June 2011 Magazine by NARFE

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For Active and Retired Federal Employees

RETIREMENT LIFE

JUNE 2011, Volume 87, Number 6

LEGISLATIVE REPORT 8 12 13 14 16 18

NARFE: Raise Debt Limit, Hands Off CSRDF

Cover design by Jim Richards

Prepare for ‘Grass-Roots Advocacy Month’ ‘Protect America’s Heartbeat’ Campaign Going Strong

COLUMNS 6 Message From the National President

Committee Approves Bills Punishing Feds With Overdue Taxes and Extending Probationary Period

24 Managing Money

Workers’ Comp Subject of Hearing

26 Live Well

Civics 101: Convention Participant-Observer

28 Alzheimer’s Update 36 Report From the

COVER STORY 20

NARFE Leads Fight Against $375 Billion in Cuts to Federal Pay & Benefits. The Fiscal Year 2012 Budget Resolution passed by the House in April would mean drastic cuts in federal pay and benefits and could put retiree benefits in jeopardy.

DEPARTMENTS 30 44 49 50 54

Questions & Answers

Regions

SPECIAL SECTION 37 NARFE 2010 Financial Statements

NARFE Resources ‘Protect America’s Heartbeat’ Coupon . . . . . . . . . . . . . . . .13 NARFE-PAC Coupon . . . . . . . .14 Silver Circle Coupon . . . . . . . . .46

NARFE News

Membership Application . . . . . .47

Out & About

DuesWithholdingApplication . .48

Letters

Alzheimer’s Coupon . . . . . . . . .49

For the Record: TSP Investments, COLA Chart

visit us online at www.narfe.org

NARFE Member Perks . . . . . . .52

NATIONAL OFFICERS

Here’s How to Contact NARFE ...

JOSEPH A. BEAUDOIN, President; natpres@narfe.org PAUL H. CAREW, Vice President; natvp@narfe.org ELAINE HUGHES, Secretary; natsec@narfe.org RICHARD G. THISSEN, Treasurer; nattreas@narfe.org

If you want to: • Join NARFE Call (toll-free):

800-627-3394 or 800-456-8410 Or go to: www.narfe.org

If you want to: • Change your address • Check your membership status • Find out dues owed • Provide a death notification Call (toll-free):

800-456-8410 E-mail:

memberrecords@narfe.org If you want to: • Add your e-mail address to your record (to receive GEMS e-mail messages, the Legislative Hotline and NARFE NewsWatch): Call (toll-free):

800-456-8410 E-mail:

memberrecords@narfe.org

REGIONAL VICE PRESIDENTS REGION I Gilbert W. Blaisdell (Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) Tel: 978-388-1830 E-mail: narf1568@comcast.net REGION II Ronald P. Bowers (Delaware, District of Columbia, Maryland, New Jersey and Pennsylvania) Tel: 410-308-0420 E-mail: narferbowers@msn.com REGION III Donald Stewart (Alabama, Florida, Georgia, Mississippi, Puerto Rico, South Carolina and Virgin Islands) Tel: 305-442-6388 E-mail: dejs33149@aol.com REGION IV Paul E. Johnson (Illinois, Indiana, Michigan, Ohio and Wisconsin) Tel: 812-306-5137 E-mail: pejohnson@tds.net REGION V Carol R. Ek (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) Tel: 620-241-1131 E-mail: ek617@att.net

REGION VI Jerome S. Smith (Arkansas, Louisiana, Oklahoma, Republic of Panama and Texas) Tel: 903-534-5849 E-mail: retiredjer@aol.com REGION VII Betty Lucero-Turner (Arizona, Colorado, New Mexico, Utah and Wyoming) Tel: 719-583-0910 E-mail: blturner2311@aol.com REGION VIII Helen L. Zajac (California, Guam, Hawaii, Nevada and Republic of Philippines) Tel: 707-644-7565 E-mail: hlz17@aol.com REGION IX Lanny G. Ross (Alaska, Idaho, Montana, Oregon and Washington) Tel: 360-692-9741 E-mail: lannyjean@comcast.net REGION X William F. Martin (Kentucky, North Carolina, Tennessee, Virginia and West Virginia) Tel: 540-872-3345 E-mail: narfe2065@hughes.net

E-mail: memberrecords@narfeorg

If you want to:

• Hear the Legislative Hotline Call (toll-free):

877-217-8234 If you want to: • Get materials to recruit members: Call (toll-free):

800-627-3394 E-mail:

rr@narfe.org

For any other NARFE matter: Call NARFE Headquarters

703-838-7760 E-mail: hq@narfe.org Fax:703-838-7785 Write: NARFE 606 N. Washington St. Alexandria,VA 22314

NARFE MAGAZINE Volume 87,Number 6 Editor, Margaret M. Carter Assistant Editor, Donna J. St. John Editorial Administrator, Toni Vallario Graphic Designer, Beth Bedard Contributing Designers, Charlene Gridley, Jim Richards Editorial Board: Joseph A. Beaudoin, Paul H. Carew, Elaine Hughes, Richard G. Thissen Editorial Office: NARFE, Attn: NARFE magazine, 606 North Washington St., Alexandria, VA 22314-1914; Phone: 703-838-7760; Fax: 703-838-7781; E-mail: rl@narfe.org Advertising Sales: Warren Berger, Media People Inc., 122 East 42nd Street, Suite 725, New York, NY 10168; 212-779-7172, ext. 223; E-mail: wberger@mediapeople.com

NARFE for the Visually Impaired On the Telephone: This publication can be heard on the telephone by persons who have trouble seeing or reading the print edition. For more information, contact the National Federation of the Blind NFB-NEWSLINE® service at 866-504-7300 or go to www.nfbnewsline.org. On Tape: Issues of NARFE magazine are also available on cassette through the National Library Service for the Blind and Physically Handicapped. To find out about availability in your area, call 800-424-8567 and ask for the Reference Section. The Association, since July 1970, has been classified by the IRS as a tax exempt labor organization [not a union]; however, dues and gifts or contributions to the Association are not deductible as charitable contributions for income tax purposes.

NARFE (ISSN 1948-4453) is published monthly by the National Active and Retired Federal Employees Association (NARFE), 606 N. Washington St.,Alexandria,VA 22314. Periodicals postage paid at Alexandria,VA, and additional mailing offices. Members: Annual dues includes subscription. Non-member subscription rate $45. Postmaster: Send address change to: NARFE Attn:Member Records,NARFE 606 N.Washington St.,Alexandria,VA 22314.To ensure prompt delivery,members should also forward changes of address without delay. Because of the volume involved, NARFE cannot acknowledge nor be responsible for unsolicited pictures and manuscripts, although every reasonable precaution is taken. All submissions become the property of NARFE. Contents of this magazine are copyrighted © 2011.Advertisements in the magazine are not endorsements of products and/or services by NARFE, unless officially stated in the ad. We shall accept advertising on the same basis as other reputable publications: that is, we shall not knowingly permit a dishonest advertisement to appear in NARFE, but at the same time we will not undertake to guarantee the reliability of our advertisers.

JUNE 2011 | NARFE

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A Message From the National President

Fairness: Take Two

ost readers of this magazine are aware that NARFE was born 90 years ago when, on February 19, 1921, 14 federal retirees met in downtown Washington to form a group dedicated to “improving the status of retired federal employees.” At that time, civil service annuities were capped at $60 per month, or $720 per year. Many retirees then were receiving as little as $15 per month. On July 1, 1926, President Calvin Coolidge signed a bill raising annuity rates for present and future retirees to $1,000. It was the first legislation endorsed by NARFE that became law. Since NARFE was founded, the Association has successfully fought to ensure that current and retired federal employees receive fair and equitable treatment when it comes to their earned benefits. NARFE has accomplished many of its victories single-handedly and, in some cases, working with our federal-postal coalition partners. Our success also has been due to the efforts of NARFE members at the grass-roots level. Now, some 90 years later, we find ourselves once again facing a Congress and a president proposing cuts to our earned benefits. When we first went to work for the government, many of us did so because we knew that federal service was a way to help our nation and fellow citizens. And although our pay might not have equaled what our private-sector counterparts were and are receiving, the retirement benefits made our choice a good one. Now we see that these benefits are threatened. Federal

workers and retirees have been singled out once again for cuts. We are willing to do our part in helping the country reduce the national debt and balance the budget, but we are not willing to do it alone. As we proved our dedication to public service by working many years for the government, often at salaries lower than those paid by private industry, we also endured restrictions, such as the Hatch Act. And remember the “diet COLAs” of the 1980s and 1990s, when our cost-ofliving adjustments were either delayed or cancelled? Government workers and retirees were not treated fairly 90 years ago, and it appears as though we may not be treated fairly again. The 14 members who started NARFE in 1921 knew an injustice when they saw one and decided to do something about it. Do you recognize an injustice – one that has a negative impact on you, your family and your survivors – and are you willing to do something about it? We cannot sit by and watch our benefits be reduced unfairly. NARFE’s Legislative Department is continuing to work each and every day on many fronts on your behalf. But efforts at the grass-roots level also must continue. One way you can help is by supporting NARFE’s “Protect America’s Heartbeat” campaign. Go to the NARFE website, www.narfe.org, to see how you can become involved. If your current and former co-workers are not NARFE members, remind them that those benefits Congress and the president are after belong to them, too. Get them to join us in this fight to preserve what is rightfully ours.

WE CANNOT sit by and watch our benefits be reduced unfairly.

Joseph A. Beaudoin natpres@narfe.org

JUNE 2011 | NARFE

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LEGISLATIVE REPORT

NARFE:Raise Debt Limit, Turns Hands Off CSRDF Treasury To Fund to Keep

ARFE President Joseph A. Beaudoin called on Pres-

ident Obama and Congress in May to enact a new

statutory debt limit instead of “borrowing” billions

of dollars from the Civil Service Retirement and

Disability Fund (CSRDF) and the Thrift Savings Plan (TSP) G Fund to avoid a government default. At press time, the federal debt was expected to reach the statutory limit of $14.3 trillion by May 16. If the limit is reached, Treasury Department officials will have to resort to extraordinary money management mechanisms (including accessing federal trust fund assets) to keep operations running. “The Treasury Department is preparing to borrow our retirement funds because some lawmakers want to use the debt ceiling increase as leverage in the battle over the budget. Or even worse, some have irresponsibly downplayed the economic crisis that would result if a government default were allowed to happen,” Beaudoin said. “Borrowing our earned economic security should be an act of last resort to avoid default, not the first. We urge Congress to stop playing politics and approve a new debt limit without further needless delay.” Beaudoin also said that federal annuitants and workers recognize how important it is to use cash management tools to protect their fellow citi-

zens from the catastrophe that would result if a default occurred. Contrary to the misinformation and propaganda that federal retirement assets were nearly bankrupt and our retirement benefits were bankrupting the nation, it is the solvency of the Civil Service Retirement and Disability Trust Fund that makes this possible. “We have denied these claims because they are simply untrue,” the NARFE president said. “Now, once again, events are demonstrating that our funds are not bankrupt, but instead are strong enough to save the nation from bankruptcy.” The CSRDF currently holds government securities valued at $734 billion. Office of Personnel Management actuarial projections indicate that the fund will be able to meet its financial obligations in perpetuity. In April, Treasury Secretary Timothy F. Geithner warned Congress that if it failed to raise the statutory federal debt limit before May 16, he would be forced “to take certain extraordinary measures”

From Default ■ The federal debt is the

cumulative amount of money the federal government has borrowed from the public (to finance periods of deficit spending) through the sale of notes and bonds of varying sizes and time periods. ■ It is also debt that the

government owes itself, including the total of all trust fund surpluses (i.e.,Social Security and the Civil Service Retirement and Disability Fund). ■ When the debt limit is

reached,the president and Congress must enact an increase in the limit. ■ If the debt limit is not raised,

theTreasury Secretary has warned that default would cause a severe financial crisis.

LEGISLATIVE HOTLINE Toll-free! (24 Hours): 877-217-8234 Legislative Action Center: www.narfe.org JUNE 2011 | NARFE

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Legislative Report to prevent a default, including “… the suspension of new investments of the Civil Service Retirement and Disability Fund (CSRDF) and suspending reinvestment of the Government Securities Investment Fund (G Fund)” from the Federal Retirement Thrift Savings Plan. By taking these steps, the Treasury Secretary said he could delay a default until early July. Geithner has cautioned lawmakers that “default would cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover.”

STORY HIGHLIGHTS ■ NARFE President JosephA.Beaudoin has urged

Congress to raise the debt limit instead of “borrowing” from the Civil Service Retirement and Disability Fund (CSRDF) and the Thrift Savings Plan’s G Fund to avoid a government default. ■ Beaudoin noted that the prospect of borrowing from the CSRDF shows that,contrary to some claims,the fund is not bankrupting the nation,but instead is strong enough to save the nation from bankruptcy.

“BORROWING” EXPLAINED Each day, the U.S. Treasury takes in several billion dollars for federal trust funds. For Social Security, these dollars come in the form of employer and employee payroll taxes. Federal employee and Postal Service contributions to the CSRDF also inject cash into the Treasury. Usually, this cash is immediately invested in nonmarketable government securities – to remain available to finance future benefits. But if a debt limit breach appears imminent, the Treasury Department could “underinvest” this revenue as it arrives. The trust funds would be given a temporary IOU that does not count against the debt ceiling, and the withholdings would be used to pay off the government’s cash obligations until an increase in the debt ceiling could be settled. The Treasury Department could also make cash available from the trust fund by “disinvesting” some of the money used to buy government bonds. Under this ap-

proach, bonds held on behalf of trust funds would be converted to cash earlier than normally needed. Like the “underinvestment” option, cash from this transaction would be used to pay federal obligations on a temporary basis. The disinvesting approach is a temporary accounting device that would help maintain the Treasury’s cash flow. Federal law requires that the TSP G Fund and the CSRDF be reinvested and made whole for any interest lost once a debt limit increase becomes law and the period of debt suspension ends. Indeed, the CSRDF was disinvested and underinvested in 1985, 1995, 1996, 2002, 2003, 2004 and 2006 to prevent the federal government’s default, and in each instance the fund was reimbursed with interest after Congress and the president agreed to raise the debt limit. The 1985 debt crisis prompted the adoption of the “make whole” provision in the Consolidated Omnibus Budget Rec-

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Legislative Report Prepare forAugust and‘Grass-RootsAdvocacy Month’

very August, like clockwork,Washington, DC, empties out as members of Congress return home for the August-Labor Day recess. Occurring between August 6 and September 6, this four-week period provides NARFE members with the best opportunity to reach out to their representative and senators while they are in their home districts. That’s why NARFE has designatedAugust 2011 as“Grass-RootsAdvocacy Month.” Grass-roots advocacy is vital as lawmakers prepare to return toWashington, DC, for the fall. During the summer and beyond, Congress is expected to debate budget reconciliation legislation, which could include reductions to federal civil service retirement and health benefits, and appropriations bills, which may contain an extension of the federal employee pay freeze and/or a ban on merit-based pay increases. TOOLKIT: As part of NARFE’s“Protect America’s Heartbeat” campaign,we have created an advocacy and communications toolkit to help chapters and state federations plan for Grass-RootsAdvocacy Month. The toolkit is available online at www.ProtectAmericasHeartbeat.org/resources. The toolkit includes a timeline to assist in the scheduling and planning of meetings with members of Congress. NARFE encourages chapters and state federations to contact congressional schedulers as soon as possible to begin arranging meetings.Chapters that share representatives with other chapters should work together to arrange a single meeting. Further, NARFE encourages state federations to take the lead on arranging meetings with Senate offices. A sample letter is available online,including one specifically for theAugust recess. MEDIA: An important part of grass-roots advocacy is publicity and media outreach. The toolkit includes a sample letter to the editor, press release and press notice. Members of Congress and/or their staff read local newspapers to keep up-to-date with what is going on at home. A letter to the editor published in your local paper is an easy way to get NARFE concerns directly in front of a legislator’s eyes. TOWN HALL MEETINGS: During August, lawmakers frequently hold town hall meetings throughout their districts and states to update constituents on the first seven months of the 112th Congress (2011-2012). Town hall meetings are an excellent opportunity to meet briefly with lawmakers or their staff. These public forums are good chances to ask questions, encourage support of the federal community or thank legislators for supporting NARFE issues. To find out where and when your representative or senators might be holding a town hall meeting,call their office or sign up for their e-newsletters. The NARFE Legislative Department also updates a list online, which is available at www.narfe.org/legislation. While the August recess is the longest period of time that members of Congress are in their districts during the session,it is not the first and only opportunity for grass-roots advocacy.Lawmakers will also be home for the July 4 recess, and most representatives and senators return for district and state events during weekends.Letter-writing campaigns and letters to the editor also are important when Congress is in session. By Sarah Holstine,Legislative Specialist onciliation Act of 1986, which NARFE fully supported, as an amendment to the retirement law.

QUID PRO QUO At press time, the House majority leadership announced that it would hold “listening sessions” to determine what Republican representatives want in return for their support for an increase in the debt limit. Budget hawks in both parties and chambers are likely to demand large spending cuts and new procedures that require automatic across-the-board reductions when spending exceeds a specific limit (see cover story, pp. 20-22). Payment of federal annuity checks to retirees and sur-

vivors, and disbursement of, and the accrual of earnings to, the TSP’s G Fund accounts would be unaffected if Geithner disinvests and/or underinvests the civil service retirement trust funds to avoid a government default. However, if a default were allowed to occur, a broad range of government payments would have to be stopped, limited or delayed, including federal civilian and military salaries and retirement benefits, Social Security and Medicare payments, interest on the debt, unemployment benefits and tax refunds. But as Geithner has said, “default would cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover.”

By Dan Adcock,Legislative Director JUNE 2011 | NARFE

‘Protect America’s Heartbeat’ Campaign Going Strong

ince late February, NARFE’s “Protect America’s Heartbeat” campaign has been at the forefront of the national effort to educate decision makers and the public about federal workers and retirees and their immeasurable contributions to this country. The goal of the campaign is to reduce or eliminate the many proposed budget cuts that would affect the federal family. In just a few short months, the grass-roots efforts of NARFE activists from across the country have delivered more than 10,000 online messages to Congress. Legislative Director Dan Adcock gives a TV The campaign also interview in front of NARFE HQ as NARFE raises the profile of the federal family. has elicited dozens

of inspiring federal worker stories through its website, www.ProtectAmericasHeartbeat.org. Some of these stories showcasing the value of federal workers and retirees have even been featured in some of the largest newspapers in the country, with a total readership of nearly 100 million. But these results are only the beginning. With your help, we can do even more to safeguard the benefits you worked hard for and have earned. If you want to become active locally in the Protect America’s Heartbeat campaign, here’s what you can do: • Go to www.ProtectAmericasHeartbeat.org to share your story and send an e-mail to Congress. • Next, download the Protect America’s Heartbeat Take Action Toolkit. • Then, use the resources in the toolkit to organize your chapter, send letters to the editor to your hometown newspaper, and request meetings with your senators and representative the next time they’re back in your district. For more ways to get involved, be sure to speak with your NARFE chapter or state federation president. Together, we will Protect America’s Heartbeat and our families from unfair cuts. ■

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Legislative Report

Feds’ Taxes, Probation Subject of Bills

he House Committee on Oversight and Government Reform has approved legislation that would authorize the firing of federal employees who are delinquent in their taxes and require a mandatory two-year probationary period for new hires. In a letter sent April 12 to committee members, NARFE President Joseph A. Beaudoin expressed the Association’s concern that “both bills are needlessly punitive attacks on federal workers who are already facing a two-year pay freeze and whose earned compensation is being singled out for unfair and disproportionate reductions during the current budget process.” At the committee markup session April 13, both bills were amended to partially address concerns raised by NARFE. H.R. 828, the Federal Employee Tax Accountability Act of 2011, introduced by Rep. Jason Chaffetz, R-UT, would require employees to be immediately fired based on a notice of back taxes. An amendment offered by Chaffetz eliminated automatic termination and provides federal employees with slightly more due process. The committee approved an amendment offered by Chairman Darrell E. Issa, R-CA, and Rep. Stephen F. Lynch, R-MA, that added exemptions for military personnel, and employees working with the Internal Revenue Service (IRS) to have their wages garnished or who fall under the IRS hardship status. The amendment also provides employees an appeals process that allows them 60 days to show that they are working with the IRS and requires the Office of Personnel

STORY HIGHLIGHTS ■ Bills that would authorize the firing of federal

employees who are delinquent in their taxes and impose a two-year probationary period for new federal hires were approved by a House committee. ■ NARFE called the measures “needlessly punitive.” ■ Both bills were amended to partially address NARFE’s concerns. Management to work with the IRS on management concerns. The committee also approved H.R.1470, a bill to extend the probationary period for federal employees to two years. Under current law, the executive branch has the discretion to set the probationary period at two years or more, but most positions require a one-year probationary period on hiring and when promoted to a management position. The legislation, as introduced by Rep. Dennis A. Ross, R-FL, chairman of the Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy, would have required the probationary period to also include transfers, promotions, demotions and reassignment, resulting in employees serving probationary periods for decades. It was revised so the probation period applies only to new hires. Rep. Elijah E. Cummings, D-MD, said that one year is longer than most private companies require and noted that there have been no hearings held on the legislation. At press time, it was unclear when H.R. 1470 and H.R. 828 would be considered by the House.

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Signature Date Only members of the National Active and Retired Federal Employees Association may contribute to NARFE-PAC. NARFE will neither favor nor disadvantage anyone based on the amount of a contribution, or the failure to make a voluntary contribution to this non-partisan political action fund. NARFE-PAC contributions are not deductible for federal income tax purposes.

JUNE 2011 | NARFE

Legislative Report

Workers’Comp Subject of Hearing

he House Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy held a hearing on April 13 on reforming the Federal Employees’ Compensation Act (FECA). FECA provides compensation to federal workers who are injured or become ill in the performance of their duties. Subcommittee Chairman Dennis A. Ross, R-FL, focused on shifting FECA recipients to the retirement system when they reach retirement age. This was a clear show of support for a bill introduced in the Senate, S. 261, the Federal Employees’ Compensation Reform Act of 2011, which would terminate workers’ compensation benefits for individuals who reach full Social Security retirement age. Said Ross, “Workers who have been permanently disabled by their injuries and who will never return to work should not be covered indefinitely by FECA.” NARFE President Joseph A. Beaudoin, in written testimony entered into the record, urged subcommittee members “to seriously reconsider the significant financial implications that proposed legislative changes could have on disabled public servants who have lost the ability to earn income to adjust their financial situation to new circumstances.” He added, “without an informed and fair assessment, we risk turning our backs on those who have not only served their country but also have already borne a heavy burden for doing so.” Beaudoin argued that “any legislative changes to FECA benefits should take into account the nature of workers’ compensation and the disadvantages faced by those employees unfortunate enough to suffer a debilitating injury or illness as a result of their public service.” Notably, FECA seeks to make federal employees whole for the injury or illness caused by their work. Yet, as Beaudoin noted, “FECA recipients do not receive a full replacement of their income; they lose the ability to increase their income through meritbased raises or promotions, and they lose the ability to accumulate years of service. This diminishes significantly their ability to save for retirement; to earn a higher annuity, which is based on their highest average three years of salary and years of service, if they are forced into the retirement system at retirement age; and to earn a higher Social Security benefit, which is based on average monthly earnings.” Particularly for a federal worker who is injured or becomes

STORY HIGHLIGHTS ■ A House subcommittee is looking into shifting

recipients of benefits under the Federal Employees’ Compensation Act to the federal retirement system when they reach retirement age. ■ A bill to do this has already been introduced in the Senate. ■ NARFE entered testimony into the hearing record that pointed out that such a move would have “significant financial implications” on disabled public servants. ill in the middle of his or her career, the lost opportunity to prepare adequately for retirement is substantial. In addition to the proposal to shift FECA recipients to annuities at retirement age, a number of other reforms to the federal workers’ compensation system were discussed. Gary A. Steinberg, acting director of the Department of Labor’s Office of Workers’ Compensation Programs, suggested legislative reforms that would improve rehabilitation for injured workers and return them to work sooner, reforms to initial claims processing, wage data collection and updating the benefit structure. He proposed changing the income replacement rate to 70 percent rather than 66.6 percent for single workers and 75 percent for employees who are married or have dependents. Rather than moving FECA recipients to the retirement system, he suggested simply reducing their benefit at retirement age to 50 percent of their salary at the time of injury. There appeared to be bipartisan consensus in favor of legislative reforms to FECA, but it was unclear to what extent there was bipartisan consensus on the specifics of those reforms. Lisa McManus, president of Contract Claims Services, Inc., suggested throwing out the entire law. She backpedaled from that position, however, when questioned by Rep. Gerry E. Connolly, D-VA, who suggested that practical reforms might be a better solution. Congress may be headed in that direction. As they consider those reforms, Beaudoin reminded subcommittee members to treat our disabled public servants “with respect and gratitude, and not indifference.”

TREAT DISABLED public servants “with respect and gratitude, and not indifference,” NARFE urged.

By John Hatton, Legislative Specialist JUNE 2011 | NARFE

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Legislative Report CIVICS 101:

THE INFORMED CITIZEN

Convention Participant-Observer

ARFE’s 46th Kentucky Federation Convention was held in Lexington in April. As both a participant and an observer, I wanted to share with you my thoughts about this event. The convention was a major success due to excellent planning and the leadership of both incoming and departing officers. The only thing better than the facility and meals was the spirit of collegiality among the delegates. The work of the host, the six chapters of District V and most especially District Vice President Bill Crase, deserves special praise.

STORY HIGHLIGHTS ■ Collegiality and planning were key to the Kentucky

Federation Convention’s success. ■ The legislative keynote address reminded

convention attendees of the stakes in the remaining congressional battles this year – the debt ceiling and fiscal year 2012 budget. the host congressman and eagerness to hear from (and recruit) his staffer.

OFFICERS ELECTED CONGRESSMAN INVITED Showing a correct ordering of priorities, Rep. Ben Chandler, representing Kentucky’s Sixth District, had been invited to be the pre-convention speaker. Rescheduled floor votes in the House of Representatives precluded his attendance, but his Constituent Services Director Veronica Cecil ably addressed the convention and took questions from the audience. She was introduced by Ken Overhults, federation NARFE-PAC coordinator.

HEADQUARTERS REP I had the pleasure of representing NARFE’s Legislative Department and gave the legislative keynote address, reminding Kentucky officers and activists of the stakes in the remaining congressional battles this year. With the government shutdown just narrowly averted, two remaining battles – the debt ceiling and the fiscal year 2012 budget – leave the earned benefits of current and future federal retirees at risk (see pp. 8 and 20). Face-to-face meetings with the Kentucky congressional delegation were repeatedly stressed. Five of Kentucky’s six representatives, including three of the four Republicans, were commended for their floor votes opposing the amendment to H.R. 1, the House continuing appropriations bill, introduced by Rep. Darrell E. Issa, R-CA. The Issa amendment would ban step increases for current federal employees. Despite its defeat, the Fiscal Year 2012 Budget Resolution, H. Con. Res. 34, includes a freeze on federal pay for five years. Only the actions of Kentucky federal employee advocates can explain the opposition to the Issa amendment. Convention organizers won praise for flexibility in their invitation to

The Nominating Committee’s Report proposed the elevation of the vice president, election of District II Vice President Betty Hundley as Federation Vice President, and continuation in office of the secretary and treasurer. This slate of officers was elected for a two-year term.

NATIONAL EXECUTIVE BOARD REP Region X Vice President Bill Martin, attending his second consecutive Kentucky Federation Convention, updated the attendees on national finances, membership, the “Protect America’s Heartbeat” campaign with M+R Strategic Services, and national committees on recruitment, retention and Bylaws. Martin answered many delegates’ questions and invited regular communication.

LEGISLATIVE CONFERENCE REPORT Paul Johnson, national legislative chair, reported on the NARFE Legislative Training Conference he had attended in March. Johnson highlighted his visits to Capitol Hill on NARFE Advocacy Day, which was held during the conference. Johnson distributed conference materials used during his congressional visits. Later during the convention, he moderated a panel discussion on national legislation.

NEW BOARD MEETS Newly elected Federation President Noreene Morgan conducted her first board meeting as soon as the convention concluded. Morgan encouraged officers to bring potential leaders with them to future board meetings as a means of recruitment and training.

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NARFE Leads Fight Against

$ 3 7 5 B i l l i o n In Cuts to Federal Pay and Benefi fitts IF THE BUDGET resolution passed by the House of Representatives in April becomes a reality, the federal work force would be drastically diminished, NARFE has warned. “Even in these tough economic times, America cannot afford a second-tier government, and we must not forfeit our protections,” NARFE President Joseph A. Beaudoin said in protesting the budget plan. Beaudoin said that retiree benefits also could be in jeopardy under the proposal. The Fiscal Year 2012 Budget Resolution, H. Con. Res. 34, was passed by the House on April 16. It would cut federal employee pay and benefits by an unprecedented $375 billion over 10 years. The measure was introduced by Rep. Paul Ryan, R-WI, chairman of the House Committee on the Budget. It would reduce the federal work force by 10 percent, extend the current two-year pay freeze to five years, and require federal workers to contribute more to the Civil Service Retirement and Disability Fund (CSRDF). In an April 5 letter to members of the Budget Committee, NARFE President Beaudoin wrote, “More than anyone, our federal employees understand the constraints of the U.S. budget, and they are already doing their part to lower gov-

By Dan Adcock, Legislative Director

ernment costs. But Chairman Ryan’s plan to cut pay and retirement by $375 billion over 10 years goes too far and is not an acceptable solution.” NARFE led the effort to send a similar letter, signed by 22 member organizations of the Federal-Postal Coalition. The letter, sent on April 13 to all 435 members of the House, urged them to vote against Ryan’s budget resolution. H. Con. Res. 34 passed on a nearly party-line vote of 235193. Four Republicans – Reps. Dennis Rehberg, MT; Walter B. Jones, NC; David B. McKinley, WV; and Ron Paul, TX – voted against it, and no Democrats voted in favor of it. The House-passed budget resolution must be reconciled with the Senate’s version of the measure, which, at press time, had not yet been considered. The president does not sign the budget resolution, and it does not have the force of

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law. However, once it has been approved by Congress, it sets up a process with binding requirements on how the budget becomes law through budget reconciliation legislation (entitlement programs and revenue changes) and appropriations bills (discretionary programs). Congress may be forced to act sooner, rather than later, on the budget as part of a negotiation on raising the debt limit, which may be reached by May 16. This will be the crucial point when budget hawks in Congress will be at the height of their leverage by withholding their vote for a debtlimit increase until there is consensus on making unprecedented cuts in entitlement and other direct-spending programs (see story, p. 8).

IMPACT ON FEDERAL BENEFITS H. Con. Res. 34 suggests reducing the federal work force by 10 percent, extending the pay freeze to five years and forcing federal employees to increase significantly their contribution to the CSRDF without any additional benefit. Federal Employees Retirement System (FERS) employees would pay about 5.8 percent of their salaries toward an annuity instead of the 0.8 percent that they currently contribute. FERS employees already contribute 6.2 percent of their salaries to Social Security, which would mean FERS employees would pay 12 percent in all toward their retirement. Civil Service Retirement System employee contributions would increase from 7 percent to about 12.5 percent. They do not pay into Social Security. The House Committee on Oversight and Government Reform, which has jurisdiction over federal employee and retiree compensation, is not required to include the budget resolution’s policy recommendations in the budget reconciliation bill, but it will probably have to come up with enough cuts in federal retirement and health benefits to reach the amount of savings specified in the budget resolution. This means that, while the initial cuts impact current federal employees, proposals affecting the entire federal community – including retirees and survivors – will remain under consideration. “Every inequitable and unfair proposal to cut federal retirement, pay and health benefits ever concocted continues to be on the table,” Beaudoin said. “For example, we are still concerned about the National Commission on Fiscal Responsibility and Reform’s plan to impose a voucher system in the Federal Employees Health Benefits Program (FEHBP) in which enrollees would pay a higher percentage of premiums each year to the point at which many could no longer afford health insurance.”

MEDICARE, MEDICAID WOULD BE CHANGED There also is a proposal in the budget resolution that would end the traditional Medicare program and replace it in 2022 with something Ryan says would be like the FEHBP. NARFE would oppose legislation that would end traditional Medicare. That is because most federal annuitants enroll in traditional Medicare since the program’s coverage coordinates better with FEHBP benefits than Medicare Advantage plans, the private plans currently available through Medicare. Beneficiaries would be given a voucher to buy a private Medicare plan. The voucher part of this proposal is based on the “premium support” pilot project Ryan and former Clinton Administration Budget Director and Fiscal Commission member Alice Rivlin proposed for the FEHBP in the Fiscal Commission report in December, described above. This is the plan that would require enrollees to pay a higher percentage of the premium every year. H. Con. Res. 34 also would convert Medicaid, the health care program for low-income individuals, into a block grant program in which federal Medicaid funding would be subject to a limit or ceiling. Block grant programs do not require states to serve all eligible people. As a result, cash-strapped states could deny or defer Medicaid long-term care to severely disabled persons who have impoverished themselves to qualify for the program. The NARFE Legislative Program for the 112th Congress (2011-2012) “supports the guarantee of long-term care benefits for individuals presently eligible for Medicaid, [and] adequate state and federal contributions to Medicaid to finance current and future program needs.”

Legislative Counsel Alan Lopatin contributed to this article.

STORY HIGHLIGHTS ■ The House passed a budget resolution, introduced

by Rep. Paul Ryan, R-WI, to cut $375 billion in federal pay and benefits over 10 years. ■ It also would end the traditional Medicare program and convert Medicaid into a block grant program. ■ The House budget resolution would have to be reconciled with the Senate’s version, not yet considered at press time. ■ Initial cuts impact current feds, but proposals affecting retirees and survivors will remain under consideration.

JUNE 2011 | NARFE

Managing Money

Roth IRA Distributions: Part II By Mark A. Keen, CFP®

ay’s column covered the rules for taking tax-free distributions from a Roth individual retirement account (IRA) when funded with regular contributions. Roth IRAs also may be funded with conversions from traditional IRAs and employer-sponsored plans, such as the Thrift Savings Plan. This month, we’ll look at the rules for distributing taxable conversion assets as well as the tax consequences of nonqualified distributions. Last month’s column covered the five-year waiting period that is used to determine whether a Roth IRA distribution is qualified. But there are actually two five-year waiting periods applying to Roth IRAs. The second applies to taxable conversions, which requires that you wait five years after the conversion before you can distribute those assets from the Roth IRA without incurring the 10-percent early distribution penalty (unless you’re older than age 59-1/2 or qualify for an exception). The clock starts ticking for the fiveyear waiting period for conversions on January 1 of the applicable calendar year. But unlike the five-year waiting period for qualified distributions (which has to be satisfied only once), a separate five-year period must be satisfied for each taxable conversion. For example, if you made a conversion in 2010, the five-year period for that conversion would be satisfied beginning January 1, 2015. If you do another conversion in 2011, the five-year waiting period relating to the 2011 conversion would be satisfied beginning January 1, 2016. Note that, although the five-year waiting period for conversions doesn’t apply if you’re older than age 59-1/2,

you would still have to satisfy the fiveyear test for determining qualified distributions; otherwise, any distributed earnings would be taxable. The five-year waiting period only comes into play if you take a nonqualified distribution. Qualified distributions will always be income tax- and penaltyfree, regardless of whether the distributions come from regular contributions, conversions or earnings. That said, let’s take a look at the tax consequences of nonqualified distributions when a Roth IRA contains regular

needs to apply the Internal Revenue Service (IRS) ordering rules: 1. Regular Contributions; 2. Conversion Assets; and 3. Earnings. In addition, although Jane has two Roth IRAs, the IRS treats multiple Roth IRAs as one when applying the distribution ordering rules. We can summarize her two Roth IRAs as follows: $10,000 2006 & 2007 Regular Contributions $20,000 2007 Taxable Conversion $20,000 Earnings $50,000 Total Value

THE CLOCK starts ticking for the five-year waiting period for conversions on January1of the applicable calendar year. contributions, conversion assets and earnings. In 2006, Jane opened her first Roth IRA with a contribution of $5,000. The Roth IRA has gained $5,000 and is now worth $10,000. In 2007, Jane opened a second Roth IRA, contributing another $5,000. Later in 2007, she converted $20,000 from her traditional IRA to the second Roth IRA. The second Roth IRA has $15,000 in earnings and is now worth $40,000. Jane, who is now age 58, wants to take a distribution from her Roth IRAs and would like to know the tax consequences. Although her first Roth IRA has been open for more than five years, her Roth IRA distribution would still be nonqualified because she is under age 59-1/2 and doesn’t meet one of the other tests for qualified distributions. To determine the tax consequences, Jane needs to determine the source of funds being distributed. For this, she

Let’s take a look at the tax consequences for various distribution scenarios from Jane’s Roth IRAs. Jane distributes $10,000. According to the ordering rules, distributions first come from regular contributions. According to IRS regulations, you may distribute regular contributions tax- and penalty-free at any time. Jane distributes $25,000. The first $10,000 again comes from contributions and is, therefore, tax- and penaltyfree. The remaining $15,000 comes from taxable conversion assets. She paid tax on the converted assets at the time of conversion, so there will be no additional tax. However, because it has not been five years since these assets were converted, and Jane doesn’t meet one of the early distribution exceptions, she must pay the 10-percent early distribution penalty on the $15,000 attributable to taxable conversion assets. JUNE 2011 | NARFE

Jane distributes $40,000. As with the previous examples, the first $10,000 is income tax- and penalty-free. The next $20,000 comes from the taxable conversion and will be subject to the early distribution penalty. The remaining $10,000 comes entirely from earnings. Jane’s distribution is nonqualified; therefore, the earnings will be subject to income tax as well as the 10-percent early distribution penalty because she is under age 59-1/2 and doesn’t qualify for any other exception. Now, let’s assume that Jane is age 60, and her regular contributions occurred in 2007 and 2008. If she decides to take a distribution, it would still be nonqualified because, although she now meets the age 59-1/2 requirement, her first Roth IRA hasn’t been open for the required five years. Looking at the

NARFE | JUNE 2011

three distribution scenarios again, Jane’s tax consequences are as follows: $10,000 Distribution: Comes from contributions and is income tax- and penalty-free. $25,000 Distribution: The first $10,000 comes from contributions and is income tax- and penalty-free. The remaining $15,000 comes from the taxable conversion Jane did in 2007. She is older than age 59-1/2, so she is free to pull out her taxable conversion assets without incurring the early distribution penalty (and no taxes because she paid them at the time of conversion). $40,000 distribution: As in the previous two scenarios, Jane can pull out her contributions and taxable conversion assets income tax- and penaltyfree. The remaining $10,000 comes from earnings and will be subject to in-

come tax. However, Jane will not have to pay the early distribution penalty because she is over age 59-1/2. These scenarios show the tax implications and penalties that should be considered when taking a distribution from your Roth IRA. If properly timed, you can control your liability and maximize your distributions. Consult your tax consultant or financial adviser to discuss your personal financial situation.

Mark A. Keen, CFP®, is president and owner of Bennett Financial Advisors in Fairfax,VA, and an investment adviser representative and registered representative of The Strategic Financial Alliance, Inc. (SFA). Securities and advisory services are offered through SFA. E-mail: mkeen@tributary advisors.com.

Live Well

Help From a Registered Dietitian By Marilyn S. Radke, M.D.

utrition services are one of the first treatments your doctor should consider to improve medical conditions such as high blood pressure, diabetes and heart disease. A registered dietitian (RD) is a food and nutrition expert who can help you cope with food or medication interaction, digestive problems, proper hydration, special diets for chronic medical conditions and changing taste buds as you age. RDs provide nutrition education for disease prevention and nutrition counseling for chronic conditions over a series of visits as part of a comprehensive health care program. After reviewing your eating habits, an RD will help you make a personalized nutrition plan and set nutrition goals to improve your health. The nutrition care process has four steps: 1. Nutrition Assessment – gathers food- and nutrition-related information from the client’s history, medical test results and body measurements; 2. Nutrition Diagnosis – names the specific nutrition problem; 3. Nutrition Intervention – selects the nutrition method aimed at relieving the signs and symptoms of the specific nutrition problem; and 4. Nutrition Monitoring/Evaluation – determines if the client has achieved, or is making progress toward, the

planned goals. The first visit with an RD takes approximately one hour. After the first session, the RD schedules follow-up visits to check on your progress, and change your nutrition goals and nutrition treatment plan, as needed. Most RDs work as part of the health care team in hospitals, health maintenance organizations, private practices or other health care facilities. Many work in community and public health settings, research, or the food and nutrition industry. A dietetic technician, registered (DTR) often works in partnership with RDs to screen, evaluate and educate clients, and monitor their progress. The DTR credential requires earning a two-year associate degree, completing accredited course work and supervised practice, passing a national examination and completing continuing, professional education to maintain the DTR. DTRs work in hospitals, clinics, extended-care facilities, home health care programs, schools and prisons. They also work for food companies, food service providers, public health agencies, and government and community programs, such as Meals on Wheels. Ask your doctor if a referral for medical nutrition therapy (MNT) is right for you. With a doctor’s referral, you can make an appointment to see

an RD at your local hospital outpatient department, clinic or an RD’s practice near you. Medicare may cover MNT and certain related services if you have diabetes or kidney disease, or if you had a kidney transplant in the last three years, and your doctor refers you for the service. This benefit includes: • An initial assessment of nutrition and lifestyle; • Nutrition counseling; • Information on managing lifestyle factors that affect diet; and • Follow-up visits to monitor progress managing your diet. Medicare covers three hours of one-on-one nutrition counseling services the first year and two hours each year after that. If your medical condition, treatment or diagnosis changes, you may be able to receive more hours of MNT with a doctor’s referral. A doctor must prescribe these services and renew referrals yearly if you need MNT into another

CONSIDER inviting a registered dietitian to the table to help you design a smarter eating plan for good health.

To Learn More or more information, write to the American Dietetic Association, 120 S. Riverside Plaza, Suite 2000, Chicago, IL 60606-6995; or call 800-877-1600; or visit the website at www.eatright.org.

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Marilyn S. Radke, M.D., is board certified in preventive medicine and practices in Atlanta, GA. NARFE | JUNE 2011

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calendar year. These services can be given by an RD or other Medicare-approved nutrition professional. You pay nothing for these MNT services if your doctor accepts assignment. Many private insurance companies also cover MNT services for a variety of diseases and medical conditions. Check with your insurance plan and/or Medicare for specific MNT coverage details. You should be aware that the RD credential applies only to practitioners who have done all of the following: • Earned a bachelor’s degree with course work in food and nutrition sciences, food service systems management, sociology, biochemistry, anatomy, physiology, microbiology and chemistry; • Completed an accredited, supervised program of practical experience at a health care facility, community agency or food service corporation; • Passed a national examination; and • Completed continuing, professional education courses to maintain the RD. Some RDs earn additional certifications in specialized areas of practice, such as pediatric nutrition, renal nutrition, gerontological nutrition, oncology nutrition or sports dietetics. Although some RDs call themselves “nutritionists,” not all nutritionists are registered dietitians. Some states have licensure laws that define the range of practice for a “nutritionist.” But in other states, almost anyone can call themselves a “nutritionist,” regardless of education or training. Consider inviting an RD to the table to help you design a smarter eating plan for good health, taste and nutrition.

Alzheimer’s Update

Success and a New Goal By Barb L. Pretzer

am still in awe that we reached another truly amazing goal of $9 million for Alzheimer’s research, and we did it by raising $1 million in just 23 months. To top it off, this was accomplished not only with funds raised at concession stands, dinner dances, golf tournaments and other types of fundraisers, but also with our pennies, dimes, quarters and dollar bills collected at NARFE meetings. (And there was no unusually large estate gift to help us reach our goal this time.) This achievement confirms just what can be done when we all pull together for the same cause. All of you have my respect and admiration for what you have done. Now it’s on to the next goal of $10 million in 2012, approved by delegates at the 2010 National Convention. Can we do it again in 23 months? That’s what would be needed to reach the goal in 2012. If your federation or chapter needs some new ideas, contact your region or federation Alzheimer’s coordinator. They are listed, along with their e-mail addresses, on the NARFE website. (Go to www.narfe.org; log in as a member; then click on “Alzheimer’s Fund” under “Special Programs” in the left panel.) A fresh idea or setting up a friendly competition among chapters can really boost a chapter’s momentum in meeting its own chapter goals.

Don’t forget about using memorials to honor a NARFE member or anyone in your community. Memorials can mean so much more than flowers. The North Dakota Federation has developed a brochure that may be left at funeral homes to help with establishing a memorial. Go to www.narfe.org/nd to download the brochure. Your chapter or federation Alzheimer’s coordinator

against excess glutamate, which can speed up cell damage. If you would like to obtain a report of NARFE’s recently funded grants and their findings, contact your region Alzheimer’s coordinator or me. Our new credit card procedure with the Alzheimer’s Association is working well. NARFE donations by credit card are being received every month. Thank you for a great start with this new procedure. As a reminder, this method will allow you to take advantage of your credit card’s cash-back program, and it can be done online by going to the Alzheimer’s Association’s website, which features a secure link to the NARFE page, at www.alz.org/narfe. You also can use the coupon printed in each issue of NARFE magazine (see p. 49 for this month’s coupon). The coupon may be used to send your contribution by personal check or credit card directly to the Alzheimer’s Association headquarters in Chicago. Please be sure to write your chapter number on the check and coupon so your chapter and federation will get the proper credit toward meeting our new goal. Contributions to “NARFE-Alzheimer’s Research” are tax-deductible to the fullest extent allowed by law. Thank you again for your continued support. And let’s pledge to meet our new 2012 goal in the effort to defeat Alzheimer’s disease.

IT’S ON tothe next goal of $10 million in 2012, approved by delegates at the 2010 National Convention. can help you with any questions you may have about memorials. For the benefit of our new members, please know that 100 percent of our contributions go directly to fund Alzheimer’s research. Federation coordinators keep track of contributions and receive a report to reconcile every month with the Alzheimer’s Association. The NARFE-Alzheimer’s National Committee meets once a year. One very important agenda item is to select, from a short list provided to us by the Alzheimer’s Association, the research projects that we want to fund with the money raised during the previous fiscal year. We have now funded 49 researchers, and there have been some very significant advances made by the scientists we selected. A noteworthy example involves our 1999 selected scientist who was heavily involved in a discovery that led to the development of memantine (Namenda), one of the five widely used Alzheimer’s drugs. This drug works by protecting brain cells

Barb L. Pretzer is chairman of the NARFE-Alzheimer’s National Committee. E-mail: bpretzer@ksu.edu. JUNE 2011 | NARFE

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Questions & Answers NOTE: The following Questions & Answers were compiled by Retirement Benefits Service Department staff. These are real questions received by the Department and real answers, based on the members’ personal circumstances. The answers are not universal and may include information that is relevant to the correspondent’s particular situation. NARFE does not provide legal advice or assistance, does not provide financial planning advice or assistance, and does not provide tax advice or assistance. For legal, financial planning or tax advice/assistance, NARFE recommends members contact an attorney, financial planner or certified public accountant/tax adviser.

MILITARY SERVICE CREDIT QUESTION: My husband is under the Federal Employees Retirement System and was planning to retire at the minimum retirement age (MRA) of 56, with 31 years of combined civilian and military service. Six of those 31 years were under absentuniformed service or LWOP-US,and he paid a military deposit for those years. Are those six years included as creditable service for an immediate annuity, or are they calculated as MRA+10 because he did not have 30 years of civilian service? Response: He won’t be retiring under the MRA+10 provisions. He will receive an immediate, unreduced annuity because he will have reached his MRA and have at least 30 years of combined service.

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REDUCED ANNUITY QUESTION: I will be age 56,my minimum retirement age (MRA), in July, with 28 years and three months of service under the Federal Employees Retirement System. What are the advantages of waiting until I have 30 years of service before retiring? Response: The only advantage is that you can stop working and receive a monthly retirement benefit. Because you wouldn’t be eligible for an immediate, unreduced annuity, if you retired now, it would be under the MRA+10 provisions (MRA with at least 10 years of service but fewer than 30). As a result, your annuity would be reduced by 5 percent for every year you are younger than age 60. Of course, you could delay the receipt of your annuity to a later date to reduce or eliminate the age penalty.

QUESTION: I am under the Civil Service Retirement System and plan to retire on November 30,2011. I have already paid my military deposit on my 20-1/2 years of service. My civil service time is 33 years and nine months,which would give me more than 54 years of combined service at the time of my retirement. That is well beyond the 41 years and 11 months required for the 80-percent maximum retirement benefit. Am I correct that, at my time of retirement,the Office of Personnel Management (OPM) would automatically refund the excess retirement contributions that I will have made for those 12-plus years? What forms are needed to request the excess retirement contributions, and how does OPM compute the refund?

part are required. When OPM processes your retirement application, OPM will automatically let you know the amount of your excess contributions and offer you the option of either receiving a refund or using that money to purchase an additional annuity, which is not subject to the 80-percent limit.

SS & FERS QUESTION: I will be age 62 in November 2011.I am under the Federal Employees Retirement System (FERS) and plan to retire on December 31, 2011. I will draw a FERS annuity as well as Social Security. Will my FERS annuity be considered taxable income to the Social Security Administration, and will my Social Security benefit be taxed for it? Response: Your FERS annuity will be taxable as regular income; however, a portion of it will be tax-exempt because it represents a return of the contributions you made to the retirement system, which have already been taxed. When determining if you have exceeded the Social Security earnings limit, the Social Security Administration only considers earnings from wages or self-employment – in other words, earnings from which Social Security deductions are taken. The amount of your Social Security benefit that would be considered taxable would depend on your benefits and the total of your other income.

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LUMP-SUM PAYMENTS QUESTION: I am close to retirement and have heard rumors that lumpsum settlements will change,starting in 2013, and the calculation will result in reduced lump-sum payment amounts. Are there any changes JUNE 2011 | NARFE

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Questions & Answers NARFE SERVICE OFFICERS are available to answer questions and to coming in 2012 and beyond that will affect our lump-sum payments? Response: We do not know where these rumors started, but there are no new regulations regarding changes to lump-sum payments from employing agencies or the Office of Personnel Management.

SS REDUCTION QUESTION: I am age 65 and will have 30 years of federal service as of January 2012.I previously worked for 15 years in the private sector and am covered by Social Security. I will be age 66 in July 2011 and have been told that I can draw my full Social Security benefit while I am still working.Is this true? Besides taxes, is there a downside to drawing Social Security benefits while you are still working? Response: You can continue to work

assist in helping with a variety of benefit matters. Check your chapter newsletter for the name and phone number of your service officer. Call NARFE toll-free at

800-456-8410 for the nearest service officer. NARFE Service Centers are also available in some areas. Use the Service Center listings on the NARFE Web site, www.narfe.org.

and still get Social Security retirement benefits. Your earnings in (and after) the month you reach your full retirement age will not affect your Social Security benefits. However, your benefits would be reduced if your earnings exceed certain limits for the months before you reach your full retirement age. The full retirement age is 66 for people born in 1943-1954 and will gradually increase to 67 for people born in 1960 or later.

SS & FERS QUESTION: I am age 58 and under the Federal Employees Retirement System. I plan to retire at age 60. I meet the minimum age and years of service requirements to receive the special retirement supplement from age 60 to 62. How much will my Social Security benefit be when I start receiving it at age 62? I will not be working those two years between age 60 and 62 and, therefore, will not be paying into Social Security past age 60.

JUNE 2011 | NARFE

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NARFE now offers an online retirement calculator and other financial planning tools for members only.Find out more about this new membership benefit at www.narfe.org.

Response: The Social Security Administration has a benefit estimator at www.ssa.gov/estimator. Just enter 0 for ages 61 and 62 to find out what your benefit would be in the circumstances you described.

RETIREMENT CONTRIBUTIONS QUESTION:I am a federal employee with nearly 50 years of service. Are the excess contributions that I have made since reaching the 80-percent maximum at 41 years and 11 months taxable when I retire? Response: Any refund of excess contributions you made to the retirement fund won’t be taxable. You already paid taxes on them. On the other hand, any interest you receive would be taxable.

RETIREES DISABILITY RETIREMENT QUESTION: I am retired on disability from the federal government. I understand that you are medically re-evaluated every year or two. At what age does this stop? What if it is determined that you are no longer disabled? Are you returned to your previous position? I understand that if you make more than a certain amount of money, you will lose your disability and be returned to your prior position. Is this correct? Response: Until you reach age 60, the Office of Personnel Management (OPM) has the right to ask you to provide medical information or undergo a medical examination to determine if NARFE | JUNE 2011

you have recovered from the disabling condition. While OPM can ask for that proof annually, it generally won’t do that unless it determines that a frequent update is needed. On the other hand, you are required to complete the questionnaire that OPM sends out every year asking for information about your earnings from wages or self-employment. If your earnings exceed 80 percent of the current basic pay for the position you occupied when you were retired on disability, your annuity would be discontinued, either on your re-employment by the federal government or six months from the end of the calendar year in which your earning capacity was restored. If your annuity is discontinued, you would be given priority referral to other jobs in the federal government. However, your agency isn’t required to place you in your former position, nor is it required to rehire you.

SURVIVOR’S BENEFIT QUESTION: I retired in 2010 under the Civil Service Retirement System. I elected a survivor’s benefit for my spouse, with a dollar amount to be paid out upon my death. I didn’t include health benefits as my husband is a federal employee with his own health insurance. My husband would like to waive the spousal annuity to be paid out upon my death. What is the process? Response: A survivor’s election is irrevocable until death or divorce. You had

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an opportunity to change your election within 30 days after the date of your first regular monthly check. After your husband begins to collect a survivor’s benefit, he may request the Office of Personnel Management to waive receipt of part or all of the benefit.

CSRS OFFSET & SOCIAL SECURITY QUESTION: I am a Civil Service Retirement System (CSRS) Offset retiree (15 years in offset) and turned age 62 in May.I applied to receive my Social Security benefit in June. I have contacted the Office of Personnel Management (OPM) on several occasions, asking how much my annuity will be offset, but I have been unable to get an answer.My annuity still has not changed. Is it normal for OPM to be late in changing (offsetting) annuities of CSRS Offset retirees? Response: Because you aren’t due for your first Social Security benefit check until the end of July, it’s likely that OPM will not make the reduction in your annuity payment until then. While OPM doesn’t provide estimates of CSRS Offset reductions, you can get a good idea of what your offset will be by using the online calculator at www.FEDbens.us.

SURVIVOR & FEHBP QUESTION: I have just retired. I understand that, to be eligible to carry federal health insurance coverage into retirement,the individual must have at least five years of consecutive coverage under the Federal Employees Health Benefits Program (FEHBP) or have been covered since his or her first opportunity to enroll.If a retired federal employee is covered under the spouse’s FEHBP plan while the spouse is still working,and the spouse dies,is the retiree still covered? JUNE 2011 | NARFE

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RAID ON RETIREMENT FUNDS? QUESTION: Will the Civil Service Retirement and Disability Fund (CSRDF) and/or the Thrift Savings Plan (TSP) be raided to keep the government from going broke? Response: In years past, the Treasury Secretary has temporarily delayed government contributions to the CSRDF, which is the trust fund for federal employees’ annuities, and suspended investments in the TSP’s G Fund, which is the TSP’s government securities fund, to avoid the government defaulting on its debts until Congress acts to raise the federal debt ceiling. In the past, throughout this process, all federal retirees continued to receive their monthly annuity payments, and no TSP participants were affected. Thanks to NARFE efforts in the 1980s, the Treasury Secretary is required by law to “make whole” the CSRDF and the TSP’s G Fund, with full interest, as soon as Congress approves legislation to raise the debt ceiling. ■

he response to the question titled“IRA Rollover” on p.39 of the May issue was incorrect. The correct response is: “The Thrift Savings Plan can accept transfers (or rollovers) of eligible distributions from a traditional IRA even if you are receiving monthly payments.”

NARFE | JUNE 2011

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Report From the Regions Working Together By Paul E. Johnson Region IV Regional Vice President pejohnson@tds.net

his is an especially critical time for our future and the future of NARFE. We must work together to protect our annuities and benefits. In this highly charged political climate, NARFE is taking steps to improve the image of the federal community with a campaign, “Protect America’s Heartbeat.” The two main objectives are to counter negative propaganda about federal em-

ployees and retirees, and clarify what they contribute to society, which often goes unrecognized. NARFE also is continuing to work behind the scenes on Capitol Hill to

YOUR BENEFITS are only as safe as NARFEis strong. safeguard our benefits. But numbers mean power. And each month, our membership continues to drop. Our newly formed membership committees are working on plans to promote recruitment and retention of members. But no plan will be successful if it doesn’t have the support of individual members. Have you tried to

sign up a member? How simple it would be to increase our membership if every member would sign up just one new member. Many federal workers and retirees do not realize that their benefits can be reduced or even eliminated. All of these benefits have come about by way of Congress, the hard work of NARFE leadership and the grass-roots efforts of NARFE members. Your benefits are only as safe as NARFE is strong. Please contact your senators and representatives. “We the people” must remind them that they work and represent the voters. We need to persuade independent-minded representatives and the general public that the federal community should not be singled out for unfair treatment. ■

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JUNE 2011 | NARFE

Consolidated Financial Statements for theYear Ended December 31,2010 REPORT OF THE NATIONAL TREASURER I hereby present, as required by NARFE’s Bylaws, the results of the just-concluded audit of the Association’s financial condition as of the calendar year ended December 31, 2010. The consolidated statement of activities shows a $764,478 decrease in total net assets. However, NARFE’s unrestricted net assets decreased by $858,827, while the temporarily restricted net assets increased by $94,349. Of the decrease in unrestricted net assets, $1,381,389 was from operations while investments posted a $522,562 gain. Additionally, there was a $205,963 decrease in cash and cash equivalents, but the net cash used in operations was $865,879. Our cash flow statement thus reflects a continued use of our cash reserves. Overall, NARFE’s financial results highlight the necessity of the passage of the 2011 dues increase resolution. Regardless, we must continue to explore and implement cost-cutting steps. The audit report that follows presents the financial statements for the year ended December 31, 2010. Again, this year, the audit resulted in “no findings” by the auditors. I commend my dedicated staff for these accomplishments.

Paul H. Carew, Then-Acting National Treasurer and National Vice President

INDEPENDENT AUDITORS’ REPORT

The Executive Board National Active and Retired Federal Employees Association We have audited the accompanying consolidated statement of financial position of National Active and Retired Federal Employees Association and Affiliate as of December 31, 2010, and the related consolidated statements of activities and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Association and Affiliate’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The prior years’ summarized comparative information has been derived from the Association and Affiliate’s 2009 and 2008 consolidated financial statements, and, in our reports dated March 25, 2010, and March 26, 2009, respectively, we expressed unqualified opinions on those consolidated financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of National Active and Retired Federal Employees Association and Affiliate as of December 31, 2010, and the changes in their net assets and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Bethesda, Maryland March 24, 2011

NARFE | JUNE 2011

Certified Public Accountants

National Active and Retired Federal Employees Association and Affiliate Consolidated Statement of Financial Position December 31,2010 (With ComparativeTotals for December 31,2009 and 2008) 2010 Unrestricted Operating

BoardDesignated

Total Unrestricted

Temporarily Restricted

2010 Total

2009 Total

2008 Total

Assets Current Assets Cash and Cash Equivalents Short-Term Investments–at Market Accounts Receivable–Net Interorganization Receivables Prepaid Expenses and Deposits

$ 418,450 350,287 178,577 – 192,844

Total Current Assets Noncurrent Investments Property and Equipment Land Buildings Furniture, Equipment and Software Less Accumulated Depreciation and Amortization Net Property and Equipment Total Assets

497,127 $ 960 – 4,735 –

915,577 351,247 178,577 4,735 192,844

449,458 $ 1,365,035 $ 1,570,998 $ 1,923,993 – 351,247 351,291 602,799 11,570 190,147 150,405 271,731 25 –* –* –* 815 193,659 212,592 197,039 2,100,088 *

2,285,286 *

2,995,562 *

–

4,770,604

5,120,666

4,652,205

700,000 3,904,342 1,657,432

– – –

700,000 3,904,342 1,657,432

700,000 3,904,342 1,670,533

700,000 3,887,750 1,668,829

–

(2,674,598)

–

(2,674,598)

(2,443,166)

(2,152,007)

–

3,587,176

–

3,587,176

3,831,709

4,104,572

1,140,158

502,822

1,642,980

461,868

1,986,542

2,784,062

4,770,604

700,000 3,904,342 1,657,432

– – –

(2,674,598) 3,587,176 $ 6,713,876

$ 3,286,884 $ 10,000,760

461,868

$10,457,868 * $11,237,661 * $11,752,339 *

Liabilities and Net Assets Current Liabilities Accounts Payable and Accrued Expenses Interorganization Payables Chapter Dues Payable Deferred Revenue Total Current Liabilities Net Assets Unrestricted Temporarily Restricted Total Net Assets Total Liabilities and Net Assets

584,568 4,760 171,003 3,074,065

– $ 584,568 – 4,760 – 171,003 757,173 3,831,238

691 $ 585,259 $ 446,422 $ 427,297 – –* –* –* – 171,003 148,003 156,350 – 3,831,238 4,008,390 4,267,700 4,587,500 *

4,602,815 *

4,851,347 *

– 461,177

5,409,191 461,177

6,268,018 366,828

6,522,612 378,380

461,177

5,870,368

6,634,846

6,900,992

3,834,396

757,173

4,591,569

691

2,879,480 –

2,529,711 –

5,409,191 –

2,879,480

2,529,711

5,409,191

$ 6,713,876

$ 3,286,884 $ 10,000,760 $

461,868

$10,457,868 * $11,237,661 * $11,752,339 *

*Interorganization receivables and payables eliminated in consolidation. See accompanying Notes to Consolidated Financial Statements.

JUNE 2011 | NARFE

National Active and Retired Federal Employees Association and Affiliate Consolidated Statement of Activities For theYear Ended December 31,2010 (With ComparativeTotals for the Years Ended December 31,2009 and 2008) 2010 Unrestricted Operating Revenues and Support Membership Dues Contributions–Calendar and Cards Contributions–PAC Contributions–Silver Circle and Other Advertising Royalties National Convention Revenue Other Net Assets Released from Restrictions Total Revenues and Support

$ 7,202,477 1,476,202 – 128,833 920,758 190,199 214,555 83,469 1,072,469

BoardDesignated

Total Unrestricted

$ (117,294) $ 7,085,183 – 1,476,202 – – 6 128,839 – 920,758 – 190,199 – 214,555 – 83,469 60,000 1,132,469

Temporarily Restricted $

– – 1,204,154 22,616 – – – – (1,132,469)

2010 Total

2009 Total

2008 Total

$ 7,085,183 $ 7,290,140 $ 7,469,554 1,476,202 1,655,396 2,002,698 1,204,154 140,582 802,482 151,455 44,339 47,750 920,758 823,289 917,621 190,199 166,694 203,591 214,555 – 257,385 83,469 158,392 120,473 – – –

11,288,962

(57,288)

11,231,674

94,301

11,325,975

10,278,832

11,821,554

2,020,926 666,632 305,197 680,350 223,657 450,897 134,278 275,446 1,109,851 22,616 –

– – – – – – – – – – 25

2,020,926 666,632 305,197 680,350 223,657 450,897 134,278 275,446 1,109,851 22,616 25

– – – – – – – – – – –

2,020,926 666,632 305,197 680,350 223,657 450,897 134,278 275,446 1,109,851 22,616 25

1,990,116 718,687 289,145 754,276 220,373 455,925 117,730 – 152,298 28,343 –

2,289,773 684,515 393,027 641,118 210,662 581,558 118,544 269,651 746,006 22,270 –

5,889,850

5,889,875

–

5,889,875

4,726,893

5,957,124

Support Services General Administration Membership Recruitment Membership Services Fund-Raising

4,470,867 665,798 795,952 767,917

22,654 – – –

4,493,521 665,798 795,952 767,917

– – – –

4,493,521 665,798 795,952 767,917

4,472,521 553,797 852,654 772,808

4,193,248 595,212 788,558 987,403

Total Support Services

6,700,534

22,654

6,723,188

–

6,723,188

6,651,780

6,564,421

12,590,384

22,679

12,613,063

–

12,613,063

11,378,673

12,521,545

(1,301,422)

(79,967)

(1,381,389)

94,301

(1,287,088)

(1,099,841)

(699,991)

431,238

91,324

522,562

522,610

833,695

(1,651,445)

(870,184) 3,749,664

11,357 2,518,354

(858,827) 6,268,018

94,349 366,828

(764,478) 6,634,846

(266,146) 6,900,992

(2,351,436) 9,252,428

Expenses Program Services Communications Rebates to Federations New Member Rebates to Fdrns & Chptrs Legislative Program Retirement Benefits Program Public Relations Program Pre-Retirement Seminars Program National Convention NARFE-PAC NARFE Alzheimer’s Fund Life Membership Fund Total Program Services

Total Expenses Increase (Decrease) in Net Assets from Operations Investment Income (Losses) Increase (Decrease) in Net Assets Net Assets, Beginning of Year Net Assets, End of Year

$ 2,879,480

$ 2,529,711 $ 5,409,191

461,177

$ 5,870,368 $ 6,634,846 $ 6,900,992

See accompanying Notes to Consolidated Financial Statements.

NARFE | JUNE 2011

National Active and Retired Federal Employees Association and Affiliate Consolidated Statement of Cash Flows for theYear Ended December 31,2010 (With ComparativeTotals for the Years Ended December 31,2009 and 2008) 2009

2010 Cash Flows From Operating Activities Decrease in Net Assets Adjustments to Reconcile Decrease in Net Assets to Net Cash Used in Operating Activities Depreciation and Amortization Net Realized and Unrealized (Gains) Losses on Investments (Increase) Decrease in Assets Accounts Receivable–Net Prepaid Expenses and Deposits Increase (Decrease) in Liabilities Accounts Payable and Accrued Expenses Chapter Dues Payable Deferred Revenue

Cash Flows From Investing Activities Purchases of Investments Sales and Maturities of Investments Purchases of Property and Equipment Net Cash Provided by (Used in) Investing Activities Net Decrease in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year Supplementary Disclosure of Cash Flow Information Cash Paid During the Year for Income Taxes

(266,146)

$ (2,351,436)

264,693 (329,970)

291,159 (557,732)

315,953 2,061,489

(39,742) 18,933

121,326 (15,553)

(94,342) (59,120)

138,837 23,000 (177,152)

19,125 (8,347) (259,310)

(18,298) 10,860 (220,939)

(865,879)

(675,478)

(355,833)

(1,617,392) 2,297,468 (20,160)

(8,150,815) 8,491,594 (18,296)

(3,974,250) 4,138,143 (365,198)

659,916

322,483

(201,305)

(205,963) 1,570,998

(352,995) 1,923,993

(557,138) 2,481,131

$ (764,478)

Net Cash Used in Operating Activities

2008

$ 1,365,035

1,570,998

1,923,993

190

8,200

–

See accompanying Notes to Consolidated Financial Statements.

National Active and Retired Federal Employees Association and Affiliate Notes to Consolidated Financial Statements / December 31,2010 NOTE 1. ORGANIZATION National Active and Retired Federal Employees Association (the “Association”) was established to advance the general welfare of its members and to aid them in securing their rights under federal retirement laws. Fifty-three (53) federations, located in the United States, Panama, Puerto Rico and the Philippines, are affiliated with the Association and conduct local independent programs. Ten percent of all eligible member national dues collected are rebated to these federations to facilitate local association activities. In addition, there are 1,411 chapters affiliated with

the Association that are located in the United States and some international locations. The chapters are established by members to increase the scope and effectiveness of the Association. Chapter dues, which are not reported as revenues and expenses of the Association in the accompanying consolidated statement of activities, are established by the chapters and are billed and collected by the Association with the national dues. However, the Association rebates to the chapters one-third of the national fee charged for all new members. The consolidated financial statements include the assets, liabilities, net

assets, activities and cash flows of the Association and its political action committee (NARFE-PAC or Affiliate), which was authorized by the executive board of the Association. All significant interorganization balances and transactions were eliminated in consolidation. The financial information of the 53 federations and the 1,411 chapters is not included in the Association and Affiliate’s consolidated financial statements. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The consolidated financial stateJUNE 2011 | NARFE

ments have been prepared on the accrual basis of accounting. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents consist of cash deposits in checking accounts, certificates of deposit with original maturities of less than 90 days, money market accounts, and overnight investment accounts. Investments Investments in debt and equity securities are stated at fair value as determined from published sources. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist primarily of amounts due to the Association for advertising in the December 2010 issue of NARFE magazine, royalties and seminars. Accounts receivable are reported at their outstanding balances. The Association provides an allowance for doubtful accounts, as needed, for accounts deemed uncollectible. The allowance for doubtful accounts as of December 31, 2010, was $17,008. Management periodically evaluates the adequacy of the allowance for doubtful accounts by considering the Association’s past receivables loss experience, known and inherent risks in the accounts receivable population, adverse situations that may affect an obligor’s ability to pay, and current economic conditions. The allowance for doubtful accounts is increased by charges to bad NARFE | JUNE 2011

debts expense and decreased by charge-offs of the accounts receivable balances. Accounts receivable are considered past due when no payments have been received for 30 days. Accounts receivable are charged off based on management’s case-by-case determination that they are uncollectible. Property and Equipment Property and equipment are stated at cost and are depreciated and amortized on the straight-line method over the useful lives of the assets, ranging from three to 40 years. The Association capitalizes items of property and equipment costing $1,500 or more. Depreciation and amortization expense for the year ended December 31, 2010, was $264,693. Net Assets The Association and Affiliate classify net assets into two categories, unrestricted and temporarily restricted. All contributions are considered to be available for unrestricted use unless specifically restricted by the donors. Temporarily restricted net assets are contributed with donor-imposed purpose or time restrictions and are to be used for the restricted purposes or time periods as requested by the donors. The Association and Affiliate had no permanently restricted net assets at December 31, 2010. Included in unrestricted net assets as of December 31, 2010, is $2,000,000 that is designated by the Association’s executive board to pay operating expenses should the Association’s operations be disrupted by an unforeseen event. Also included in board-designated net assets are amounts for the life membership fund and building fund. Membership Dues Annual membership dues are deferred when received and are recognized as revenue over the periods covered by the memberships. Life membership dues are recognized as revenue over the duration of the life membership based on the collective average life expectancy for life

members, according to the “United States Life Tables,” 2003, published in the National Vital Statistics Reports, Volume 54, Number 14, April 2006. Contributions The Association and Affiliate report contributions as support when they are received. The Association and Affiliate report contributions as temporarily restricted support if restricted for use for specific programs or time periods. When donor restrictions expire, that is, when purpose or time restrictions are accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the consolidated statement of activities as net assets released from restrictions. Royalties Royalties are earned by the Association for granting the use of its name to third parties that market services to Association members. Revenues from these activities are recorded when earned. Rebates to Federations and Chapter Dues and Rebates Rebates to federations and chapter dues payable for renewing members are disbursed to federations and chapters after their receipt in the Association’s headquarters. Rebates due to the federations on life members are deferred for the duration of the life membership and disbursed to federations monthly, when earned. New member rebates disbursed to federations and chapters were approximately $76,200 and $229,000, respectively. Income Taxes The Association is exempt from federal and Virginia income taxes, other than any taxes on unrelated business income. There were no taxes on unrelated business income for 2010. As of December 31, 2010, the Association’s information and tax returns filed with the Internal Revenue Service (IRS) for the years ended December 31, 2009, 2008 and 2007 remain open for examination. NARFE-PAC is generally exempt from federal income tax under Section 527 of the Internal Revenue Code.

NOTE 4. INVESTMENTS AND FAIR VALUE MEASUREMENTS As of December 31, 2010, the Association and Affiliate’s only assets or liabilities measured at fair value on a recurring basis consisted of the following investments: Level 1 Level 2 Fair Value Inputs Inputs Short-Term Investments U.S. Treasury Bills and Accrued Interest

$ 351,247

Noncurrent Investments Corporate Stocks and Equity Mutual Funds Corporate Bonds Government-Backed Securities Certificate of Deposit Total Noncurrent Investments Total Investments

351,247

2,450,726 1,967,993 243,328 108,557

2,450,726 1,967,993 243,328 -

108,557

4,770,604

4,662,047

108,557

$ 5,121,851

$ 5,013,294 $ 108,557

Financial assets valued using Level 1 inputs are based on unadjusted quoted market prices within active markets. Financial assets valued using Level 2 inputs are based primarily on quoted prices for similar assets in active or inactive markets. Financial assets valued using Level 3 inputs, if any, are valued using unobservable inputs to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. The fair value measurement objective is to determine an exit price from the perspective of a market participant that holds the asset or owes the liability. None of the Association and Affiliate’s financial assets are valued using Level 3 inputs. Investment income for the year ended December 31, 2010, consisted of the following:

Dividends and Interest Net Realized and Unrealized Gains Total Invest. Income

Unrestricted $ 192,592 329,970

Temporarily Restricted $ 48 -

522,562

Total 192,640 329,970

522,610

NOTE 5. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes as of December 31, 2010: NARFE-PAC NARFE Alzheimer’s Fund Total Temporarily Restricted Net Assets

425,831 35,346

461,177

Net assets were released from donor restrictions by incurring expenses or otherwise satisfying the restricted purposes for the year ended December 31, 2010, as follows: NARFE-PAC NARFE Alzheimer’s Fund Total Net Assets Released from Restrictions Due to Satisfaction of Program Restrictions

1,109,853 22,616

1,132,469

However, interest revenue earned on NARFE-PAC investments is subject to federal and state income taxes. The taxes on that interest for the year ended December 31, 2010, were not significant. As of December 31, 2010, NARFEPAC’s tax returns filed with the IRS for the years ended December 31, 2009, 2008 and 2007 remain open for examination. Prior Years’ Comparative Totals The consolidated financial statements include certain prior years’ summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Association and Affiliate’s consolidated financial statements for the years ended December 31, 2009 and 2008, from which the summarized information was derived. NOTE 3. CONCENTRATION OF CREDIT RISK For purposes of Federal Deposit Insurance Corporation (FDIC) coverage, cash accounts are maintained in several different banks. As of December 31, 2010, deposits exceeded the $250,000 FDIC-insured limit by approximately $100,000. Additional deposits of approximately $810,000 are held in noninterest bearing accounts, which are fully insured by the FDIC. NOTE 6. RETIREMENT PLAN The Association contributes 2 percent of each eligible employee’s annual compensation to a retirement savings plan and also matches 60 percent of each employee’s voluntary contribution (up to 6 percent of annual compensation). For employees to be eligible, they must have been employed by the Association for at least six months. Total contributions made by the Association were $159,290 for JUNE 2011 | NARFE

BUSINESS ADVISORY LETTER The Executive Board National Active and Retired Federal Employees Association We recently completed our audit of the financial statements of National Active and Retired Federal Employees Association (NARFE) as of and for the year ended December 31, 2010. We would like to again bring the following matter to your attention. This matter is an observation only and does not represent a significant deficiency or material weakness in your system of internal control that would have impacted our audit scope. CONTINUED FINANCIAL TRENDS During the year ended December 31, 2010, NARFE experienced another significant operating loss of approximately $1,300,000. Coupled with the operating losses for 2008 and 2009, NARFE has incurred approximately $3 million in operating losses during the past three years. The primary reason for this decline is the loss of members and the resulting decline in dues revenues. We are aware that the National Executive Board (NEB) and management have identified several new revenue producing options, including a dues increase that was effective January 1, 2011. However, with the continued downward trend in the number of members over the past three years, the most likely scenario for dues income for 2011 would be to remain flat (primarily because of the dues rate increase), or at least not drop significantly. Salaries and benefits continue to rise as staffing levels have remained constant, even though revenues are decreasing significantly. Since January 1, 2008, salaries and benefits have increased approximately 14 percent while dues (the primary revenue source) have declined 9 percent. The gap between declining revenue and increasing expenses has been covered by tapping into NARFE’s investment reserves. Considering the stock market plunge during the early part of the recession, the subsequent partial upswing, and the amount of withdrawals to fund operations, NARFE’s reserves at the end of 2010 were approximately 31 percent less at December 31, 2010, than at January 1, 2008. Assuming an estimated operating loss of approximately $1 million per year, it is not difficult to project that if new revenue programs and/or effective cost-cutting measures are not implemented in the near term, NARFE will face the possibility of totally consuming its existing reserves within the next four-to-five years and be faced with the task of identifying other, more expensive means to finance operations, such as bank financing. Ultimately, NARFE could face the possibility of a significant downsizing to survive, or consider a possible sale of the NARFE building to provide funds for continuing operations. We recommend that the NEB consider engaging a management consultant to assist you in assessing NARFE’s staffing and related office space needs, outsourcing certain production functions, and in considering the possibility of either selling or subleasing some part of the NARFE building. The objective of such a review would be to identify those strategies that could be implemented in the near term to reverse the trends of the past several years. We will be happy to provide the NEB with several individuals who specialize in operational consulting for not-for-profit organizations. We would like to extend our appreciation to Richard Ostergren, Charles Saylor, Tayo Coker Polson and their staff for their cooperation during our audit. If you should have any questions, please contact us. Councilor, Buchanan & Mitchell, P.C., Certified Public Accountants Bethesda, Maryland March 25, 2011

the year ended December 31, 2010. NOTE 7. SUBSEQUENT EVENTS The Association and Affiliate have evaluated subsequent events through March 24, 2011, the date on which the financial statements were available to be issued. ■ NARFE | JUNE 2011

Additional Financial Information

he report of the National Executive Board Audit Committee and additional financial information required under the NARFE Bylaws to be published annually in NARFE magazine may be found on p.44 of this issue.

NARFE News NEB Audit Committee Report

he NARFE National Executive Board (NEB) Audit Committee met on March 24, 2011, through teleconference with representatives of the audit firm Councilor, Buchanan & Mitchell to review the firm’s audit of the 2010 NARFE financial reports. Audit Committee members participating were Regional Vice Presidents Richard G. Thissen, Paul E. Johnson, Donald Stewart and William F. Martin. Also participating were NARFE National President Joseph A. Beaudoin; Vice President Paul H. Carew; Secretary Elaine Hughes; Tayo Coker Polson, director of Budget & Finance; and Veronica Clemons, accounting supervisor. The audit firm’s representatives, Anthony Cuozzo, John Mullins and Pete Reilly, provided a comprehensive review of the audit. They reported finding no weaknesses; and, as a result, they had no recommendations or findings. Based upon the report by the audit firm, the NEB Audit Committee com-

mends the members of the NARFE Treasurer’s Office for their excellent performance again this year. The audit firm did make an observation in a separate advisory letter, which indicates that NARFE needs to look at the fact that revenues are decreasing, and expenses are continuing to increase (see Business Advisory Letter, p. 43). This advisory was provided because NARFE’s total assets continued to decrease; in 2010, there was a decrease of approximately $765,000. This can be attributed to the fact that membership continued to decrease, which translates into significantly less revenue derived from the primary revenue source. Expenses have not decreased; disregarding the National Convention and NARFE-PAC, expenses increased by approximately $42,000. The trend of these two financial barometers going in opposite directions has resulted in NARFE using its reserves to partially fund the operating losses. The audit firm is recom-

NARFE 2010 Financial Statements,pp.37-43. mending that NARFE management review opportunities to identify increased revenue sources and to critically review expenses (the greatest of which is the cost of salaries and benefits), to identify processes not critical to its operations or at least hold such costs flat until other revenue streams are developed. In their wisdom, the delegates at the 2010 NARFE National Convention completed the first part of this by approving a dues increase, which in 2011 will lead to steps to increase dues revenue. In addition, staffing at NARFE Headquarters has been reduced by two positions, and vacancies are reviewed carefully to ensure the need to fill them. Now it is up to all of the managers in NARFE to review expenses and ways to decrease or eliminate them.

Richard G.Thissen,Then-Chair, NEB Audit Committee

Additional NARFE Financial Data

n accordance with NARFE Bylaws,the following information must be published annually,along with other financial information (see pp.37-43). • Salaries of members of the National Executive Board as of December 2010: President $107,536.00 Vice President $100,381.00 Secretary $ 96,262.00 Treasurer $ 96,262.00 RegionalVice Presidents $ 23,878.00 • In 2010,NARFE’s investments were held with these firms: Operating Fund Board-Designated Funds Morgan Stanley Smith Barney Life MembershipTrust Fund:Morgan Stanley Smith Barney TheVanguard Group Contingency Fund: Wells Fargo.

JUNE 2011 | NARFE

First Quarter 2011 Recruitment Results In the first quarter of this year,3,689 new members joined NARFE. – Jacqueline Johnson-Bryant, Recruitment and Retention Assistant REGION I

REGION V Iowa . . . . . . . . . . . . .68 Kansas . . . . . . . . . . .54 Minnesota . . . . . . . .79 Missouri . . . . . . . . . .90 Nebraska . . . . . . . . .29 North Dakota . . . . .18 South Dakota . . . . . .28 Total . . . . . . . . .366

REGION IX Alaska . . . . . . . . . . . .15 Idaho . . . . . . . . . . . .22 Montana . . . . . . . . . .14 Oregon . . . . . . . . . . .35 Washington . . . . . . .76 Total . . . . . . . . .162

REGION IV Illinois . . . . . . . . . . .103 Indiana . . . . . . . . . . .51 Michigan . . . . . . . . . .52 Ohio . . . . . . . . . . . . .96 Wisconsin . . . . . . . .71 Total . . . . . . . . .373

Connecticut . . . . . . .20 Massachusetts . . . . .42 Maine . . . . . . . . . . . .17 New Hampshire . . .18 New York . . . . . . ..125 Rhode Island . . . . . . . .7 Vermont . . . . . . . . . . .8 Total . . . . . . . . .237

REGION II Dist. of Columbia . . .48 Delaware . . . . . . . . .24 Maryland . . . . . . . .306 New Jersey . . . . . . . .54 Pennsylvania . . . . . .179 Total . . . . . . . . .611

REGION VIII California . . . . . . . .237 Guam . . . . . . . . . . . . .6 Hawaii . . . . . . . . . . .32 Nevada . . . . . . . . . . .22 Philippines . . . . . . . . .0 Total . . . . . . . . .297

REGION X Kentucky . . . . . . . . . 39 North Carolina . . . 100 Tennessee . . . . . . . . . 60 Virginia . . . . . . . . . . 491 West Virginia . . . . . . 24 Total . . . . . . . . . 714

REGION VII Arizona . . . . . . . . . .68 Colorado . . . . . . . . .97 New Mexico . . . . . .34 Utah . . . . . . . . . . . . .11 Wyoming . . . . . . . . . .5 Total . . . . . . . . .215

REGION III

REGION VI Arkansas . . . . . . . . . .29 Louisiana . . . . . . . . .34 Oklahoma . . . . . . . .53 Panama . . . . . . . . . . . .4 Texas . . . . . . . . . . .142 Total . . . . . . . . .262

FOREIGN 7

Alabama . . . . . . . . . .74 Florida . . . . . . . . . .171 Georgia . . . . . . . . .121 Mississippi . . . . . . . .29 Puerto Rico . . . . . . .11 South Carolina . . . . .39 Total . . . . . . . . . . .445

ome is where the heart is.

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NARFEpremierFCU.org Call us today at 800.328.1500. Note: Your savings are federally insured to at least $250,000 by the National Credit Union Administration (NCUA) and backed by the full faith and credit of the United States Government.

NARFE | JUNE 2011

NARFE News

Silver Circle Exceeds $106 K

ilver Circle donations totaled $106,572 as of April 15. Donors from January 16-April 15 are listed here with their chapter numbers.

The program offers a way for members to give to NARFE beyond the norm. Members who donated to the program in memory of the late Kathy Thigpen, a

SILVER CIRCLE ($25 OR MORE) ARIZONA DOUGLAS G. GRAY 1234 DIANNA D. DIMICK 1400 CHARLES J. BECKMAN 1485 CALIFORNIA IRVING M. KELLEY 0004 FRANK R. STREBEL 0040 LUKE POPE 0045 PETER C.TAYLOR 0065 NANCY KAY MORGAN 0352 VICTORIA C.WILSON 0669 JOSEPH W. HEFLIN 0877 MICHAEL PRINGLE 1317

GLEN MIXON 1497 ROBERT G. STURN 1718 COLORADO DION S. DISHONG 0081 MYRON D.TJARKS 1085 FLORIDA CARMAN KAZANZAS 0095 FLORENCE N. LAVIN 0230 KENNETH E. KAPLAN 0845 SUSAN J. O’BRIEN 2247 GEORGIA BERNARD V. LOWRY 0599 ALBERT F. GIBSON 1033

IOWA MITCHELL SABIN 0277 FRANK M. BOTTS 1967 IDAHO THEODORE A. NICHOLS 0083 R. GALE MCMURTREY 0763 GEORGE B. FRY 1959 KANSAS E.W. STALNAKER 0027 AGNES T. SHELLHAMMER 1162 KENTUCKY LELA WILLIAMS 1050 MASSACHUSETTS CAROL TOMASELLO 0807

THIGPEN MEMORIAL DONATIONS MARGARET L. BAPTISTE 0072 G. J. BASARA 0444 JOSEPH A. BEAUDOIN 0180 JOY BRIDENSTINE 0148 CHARLES & SHARON BRODIGAN 0212 BUTLER AREA PA CHAP 1296 PAUL H. CAREW 2108 GERALD CORNELIUS 0894 JUNE CROISSANT 0302 DORIS DESAUTEL 0302 DARLENE FREEMAN 0148 MALCOLM FREUND 0912 KATHLEEN FREUND 0912

VIVIAN GINN 0085 JERRY D. HATFIELD 0300 HUDSON-MOHAWK NY CHAP 2340 PAUL E. JOHNSON 0326 JOHN LEDMAN 1137 EDWARD J. LEYENAAR 0718 BETTY LUCERO-TURNER 0232 HENRY MAGEE 1681 R. L. MILLINGTON 1248 NEW YORK FEDERATION ROBERT NORMANDIE 2324 JOHN PADAN 0581

GAYLORD & BEVERLY PETERS 1063 BARB L. PRETZER 0366 GARY ROBERTSON 1801 LANNY ROSS 0181 JEROME SMITH 0344 CHARLES STANPHILL 2351 ANDREW & ANGELA STEEVER 1797 NOEL SUMRALL 1388 DAVID F. SULLIVAN 0893 CHARLES TIMANUS 2363 BARBARA WHITE 0300 LEA D. ZAJAC 0016

WALL OF FAME ($1,000 OR MORE) LOUIS J. JURUS, CH. 4, CA DANTE C. DE MIO, CH. 241, CO JOHN R.VOGLER, CH. 288, FL DAVID L. HANSEN, CH. 140, MN

longtime NARFE staff member, are listed at left below with their chapter numbers.

MARYLAND CHARLES H. DAVIS 0258 CURTIS A. SCHROEDER 0357 H.W. RHETT 0422 ALLEN J. ENGLISH 1122 L. EVERETT MARVEL 1372 BETTEANNE M. PRIEST 1734 EDWARD E. PRIEST 1734 EDGAR F. DIRAIMO 1887 MAINE KENTON E. MORROW 0485 DONALD D. CARTER 1796 HERBERT W. MARSH 1831 MICHIGAN DONNIE W. ERVIN 0089 SHIRLEY L. HAYES 2179 MINNESOTA C.WARREN HEROLD 0738 CLARK C. PETERSON 1746 MISSOURI THOMAS M. BECKER 1229 NORTH CAROLINA JASPER F. WATERS 1158 NEW JERSEY DENNIS E. MATULEWICZ 0718 CHARLES BEAUDOIN 1066 NEW YORK NORMA ALFORD 0500 OHIO DON DUDERSTADT 0265 OKLAHOMA DAVID S. DICKERSON 2184

OREGON MILDRED K. SHOVELL 0029 B. WILLIAM HENRY 1751 PENNSYLVANIA CARY BREECH 1646 WILLIS J. MCCORMICK 1816 SOUTH CAROLINA ANDREA S. RUSH 0934 JAMES A. RUSH 0934 TENNESSEE LARRY G. CUNNINGHAM 0204 WAYNE M.YODER 0204 TEXAS GEORGE H. MCCLESKEY 0273 LESTER B. COALSON 1320 MARY MOORE 1410 ERASMO GARZA 1441 RODNEY S. SMITH 1473 UTAH LUDEAN A. BURTON 0320 VIRGINIA PHILIP S. CHURCH 0737 P. A. ALBAUGH 2358 WASHINGTON DONALD R. BLISS 0043 LARRY G. LUDWIG 1247 WISCONSIN KENNETH L. SMITH 0094 PATRICK C. PFLUGARDT 0689 WEST VIRGINIA E. JEAN SAMPLES 0174

Silver Circle Contribution Form

Yes!

I want to be a member of the NARFE Silver Circle. Enclosed is my Silver Circle contribution of $ _____

• For a contribution of $25 or more, you will receive a Silver Circle pin, and your name will be listed in NARFE magazine with other contributors. • For a contribution of $1,000 or more, your name will be placed on the “Wall of Fame” at NARFE Headquarters.

ID # ____________________________________________________________________ (ID # may be found on your NARFE magazine label or your NARFE membership card)

Name ____________________________________________________________________ Address ___________________________________________________________________ City ____________________________________ State ___________ ZIP _____________ J My check is enclosed (please make check payable to NARFE Silver Circle) Silver Circle contributions are not deductible for federal income tax purposes. J Please charge my credit card Card type J Mastercard J Visa J Discover J AMEX J Installment Plan Card # _________________________________________________ Wall of Fame 12-month installment plan Expiration Date_____________________________________________ Name __________________________________________________ Signature ___________________________________________ Date ___________________

Clip this contribution form and mail to: NARFE Silver Circle, NARFE, 606 N. Washington St., Alexandria, VA 22314

JUNE 2011 | NARFE

Join

NARFE

Who can join?

Today!

To apply:

Membership is open to civilians in any agency of the federal or D.C.* governments including: • Retirees • Active federal employees • Spouses and former spouses of active and retired federal employees • Former employees eligible for deferred annuity • Survivors of those eligible to join NARFE

• Complete the application below. • Enclose payment information, bill pay, check or money order payable to NARFE, or request to be billed. • Or go to our Web site at www.narfe.org. • Or call us at 800-627-3394 and join today! *Prior to October 1, 1987

Enrollment includes membership in a local chapter and the national association, plus a subscription to NARFE’s monthly publication, NARFE magazine.

NARFE MEMBERSHIP APPLICATION For Active and Retired Federal Employees 1. Choose all that apply: Retiree Spouse Survivor

Active employee Former spouse Former employee

2. Also enroll my spouse __________________________

www.narfe.org

Contact Information:

Full Name: Mr./Mrs./Miss/Ms.

full name

3. Please enroll me in NARFE chapter ______________

Street Address

4. __________ $45 x __________ Membership Fee # of People Per Person Enrolling

City/State/ZIP

= __________ Total Payment

Total payment (check, bill pay or money order payable to NARFE) Bill me (Membership starts when payment is received) Charge to my credit card The first year membership fee includes national and chapter dues.

Credit Card Information: MasterCard Card type: Discover

VISA AMEX

Card no. ___________________________________________ Expiration Date ________________ (MM)

(YY)

Name on Card (Print) ________________________________ Signature ____________________________ Date __________ NARFE | JUNE 2011

Apt./Unit

Phone Number E-mail Address Date of Birth Spouse’s Date of Birth (if applicable) Recruiter’s Membership and Chapter Number

MAIL TO:

NARFE Member Records 606 N. Washington St. Alexandria, VA 22314-1914 Fax: 703-838-7783

1Q 47

NARFE Dues Withholding Application Retired Federal Employees Only If you are a Retired Federal Employee and you would like your NARFE dues to be deducted from your annuity payments, fill out the form below.

Dues Withholding Application (Retirees Only) Fill out this form completely and mail to: Attn: Member Records, NARFE, 606 N. Washington St., Alexandria, VA 22314 (Do Not Send Money With This Form). (Please Print) —

—

Civil Service Annuity Number

Social Security Number (9-digits)

(Include prefix CSA or CSF) (Include any applicable suffix)

(Mr., Mrs., Miss, Ms.) Address

Telephone

City, State, ZIP

E-mail

Date of Birth

NARFE Membership Number

NARFE Chapter Number

Authorization I authorize the United States Office of Personnel Management to make appropriate deductions from my annuity payments, not to exceed the amount certified by the National Active and Retired Federal Employees Association as the amount of dues for which I am annually obligated, in accordance with elections I make below and to pay the deducted sum to the National Active and Retired Federal Employees Association (NARFE). This authorization shall also apply to any and all dues changes certified by NARFE membership in accordance with elections I make below:

Do You Authorize Your Spouse’s Dues to Be Withheld from Your Annuity? If YES, enter your spouse’s name and membership number below.

Name

Number

❑ Yes

❑ No

You authorize: Annual NARFE dues of $34.00 plus Chapter dues of record to be withheld annually.

I understand that this authorization shall be valid until NARFE receives & processes my written notice of cancellation in accordance with its agreement with the Office of Personnel Management & that any disputes regarding this authorization shall be a matter between NARFE & myself. I hold the Office of Personnel Management harmless for any erroneous allotment deduction made pursuant to this authorization. Signature of Annuitant or Survivor-Annuitant

Date

Dues payments & gifts or contributions to NARFE are not deductible as charitable contributions for federal income tax purposes.

JUNE 2011 | NARFE

Out & AW bout ith the Chapters

Visit our online gallery at www.narfe.org. Click on NARFE magazine.

Jamie Boone, left, legislative/press assistant to U.S. Rep. Bill Shuster, meets with Virginia L. Giordano, secretary of the Pennsylvania Federation, and Raymond C. Hain, Pennsylvania Federation District 4 vp, during “NARFE’s Day on the Hill,” part of the NARFE Legislative Training Conference.

Chapter 1480 in Athens, AL, had a surprise visitor at a recent meeting. U.S. Rep. Mo Brooks, left, dropped in on his way to a town hall meeting, spurred by the frequent invitations of NARFE members. Chapter1480 President Garry Clem is at right.

Celebrate NARFE’s 90th NARFE has 90th Anniversary merchandise for sale: • 90th Anniversary Book, NARFE: Celebrating 90 Years of Service, 1921-2011, $10. • 90th Anniversary PowerPoint Presentation, $5; • 90th Anniversary Lapel Pin, $3.

Go to www.narfe.org, click on Leadership at the top of the page, then click on NARFE 90th Anniversary Merchandise.

U.S. Rep. Norman D. Dicks, left, meets with Ann and George Eads during “NARFE’s Day on the Hill.” George Eads is president of Chapter 181 in Bremerton, WA,

To submit a photo: E-mail it to rl@narfe.org or send it by postal mail to NARFE Headquarters, ATTN: Out & About.

NARFE members contributed for Alzheimer’s research:

SUPPORT ALZHEIMER’S RESEARCH

$10 Million Fund

$9,136,542* *Total as of March 31, 2011 100% of all contributed funds go to Alzheimer’s research. If you have any questions, write to: National Committee Chairman Barb L. Pretzer, 4817 Rockridge Ct. Manhattan, KS 66503

Enclosed is my NARFE-Alzheimer’s contribution: $ ___________. Every cent that is contributed is used for research. Please circle:

Mr.

Mrs.

NARFE-Alzheimer’s Research and mail to: Alzheimer’s Association 225 N. Michigan Ave., 17th Floor Chicago, IL 60601-7633 NARFE | JUNE 2011

Ms.

Address _____________________________________________________________ City _______________________________ State _________ ZIP ______________ Chapter number _______________________ Credit Card Information: ❑ Visa

Your charitable contribution is tax deductible to the fullest extent allowed by law. Write your chapter number on check; make it payable to:

Miss

Name _______________________________________________________________

❑ MasterCard

❑ Discover

❑ AMEX

Card Number: __________________________________________________________ Expiration Date:________(mm)/_________(yy) 3-Digit Security Code: _________ Name on Card: (print) ___________________________________________________ Signature:_________________________________________ Date: _______________

Letters Creation of eNARFE Shows ‘Real Hope’

Sharper Focus REMINDER:

ice President Paul H. Carew’s article, “NARFE Establishes eNARFE Membership,” in the April issue of NARFE magazine (p. 43) is the most compelling and encouraging thing I have ever heard from NARFE. Recognizing the profound changes going on in society and how it chooses to communicate indicates that there is real hope to see NARFE influence and membership increase. I respect the older “Rotary and Elks” model of organization, but any organization that pins its future hopes on this fading approach is doomed to a slow dissolve.

Tell your story of federal service and fight back against cuts in benefits. See p. 13 for details.

Thanks for so closely articulating this new approach and the reasons for it. Patrick Harrison, Laramie, WY

agree with the sentiments expressed by Marc Harris in his letter appearing in the February issue of NARFE magazine (p. 51). There needs to be a sharper focus on recruitment, retention and working toward achieving legislative goals. The continuing relitigation of settled internal issues is not the best use of our time and resources. David Adams, Detroit, MI

Letters to the editor may be edited for grammar, clarity and length. All letters must be signed. Send by e-mail to rl@narfe.org or by postal mail to NARFE Headquarters, ATTN: Letters to the Editor.

Presenting NARFE’s

Limited Edition 90th Anniversary Book

ars of Service Celebrating 90 Ye 1921-201

Only $10

Order your copy of NARFE’s 90th Anniversary Book today! Clip and mail to: NARFE 90th Book, 606 N. Washington Street, Alexandria, VA 22314-1914 Name __________________________________________________________________ Address ________________________________________________________________ City __________________________________________State ______ZIP ___________

Number of Books

____ x $10 = __________ (includes shipping & handling)

Member ID# (As it appears on NARFE magazine label) ________________________

Tax (if applicable) = _______

❏ Charge to my credit card

Virginia residents must add 5% tax ($0.50 per book)

❏ MasterCard

❏ Visa

❏ Discover

❏ AMEX

Card # _________________________________________________________________ Exp. Date

Total cost = ______________

________ / _______ (mm)

(yy)

MAIL ORDER ONLY NO PHONE ORDERS Signature ____________________________________________ Date _____________ Make checks payable to NARFE Name on card (print) ____________________________________________________

JUNE 2011 | NARFE

IN GOD WE TRUST

FOR THE INVESTOR

FINAL RELEASE

If you had $25,000 in gold in 2001 at $290 per oz you would have over $100,000 at today’s gold prices. These profit margins are unheard of in today’s volatile financial market. Experts say this is just the beginning. Gold last touched $850 an ounce on Jan. 21, 1980, just after the Soviet invasion of Afghanistan and the seizure of U.S. hostages in Iran. Inflation was running in the triple digits. In today’s terms, this would be equivalent to $2,000 an ounce suggesting the current nine year bull market has much further to run. With the Fed’s decision to print, print, print trillions of dollars Americans will soon see inflation like never before. With these current conditions we are pleased to provide special arrangements for orders of $25,000 and more. Numerous experts are now predicting gold at $5,000 an ounce your $25,000 could be worth $125,000 in the near future. Please understand that when you convert money to U.S. Government Gold you have not spent your money, but rather transferred its value from a declining paper currency, to a powerful asset providing a long term hedge against inflation. Smart investors are currently moving 25-30% of their paper assets into gold. Call today for the opportunity to turn your $25,000 into $125,000. Toll free 877-817-1220.

Nationwide Coin and Bullion Reserve announces the final release of 2,500 congressionally authorized, fully backed by the U.S. Government, completely free of dealer mark up, $5 gold coins at the incredible low price of only $155.00 each. This at cost offer for American citizens may be your final opportunity to own government gold free of dealer mark up. Gold is currently trading above $1,400.00 per ounce and experts predict gold to skyrocket to as much as $5,000.00 an ounce. Inflation, the printing of trillions of dollars, two wars and the threat of terrorism all have caused the demand for gold to soar. Leading financial experts, Rob McEwen, Christopher Wyke, Peter Schiff and James DiGeorgia all predict $5,000/oz. gold. Due to extremely limited supplies we must adhere to a strict limit of ten coins per household. Nationwide Coin and Bullion Reserve has set these beautiful U.S. Government gold coins for immediate public release and cannot guarantee sufficient inventory to supply current demand. Order now to avoid disappointment. This at cost public offer will sell out immediately. Overage orders may be cancelled and your checks returned uncashed. Ordering now may be your last chance to own these magnificent government issued gold coins at this level. Call toll free 877-817-1220.

SPECIAL ARRANGEMENTS NOW AVAILABLE FOR ORDERS OVER $25,000

1-877-817-1220 CALL TOLL FREE (24 hrs a day seven days a week) MINIMUM ORDER 5 COINS

CHECK

VAULT # RFE-110501

NARFE Perks NARFE Perks are designed to provide NARFE members with a quality option in their search for commonly used products and services. NARFE makes no guarantee on any products and services listed below and encourages its members to shop and compare before making a decision on any financial matter.

MOVING SERVICES

NARFE MEMBER HOMEBENEFITS 1-800-666-9203 http://narfe.myhomebenefits.com • Earn thousands in cash-back rewards when you buy or sell a home* • Shop competitive mortgage rates, receive discounts on closing costs, plus take advantage of your VA Loan Benefits • Receive preferred pricing on interesete moving services with the nation’s most trusted moving company – Allied Van Lines! *State restrictions apply. Call or visit website for details.

BEKINS VAN LINES 1-800-456-6832 (M-F, 8 a.m.-5 p.m. CT) narfe@bekins.com All NARFE members will receive discounted pricing for all interstate shipments. Discount will apply to packing and moving services and valuation protection. All intrastate shipments, locals and international moves will be competitive in cost based on your geographical location. Mention you are a NARFE member and transportation agreement #00930.

VACATION RENTALS .

Endless Vacation Rentals® As a member of NARFE, you will receive 10% off the “Best Available Rate” at vacation rental properties booked at www.evrentals.com/narfe or by calling 1877-670-7088, prompt 3, and providing promotion code 20672 at time of booking.

INSURANCE

TRAVEL

NARFE INSURANCE SERVICES

RIVER CRUISES

1-800-233-5764 Insurance plans designed and administered exclusively for NARFE members. Call for information on Whole and Term Life, Hospital Indemnity, Accidental Injury and Death Plan, Dental Plan and Cancer Care Plan. For information on Long Term Care call the Long Term Care Unit at 1800-358-3795.

2-for-1 Cruise Fares PLUS up to FREE Air! ~ 2011 & 2012 DEPARTURES ~ Europe * Russia * China Southeast Asia CALL TODAY TO SAVE ON YOUR NEXT VACATION!

GEICO: 1-800-368-2734 NARFE members with good driving records may be eligible for quality automobile insurance from GEICO. Ask about the NARFE discount now available to members in many states. Call today for your free, no-obligation rate quote. Be sure to mention that you’re a NARFE member! • Discount amount varies in some states • Discount not available in all states or in all GEICO companies • One group discount applicable per policy.

EMERGENCY SERVICES SINCE 1974 1-800-423-3226 Medical Air Services Association has been the industry leader in prepaid emergency assistance services for more than 30 years. NARFE members have experienced MASA’s “peace of mind” services since 2001. Now NARFE members are entitled to even more: air ambulance transportation, helicopter transportation, ground ambulance, vehicle return, mortal remains transport, and much more! Call MASA Today. It Could Save Your Life!

1-800-607-4538 www.NARFEtravel.com

HEARING BENEFITS TRUHEARING The TruHearing program can save you hundreds of dollars: • Free hearing screening • 45-day, money-back guarantee • 3-year warranty • Free one-year supply of batteries • 1,400 hearing professionals nationwide • 12-months, no interest financing (available upon approved credit)

Call to schedule your appointment

877-360-2442 Operators available Mon-Fri 9 a.m.-9 p.m. (East Coast time)

JUNE 2011 | NARFE

HOTELS

CAR RENTALS

CREDIT UNION

CHOICE HOTELS INTERNATIONAL With 6,000 hotels in the United States and throughout the world, Choice Hotels® offers something for everyone. Join the Choice Privileges® rewards program and earn points with every qualifying stay toward free nights, Airline Rewards, gift cards and more. As a NARFE member, receive 20% off your next stay at participating hotels when you use Special Rate ID 00801967. This offer is subject to availability and cannot be combined with any other offer. Advance reservations required. To book, visit choicehotels.com or call 800-258-2847.

ALAMO Drive Happy® with Alamo® where NARFE members receive year-round discounts. Call 1-800-462-5266 and reference Contract ID 262544.

NATIONAL You Drive A Hard Bargain. Receive up to 20% off rentals at National Car Rental. To make a reservation call National Car Rental at 1-800-CAR-RENT® and reference Contract ID 5282909.

NARFE’S OFFICIAL CREDIT UNION As a member of NARFE, you have the privilege of joining NARFE Premier Federal Credit Union, which has been serving members since 1935. We offer extensive services at competitive rates to members nationwide. Your savings are federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. For more information, call 800-3281500, e-mail jparish@narfepremierfcu. org or visit us at NARFEpremierfcu.org.

CREDIT CARD AVIS: 1-800-331-1441

WYNDHAM HOTEL GROUP As a member of NARFE, you will receive up to 20% off the “Best Available Rate” at participating locations when you travel. Call and give agent your special discount ID number, #20672, at time of booking to receive discount. Whether you are looking for an upscale hotel, an all-inclusive resort or something more cost-effective, we have the right hotel for you... and at the right price. So start saving now. Call our special memberbenefits hotline 1-877-670-7088 and reserve your room today at one of these fine hotels: Wyndham Hotels and Resorts®, Days Inn®, Ramada Worldwide®, Super 8®, Wingate By Wyndham®, Baymont Inns and Suites®, Hawthorn Suites® By Wyndham, Microtel Inns and Suites®, Howard Johnson®, Travelodge® and Knights Inn®.

NARFE | JUNE 2011

The employees/owners of Avis offer guaranteed low rates and quality services to members of NARFE. Mention ID# A991900.

HEALTH SCREENING

LIFE LINE SCREENING Life Line Screening, America’s leading provider of community-based preventive health screenings, will conduct the following screenings using state-of-the-art ultrasound technology in your neighborhood: 1. Stroke/Carotid Artery 2. Abdominal Aortic Aneurysm 3. Atrial Fibrillation 4. Peripheral Arterial Disease. You will receive a confidential written report within 21 days. Life Line Screening and NARFE encourage you to share these test results with your doctor. All four screenings cost just $135. To schedule an appointment, please call 1-800-324-9906 and give the operator code number: BKHN075 or visit www.lifelinescreening. com/NARFE. Coverage may vary and may not be available in all states.

Bank of America now offers the officially approved credit card program for NARFE, featuring the Platinum Plus® MasterCard® with WorldPoints. This is the only credit card that helps support NARFE every time you use it to make a purchase–at no additional cost to you. Call toll-free 1-866-438-6262 Use NARFE’s full name, not NARFE. Use priority code: UABEWD.

NARFE MERCHANDISE NARFE GENERAL STORE

Order Official NARFE Name Badges. Coming soon, customizable NARFE logo products and plaques. See MEMBER PERKS on the NARFE Web site, or go to: www.narfegeneralstore.com. Toll-Free Phone: 877-866-0102 Fax: 301-371-6824

For the Record The chart below tracks the CPI-W, the monthly inflation change, and the cumulative percentage gain for the next CSRS and Social Security COLA. CPI-W October 2010 November December January 2011 February March April May June July August September

214.6 214.8 215.3 216.4 217.5 220.0

MONTHLY % CHANGE % CHANGE FROM 215.5 +0.1 +0.1 +0.2 +0.5 +0.5 +1.1

Markets Strong Again in April ByTracey Ray

pril was another strong month for the financial markets, as all of the Thrift Savings Plan funds had positive returns for the month. After struggling in March on concerns about economic growth, the earthquake in Japan and rising inflation, the markets focused on strong corporate earnings reports. Despite a midmonth swoon when Standard & Poor’s changed its outlook for the U.S. Treasury’s long-term debt to negative for the first time in history, the C Fund advanced to its highest level since December 2007. The I Fund, which comprises foreign stocks, performed much better than the other funds, more than reversing the March decline, as it benefited from the dollar’s decline to its lowest level since the summer of 2008.

Tracey Ray is chief investment officer of the Thrift Savings Plan. 54

-0.4 -0.4 -0.1 +0.42 +0.95 +2.10

Index Rises in March

he Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.1 percent in March. To calculate the 2012 cost-of-living adjustment (COLA), the indices of July, August and September 2011 will be averaged for a thirdquarter determinant, which will be compared with the 2008 thirdquarter base of 215.495 (because of price deflation in the past two measurement years, the 2008 third-quarter average is still the point of comparison). The March index of 220.024 is up 2.1 percent from the base. Benefits awarded under the Federal Employees’ Compensation Act (FECA) to individuals suffering work-related injuries or illnesses are adjusted according to each calendar year’s percentage change in the CPI-W. March’s index is 2.21 percent higher than the December 2010 base index of 215.262. ■

Thrift Savings Plan Investments* Month G Fund May 0.28% 2010 June 0.24% July 0.23% August 0.22% September 0.17% October 0.18% November 0.17% December 0.20% 0.24% 2011 January February 0.22% March 0.26% April 0.25% Last 12 Months 2.69%

F Fund 0.85% 1.56% 1.07% 1.28% 0.17% 0.36% (0.57%) (1.05%) 0.13% 0.26% 0.06% 1.28% 5.49%

C Fund (7.99%) (5.24%) 7.01% (4.51%) 8.92% 3.80% 0.01% 6.68% 2.37% 3.42% 0.04% 2.96% 17.19%

S Fund (7.51%) (6.90%) 7.00% (5.59%) 11.47% 4.48% 3.00% 7.38% 1.23% 4.52% 2.06% 2.94% 24.53%

Month 2010 May June July August September October November December 2011 January February March April Last 12 Months

L 2020 (4.98%) (2.34%) 4.82% (2.29%) 5.54% 2.29% (0.49%) 4.08% 1.35% 2.15% (0.03%) 2.37% 12.59%

L 2030 (6.07%) (2.98%) 5.80% (2.88%) 6.77% 2.78% (0.56%) 4.96% 1.57% 2.60% (0.05%) 2.83% 14.88%

L 2040 (6.97%) (3.47%) 6.60% (3.33%) 7.76% 3.16% (0.64%) 5.67% 1.75% 2.95% (0.08%) 3.20% 16.68%

L Income (1.50%) (0.61%) 1.81% (0.63%) 2.00% 0.92% (0.05%) 1.49% 0.63% 0.90% 0.17% 1.01% 6.26%

I Fund (11.20%) (1.75%) 10.78% (3.14%) 9.81% 3.63% (4.84%) 8.12% 2.41% 3.33% (2.23%) 6.03% 20.23% L 2050

3.28% (0.15%) 3.57

*This chart is provided as a service to NARFE members who enrolled in the Thrift Savings Plan while employed by the federal government. Retirees are not eligible for enrollment. These returns are net of the effect of accrued administrative expenses and investment expenses/costs. Percentages in ( ) are negative. Source: tsp.gov.

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