What Does the Latest Legislative Proposal Mean for Federal Employees? 

What Does the Latest Legislative Proposal Mean for Federal Employees? 

The latest legislative proposals for fiscal year 2025 signal significant changes for federal employees, encompassing reductions in pay and benefits, diminished job protections, and organizational restructuring. These measures are part of broader efforts to reduce federal spending and reshape the civil service. FedSmith.com Government Executive+1National Treasury Employees Union – NTEU+1

Proposed Cuts to Pay and Benefits

1. Increased Retirement Contributions and Reduced Pensions

The House Budget Committee has advanced a reconciliation bill that includes provisions to: Federal News Network+5Federal News Network+5United Benefits+5

• Increase Federal Employees Retirement System (FERS) contributions for employees hired before 2014 to 4.4%.National Treasury Employees Union – NTEU
• Eliminate the FERS annuity supplement, which currently benefits employees retiring before age 62.Federal News Network+1National Treasury Employees Union – NTEU+1

These changes aim to cut federal spending by $50 billion. FedSmith.com+4National Treasury Employees Union – NTEU+4NARFE+4

 Shift to Voucher-Based Health Insurance

Proposals suggest replacing the current Federal Employees Health Benefits (FEHB) cost-sharing model with a voucher system. This would provide a fixed-dollar contribution toward health insurance premiums, potentially leading to higher out-of-pocket costs for employees as healthcare expenses rise. U.S. Office of Personnel Management+2FedImpact+2U.S. Office of Personnel Management+2

3. Pay Freeze and Performance-Based Increases

Legislation such as the Federal Freeze Act proposes a one-year freeze on federal pay increases and workforce caps over a three-year period. Additionally, the Federal Employee Performance and Accountability Act of 2025 introduces a pilot program where pay increases for certain employees would be contingent on job performance. FedSmith.comCongress.gov

Erosion of Job Protections and Union Rights

1. Reinstatement of “Schedule F”

The Social Security Administration is considering reclassifying certain positions under a proposed “Schedule F,” designating them as “policy-influencing” and thereby removing civil service protections. This change would make it easier to dismiss employees and is part of broader federal budget cuts. Business Insider  

2. Restrictions on Collective Bargaining

An appeals court has allowed the implementation of an executive order that limits collective bargaining rights for federal workers. This order affects multiple agencies and is part of efforts to streamline the federal workforce. AP News

Organizational Restructuring and Oversight

1. Reorganizing Government Act of 2025

This act extends presidential authority to propose executive branch reorganization plans, requiring Congress to vote on these plans within 90 days without the possibility of a filibuster. The aim is to streamline government operations. dailyfed.com

2. Department of Government Efficiency (DOGE) Initiatives

The Department of Government Efficiency, led by Elon Musk, has implemented cost-cutting measures within the Social Security Administration, including staff reductions and technology overhauls. These actions have led to service disruptions and increased workloads for remaining employees. Business Insider+2The Washington Post+2FedSmith.com+2

Potential Positive Developments

1. Expanded Eligibility for Dental and Vision Benefits

The Office of Personnel Management (OPM) proposes to expand the definition of a “member of family” under the Federal Employees Dental and Vision Insurance Program (FEDVIP) to include individuals up to 26 years of age. This aligns dental and vision coverage with medical benefits extended under the Affordable Care Act. U.S. Office of Personnel Management

2. Enhanced Oversight of Human Resources

OPM seeks statutory authority over approximately 40,000 federal employees working in human resources positions government-wide. This would allow OPM to manage training and development across all agencies, aiming to improve HR practices and employee support. Federal News Network

These legislative proposals collectively represent a significant shift in federal employment policies, with potential implications for job security, compensation, and organizational structure. Federal employees and stakeholders are advised to stay informed and engaged as these developments unfold.