Spending Agreement Would Allow 1% Pay Raise, Fails to Ban Schedule F

Manuel Balce Ceneta/AP

Provision in the fiscal 2021 omnibus appropriations bill would give feds until the end of next year to repay payroll taxes deferred by the Trump administration from September through December.

After weeks of negotiations and multiple short-term continuing resolutions, lawmakers on Monday approved a $1.4 trillion omnibus appropriations package to fund agencies through the end of fiscal 2021, although the measure would allow for only a 1% across-the-board pay raise for federal employees and fails to block implementation of President Trump’s controversial plan to politicize the civil service.

The bill, which was finalized and released Monday afternoon, is silent on federal employee compensation for next year, which effectively endorses the alternative pay plan that President Trump submitted in February. That plan provides civilian federal workers with a 1% across-the-board pay increase next year and no change to locality pay rates, a figure that falls far short of the 3% pay raise that military service members are slated to receive in 2021.

The provision marks an improvement over the pay freeze advocated by Senate Republicans and the White House in recent weeks. Trump must sign an executive order finalizing the pay raise before the end of the year.

The bill also makes no mention of Schedule F, the controversial plan unveiled by Trump in October that would strip the civil service protections of potentially hundreds of thousands of career federal workers, making them effectively at-will employees. Experts warn that even partial implementation of Trump’s executive order establishing Schedule F could have broad ramifications and will be difficult for the Biden administration to roll back.

In a statement, Rep. Gerry Connolly, D-Va., blamed Republican intransigence for the failure of a provision blocking implementation of Schedule F to make it into the final bill.

“I am deeply disappointed Republicans were unwilling to stand up for our federal employees and reject President Trump’s Schedule F executive order that undermines our 140-year professional civil service,” Connolly said. “Congress must protect the civil service and I will look forward to working with the Biden administration to reverse this executive order with all deliberative speed.”

But sources told Government Executive that Democratic appropriators failed to adequately push for the language’s inclusion, saying lawmakers “don’t get” how quickly some agencies might implement the plan or how difficult it will be to reverse.

“What I’m hearing is that, since Republicans are a hard ‘No’ on this and Biden can rescind it, this doesn’t need to be part of the negotiations,” a source familiar with the negotiations said earlier this month. “If you’re [House Speaker Nancy] Pelosi or [Senate Minority Leader Chuck] Schumer or whoever and you think that Biden can easily rescind this, why would you trade this for something else?”

In a statement Monday, National Active and Retired Federal Employees Association National President Ken Thomas blasted lawmakers’ inaction on the issue.

“Congress has given the Trump administration a green light to continue its implementation of Executive Order 13957, which creates a broad exception to competitive civil service rules through a new Schedule F job classification, removing protections that ensure civil servants are hired and fired based on merit, as opposed to political motivations,” Thomas said. “Unfortunately, Congress has abrogated its responsibility to ensure checks on either the current or future administration’s implementation of the executive order and use of the new authority.”

One positive provision for federal workers in the omnibus spending bill is language setting the deadline to repay deferred payroll taxes to the end of 2021, rather than next April. The Trump administration came under fire earlier this year for forcing all executive branch employees to defer their Social Security and Medicare taxes between September and the end of 2020, after private sector employers balked at the plan.

National Treasury Employees Union National President Tony Reardon applauded the decision to spread repayment of the deferred taxes over a full year of pay checks.

“NTEU was concerned that requiring employees to pay the deferred taxes in just four months was too short and would present a financial burden to federal employees, especially because they were forced to participate in the deferral with little or no notice,” Reardon said. “NTEU commends Sen. Chris Van Hollen, D-Md., and other congressional allies who fought to give federal employees more time. The amount of deferred taxes will be withheld over 26 pay periods instead of eight, which is a fair resolution to a shortsighted policy that only affected civilian and military federal employees in the executive branch, and no one else.”

The House passed the measure Monday evening, and senators voted later Monday night to send it to Trump’s desk. Since government funding was slated to expire Monday night, Congress also passed a 1-week continuing resolution to ensure that government stays open during the process of sending the omnibus to Trump and waiting for him to sign it. 

This story has been updated.

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