor of a larger pay raise for feds in 2025, calling for a 7.4% boost rather than the 2% proposal.

Legislation titled the FAIR Act, if enacted, would offer that large of a raise to feds next year. Unions including the National Treasury Employees Union have endorsed the bill, which lawmakers first introduced in January.

“NTEU continues the fight to pass the FAIR Act,” NTEU wrote in a blog post Tuesday. “Such an investment in the federal workforce would help close the significant pay gap between federal employee and private sector pay and help the federal government compete with the private sector for talented employees.”

But many agencies are already trying to figure out how to incorporate the larger 5.2% raise into their budgets for 2024. Some agencies’ budgets this fiscal year remained relatively stagnant, while other costs, such as federal employees’ paychecks, have continued to rise.

The next step in the process toward finalizing the federal pay raise will likely come later this summer. To avoid defaulting to the Federal Employees Pay Comparability Act (FEPCA), Biden will have to issue an alternative pay plan by the end of August.

Federal employees currently earn about 27.54% less in wages than those in the private sector with similar occupations, according to the Federal Salary Council. Although FEPCA allows for a large enough annual federal pay raise to bring the federal-private sector wage gap down to 5%, no president since 1994 has incorporated the fully authorized amount.

Decades of deviation from FEPCA have caused distortion of federal pay in multiple ways. It would now cost an estimated $22 billion to bring General Schedule salaries in line with the private sector.

Any potential changes in Congress that might break away from the current pay plans could still take place this fall ahead of an executive order in December.

The post Proposed 2% federal pay raise gets support in 2025 defense authorization bill first appeared on Federal News Network.

Beginning in 2025, OPM is adding stricter eligibility requirements to try to root out ineligible enrollees in the Federal Employees Health Benefits (FEHB) program — something that’s been high on GAO’s radar for at least the last few years. A 2022 GAO report showed that OPM spends up to $1 billion each year on ineligible participants erroneously enrolled in FEHB.

“One of the biggest benefit systems in the country, and for decades, nobody checked these things,” Comptroller General Gene Dodaro told lawmakers on the House Oversight and Accountability Committee during a June 13 hearing.

Each year, GAO releases a report of the programs and spending areas across the federal government that could lead to significant cost savings for agencies. The changes that GAO recommends aren’t always complex, but to be able to implement the measures, agencies need resources, Dodaro said.

“This isn’t rocket science — I mean, it’s basically looking at those things and doing some good auditing,” Dodaro said. “It could be tackled as soon as the resources could be marshaled to do it.”

Agencies often ‘slow to act’

By putting more controls in place and creating stricter measures on who can actually enroll — and stay enrolled — in FEHB, OPM should be able to more effectively address the cost issues, GAO said. Identifying ineligible dependents has remained a top challenge for FEHB since 2018, according to OPM’s inspector general office.

“[OPM] recognized the significance of the issue, but like in a lot of cases, people are slow to act on a recommendation,” Dodaro told committee lawmakers. “That’s why we keep following up.”

Addressing the FEHB spending challenges will involve a multi-pronged approach from OPM. It’s a matter of finding and removing currently enrolled ineligible FEHB members and preventing new members from enrolling in error, while also making long-term data updates to more easily root out ineligible enrollees in the future.

OPM is already gearing up to take some of these steps beginning in 2025. Starting next year, federal employees will be required to provide eligibility documentation for any family members they want to add to their insurance coverage during Open Season. But on top of that, Dodaro said an audit of current FEHB enrollees is necessary.

“[OPM] has not yet gone back and looked at all the people that are already in the system as to whether they have legitimate numbers of … people who are eligible for services,” Dodaro said. “They could sample across federal agencies, they could get some participation. But there has to be a thorough audit done of existing people that are on the federal employee’s health benefit systems.”

OPM is planning to start on this path as well. During this year’s Open Season, agencies will be required to validate the eligibility of a random sample of FEHB participants. That sample must comprise at least 10% of elections for both Self-Plus-One and Self-and-Family enrollments. Where possible, OPM is also encouraging agencies to validate larger portions of enrollees. If agencies find ineligible members through that data collection, they’ll have to follow OPM’s instructions for removing them.

A centralized FEHB database

But another major barrier for OPM to make improvements, Dodaro said, is the agency’s lack of a central database of FEHB enrollees. Without a centralized system, it’s much more difficult to identify and remove erroneously enrolled FEHB participants.

“Current FEHB eligibility determination and enrollment is highly decentralized and requires cooperation between nearly 100 employing offices responsible for determining eligibility and enrolling more than 8 million members,” OPM said in April. “If funded, OPM could extend this same central enrollment system to all FEHB enrollments, which would allow OPM to manage and make consistent all FEHB enrollments and remove individuals who cease to be eligible for the program.”

OPM, as part of its fiscal 2025 budget request, is proposing legislation to build a centralized enrollment system for FEHB. With a central database, OPM would be able to more quickly address the problem and avoid the spending errors. That system, if it’s implemented, would be modeled after the centralized system OPM just recently built for the upcoming Postal Service Health Benefits program.

During the oversight committee hearing, Dodaro said OPM Acting Director Rob Shriver’s background in insurance should help OPM make headway and get the changes underway — as would asking the Office of Management and Budget for additional support.

“He knows what the shortcomings are,” Dodaro, speaking about Shriver, told House committee members last week. “The question he’s wrestling with is how can he implement all these things that need to be implemented as soon as possible, like getting a central repository in place.”

The post Centralized FEHB database key to OPM cost savings, GAO says first appeared on Federal News Network.

Employees have reported fraudulent FSAFEDS deductions in paychecks as recently as June 7, Federal News Network has learned. FNN could not confirm the number of employees who have continued to see fraudulent deductions. The FSAFEDS fraud was originally estimated to impact approximately “several hundred” employees.

The Office of Personnel Management operates the FSAFEDS program through a contract with HealthEquity, a third-party vendor.

HealthEquity referred all questions to OPM. An OPM spokesman said the agency was continuing to work with the HealthEquity “to secure impacted accounts, refund impacted individuals, and implement additional anti-fraud controls.”

OPM did not answer specific questions about further reports of fraud impacting the program. “At this time, there is no evidence that OPM or our vendors’ systems have been compromised in any way,” the spokesman said.

But agencies have continued to warn their employees about the potential for FSAFEDS fraud. In a June 13 notice, the Coast Guard alerted employees to OPM’s temporary pause in new FSAFEDS enrollments.

“Your vigilance is crucial in helping address this issue promptly and effectively,” the Coast Guard wrote in the alert. “FSAFEDS appreciates your cooperation and understanding and will continue to communicate any new updates with members in the coming days and weeks.”

The ongoing pause in the FSEFEDS enrollment function also applies to current employees who experience a qualifying life event (QLE), such as the birth of a child or a marriage. OPM said employees will be able to retroactively adjust their elections due to a QLE after the pause is lifted.

Employees can also submit claims for reimbursement while the pause is in effect.

John Hatton, vice president for policy and programs at the National Active and Retired Federal Employees Association (NARFE), said the situation was “obviously concerning.”

“The questions now are how OPM and federal agencies are going to identify all unauthorized deductions, and ensure every federal employee is made whole; and how quickly can OPM get FSAFEDs enrollments back up and running so this employment benefit remains available to federal employees,” Hatton said in a statement. “We’re thankful the OPM OIG has identified this problem, and hope law enforcement is able to identify and prosecute the individuals responsible for these fraudulent activities.”

FSAFEDS fraudsters used personal data

The FSAFEDS fraud stems from bad actors using federal employee information to either create fraudulent accounts or fraudulent reimbursement claims, according to one government source. The source said HealthEquity has been introducing new anti-fraud and security measures, including requirements to use Login.gov, which features multifactor authentication.

But Linda Miller, the founder CEO of Audient Group, LLC and former deputy executive director of the Pandemic Response Accountability Committee, questioned why OPM didn’t require HealthEquity to use stronger fraud controls in the first place.

“There needs to be really stringent identity theft-based fraud controls at the front end, and anybody that is administering a program like this should be expected to have a baseline level of those kinds of controls,” Miller said. “Anytime you’re dealing with a service that involves money being exchanged, [multifactor authentication] is the floor, not the ceiling, when it comes to anti-fraud controls.”

Miller said it’s easier than ever for fraudsters to leverage stolen personal data, including that of federal employees, that can be found for sale on the deep or dark web.

“In my experience with federal agencies, across the board with some exceptions, there’s not really a lot of attention on the possibility that fraud or identity theft could be happening,” Miller said. “The awareness of this issue is so small compared to the impact and the size of the problem.”

The post Some feds continue to see fraudulent FSAFEDS deductions first appeared on Federal News Network.

For federal employees, a bill pending in the Senate would bring expanded coverage of fertility treatments through the Federal Employees Health Benefits (FEHB) program.

But the Right to IVF Act, which Sens. Tammy Duckworth (D-Ill.), Patty Murray (D-Wash.) and Cory Booker (D-N.J.) introduced last week, did not garner the 60 votes needed to move forward with a floor vote Thursday afternoon. Almost all Republicans voted against the measure to advance the legislation, resulting in a 48-47 tally.

The legislation rolls together three previous bills all aiming to improve access and insurance coverage for in-vitro fertilization (IVF). In part, the bill would have impacts specifically on FEHB enrollees. One component of the Right to IVF Act aims to set higher requirements for FEHB carriers to offer IVF coverage.

The Office of Personnel Management increased FEHB carrier requirements for IVF treatments for plan year 2024. But the legislation looks to further extend the requirements of IVF to cover both treatments and medications, as well as expanding to more types of assisted reproductive technology (ART).

The Democrat-led bill currently has 48 cosponsors. Generally, it focuses on establishing broader access to IVF and ART and lowering treatment costs, which without insurance can add up to tens of thousands of dollars in costs.

“Federal workers — myself included — know how expensive paying for IVF out of pocket can be, and the cost has put it out of reach for far too many,” Stacey Young, president of the Department of Justice Gender Equality Network (DOJ GEN), a federal employee advocacy group, told Federal News Network.

The push for a vote on the IVF bill represents a mindset shift toward the presidential campaign now just five months away, the Associated Press reported. Duckworth and other co-sponsors of the bill have said the legislation is also a response to the overturning of Roe v. Wade in 2022, and other more recent efforts to limit access to fertility treatments and medications.

“Today, women and families … are worried about what comes next, including the erosion of reproductive freedoms nobody thought were at risk. This includes access to services like IVF,” Senate Majority Leader Chuck Schumer (D-N.Y.) said Tuesday on the Senate floor. “The Right to IVF Act establishes a nationwide right to IVF and eliminates barriers for the millions of families looking to use IVF to start and grow a family.”

The Biden administration also came out in support of the legislation and called for its passage.

“The administration looks forward to working with Congress … in order to protect access to fertility services, eliminate barriers for families in need of high-quality, affordable fertility services, and ensure that federal agencies have the resources to implement these benefits,” the Office of Management and Budget wrote in a statement of administrative policy Wednesday.

DOJ GEN has continually called for better federal health care coverage of infertility treatments. The group is one of many stakeholders that pushed for the advancement of the Right to IVF Act in the Senate.

“Supporting this bill should be a no-brainer,” Young told Federal News Network. “Our nation’s public servants should have affordable access to the full range of reproductive health care, including IVF and other forms of assisted reproductive technology.”

But some lawmakers, along with DOJ GEN, have said even without the legislation, OPM should still work to add more coverage for FEHB enrollees. For plan year 2024, OPM already expanded IVF coverage requirements for FEHB carriers to provide, at a minimum, coverage of the cost of drugs related to an IVF procedure for three cycles annually. OPM has also encouraged FEHB carriers to go beyond the minimum requirements — and so far, 24 carriers have done so.

DOJ GEN leaders said they’re grateful for the efforts OPM has made so far in the FEHB requirements. But the advocacy group wants OPM now to take things a step further. DOJ GEN is asking OPM to expand health carrier requirements to cover IVF treatments, on top of medications, for plan year 2025.

“OPM has the opportunity to break new ground again in 2025 by mandating not only coverage of IVF medications, but also medical treatments,” DOJ GEN wrote in a letter to OPM Acting Director Rob Shriver in May. “Medical treatments comprise the lion’s share of the cost of IVF. Many of our members can attest first-hand to the financial strains that paying out of pocket for IVF placed on them. Some had to drain their savings; borrow money from family members; or forgo treatments entirely. Others left DOJ for private-sector jobs that offered full IVF coverage, taking their invaluable skills and institutional knowledge with them.”

OPM declined to comment on whether there were any plans underway to further expand coverage requirements for IVF in the health insurance program. But some federal health experts have said with just a few months before Open Season, it’s likely too late to expand the coverage as early as plan year 2025 — though it would be possible in future health plan years.

Betsy Campbell, chief engagement officer at national infertility association RESOLVE, said the calls for better insurance coverage of fertility treatments have been growing.

“We know that hundreds of federal employees have been reaching out to OPM to request this coverage, and we’ve started to see some progress with OPM,” Campbell said in an interview with Federal News Network. “The next step is actually adding the medical procedure of IVF. So we’re hopeful that OPM will listen to their employees and add this highly desired benefit.”

RESOLVE has also been encouraging the adoption of a more inclusive definition of infertility that would help LGBTQ+ employees as well as unpartnered individuals access IVF and other fertility benefits through FEHB — but she said the efforts should go beyond simply updating the definition.

“There appears to still be some work, because donor sperm and donor eggs aren’t necessarily covered by all the plans,” Campbell said. “And that, of course, is needed by same-sex couples and non-partnered people when building their families. It’s one thing to have an inclusive definition, but you also have to cover the elements that are needed for these communities to build their families as well.”

A 2021 survey from Mercer, in partnership with RESOLVE, found that a vast majority of employers that increased fertility treatment coverage and benefits did not see a significant increase in medical plan costs.

Additionally, Campbell said, these types of benefit adjustments can significantly impact recruitment and retention of employees.

“You don’t want to provide yet another reason for them to leave federal employment to go to a private employer that is providing fertility benefits,” Campbell said. “Often employers don’t realize there’s a gap in this coverage until it’s pointed out. I think we’re seeing OPM trying to fill this gap piece by piece … Now it’s time to also cover these medically necessary procedures to help their employees build their families.”

The post Senate GOP blocks bill to expand IVF access as advocates call for better FEHB coverage first appeared on Federal News Network.

• The Social Security Administration is working quickly to try to dispel a false rumor about a payment increase on Social Security checks. As a result of a fake news article, SSA employees were inundated with phone calls earlier this month from beneficiaries who mistakenly thought they would be getting a $600 payment increase. SSA's phone lines received more than 463,000 calls in one day as a result of the rumor. SSA Commissioner Martin O'Malley has confirmed that the benefit increase is false. There will not be another cost-of-living adjustment for Social Security beneficiaries until January 2025.
  (Dispelling false rumor of $600 Social Security payment increase - SSA Commissioner Martin O'Malley)
• Agencies have a new tool to make acquisition research a little easier: The Procurement Co-Pilot tool. Contracting officers and program managers now have access to a host of data sources where they can review the prices paid on common products or find vendors across all categories and sizes that currently work with the government. GSA and the Office of Federal Procurement Policy launched the portal only for federal employees through the Acquisition Gateway. The Procurement Co-Pilot is one of several new data-driven tools that are a part of the administration's Better Contracting Initiative.
  (Procurement Co-Pilot tool officially open for business - GSA)
• Lawmakers are pressing the Coast Guard for more details about how it handled sexual assault cases. Last year, the Senate Homeland Security and Governmental Affairs Committee requested all documents related to Operation Fouled Anchor, the Coast Guard’s internal investigation of sexual assault cases at the Coast Guard Academy. Lawmakers said the records provided to Congress are highly redacted and include a large number of duplicates. Coast Guard Commandant Adm. Linda Fagan said she is working in good faith with the committee. The House Committee on Oversight and Accountability is conducting its own investigation into the Guard’s handling of sexual assault cases.
  (Coast Guard ‘stonewalls’ Senate’s investigation of service’s sexual assault cases - Federal News Network)
• The Federal Deposit Insurance Corporation is dealing with low employee morale, following reports of a toxic workplace environment. An independent report substantiates cases of stalking, harassment and homophobia at the FDIC, based on more than 500 complaints from employees. Jonathan McKernan, co-chair of a special committee FDIC created to oversee the report, said FDIC employees face significant headwinds to do their jobs. “Longer term, the state of affairs at the FDIC, if not fixed are going to be a real problem for retention and recruitment of new staff and that will be fatal to our ability to achieve our mission if we can't fix that," McKernan said.
  (‘Morale is bad’ across FDIC workforce after reports of toxic workplace culture - Federal News Network)
• A new bill looks to address a discrepancy in how Transportation Security Administration employees are compensated. The TSA Commuting Fairness Act would require the agency to study the feasibility of using cell phone data to allow employees to clock in when they reach the airport parking lot. Many TSA employees report not being compensated for the up-to-45 minute commute between the parking lot and airport checkpoints. The bill, introduced by Rep. Tim Kennedy (D-N.Y.), was passed by the House Homeland Security Committee yesterday.
  (Lawmakers advance DHS bills to ban Chinese batteries, help TSAers with commute - Federal News Network)
• Beyond looking to make spending cuts, House Republicans are eyeing several policy riders in next year’s spending bills. One policy rider tacked onto fiscal 2025 spending legislation aims to block environmental investments in the Thrift Savings Plan. The TSP board has already said that type of change would mean they would have to end the mutual fund window altogether. Another policy rider would add more reporting requirements on federal telework and office space. The GOP-led appropriations committee released its report language for several appropriations bills Wednesday afternoon. House appropriators plan to mark up those government spending bills later today.
  (Policy riders to watch as House appropriators mark up 2025 spending bills - Federal News Network)
• A record 53,000 women veterans enrolled in health care at the Department of Veterans Affairs over the past year. That is a 20% increase compared to the previous year. VA said those enrollments are driven by the PACT Act, which expands health care eligibility for service members exposed to toxic substances during their military service. Texas, Florida and California saw the most new enrollments. Women veterans are the VA’s fastest growing patient population.
  (More than 50,000 women veterans enrolled in VA health care over past 365 days, marking the largest enrollment year ever for women veterans - Department of Veterans Affairs )
• The Small Business Administration is keeping in place a COVID-19 moratorium on requiring companies in the 8(a) program to have an established office in a particular location before being awarded a construction contract. SBA said the suspension of the Bona Fide Place of Business requirement will remain in place through September 30, 2025. The reason for the extension, SBA said, is due to workforce shortages, cultural shifts in the workplace and trends favoring remote-work opportunities. SBA said these factors are making it increasingly difficult for small businesses to recruit and retain office-based employees.
  (SBA adds 15 months to 8(a) bona fide place of business moratorium - SBA)
• U.S. Space Command and U.S. Indo-Pacific Command, along with allies and partners, are in the middle of a 10-day multinational exercise in the northwestern Pacific Ocean area called, "Valiant Shield." The exercise allows the military services and partner nations to prepare to rapidly respond to crises, from humanitarian and disaster-related to armed conflict. With the involvement of U.S. SPACECOM and U.S. Transportation Command, the exercise has expanded the multi-domain collaboration needed for large-scale operations. Running through June 18, this is the 10th Valiant Shield exercise.
  (SPACECOM, US Transportation Command participate in multinational exercise - U.S. Indo-Pacific Command USINDOPACOM)
• Phone scams are on the rise and now the Cybersecurity and Infrastructure Security Agency says organizations should watch out for phone calls from scammers purporting to be CISA employees. CISA said its staff will never call and request cash, cryptocurrency or gift cards. If you believe you may have been the target of a CISA scammer, the agency said to take note of the number, hang up immediately and notify either CISA or law enforcement.
  ( Phone scammers impersonating CISA employees - CISA)

The post Rumors targeting Social Security recipients cause inundation of SSA phone lines first appeared on Federal News Network.

But beyond hammering out agency budgets for next year, the GOP-led House Appropriations Committee has tacked on several policy riders that could impact federal employees and retirees in other ways as well.

One policy rider included in the committee’s report language, for instance, would bar any investments through the Thrift Savings Plan that are based on environmental, social or governance (ESG) criteria.

House Republicans also tried last budget cycle to include the “No ESG in the TSP” policy rider in the spending legislation, but it ultimately did not end up in the final appropriations package.

The launch of the voluntary TSP mutual fund window in June 2022 brought more than 5,000 new mutual fund options to TSP participants who choose to enroll in the window and pay a fee for the service. But the Federal Retirement Thrift Investment Board has said if an anti-ESG policy is enacted, it would bring the TSP’s new mutual fund window to an early demise.

Keeping track of 5,000 mutual funds would become too burdensome and open FRTIB to potential legal exposure, the board has said.

“There is no practical, cost-efficient way to monitor each of the roughly 5,000 individual mutual funds’ holdings,” FRTIB Director of External Affairs Kim Weaver said in 2023.

FRTIB has publicly opposed the provisions that aim to bar ESG investments. Weaver has also said there would be ripple effects from the provision, if it’s enacted. It would cost the TSP additional money to wind down the mutual fund window, and TSP participants may be exposed to potential financial losses if they had to transfer their investments back to the main TSP funds.

Appropriations committee members plan to mark up the financial services and general government 2025 spending bill, as well as several others, on Thursday afternoon. Here are some of the other policy riders federal employees should pay attention to:

Telework, office space in 2025 spending bill

In the report language, committee members also noted previous and upcoming requirements for the Office of Management and Budget and the General Services Administration to report to Congress on federal telework and office space.

In the 2024 enacted appropriations package, lawmakers included a now-approaching deadline for OMB to share all agencies’ work environment plans with Congress. Those plans, which stem from the initial return-to-office memo in April 2023, detail agencies’ recent telework policy changes.

OMB’s deadline to submit all agencies’ return-to-office plans to Congress is coming up in late June.

“The committee looks forward to receiving the report from OMB on governmentwide telework,” House appropriators wrote in the committee’s report. “The committee [also] expects agencies under the jurisdiction of the subcommittee to reduce their office footprint if their average office space utilization rate is less than 60%, based on a benchmark of 150 usable square feet per person.”

At the same time, the committee said GSA has not yet provided its required report on how agencies can reduce office space requirements based on lessons learned from using telework during the COVID–19 pandemic.

The federal footprint has been steadily declining, but agencies still holding onto excess and underutilized office space is a main reason the Government Accountability Office has kept federal real property management on its High-Risk List for over 20 years.

In the 2024 spending package, Congress called on all agencies with an office space utilization rate of less than 60% to submit a description of their current efforts to reduce their physical footprint, the total office space costs, the average utilization rate and the estimated cost of underutilized space.

If enacted, the 2025 spending bill from House appropriators would also give GSA and OMB a new 180-day deadline to offer further data and recommendations on how to best consolidate federal office space, while disposing of unneeded federal real estate.

Continuing a few longstanding provisions

In addition to the slate of new policy riders, House appropriators are also looking to maintain numerous provisions that have been around for years, and in some cases decades. Many of those provisions have become practically standard in spending bills each fiscal year.

For example, one continued provision requires agencies to pay OPM a fee for processing retirement claims for employees who separate early from federal service.

Another would continue to direct agency employees to use official time — or time spent working on union-related activities while on the job — in “an honest effort to perform official duties,” the committee report language said.

Additionally, a provision often referred to as the Hyde amendment would maintain the current ban on any government funding from going toward abortions through the Federal Employees Health Benefits (FEHB) program.

IRS pilot, FBI headquarters and more

The full appropriations committee also maintained several provisions from the subcommittee’s initial 2025 spending and policy proposals earlier this month.

Notably, the committee plans to implement steep spending cuts for the IRS, and aims to completely defund IRS’ free Direct File platform.

The lawmakers are also looking to decline a $3.5 billion request for construction on the new FBI headquarters building during 2025. The appropriations bill would also withhold all current funds allocated for the GSA construction project.

Democrat committee members, unsurprisingly, have come out in strong opposition to the spending cuts and many of the policy riders. Some lawmakers said they’re concerned about the ability of several relatively small agencies to handle large budget cuts. Rep. Steny Hoyer (D-Md.) warned last week that the House GOP bill would force agencies to implement staff reductions to make ends meet.

The post Policy riders to watch as House appropriators mark up 2025 spending bills first appeared on Federal News Network.

• The National Institute of Standards and Technology has a new project to help secure public benefits programs. NIST will adapt its digital identity guidelines to support public beneficiary programs, including those used to pay for food, housing and medical expenses. The agency is working with the Digital Benefits Network and the Center for Democracy and Technology on the two-year project. It comes amid concerns around fraud and cyber attacks on government benefits programs. NIST leaders said the goal is to balance access and security.
  (NIST launches collaborative research effort on digital identity to support secure delivery of public benefits - NIST)
• Agencies know more today about the security of their endpoint devices than ever before. The Cybersecurity and Infrastructure Security Agency (CISA) spent tens of millions of dollars last year to install technology to protect agency device endpoints. The Office of Management and Budget (OMB) told Congress in its annual Federal Information Security Modernization Act (FISMA) report, that 76 agencies have met the criteria to have at least 80% of all known endpoints covered by the Continuous Diagnostics and Mitigation (CDM) program. Of those 76 agencies, 36 are using CISA's Persistent Access Capability (PAC) tools to enable continuous threat hunting activities. CISA has now deployed more than 750,000 endpoint detection and response (EDR) licenses across 54 agencies since 2021.
  (76 agencies meet goal to protect majority of device end points - White House)
• The Marine Corps has launched a pilot program that will allow qualified civilians to enlist at ranks up to gunnery sergeant, if they have certain high-tech skills. The program’s initial focus is on military occupational specialties that have shortages. For the initial effort, the Corps is looking to fill cyberspace warfare operator and signals intelligence collection manager roles. Veterans or civilians with a degree in computer science, information systems, engineering or other related fields are encouraged to apply. Civilians will have to go through Marine Corps basic training to qualify. The Marine Corps Talent Acquisition program is a two-year pilot.
  (Marine Corps launches new pilot to hire cyber talent - Marines website)
• The Department of Veterans Affairs is giving veterans more options to get health care and benefits. In some cases, it takes just a few taps on their smartphones. VA’s flagship health-and-benefits app recently surpassed more than two million total downloads. It is also seeing more than a million monthly users. VA launched the app less than three years ago. The app allows veterans, among other things, to message their doctors, view upcoming health care appointments, and check the status of benefits claims. Charles Worthington, VA’s chief technology officer, said more and more veterans are looking to sign up for services right from their phones. “We wanted to ask ourselves, the question is this the best experience we can provide to smartphone users?”
  (How VA’s flagship app got to 2M downloads in less than 3 years - Federal News Network)
• The first-ever Acquisition and Sustainment Workforce Framework from the Defense Department outlines four pillars to improve how the military recruits, trains and retains contracting officers and other acquisition workers. The focus areas include acquisition innovation, making DoD an employer of choice, talent development, and continuous improvement of workforce policies, programs and processes. DoD said each pillar includes initiatives prioritized by Acquisition and Sustainment leadership that will be pursued and measured against specific metrics. The framework also details how DoD will recruit from non-traditional communities, promote industrial careers, increase apprenticeship programs, grow manufacturing and STEM skills, and upskill existing acquisition and sustainment workers.
  (DoD issues first-ever Acquisition and Sustainment Workforce Framework - Undersecretary of Defense for Acquisition and Sustainment)
• The IRS is reducing underutilized office space, but still has plenty it doesn’t need. The Treasury Inspector General for Tax Administration finds more than half of IRS buildings had a workstation occupancy rate of 50% or less. The watchdog said the IRS has not rolled out shared workstations for most employees, who frequently telework. Since fiscal 2018, the IRS has reduced its office space by about two million square feet. It holds more than 22 million square feet of office space across the country.
  (The IRS has reduced its overall space footprint; however, a significant amount of unneeded office space still remains - Treasury Inspector General for Tax Administration)
• Agencies processed a record 1.1 million Freedom of Information Act (FOIA) requests last year, according to the Justice Department's summary of annual FOIA reports released this week. Agencies also received nearly 1.2 million FOIA requests in 2023, another record number. The Department of Homeland Security accounts for more than half of all FOIA requests received and processed every year. There was a slight improvement in the government-wide FOIA backlog, as it decreased by 2.8% to about 200,000 cases at the end of 2023.
  (Summary of fiscal 2023 annual FOIA reports published - DoJ)
• The Department of the Air Force is looking for its next chief data and artificial intelligence officer. The service’s CDAO will be responsible for advancing data and artificial intelligence efforts across the Air Force and Space Force. The candidate must possess executive-level knowledge and experience in enterprise data management, as well as artificial intelligence and machine learning strategy. Applications are due by June 18.
  (Air Force seeking its next CDAO - USAjobs.gov)

The post NIST’s new project for securing public benefits programs first appeared on Federal News Network.

OPM received 6,751 new retirement claims in May, a decrease of  150 from April. OPM processed 8,793 claims, 1,146 more claims than the previous month.

Initial retirement claims in May completed in less than 60 days took on average 37 days to process, a two day decrease from April, while initial cases that were processed in more than 60 days on average took 119 days, an increase of 15 days, from the previous month.

The monthly average processing time decreased from 61 days in April to 60 days in May, a continued decrease from January’s average of 66 days.

May now holds the record for the fewest number of retirement claims filed in a month for 2024.

The post OPM retirement claims backlog at lowest level since May 2016 first appeared on Federal News Network.

For many people, thinking about retirement, is axiomatic. Pay off that mortgage on the house. It might be wise to think through this strategy a little more carefully. For why, the Federal Drive with Tom Temin spoke with private wealth advisor Thiago Glieger of RMG Advisors.

Interview Transcript: 

Thiago Glieger Yeah. I think it’s one of those things that with most retirement planning, with most financial planning, what seems to be good for one family isn’t always the best thing for another family. And it’s kind of against the grain, because in medicine we think about, there’s a certain symptom that’s met with a specific treatment or medication or whatever. But in financial planning, we start to recognize it doesn’t quite work that way. So you have to be careful and look at your own circumstance very objectively. But what doesn’t help is the fact that all these pundits are often talking about, you can’t have any debt to your name. Liability is bad, bad, bad, bad. You need to pay off your mortgage before you head into retirement. And so people start to have this ingrained idea that they can’t retire until they do so, or going into retirement with a mortgage is a really bad thing.

Tom Temin But a mortgage has characteristics, and homeownership have characteristics that are different from other kinds of debt. And that’s the crux.

Thiago Glieger Yeah. I very loosely categorize debt into two different categories, one being good debt and then bad debt. Bad debt is that little plastic card everyone has and overuses. If you’re carrying debt on that, that’s not good. Good debt, you can use leverage to have your money grow it for your retirement, continue to allow it to support you, but you also get to have something like a house and live in it. And that house gets to appreciate in value. There are some tax properties that may be beneficial for you about having a mortgage. So it can be done correctly.

Tom Temin Because yes, the mortgage interest is deductible still under federal tax law. And so if you lose that you could have a greater tax liability from whatever income you have when you do retire.

Thiago Glieger That’s right. And I think a lot of people kind of forgot about the deductibility of the mortgage interest because standard deduction amounts have been so high. So unless they’re itemizing, they may not be getting that benefit. But I have to remind people that in two years, the law is set to go back to the original rule, where again, deductions will go down. And unless they change the law, that could be a very beneficial benefit for people again.

Tom Temin And people sometimes think, well, I’ll pay off the house, realize the appreciation. And there’s a pretty hefty capital gains avoidance that you have. Most normal people with normal houses will be under that limit and then buy a condo and then still have space I want and live rent free. Well, not so fast there either.

Thiago Glieger Right. And you always have to think about what are you trading? Or that liquidity. That paying off the full mortgage or just paying cash for another property and just having no mortgage at all, like something for a condo, for instance, you’re trading that liquid capital for illiquidity in real estate, as well as some reduced expenses, because then you don’t have that mortgage. But if you think about also what is the composition of a mortgage, it’s not entirely just the loan and the interest payment that you have. There’s really four parts to it. We call that Principal Interest Taxes and Insurance (PITI). So in even in your case when you’re describing a condo, somebody may not have a mortgage payment but you’re going to have HOA fees, you’re going to have condominium fees, you’re going to have the taxes in the insurance that you still owe each month.

Tom Temin Right. And sometimes a condo will come to you and say, guess what, we need a new roof. It’s $2 million, but we only have $500,000 in escrow for the roof. So everybody gets assessed up to up $10,000 out of nowhere to make sure the place doesn’t fall apart.

Thiago Glieger And that number is not out of the ordinary. I had a client just a few months ago come to us for $15,000 out of nowhere because, again, it was that situation where they needed to replace everything throughout the whole building. And it was a huge assessment.

Tom Temin Right. And especially in the age after the collapse of that condo in Florida, nobody wants to take a chance with a condo building if it’s more than two-storey high.

Thiago Glieger That’s right.

Tom Temin We’re speaking with Thiago Glieger, wealth advisor with RMG Advisors of Rockville, Maryland. So let’s presume then, that someone nevertheless wants to pay off their mortgage. What’s a good strategy for doing it? Where do you get the money to do it?

Thiago Glieger There’s a couple of questions I would want people to see themselves asking. And really the first is, if I do this, what are going to be the tax implications? If I’m going to take a large lump sum payment from my retirement accounts, that’s taxable like salary, just like ordinary income. And so the additional question here is beyond just the tax cost, how much potential future growth did you also cost yourself by not having this money anymore? Does this create any kind of risk in later retirement, because it’s a huge chunk of money that you’re not paying. So then other people may look at non retirement accounts like individual accounts, brokerage, joint, trusts. That comes with capital gains. So you have more control, and it is less taxes in ordinary income. And then sometimes people will say, well, you know what, this is what we have the Roth for. The Roth is totally tax free. It’s for surprise bills like this or something we can use, and we don’t have to worry about the tax. I don’t like people using the Roth for something like this, because the Roth is where you get all of your tax free growth. I’d like to see people using the Roth as kind of their growth vehicle for the future, so taking it and dumping it into a house may not be the best thing, but that’s usually the three options that people have.

Tom Temin Or you could win the lottery, I suppose. And then it doesn’t matter what happens. But if you do, then retain your house and the mortgage payments. If you can afford them, the question is if you can afford them before you retire, can you afford them after you retire that PITI payment? And that’s really the analysis you have to do, because it might be that you can totally handle it.

Thiago Glieger That’s right, exactly. And that’s the point here is I think a lot of people think they just can’t have a mortgage payment because their FERS and Social Security is not making up all of the income that they have from their salary. So they think, oh, well, our income is going down, so we must reduce our expenses. And that may not necessarily be true. If you’ve been a good saver throughout your career, then you might be sitting on a substantial chunk of change that you can use to continue to grow and invest for yourself. It continues to generate cash flow so you can keep making those mortgage payments, because you’re still generating a retirement paycheck at this point, it’s just not coming from the government.

Tom Temin I guess people might have the idea, well, we can partially pay it off with a chunk of the Roth or a chunk of the rainy day savings we have. But on the other hand, if you do that, you don’t really change your PITI payment, because the bank, the way they’ve rigged the mortgage system, pay all this interest until you pay off the principal.

Thiago Glieger And that’s why people really look to do a full payment, because you’re only free and clear of those interest payments. Once you clear that liability completely. And again, the challenge in doing these lump sum payments is that it affects something called your adjusted gross income. And not only do you pay higher taxes, potentially in that first year, you may have pushed yourself into a higher tax bracket for your first pension. So now there’s a bigger bite coming out of your annuity as well. This can also impact capital gains taxes. It could impact your Medicare Part B premiums. There’s a whole lot of other elements of a retirement plan that this one single move can have an impact negatively on. So you really have to be careful.

Tom Temin Most of the calculators online, where you plug in numbers to calculate whether you can retire or not or what your costs will be. There’s a lot they leave out, and one of the things they don’t have is tax. Because tax varies so widely by location, state you’re in municipality you’re in. This property taxes vary and then state taxes etc., etc.. Are there any sources of information to model what your taxes might look like? If I stay in my house, I pay this, that and the other for mortgage. Now here’s my income. That type of tax analysis.

Thiago Glieger Yeah. And the challenge Tom is needing to know a little bit about how the tax structure works. And I always encourage people, if you want to do some of this work, you can actually just go to the IRS website and look up the tax brackets and say, okay, if I generate this much in ordinary income, what is considered my marginal tax bracket, that’s the rate at which my next dollar is going to be taxed at. And this helps me to figure out if I take a lump sum from my TSP. That’s what my tax picture is going to look like. And then thinking about, all right, well, if I do this for next year, is that a year that’s going to be better for me because maybe I’m not working. Or do I want to do it this year because I have extra cash flow to be able to still contribute to the TSP, even on taking money out. So there’s some modeling that can be done. But you’re right, depending on how you file your taxes, depending on how you’re generating your income and retirement, which accounts you’re pulling the money from if you’re no longer earning a salary at this point, that’s all going to impact what that bottom line is for each individual family.

Tom Temin Yes, because you have to figure in your Social Security payments in there because that’s taxable since 1980. They’ve been taxing Social Security income, which kind of sounds absurd since you paid 6% tax on your income for your whole working life. And so did your employer or employers. And yet, it’s taxable.

Thiago Glieger Yeah, it’s tax on tax. And a lot of people don’t recognize that. They think Social Security is not taxed. But a good chunk of it is likely going to be taxed because you’ve got a first pension that essentially puts you in that you’ve already started with taxable income, which means your Social Security will be too.

Tom Temin All right. So bottom line then do some real analysis before you worry about paying off the mortgage on your house.

Thiago Glieger I really think it’s good to do some sort of financial modeling on this, because if you take out a huge swath of your money and now it belongs in a real estate property instead of your portfolio, what does that do to the longevity of your retirement plan. Do you still have sufficient liquid assets to be able to support your lifestyle for the rest of your life? And also understanding that there is some emotional component to this as well, if you are financially benefiting from keeping the mortgage, but it’s keeping you up, because you’re just stressed constantly, that’s not a successful retirement plan. And so I think taking an approach of understanding, I’ve shared with you the Venn diagram of what makes financial sense, of what really makes you happy. And retirement planning lives in the middle, because sometimes you have to do something that isn’t the squeezing the last drop of money out of the system, but it makes you incredibly happy and you’re fulfilled, and you’re happy to pass on a mortgage free property to your kids. That’s meaningful in a lot of different ways, too.

Tom Temin And if you do hang on to the house and you’ve got a mortgage and you’re in a reasonably sellable area, that’s always a God forbid option. You can always sell the house at some point and then realize that capital gains because it solves some other unanticipated problem. It may produce these new tax problems, but it solves whatever that came away that you never anticipated.

Thiago Glieger Right, exactly. You can create lines of credit against the house. You can sell the house, move to something smaller. And a lot of people will do that, especially as they phase their retirement because the house is too big. Maybe it doesn’t have everything they need to age in place, and so they find themselves moving somewhere else.

The post Why it pays to think twice about paying off that mortgage before retirement first appeared on Federal News Network.

Where should you retire? What state or city can have big consequences for finances and satisfaction. People retiring from military service have extra considerations, such as access to Veterans Affairs services or post-retirement job prospects. For some of the best and worst places to retire, the Federal Drive with Tom Temin talked with Wallet Hub analyst Cassandra Happe.

Interview Transcript:  

Tom Temin And you’ve done a study of the 50 states. Just maybe a quick rundown on what your criteria were in looking at the 50 states.

Cassandra Happe For this particular study. We looked at the 50 states and the District of Columbia, and we compared them across a total of 28 different metrics. Those metrics can be grouped into three key categories, which are economic environment, quality of life, and health care. So, we used a wide variety of metrics to try to get a very holistic picture of what it’s like to be a military retiree in each of these states.  

Tom Temin And military retiree, of course, you know, ranges from four-star flag officer to someone that might be toiling away for 20 years and reaches lieutenant colonel or below. So, the prospects are very different for when you’re coming out, depending on rank.  

Cassandra Happe Absolutely. And it can be difficult to really get into those little nuance things in a study such as this, since we looked at it from such a broad perspective. But we did try to take into consideration that individuals are going to have different experience levels when they come out of the military. So, we tried to look at it from a broad perspective, as far as what opportunities are there and how those opportunities might align with a military retirees’ prospects.  

Tom Temin Sure. And well, let’s get to it then. What is the number one state in wallet hub’s estimation?  

Cassandra Happe So the best state for military retirees is South Carolina. And they did really well when it came to the quality-of-life metrics we looked at. They ranked third overall in that particular dimension. But they did struggle just a little bit when it came to the health care dimension. They came in ninth overall in that particular dimension. So it is still in the top ten as far as the 50 states in the district go. But that’s where they could really improve when it comes to health care specifically. We looked more at the VA health system and how many hospitals are in the area, and also the quality of those hospitals and the treatments that they provide.  

Tom Temin And number two is Florida. Tell us more about the nuances there.  

Cassandra Happe So Florida again stood out with that quality of life. They ranked fourth overall in that particular dimension and plaudits, traditionally known for being a retiree friendly state in general. But they do struggle again with that health care dimension. They came in 18th overall in that dimension, and they did struggle a little bit with the economic environment as well, coming in 11th overall in that particular dimension.  

Tom Temin Yeah. So, you really have to balance your own personal needs versus these general metrics. Sounds like.  

Cassandra Happe Absolutely. And that’s why we group them into these key dimensions. Because depending upon your situation, you might want to focus more on moving somewhere with a great health care system. Or you might be more concerned about your economic future. So, it’s really important to look at the nuances that go into this study.  

Tom Temin And Oregon great facilities. Popular state was ranked 51.  

Cassandra Happe Yes. They really struggled with that quality-of-life dimension. They came in 51st overall in that dimension. And they also struggled with that economic environment dimension coming in 45th overall for that. But as you mentioned health care, they came in 35th overall. So, towards the middle of the pack, which is pretty good.  

Tom Temin We’re speaking with WalletHub analyst Cassandra Happe, and I wanted to ask you also about the District of Columbia, which came in pretty poorly at number 48. And I think their highest-ranking criterion at 32 was the one for economic environment rank, the district. You know, that’s where VA headquarters are.  

Cassandra Happe Yeah, it really came down to that quality-of-life dimension that we looked at. They came in 50th overall in that particular dimension. And that comes down to metrics such as the percentage of homeless veterans in the district and housing affordability in that particular district is really where they could improve to make it more welcoming for military retirees.  

Tom Temin And where do taxes and tax rates rank? Would that be part of the economic environment consideration?  

Cassandra Happe We didn’t look at taxes as far as whether the state taxes them. Military pensions either if they tax both retired pay and survivor plan benefits, or if they only receive a partial exemption in the state, or if they don’t have any exemption for that state taxation that fell into that economic environment category. So, for instance, the District of Columbia got a half point instead of a full point for that particular metric, because they have a partial exemption for some state taxation when it comes to military pensions.  

Tom Temin And one interesting characteristic of the rankings, 1 to 50, is that they don’t exactly fall along red or blue lines.  

Cassandra Happe And I think that’s a good point to make, is that it doesn’t seem to be necessarily that red states or blue states are really making an impact. It is very localized and has a lot to do with just the nuance. Things that go into each of these states.  

Tom Temin And contiguous states, you know, have vastly different rankings. I mean, Maryland and Virginia, I think are four and three, because that’s kind of like one big blob. But then you look at New Mexico, which was next to last at 50th, right next to Texas, which is a middling 28.  

Cassandra Happe Yeah, that is pretty fascinating to see. A lot of times when we do these studies where we’re ranking the different states, you’ll see more regional trends going on. But it does seem to have a lot to do with just the state itself and what investments they are making in that environment for military retirees.  

Tom Temin And with respect to the ranking. How would they map, say, to just retirees in general, are the better states for military retirees, the better states for just every other retiree?  

Cassandra Happe That really does depend on what you’re really looking at in this study, because we did try to focus on metrics that were more specific to military retirees, like veteran owned businesses and Defense Department contracts, which may not play a role for nonmilitary retirees as much. So I would say, if you’re looking at this study from a general perspective, as a nonmilitary retiree, focusing on the quality of life rankings would be my recommendation, because those metrics are a little more universal compared to a lot of the metrics we looked at for the economic environment and health care, which were very much focused on the military side of things.  

Tom Temin And your study doesn’t go to this depth, but within a given state, there’s a lot of variation depending on the metropolitan area or rural area, if that’s your choice that you’re into.  

Cassandra Happe Absolutely. That is a really good thing to keep in mind with this particular study, since we looked at it from a state level, is there are some more localized factors to keep in mind. As you mentioned, the rural versus urban environments may allow for more or less access to different health care options or different opportunities for retirees.  

Eric White WalletHub analyst Cassandra Happe, speaking there with Federal Drive host Tom Temin.

The post Difficult location choices for military retirees first appeared on Federal News Network.

The Common Stock Index C Fund posted the highest return for May with 4.96% returns, followed closely by the International Stock Index Investment I Fund which posted 4.86% return.

The Government Securities G Fund posted the lowest return at 0.41%, up from 0.35% last month.

All funds are in positive year to date territory except for the Fixed Income F Fund which posted -1.56%.  The Common Stock Index C Fund also posted the highest return for the last 12 months with 28.15%. The Small-Cap Stock Index S Fund posted the second highest 12-month return with 24.55%.

All Life Cycle funds posted positive returns. The L 2055, L 2060 and L 2065 all posted 4.67% return in May and 24.21% return for the last 12 months.

The post TSP funds make a healthy jump in May first appeared on Federal News Network.

OPM’s inspector general office shared more information about the pause on Thursday, saying it comes “out of an abundance of caution,” and to try to prevent further fraud, the OIG said in a special fraud alert.

In addition to new enrollments, the enrollment pause also applies to any current enrollee in FSAFEDS who experiences a qualifying life event (QLE), such as a marriage or the birth of a child.

During the pause, current FSAFEDS enrollees are still able to make reimbursement claims. Once OPM chooses to resume the enrollment functionality, FSAFEDS will retroactively adjust any elections based on QLEs. But currently, OPM has not set a date for when the functionality will resume.

The pause comes after several hundred federal employees currently enrolled in FSAFEDS experienced recent fraudulent activity on their accounts. Scammers have used the employees’ personal information to either create new, fraudulent FSAs, or otherwise make fraudulent reimbursement claims on existing FSAs.

HealthEquity, the vendor that administers FSAFEDS, previously notified OPM of the recent rise in fraudulent activity.

“OPM is working with the vendor to secure impacted accounts, compensate impacted individuals and implement additional anti-fraud controls,” an OPM spokesperson said in an email statement.

The fraudulent activity in FSAFEDS is relatively limited in scope, since it’s affecting just a few hundred federal employees’ accounts. In total, the scammers have managed to shore up a couple hundred thousand dollars, Politico first reported last week.

Since becoming aware of the fraud, HealthEquity has already taken additional security measures by implementing Login.gov requirements and setting up dual-factor authentication for federal employees to be able to log in to their FSAFEDS accounts.

A HealthEquity spokesperson declined to comment with any additional details on the current status of the affected FSAFEDS accounts, or if there would be further changes to security protocols.

There’s currently no evidence that the fraudulent activity is coming from a compromise in either OPM’s or HealthEquity’s online systems, but the investigation into the source of the fraud is ongoing.

In the meantime, the accounts of any affected individuals have been secured, and OPM is in the process of reimbursing all impacted enrollees in full.

Agency benefits officers and payroll providers are advising federal employees who use FSAFEDS to review and verify their leave, earnings and FSA account statements. If employees notice any suspicious charges or activity, they can call FSAFEDS at 877-372-3337.

Each year during Open Season, federal employees have the option to enroll in FSAFEDS, but as of last plan year, less than 20% of eligible feds actually have an account set up in the health program.

FSAFEDS lets current federal employees set aside pre-tax dollars from their paychecks to go toward covering eligible health care, prescription, dental, vision and child and adult day care expenses. Enrollees will usually pay for the medical costs out of pocket and are then reimbursed using funds from an FSA.

For 2024, employees who are enrolled in an FSA can contribute up to $3,200 for the entire year. The funding has to be used within a given plan year, but there is an option to roll over up to $640 to the following year. Many federal health experts highly recommend opening and contributing to an FSA, as it lets participants save money by contributing to health expenses pre-tax.

The overall eligibility pool for FSAFEDS has also recently expanded. Beginning in January, for plan year 2024, OPM made active-duty service members as well as members of the Active Guard Reserve eligible to start a Dependent Care Flexible Spending Account (DCFSA). The program expansion made about 400,000 active-duty service members newly eligible for the benefits of FSAs.

The post OPM pauses new FSAFEDS enrollments after fraud surge first appeared on Federal News Network.

We’re not going to bore you with the nuts & bolts of how your Thrift Savings Plan works.  We do things a little differently here at Federal Employee Benefit Advisors (FEBA).  We’re going to show you how you can maximize every bit of the TSP as possible.  There are several strategies you can employ, some immediately, to put yourself into a better investment position; ultimately leaving you more confidently prepared & ready for your retirement.  Here is what you will learn as you read through this article:

• TSP basic overview (Very brief, not too wordy, we promise)
• Unmasking the C, S, I, F, G Funds
• Enhancing the Lifecycle Funds
• Maximizing TSP with withdrawal/transfer options

TSP basic overview

TSP came into being in 1986 with the G Fund added on April 1^st 1987…no foolin’!  The C & F funds were added shortly thereafter in January 1988.  To round out the fund portfolio the I & S funds were added in May of 2001.  There are also Lifecycle Funds which are a blend of all 5 funds designed to strategically reallocate to target your desired retirement year.  Currently, there is a traditional pre-tax withholding account and a Roth after tax withholding account which was added in 2012.  A 5% matching contribution is available to all FERS employees.  The matching portion is added into the traditional pre-tax withholding account even if all contributions are directed to the Roth account.  There is also a mutual fund window available.  It is expensive and limiting; only about 1% of all TSP monies exist within this window.  TSP is managed by Blackrock Capital Advisers and is facilitated by the Federal Retirement Thrift Investment Board.

Unmasking the C, S, I, F, G Funds

C, S, I Funds

Although you have 5 fund options to pick from, in reality you only have 3 choices to invest in.  Here’s why we say that.  The C, S, & I Funds are your stock index funds.  The C common stock index fund, S small capitalization stock index fund, I international stock index fund are all one asset class: Stocks/Equities.  They are the same thing.  Even though there are 3 different indexes they are correlated assets.  Correlation means that they are moving in the same direction almost all the time.  So, when the stock market is up, the C, S, I Funds are up.  And when the stock market is down, the C, S, I Funds are down.  They almost always move in the same direction together.  Unlike individual stocks, which can move in opposite directions, indexes generally do not as they are a large group of individual stocks.  They might earn a little more or less than the other, but they are moving in the same direction.

If we know that we have 3 options/funds to invest in within the same asset class, then we want to find the BEST-in-class fund.  There is a clear winner amongst the C, S & I Funds.  Only one of these funds we advise our clients to invest in.  One of these funds has greatly out-performed the other two, and has done so with considerably less risk.  In our professional opinion, the only stock fund worth putting your hard-earned money into is the C Fund.  Here is why.  The data never lies:

• In 2008 the I Fund lost -42%…the C Fund only lost -36%
• In March of 2020 (due to Covid) the S Fund lost -21%…the C Fund only lost -12%
• In 2022 the S Fund lost -26%…the C Fund only lost -18%

These are but just a few examples of the C Fund not losing nearly as much as the two riskier funds.  Yes, the S & I have the potential to have a higher single rate of return then the C; and in fact, this has happened in the past, but what we are trying to help you understand is that not having as big of losses as the other two allows the C Fund to outperform the I & S Funds over time. This is because the C Fund is a more conservative stock index Fund; it comprises around 500 big US companies.   Let’s look at the historical return data to help cement this concept:

• Since inception (1988), the C Fund has averaged 10.88% as of 4/30/24
• Since inception (2001), the S Fund has averaged 8.87% as of 4/30/24
• Since inception (2001), the I Fund has averaged 5.09% as of 4/30/24

Something we always ask our federal employee clients is this: “Would you rather average 10.88%, 8.87%, or 5.09% taking roughly the same amount of risk?”  So, we will ask you the same question.  We now have decades of data on the C, S, I.  We know they are the same asset class, so why not invest in the BEST-in-class?

F Fund

The F Fund is the fixed income index fund.  It is a blend of over 11,000 bonds and notes.  In our professional opinion, the F fund is not a great option. Even the Lifecycle funds agree, there is no significant allocation to the F fund in any of the 10 current L funds.  Before we show you why the F Fund is not an ideal investment, let us first explain why it was originally added.  For the longest time, bonds tended to be considered the “gold standard of conservative investing.”  This is because bonds tend to be non-correlated with the stock market.  In other words, when the stocks go down, bonds are supposed to rise slightly; maybe 2%-5% on average.  This is a great hedge on the more aggressive stock market.  The problem with the F Fund is that is a huge basket of many different types of bonds.  Therefore, it behaves differently than owning a bond outright.

The F Fund has not been performing well over the last 10-15 years.  Here is what we mean:

• Over the last 10 years the F Fund has averaged 1.39% as of April 30, 2024.

Even worse, the F Fund was heavily correlated with the stocks in 2022.

• The F Fund was down -12.83%. Comparatively speaking, the C Fund was down -18.13%

Here is what we ask all of our federal employee clients: “Do you really want to risk experiencing double digit loss to potentially gain 1.39%?”

G Fund

The G Fund is the government securities investment fund.  The G Fund earns interest set by law at the weighted average yield on outstanding US Treasury securities with four or more years to maturity.  In other words, it doesn’t make much money: the 10-year return to-date is 2.36%.  This creates a very big problem for federal employees who are in the retirement horizon of their career.  The G Fund is truly the only safe investment fund the TSP main core funds have to offer.  It guarantees no losses, which is very important, but it does not keep up with inflation most years historically.  This creates an investment dichotomy, as one hand, the G fund protects the investor from dangerous market downturns, but on the other hand the value of their G Fund balance reduces as they suffer from inflationary loss each year.  Ex: Inflation = 5% & G Fund return is 2.36% means that the balance of the G fund suffers –2.64% inflationary loss.

The other problem the G Fund presents the federal retiree is that it oftentimes creates income loss.  As a federal retiree begins to withdrawal money from their G Fund in retirement, we often see folks suffering from income loss.  The national average retirement income withdrawal rate out of 401k/IRA type retirement accounts is about 5%.  Therefore, as the federal retiree withdraws 5% out of a G Fund balance only earning 2.36% then that person suffers -2.64% in income loss.  The balance reduces because the interest rate is less than the withdrawal rate.  So, in the end, both income loss and/or inflationary loss creates a negative situation in the G Fund balance and has the potential to greatly reduce retirement income over time.

Lifecycle Funds

The Lifecycle Funds, or L Funds, are target date funds.  Their main goal of the L Funds is to allow for automatic reallocation of assets from the more-risky stock funds (C, S, I) into the more conservative funds (F, G) as an employee reaches retirement age.  They allow the federal employee to “set it & forget it,” so that each year as they near retirement, the L Fund of choice will automatically reallocate to the desired conservative to risk ratio.  Investment philosophy recommends a conservate to aggressive risk tolerance ratio of 60%-80% conservative and 20%-40% aggressive once one reaches the retirement horizon in life.  Anyone within 5 years of retirement or over the age of 59.5 is considered to be in the retirement horizon.

The idea of the L Funds is a sound one.  The problem with the L Funds is that they allocate a certain percentage to all 5 of the individual funds.  And as we’ve already explained above, we know the C Fund is substantially better than the S & I Funds.  Historically speaking, the C earns more than double the rate of the return the I, and about 2% more than the S fund.  So why then would we want exposure in two riskier stock funds that have proven over two decades to underperform the C Fund?

The other problem with the L Funds is the exposure you have in underwhelming F Fund.  TSP considers the F Fund a conservative income fund, therefore, they place some of your money in the F Fund within the chassis of your desired L Fund.  Let us remind you: the F fund is averaging only 1.39% over the last 10 years, and worse yet, the F Fund lost -12.83% in 2022; which was heavily correlated with the double-digit losses of the C, S, I Funds.  No thank you.  We believe you can make your own L Fund & potentially greatly outperform any of the L Funds available for you to choose from.

Customized and optimized L Fund

How to make a customized & optimized L Fund: First off, only use the C & G Funds.  These are the only two funds which are worth it.  Secondly, keep it simple:.  You don’t need to worry about adjusting your C/G asset allocation ratios every single year.  Follow this simple risk tolerance chart of our recommended re-allocation strategy*:

Maximizing withdrawal/transfer options

Before the TSP Modernization Act of 2019, Federal Employees were only allowed to make one In-Service Withdrawal out of their TSP during their entire career.  Wisely, the Federal Thrift Retirement Investment Board urged the members of Congress to pass the bill which now allows unlimited withdrawals from a federal employee’s TSP while they are still in service (up to 4 times per 12 months).  Anyone over the age of 59.5 has the privilege & power to take their retirement account into their own hands and transfer a portion or all of their TSP into an outside account in the private sector.  As long as the funds are being transferred into an IRA or a Roth IRA then there won’t be any taxes, penalties, or fees for the transfer.

That said, this is one of the most under-utilized opportunities federal employees miss out on.  TSP is a savings plan.  It is designed to allow younger employees to save money in inexpensive funds for the sole purpose of building a healthy balance for when they reach the retirement horizon.  The TSP is not a great place to keep all your money when you reach the retirement horizon.  The main reason is because of the simple fact that someday soon, the federal employee in the retirement horizon will need to begin taking income from their balance.  We have already explained why taking income from the G Fund is not ideal.  And it is NEVER recommended to take income out of an account/Fund which is down; especially when that fund could easily be down double digits in a single year (C, S, I, F).

TSP maximization

We highly recommend any federal employee who is of the age of 59.5+ or retired to strongly consider a savvy investment strategy we call: TSP Maximization. Which is simply: transferring some/all of their TSP balance & placing the funds into an IRA/Roth IRA in the private sector.  There are considerably better retirement account options waiting for you in the private sector.  You have the opportunity to take control of your TSP & maximize it this way.  Now, this does not affect your current TSP account and you will still be able to contribute into the TSP each paycheck and continue getting the government matching contribution.  It simply takes some/all of the balance and moves it out of TSP.

There are hundreds of options for you to consider in the private sector, so instead of overwhelming you in this article with the details on all of them, we have gone through the pain-staking measure of identifying what we believe to be the Top 2 private sector investment options to consider with TSP Maximization.  Each month we facilitate a live 1-hour nationwide webinar titled: TSP Maximization.  Not only will we break these two different IRA/Roth IRA investment options in detail, we will also go into greater detail with other ways you can maximize TSP no matter what age you are or where you are at in your career.  Additionally, we will follow the education with a 30- minute Live Q&A where we will answer your questions in real time.

Below you will find a link to our TSP Maximization webinar registration page so you can find a day & time that works for your schedule.  As a small preview, one of the IRA/Roth IRA options we will cover in detail guarantees no losses due to market volatility, has averaged over 8% over the last 10 years, offers a 10% cash match/bonus, and is low fee.* ,**  Lastly, we are not affiliated, endorsed nor hired by the federal government.

*Disclaimer: This article is not intended to be personal investment advice. These are general concepts and historical data. We cannot make any personal investment recommendations without understanding your personal financial situation, goals, and risk tolerance.

**Available in most states. Average annual return based on last 10 calendar year historical market data. Exact fees and limitations will be disclosed based on company and state availability.

The post How to maximize your TSP first appeared on Federal News Network.

• House lawmakers are demanding answers from VA officials, after they approved nearly $11 million in bonuses to ineligible career senior executives. The House VA Committee is calling on the under secretaries of health and benefits to testify at a hearing next week about the “bonus blunder.” The committee also wants to hear from senior HR and legal officials to explain why they didn’t flag these bonuses sooner. VA awarded the bonuses last fall and is still trying to recoup some of the money. Republican senators have called on some VA officials to step down because of the error.
  ( Chairman Bost Announces Oversight Hearing on VA’s PACT Act Bonus Mess - House VA Committee )
• Innovation in federal acquisition gets the spotlight in a new report from Office of Management and Budget. Agencies are using an assortment of innovative techniques and technologies to reduce the time to make contracting awards and lower costs for vendors. OMB detailed many of those efforts in a new congressionally-mandated report. In the Acquisition Innovation and Small Business Participation in Federal Procurement report, OMB said many of these tools — such as a market research bot, and hosting remote and interactive capability briefings with vendors to expand the field of bidders — have expanded opportunities for small businesses, including new entrants into the federal sector. OMB said agencies have been collecting and sharing these new approaches in the Periodic Table of Acquisition Innovations, which highlights 29 use cases that could help agencies increase speed, improve accuracy, reduce administrative cost, and lower risk across the acquisition lifecycle.
  (OMB details innovations that are speeding up acquisitions - White House)
• The Cybersecurity and Infrastructure Security Agency is developing new physical security goals for critical infrastructure. CISA’s physical security goals come amid rising threats to the electric grid and other critical infrastructure. CISA is raising awareness about good security practices as it prepares for national safety month in June. “It’s time for us to focus on how we keep working environments safe and free from danger,” CISA Executive Assistant Director for Infrastructure Security David Mussington said. “When it comes to running workplace safety, planning is central to what we need to do to avoid foreseeable and unforeseeable risks.”
  (Amid rising threats to critical infrastructure, CISA developing ‘physical security’ goals - Federal News Network )
• The Department of Veterans Affairs is driving down wait times for veterans to receive health care. The Veterans Health Administration in April saw an 11% decrease in average wait times for new patients in VA primary care, compared to last year. It also saw a 7% decrease in average mental health wait times. Under Secretary for Health Shereef Elnahal said these improved metrics come at a time when VA is delivering more care and more benefits to veterans than ever before. "We've been able to meet that increasing demand for care, all while we're seeing greater demand from our existing base of veterans, as they get older and get more chronic conditions and need more care," Elnahal said.
  (VA sees more patients, cuts wait times, despite higher workload - Federal News Network )
• Federal agencies are preparing for a busy hurricane season. The Federal Emergency Management Agency has opened up a new distribution center in Pennsylvania to ensure supplies can be deployed more quickly along the East Coast. FEMA is also updating its contingency contracts to support rapid response and recovery operations. The National Oceanic and Atmospheric Administration said there is an 85% chance of above-normal hurricane activity in the Atlantic this year. NOAA is forecasting the potential for eight to 13 hurricane-strength storms. The hurricane season in the Atlantic runs from June 1 to November 30.
  (FEMA prepares for 2024 Atlantic hurricane season - DHS)
• African American men and women interested in working for the FBI will have a better opportunity to understand what it takes to join the bureau. A new memorandum of understanding between the FBI and the Blacks In Government (BIG) Future Leaders in America’s Government (FLAG), or the BIG FLAG program, will expand the collaboration and information sharing between the two organizations. The FBI will do more to share details about the variety of internships and programs open to college students, as well as hiring opportunities for seniors and recent graduates.  The members of the BIG FLAG program will have access to webinars focused on the FBI’s mission, awareness information, hiring and application processes.
  (FBI, Blacks in Government agree to expand access to job opportunities - FBI News)
• The Government Accountability Office is once again a Best Place to Work in the 2023 rankings from the Partnership for Public Service. This time around, U.S. Comptroller General Gene Dodaro credits the agency's high score in part to its telework practices. GAO has been working with its union over the last year to implement a generous work-from-home policy. Many GAO employees are allowed to work fully remotely, and others can telework up to four days a week. GAO has maintained its spot as the number one midsize agency in the Best Places to Work rankings for four years in a row.
  (3 promising pockets of success in Best Places to Work - Federal News Network)
• Defense Secretary Lloyd Austin is back on the job after briefly relinquishing his duties over the weekend. The Pentagon said Austin transferred his authority to Deputy Defense Secretary Kathleen Hicks for a few hours on Friday night while he underwent a medical procedure at Walter Reed National Military Medical Center. This time, Congress and the White House were notified in advance, and Defense officials said there were not any complications. Austin came under fire in December after a separate health issue sidelined him for two weeks. In that case, lawmakers, the White House and the public were not notified that the secretary was in the hospital until complications emerged. After that, Austin and DoD promised to change the department’s transfer-of-authority procedures and make them more transparent.
  (Defense Secretary Lloyd Austin resumes duty after undergoing procedure at Walter Reed - Associated Press)

The post Scrutiny intensifies regarding VA ‘bonus blunder’ first appeared on Federal News Network.

• The Department of Veterans Affairs paid out $11 million in bonuses to career executives not eligible to receive them. Now a bipartisan group of lawmakers is seeking answers. House lawmakers are asking VA how long it will take to claw back those bonuses and what steps it will take to hold department leaders accountable. The lawmakers also want to know what steps VA will take to ensure future financial incentives are awarded responsibly.
  (Spanberger demands answers, accountability from VA over nearly $11 million misspent on executive bonuses - Rep. Abigail Spanberger (D-Va.))
• For the second time this week, a federal cybersecurity leader is heading out the door. Eric Goldstein, the executive assistant director for cybersecurity at the Cybersecurity and Infrastructure Security Agency, is leaving federal service after more than three years. CISA confirmed his last day will be in June, but didn't say exactly when. Goldstein's decision to leave government comes two days after Chris DeRusha, the federal chief information security officer, announced his decision to move on. CISA Director Jen Easterly praised Goldstein, saying through his leadership CISA pioneered new models of operational collaboration, reshaped its ability to detect and address cyber risks and shifted the balance toward building technology that is secure by design. A CISA spokesperson didn't say who would be acting in his place after Goldstein leaves.
  (Second senior cyber leader this week to exit federal service - Federal News Network)
• Transportation Security Administration employees are about to see major workforce changes. That is after TSA signed off on a new collective bargaining agreement with the American Federation of Government Employees. The seven-year contract offers more official time, sick leave, uniform allowances and much more. It also comes after TSA workers received a major pay bump last year. Altogether, it will have a massive positive impact, said TSA Administrator David Pekoske. “If we didn’t have this CBA, if we didn’t have this pay package, I would submit to you, we probably wouldn’t have a TSA in five or 10 years,” Pekoske said. Looking ahead, AFGE is now calling for the passage of a bill to further cement workforce rights at TSA.
  (TSA, AFGE see milestone contract as ‘pivot point’ for frontline workforce - Federal News Network)
• New legislation in the House calls for a crackdown on improper payments. Federal agencies made more than $230 billion in improper payments last year. A bipartisan bill seeks to rein in that wasteful spending. The Enhancing Improper Payment Accountability Act would subject federal spending programs to stricter reporting requirements if they pay out more than $100 million annually. It would also require agencies to report out their antifraud and risk management controls. Reps. Abigail Spanberger (D-Va.) and Blake Moore (R-Utah) are leading the bill.
  (Spanberger, Moore Introduce Bipartisan Legislation to Reduce Improper Payments, Strengthen Confidence in Federal Programs - Federal News Network)
• The White House wants agencies to consider social and behavioral science in policymaking. On Wednesday, the Biden administration released its Blueprint for the use of Social and Behavioral Science to Advance Evidence-Based Policymaking. Policymakers will have access to data used to measure the effectiveness of government services, and how they reach their intended targets, before developing programs. The blueprint provides a hundred examples of how social and behavioral science has been used to advance innovation and ensures that agencies will have the appropriate number of staff with the required expertise.
  (White House releases policymaking guide - Whitehouse.gov)
• The Technology Modernization Fund Board is making its first investment in generative artificial intelligence as part of awarding four new investments, worth $49.2 million, to three agencies yesterday. The State Department received its first two awards from the TMF, including $18.2 million to use GenAI in its data environment to improve the sharing and understanding of information among all of its offices around the world. The State Department also won funding to modernize its identity and access management tools. The National Oceanic and Atmospheric Administration and the Office of Federal Student Aid won the two awards from the TMF to modernize customer-facing systems. Since January 1, the TMF Board has made nine awards to eight agencies.
  (State, NOAA, Education win new IT modernization funding - Federal News Network)
• The Army is getting rid of its online training for enlisted troops. The service is eliminating the requirement for all enlisted soldiers to complete the Distributed Leader Course. Soldiers currently working on the courses will not be required to complete them. And soldiers who have not begun the training are no longer required to start. Enlisted soldiers were previously required to complete the courses before attending a noncommissioned officer academy.
  (Army eliminating Distributed Leader Course - U.S. Army)
• The Department of Veterans Affairs is trying to use a career development portal to boost its cyber workforce skills. The internal VA website includes training modules spanning 32 different cyber work roles across the agency. Through the portal, the VA is offering courses in IT, AI awareness and much more. VA employees can also take a self-assessment to decide what skills they can — and should — try to develop. The goal is two-fold: improve retention of the agency’s cyber employees, and close some of the VA's existing skills gaps in technology.
  (VA career development portal - Department of Veterans Affairs)
• The Department of Homeland Security will launch a cyber task force focused on artificial intelligence if a bipartisan bill makes it through Congress. The bill would require the Cybersecurity and Infrastructure Security Agency to lead a group to address safety and security challenges posed by AI. CISA’s AI task force would give annual updates on its work to Congress. Reps. Troy Carter (D-La.) and Bennie Thompson (D-Texas) introduced the bill.
  (Congressman Carter, Thompson Introduce CISA Securing AI Task Force Act - Rep. Troy Carter (D-La.))
• House lawmakers want to give personnel at the Office of Strategic Capital temporary assignments in the private sector. The House Armed Services Committee’s draft defense bill would require the Defense Department to establish a program under which the Office of Strategic Capital would arrange assignments for its employees at private companies, with the goal of improving their understanding of emerging defense industrial base capabilities and the role of venture capital in shaping future modernization requirements.
  (Lawmakers want to place Office of Strategic Capital employees in private companies - House Documents)

The post Spanberger demands VA clean up its act when awarding financial incentives first appeared on Federal News Network.