AGA Today

Agencies Are Increasingly Offering Buyouts, GAO Report Finds

By Stephen Barr
Tuesday, April 4, 2006; Page D04

Buyouts are back.

Since November 2002, 51 federal agencies -- about half of the executive branch -- have offered cash buyouts and early retirements to reshape their workforces, according to a recently released report from congressional auditors.

The findings confirm what many federal employees have suspected -- that buyout offers have been increasing in recent years. The report by the Government Accountability Office counted at least 22,600 employees who left the government after accepting a buyout, early-out or combined package during fiscal years 2003 through 2005.

The GAO tally did not include the Defense Department, which has independent authority to offer buyouts and is not tracked by a database at the Office of Personnel Management.

In 2003, the GAO said, 28 non-defense agencies offered 136 buyout and early-out programs. Two years later, the number had increased to 51 agencies offering 179 programs.

Over the three years, the departments of Agriculture, Commerce, Energy, Health and Human Services, Interior, Transportation, Treasury and Veterans Affairs were the major users of buyout and early-out programs, the GAO said.

Rather than respond to budget shortfalls and new staffing requirements with layoffs, agencies have turned to buyouts as a way to accelerate departures and reinvest payroll dollars more efficiently. The GAO said agencies had used buyouts to help merge bureaus, redeploy staff, reduce management layers and redirect hiring goals.

Under buyout programs, agencies offer cash bonuses of up to $25,000 to employees who volunteer to leave. The payments come out of agency budgets. Under early-out programs, agencies offer retirement with reduced pension payments to employees age 50 and above with at least 20 years of service or to employees at any age with at least 25 years of service. Agencies do not incur extra costs for offering early retirement.

Most agencies have found that employees are more likely to take early retirement if they are also offered a buyout, in part because it helps offset the loss of income.

The current round of buyouts and early-outs was authorized by a 2002 law, championed by Sen. George V. Voinovich (R-Ohio), that included a number of provisions aimed at helping agencies create more flexible workforces. Prior to 2002, most buyout programs were primarily designed to cut staffing and downsize agencies.

Under the 2002 law, the GAO report said, HHS officials consolidated personnel offices from 40 to five and reduced staffing from 1,167 employees to about 860. By using buyouts, HHS avoided layoffs.

Buyouts and early-outs helped the National Institute of Standards and Technology reduce layoffs during fiscal 2004 when the agency faced a budget shortfall, the GAO said. NIST cut staffing from 2,774 employees to 2,556, the GAO said.

The Washington Post