JUNE
’19
COVER STORY Volume 95 • Number 6
JUDGMENT CALLS
FEDS AND THE COURTS TEN TIPS FOR A SUCCESSFUL RETIREMENT
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WASHINGTON WATCH
6
White House Releases FY20 Budget Cutting Billions From Feds
7
Bill Introduced to Make Relocating Feds Whole
8
How Will You Raise NARFE’s Concerns This Summer?
10
Senate Budget Resolution Treats Federal Community as a Piggy Bank
11
MSPB in Uncharted Waters, NARFE Calls on Senate to Act
12 Bill Tracker
24
COVER STORY JUDGMENT CALLS: FEDS AND THE COURTS What’s afoot in the court system that might affect federal employees and retirees?
SPECIAL SECTION
49 NARFE 2018 Financial Statements
COLUMNS
4
From the President
40 Managing Money
32
10 TIPS FOR A SUCCESSFUL RETIREMENT Good health and a federal retirement plan are good to have, but here are some ideas on things you can do once you retire.
Questions & Answers
44 For the Record
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On the Web
46 NARFE News
VISIT US ONLINE AT:
58 Member Perks
www.narfe.org NARFE National Headquarters
DEPARTMENTS
16 JUNE
LIKE US ON FACEBOOK:
42 Alzheimer’s Update
COVER STORY Volume 95 • Number 6
JUDGEMENT CALLS
60 The Way We Worked
FEDS AND THE COURTS TEN TIPS FOR A SUCCESSFUL RETIREMENT
ON THE C OVER Illustration by GRAPHEK
FOLLOW US ON TWITTER:
@narfehq
W W W. N A R F E . O R G
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JUNE 2019 | Volume 95 | Number 6
EDITORIAL DIRECTOR Helen Mosher SENIOR EDITOR Mabel Yu COMMUNICATIONS ASSISTANT Precious Dorch-Robinson GRAPHIC DESIGN GRAPHEK Beth Bedard EDITORIAL BOARD Kenneth J. Thomas, Kathryn E. Hensley, Barbara Sido EDITORIAL OFFICE: NARFE Magazine 606 North Washington St. Alexandria, VA 22314-1914 Phone: 703-838-7760 Fax: 703-838-7781 Email: communications@narfe.org ADVERTISING SALES: Warren Berger Media People Inc. 122 East 42nd St., Suite 1622 New York, NY 10168 Phone: 212-779-7172, ext. 223 Email: 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 DIGITAL AUDIO: Issues of NARFE Magazine are also available in audio format through the National Library Service for the Blind and Physically Handicapped (NLS). For availability, call 202-727-2142 or your local NLS service provider. 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.
National Active and Retired Federal Employees Association NATIONAL OFFICERS KENNETH J. THOMAS, President; natpres@narfe.org KATHRYN E. HENSLEY, Secretary/Treasurer; natsectreas@narfe.org EXECUTIVE DIRECTOR BARBARA SIDO, execdir@narfe.org
REGIONAL VICE PRESIDENTS
REGION I James C. Risner (Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) TEL: 207-540-6233 EMAIL: rvp1@narfe.org REGION II Kathleen Adams (Delaware, District of Columbia, Maryland, New Jersey and Pennsylvania) TEL: 302-697-6650. CELL: 302-561-5660 EMAIL: adamskhawaii@aol.com REGION III Clarence Robinson (Alabama, Florida, Georgia, Mississippi, South Carolina, Puerto Rico and Virgin Islands) CELL: 404-312-8028 EMAIL: crobin8145@att.net
REGION VI Marshall L. Richards (Arkansas, Louisiana, Oklahoma, Republic of Panama and Texas) TEL: 903-660-2784 EMAIL: pappysdad@cobridge.tv REGION VII Rodney L. Adelman (Arizona, Colorado, New Mexico, Utah and Wyoming) TEL: 623-505-4719 EMAIL: narfe7vp@cox.net REGION VIII Helen L. Zajac (California, Guam, Hawaii, Nevada and Republic of Philippines) TEL: 707-644-7565 EMAIL: HLZajac125@gmail.com
REGION IV Robert L. Helfrich (Illinois, Indiana, Michigan, Ohio and Wisconsin) TEL: 317-501-1700 EMAIL: rvp4@narfe.org
REGION IX Richard Wilson (Alaska, Idaho, Montana, Oregon and Washington) TEL: 253-210-5609, CELL: 425-736-6899 EMAIL: narfe1404@comcast.net
REGION V Cindy Reneé Blythe (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) TEL: 785-256-1450 EMAIL: mrsdocbusyb@yahoo.com
REGION X William Shackelford (Kentucky, North Carolina, Tennessee, Virginia and West Virginia) TEL: 703-830-6590, CELL: 703-201-6304 EMAIL: wshack1951@aol.com
HERE’S HOW TO CONTACT US… TO JOIN NARFE, RENEW YOUR MEMBERSHIP OR FIND A LOCAL CHAPTER:
CALL (TOLL-FREE) 800-456-8410 OR GO TO www.narfe.org TO CHANGE YOUR ADDRESS, PHONE NUMBER OR EMAIL LISTING:
CALL (TOLL-FREE) 800-456-8410 EMAIL memberrecords@narfe.org OR GO TO www.narfe.org, log in and click on “Update My Record”
TO REACH A FEDERAL BENEFITS SPECIALIST:
EMAIL fedbenefits@narfe.org NARFE HEADQUARTERS
606 N. Washington St. Alexandria, VA 22314 703-838-7760 Hours of operation: Monday-Friday, 8 a.m.-5 p.m. ET
www.narfe.org
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. Nonmember subscription rate $40. Postmaster: Send address change to: NARFE Attn: Member Records, 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. Copyright © 2019, NARFE. 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 Magazine, but at the same time we will not undertake to guarantee the reliability of our advertisers.
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From the President
AIMING AT ALZHEIMER’S
A
new NARFE/Alzheimer’s Association letter of agreement continues a mutually beneficial
relationship of advancing Alzheimer’s disease research and advocacy and providing care and support resources. This relationship began in 1985. NARFE’s donations to the Alzheimer’s Association exceeded the $13 million mark in early 2019. The new campaign target of $14 million is projected to be reached by the year 2020. But, more is needed. Alzheimer’s is a public health crisis; the statistics are staggering. Someone develops Alzheimer’s every 65 seconds. The disease affects 5.8 million Americans, and without medical breakthroughs, that number will triple in a generation. Seniors are not the only ones affected by the disease; approximately 200,000 Americans under the age of 65 have younger-onset Alzheimer’s. Only 16 percent of seniors say they receive regular cognitive assessments, unlike routine checks for other medical conditions.
What can NARFE members do? First, donate to the NARFE-Alzheimer’s Research Fund (see the form on page 45). Then, contact your member of Congress and ask them to do the following: • Support $350 million in fiscal year 2020 (FY20) for Alzheimer’s research activities at the National Institutes of Health (NIH). • Support $20 million in FY20 to implement the BOLD Infrastructure for Alzheimer’s Act at the Centers for Disease Control and Prevention (CDC). • Cosponsor the Improving HOPE for Alzheimer’s Act, which would help educate clinicians on Alzheimer’s disease and dementia care planning services through Medicare. • Cosponsor the Younger-Onset Alzheimer’s Disease Act of 2019, which would allow individuals under the age of 60 to be eligible to access programs under the Older Americans Act. Working together as advocates and donors, we can make Alzheimer’s research a national priority. Make a difference by taking action and joining the fight to end Alzheimer’s disease.
NARFE’s Mission Statement To support legislation and regulations beneficial to federal civilian employees and annuitants and potential annuitants under any federal civilian retirement system and to oppose those detrimental to their interests. To promote the general welfare of federal civilian employees and annuitants and potential annuitants, to advise and assist them with respect to their rights under retirement, health and other employee and retiree benefits laws and regulations, and to represent their interests before appropriate authorities. To cooperate with other organizations and associations in furtherance of these general objectives.
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KENNETH J. THOMAS NARFE NATIONAL PRESIDENT natpres@narfe.org
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Washington Watch
WHITE HOUSE RELEASES FY20 BUDGET CUTTING BILLIONS FROM FEDS
P
resident Trump used his fiscal year 2020 (FY20) budget request to Congress as a platform to again advocate for substantial cuts to federal employee pay and benefits,
amounting to over $177 billion. This is yet another instance of the president showing scorn toward public servants by breaking promises and reneging on commitments made to current and former federal employees, despite their hard work and sacrifices for the nation. Among the cuts are some familiar targets: elimination and reduction of cost-ofliving adjustments (COLAs); increased Federal Employees Retirement System (FERS) employee contributions to retirement without any corresponding increases in benefits, amounting to a sizeable 6 percent cut in takehome pay; elimination of the fully funded FERS Annuity Supplement for new retirees; reduction of the Thrift Savings Plan G Fund rate of return; calculation of federal annuities using the average of the highest five years of salary instead of three; reduction of paid leave by combining sick and annual
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leave; and freezing federal pay in 2020. Notably, these cuts are listed in the budget as under the authority of the General Services Administration (GSA) instead of the Office of Personnel Management (OPM), which is telling, as it relates to the proposed “reorganization” of OPM and GSA. Writing OPM
ACTION ALERT!
out of the budget prior to proper congressional oversight of the administration’s reorganization proposals is a presumptive and premature move, and indicates that the president has every intention of disbanding OPM and outsourcing its vital functions to various other governmental entities despite NARFE and members of Congress calling for circumspection. Most of the benefit cuts proposed in the budget must be passed by Congress. This is not the case, however, with the president’s proposal to freeze federal pay in 2020, which the president can enact unilaterally unless Congress overrides him— as it did with the 2019 pay raise. To again propose a pay freeze for federal employees while
JUNE
If enacted, proposals in the President’s FY20 budget would take away over $177 billion in earned benefits from the federal community. Contact your legislators via the Legislative Action Center to let them know these are benefits you’ve earned and paid for. Don’t let the budget process continue without voicing your concerns.
simultaneously touting a strong economy, low unemployment and high private-sector wages is a slap in the face to the federal employees who show up day in and day out in service to the American people and ensure a safe and functioning society. NARFE worked with Congress to defeat a pay freeze this year and will do whatever is necessary to prevent it again. As long as federal pay and benefits are under repeated
attack, we risk undermining the federal government’s recruitment and retention efforts at a critical time when we are on the cusp of a sizeable retirement wave. The American people deserve a top-notch federal workforce, and the only way we can maintain the current level of excellence is to provide competitive compensation commensurate with the high-level work Feds perform. Yet, the administration insists on taking the entirely
BILL INTRODUCED TO MAKE RELOCATING FEDS WHOLE
S
en. Mark Warner, D-VA, in partnership with Sens. Tim Kaine, D-VA, Susan Collins, R-ME, Mazie Hirono, D-HI, and Chris Van Hollen, D-MD, reintroduced the Relocation Expense Parity Act, S. 841, to provide much-needed relief to all federal employees faced with burdensome taxes when relocating as part of their federal service to better serve the public’s needs. This legislation is necessary as a consequence of the Tax Cuts and Jobs Act passed into law in 2017, which eliminated tax deductions for work-related moving costs and tax exclusions for employer reimbursements intended to offset employee moving expenses. Instead, the tax reform law made moving costs taxable at the same rate as normal employee income and forced agencies to withdraw up to thousands of dollars in taxes from employee paychecks.
Such financial distress can cause employees to elect not to move and fill agency needs. To put this into perspective, NARFE and its allies identified that approximately 25,000 federal employees relocate for their jobs each year. After lawmakers and federal employee groups including NARFE voiced concerns, the General Services Administration (GSA) amended its rules and issued guidance to allow agencies to reimburse affected employees through use of withholding tax allowances and relocation tax allowances. The GSA bulletin text said the allowances would be paid to employees who relocate “in the interest of the government from one official station or agency to another for permanent duty” on or after January 1, 2018. (Continued on p. 10)
opposite course of action: gutting federal compensation at a time when the workforce is still recovering from the record 35-day government shutdown. NARFE will work alongside our allies to ensure Congress outright rejects these numerous misinformed proposals and actively appropriates a federal pay raise competitive with private-sector rates. — BY JESSICA KLEMENT, STAFF VP, ADVOCACY
MYTH vs. REALITY Myth: There are hard deadlines for Congress to pass a budget resolution.
Reality: According to the Congressional Budget Act (CBA) of 1974, Congress is supposed to reach final agreement on a budget resolution by April 15. The CBA attempted to set an orderly timeline for establishing the budget. Missing the April deadline, however, became regular practice, and the timetable the law established has, in large part, degraded. Regularly, budget agreements get accomplished much later than the deadline. Even if each chamber passes their respective budget resolutions in a timely fashion, they may be considerably different from one another and difficult to reconcile.
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Washington Watch
HOW WILL YOU RAISE NARFE’S CONCERNS THIS SUMMER?
S
ummertime is upon us, which means it’s time to start planning how you’ll bring NARFE’s legislative priorities in front of your legislators. Whether you prefer meeting in-person with your elected officials, emailing them or raising awareness on social media, there are many ways you can make a difference as a NARFE advocate. There are also plenty of community events planned in the summertime where legislators, candidates and their staff will be in attendance. These community events include fairs, festivals, picnics and much more. Take advantage of those opportunities to connect directly with legislators and congressional staff. Simply check their public calendars for confirmation of when and where they’ll be attending such events. If you attend or plan community events, expect to hear from other groups about issues in the news as well as what’s being considered in Congress. These issues will consume legislators’ time and attention, but that doesn’t mean that raising your voice to advance NARFE’s priorities should take a back seat. Groups attend these events because it’s a great way to get their issues in front of their legislator, and you should make the most of this opportunity, too. Remember, August recess is the best time to schedule a meeting with a legislator because he or she should be in the district/state for most of the month. Just be sure to call or email the legislator’s scheduler in advance of your meeting (aim
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Remember, August recess is the best time to schedule a meeting with a legislator because he or she should be in the district/state for most of the month. for June-July) to ensure that the legislator and/or staffer has time to schedule a meeting. It is important to take advantage of this opportunity and meet with your legislator while they are home in your district. All year round, NARFE members should be intentional about delivering NARFE’s message. Materials are available on the Advocacy page of the NARFE website with more information to help you brush up on the details of NARFE’s legislative priorities. With so many members planning NARFE advocacy activities this time of year, everyone needs to be on the same page about which issues to discuss and how to frame NARFE’s position. Stick to the NARFE message and strongly encourage others to do the same. A united NARFE is a strong NARFE. At congressional meeting remember to leave behind materials explaining NARFE’s legislative priorities, all of which are on the NARFE webpage. Be sure to follow up by email to thank those you met with, answer any outstanding questions and leave a more lasting impression that will help to build and maintain relationships with congressional staff. Finally, please report back to NARFE’s Advocacy Department about your meeting or event using the Congressional
Meeting or Event Feedback form, both of which can be found in NARFE’s Legislative Action Center at www.narfe.org/ legislation/votervoice.cfm. If you have any questions about how to participate in advocacy during the summer months, please contact the Advocacy Department at advocacy@narfe.org. —BY JESSICA KLEMENT, STAFF VP, ADVOCACY
NARFE GRASSROOTS ADVOCACY Learn more about how you can take action to protect your earned pay and benefits by reviewing NARFE Grassroots materials at www.bitly.com/ NARFE-grassroots.
NARFE-PAC:
MEETING OUR GOALS
NARFE-PAC, the political arm of NARFE, works to defend your earned pay and benefits by building strong relationships between NARFE and members of Congress. Support NARFE-PAC today and help fight for the federal community.
Raise $1.75 million
$264,000
Disburse $1.25 million in political contributions
Grow monthly giving program (sustainer program) by 20%
Send NARFE members to 110 local fundraisers
$196,000
4%
10
Figures as of 3/31/2019
Contribute To NARFE-PAC I want to make a monthly sustainer credit card contribution:
OR
q $25/month
I want to make a one-time contribution: q $250 – Gold lapel pin and water bottle q $100 – Silver lapel pin
q $10/month q Other: ______/month ($10 minimum) Sustainers receive a Sustainer lapel pin and NARFE-PAC 17oz stainless steel thermal bottle that keeps liquids hot for 12 hours or cold for 24 hours.
q $50 – Bronze lapel pin q $25 – Basic lapel pin q Other: _________
q Please do not send any gifts for my contribution (This saves NARFE-PAC money!)
NARFE Member #: _________________________________________ Name: __________________________________________________ Address: ________________________________________________ City: _________________________________________________ State: ___________
ZIP: _______________
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 political action fund. NARFE-PAC contributions are not deductible for federal income tax purposes.
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Washington Watch
SENATE BUDGET RESOLUTION TREATS FEDERAL COMMUNITY AS A PIGGY BANK
I
10
n March, the Senate Budget Committee approved its fiscal year 2020 (FY20) budget resolution. As with President Trump’s FY20 budget request, the Senate budget resolution threatens federal pay and benefits and calls for meeting fiscal targets on the backs of federal employees and retirees. Once again, some members of Congress are quick to see Feds as a piggy bank when it comes time to set the budget, despite the fact employees already contributed over $120 billion in deficit reduction and should not be tapped any further. Through budget reconciliation, the Senate budget resolution requires five Senate committees to cut a combined $94 billion over a five-year span from programs under their respective jurisdictions. The Senate Homeland Security and Governmental Affairs Committee (HSGAC) is among the listed committees and would be required to cut $15 billion from mandatory spending programs it oversees, mainly federal benefits. NARFE’s allies on the Senate Budget Committee stood up stalwartly in defense of Feds, but, unfortunately, they did not have requisite backing to cut provisions that would hurt the
federal community. During the committee markup, Sens. Tim Kaine, D-VA, Chris Van Hollen, D-MD, and Mark Warner, D-VA, advocated for striking the $15 billion reconciliation instruction. The senators described the severe negative impact on federal employee morale, recruitment and retention caused by repeated attacks on federal compensation and benefits, especially in the wake of a record 35-day government shutdown that demoralized the federal workforce.
(Continued from p. 7) Although the GSA solution remedied the situation for a majority of federal employees, it leaves behind roughly 5 percent of those affected who cannot get reimbursement for additional taxes imposed on their government-paid
moving expenses, generally those employees newly hired or retiring. The Relocation Expense Parity Act goes beyond the GSA rule change by providing a final legislative solution for all affected employees. Federal employees should not have to foot the bill for their
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Although the Senate budget passed out of committee, this is far from over. Before any committees can be directed to follow the reconciliation instructions, the House and Senate need to come to agreement on a bicameral budget, which many in Congress describe as highly unlikely. NARFE and our network of dedicated activists will work tirelessly to quash any misinformed and harmful provisions. — BY JESSICA KLEMENT, STAFF VP, ADVOCACY
relocation when their agency calls upon them to relocate in order to better serve the American people. We should not burden those who answer the call to public service, wherever it may lead them, with a sizeable tax bill for their moving expenses. —JESSICA KLEMENT, STAFF VP, ADVOCACY
MSPB IN UNCHARTED WATERS, NARFE CALLS ON SENATE TO ACT
T
he U.S. Merit Systems Protection Board (MSPB) plays an indispensable role in sheltering America’s civil servants from unlawful adverse disciplinary actions resulting from discrimination, cronyism or political attacks in the workplace. Due to a lack of a quorum to vote on petitions for review since January 7, 2017, MSPB’s governing board has been unable to process and issue decisions on cases that require a vote, delaying justice and causing a backlog of unresolved, languishing appealed cases numbering roughly 2,000. This backlog is projected to take years to resolve once the board is fully functioning. Throughout this extended lack of quorum, the Honorable Mark A. Robbins was the MSPB’s only serving board member. To complicate matters, Robbins reached the expiration of his one-year statutory holdover period on March 1, 2019, unprecedentedly leaving the board without Senate-confirmed leadership for the first time in its 40-year history. This latest development only worsens an already muddled and confusing situation at MSPB. Despite NARFE’s calls for appointments to be made with great haste in order to restore the MSPB’s essential functions, the Senate failed to fully confirm any nominees and fill the vacant board positions before Robbins reached the end of his extended appointment. The Senate Homeland Security and Governmental
Affairs Committee favorably reported two nominees out of committee in a bipartisan fashion, Dennis Dean Kirk and Julia Clark, but they have yet to be considered by the full Senate. Key Senate majority leaders are holding up the vote until the administration puts forward a third nominee, perpetuating years of difficulty in confirming board nominees. The president originally nominated three potential board members, but one failed to make it through committee. There is presently no indication of when the president will name a another third nominee. The Senate also failed to pass Housepassed legislation that would have extended the Robbins appointment for another year. Now, there is neither a quorum nor a chairman, and in accordance with MSPB’s continuity of operations plan, this leaves the agency’s general counsel, Tristan Leavitt, responsible for the executive and administrative functions usually vested in the board chairman. In the meantime, administrative judges will continue to issue initial decisions according to longstanding delegated authority, but petition-for-review decisions cannot be issued until a quorum is reestablished. Unfortunately, without at least one Senate-confirmed board member, the MSPB also can no longer issue studies and analysis to Congress and the administration to inform them about the civil service and
merit system principles. And without a quorum, the MSPB is hindered in delivering oversight and enforcement of the civil service merit system principles. NARFE calls on the Senate to confirm the appointees without any further delay; the chamber is long overdue in delivering on this critical task. If Congress fails to take action, they will be sending a signal to civil service employees saying that MSPB protections and preservation of the merit system are not priorities of Congress or the Trump administration. — BY JESSICA KLEMENT, STAFF VP, ADVOCACY
LEGISLATIVE RESOURCES • Legislative Hotline: A weekly update of legislative news, compiled by the NARFE Advocacy Department staff, distributed via email and available by phone (tollfree) at 800-456-8410, option 4 and online at www.narfe.org. • Legislative Action Center: A one-stop site to send a letter to Congress, and more, at www.narfe.org.
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Washington Watch
narfe bill tracker THE NARFE BILL TRACKER IS YOUR MONTHLY GUIDE TO THE CONGRESSIONAL LEGISLATION THAT NARFE IS FOLLOWING. CHECK BACK EACH ISSUE FOR UPDATES. ISSUE
BILL NUMBER / NAME / SPONSOR H.Res. 23: Rep. Susan Davis, D-CA Cosponsors: 134 (D) 28 (R)
H.Res. 33: Rep. Stephen Lynch, D-MA POSTAL REFORM
Cosponsors: 189 (D) 32 (R)
H.Res. 54: Rep. Gerald Connolly, D-VA Cosponsors: 160 (D) 54 (R)
H.Res. 60: Rep. David McKinley, R-WV Cosponsors: 117 (D) 21 (R)
H.R. 1254: The Equal COLA Act / Rep. Gerry Connolly, D-VA Cosponsors: 4 (D) 1 (R)
FEDERAL ANNUITIES
H.R. 1553: Fair COLA for Seniors Act of 2019 / Rep. John Garamendi, D-CA Cosponsors: 24 (D) 2 (R)
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WHAT BILL WOULD DO
LATEST ACTION(S)
Expresses the sense of the Referred to the House House that the United States Committee on Oversight and Reform Postal Service should take all appropriate measures to ensure the continuation of door delivery for all business and residential customers. Expresses the sense of the House that Congress should take all appropriate measures to ensure that the United States Postal Service remains an independent establishment of the federal government and is not subject to privatization.
Referred to the House Committee on Oversight and Reform
Expresses the sense of the House that the United States Postal Service should take all appropriate measures to ensure the continuation of its six-day mail delivery service.
Referred to the House Committee on Oversight and Reform
Expresses the sense of the House that the United States Postal Service should take all appropriate measures to restore service standards in effect as of July 1, 2012.
Referred to the House Committee on Oversight and Reform
Provides Federal Employees Retirement System (FERS) retirees with the same annual cost-of-living adjustment (COLA) as Civil Service Retirement System (CSRS) employees.
Referred to the House Committee on Oversight and Reform
Requires Social Security and federal retirement programs to use the Consumer Price Index for the Elderly (CPI-E) to calculate cost-of-living adjustments (COLAs) to retirement benefits.
Referred to the House Committees on Ways and Means, Veterans’ Affairs, Oversight and Reform, and Armed Services
NARFE’s Position:
Oppose
Support
No position
EDITOR’S NOTE: These bills are all listed online at www.narfe.org/legislation/votervoice.cfm.
ISSUE
FEDERAL COMPENSATION
BILL NUMBER / NAME / SPONSOR
Passed in the House of Representatives (H.R. 790) Referred to the Senate Committee on Homeland Security and Governmental Affairs (S. 262)
Provides a 3.6 percent federal H.R. 1073/S. 426: Federal employee pay raise in calendar Adjustment of Income year 2020. Rates (FAIR) Act / Rep. Gerry Connolly, D-VA / Sen. Brian Schatz, D-HI
Referred to the House Committee on Oversight and Reform (H.R. 1073)
Cosponsors: H.R. 1073: 39 (D) 0 (R) S. 426: 13 (D) 0 (R)
Cosponsors: H.R. 1534: 27 (D) 2 (R) S. 1174: 3 (D) 0 (R)
H.R. 141/S. 521 Social Security Fairness Act of 2019 / Rep. Rodney Davis, R-IL / Sen. Sherrod Brown, D-OH Cosponsors: H.R. 141: 119 (D) 40 (R) S. 521: 23 (D) 3 (R) 2 (I)
DC STATEHOOD
LATEST ACTION(S)
H.R. 790/S. 262: Federal Provides a 2.6 percent federal Civilian Workforce Pay employee pay raise in 2019. Raise Fairness Act of 2019 / Rep. Gerry Connolly, D-VA / Sen. Chris Van Hollen, D-MD Cosponsors: H.R. 790: 26 (D) 0 (R) S. 262: 18 (D) 1 (R) 1 (I)
H.R. 1534/ S. 1174: Federal Employee Paid Leave Act of 2019 / Rep. Carolyn Maloney, D-NY / Sen. Brian Schatz, D-HI
GPO/WEP
WHAT BILL WOULD DO
H.R. 51: Washington, D.C. Admission Act / Del. Eleanor Holmes Norton, D-DC
Referred to the Senate Committee on Homeland Security and Governmental Affairs (S. 426)
Provides federal employees with 12 weeks of paid leave in connection with the birth, adoption, or foster placement of a child and other medical conditions.
Referred to the House Committees on Oversight and Reform, and House Administration (H.R. 1534)
Repeals both the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).
Referred to the House Committee on Ways and Means (H.R. 141)
Referred to the Senate Committee on Homeland Security and Governmental Affairs (S. 1174)
Referred to the Senate Committee on Finance (S. 526)
Provides for the admission of the Referred to the House State of Washington, D.C. into Committees on Overthe Union. sight and Reform, and Rules
Cosponsors: 203 (D) 0 (R)
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Questions & Answers
The following Questions & Answers were compiled by NARFE’s Federal Benefits Institute staff. NARFE does not provide legal, financial planning or tax advice or assistance.
EMPLOYEES NEED A NEW SOCIAL SECURITY CARD
Q A
I recently got married and changed my last name. I’d like to get a new Social Security card. How do I do this?
If you legally change your name because of marriage, divorce, court order or for any other reason, you must tell the Social Security Administration so you can get a corrected card. There is no charge for this service, but it’s something you will have to do in person or by mail. You cannot apply for a new card online. You will need proof of your identity. You may need to prove your current U.S. citizenship or lawful noncitizen status. The following web page will show you a list of all required documents: www.ssa.gov/ssnumber/ss5doc. htm. You will also need to complete an application, which you can access at www.ssa.gov/forms/ ss-5.pdf.
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Once you complete your application, you can take or mail it to your local Social Security office, along with the necessary documents. You can use the following weblink to search for an office in your area: https:// secure.ssa.gov/ICON/main.jsp.
If you have forgotten your user ID but still have access to your TSP account number, you can use that account number to access your account and then create another user ID. You can use your account number and user ID interchangeably to log into your TSP account online.
THRIFT SAVINGS PLAN LOAN
THRIFT SAVINGS PLAN (TSP) ONLINE ACCESS
Q
If you have forgotten your account number, you can use the following weblink to ask TSP to mail it to you: www.tsp.gov/tsp/ forgottenAccount.html.
When you leave federal service, you must repay your loan in full within 90 days from the time your agency reports your separation to TSP. Your repayment must include any accrued interest on the outstanding principal
Q A
What if I forgot my TSP account number or user ID for online access to my account?
I’m thinking about separating from federal service later this year. Can I continue to repay my TSP loan after I separate from federal service?
A
balance. You will receive a notice providing repayment details from TSP after your agency notifies them of your separation. If you do not repay your outstanding loan balance in full, a taxable distribution of the remaining balance amount of your loan will be declared as taxable income. You can roll the amount of the distribution into a traditional IRA or eligible employer plan within 60 days of it being declared to avoid taxes and penalties in accordance with Internal Revenue Code regulations. You will not be able to make a post-separation withdrawal from your TSP account until your loan is closed by either payment in full or taxable distribution. For more details about the taxable distribution of an unpaid loan, refer to the following tax notice: www.tsp.gov/PDF/formspubs/ tsp-536.pdf.
FERS MRA+10
Q
What is an immediate minimum retirement age (MRA) plus-10 annuity under the Federal Employees Retirement System (FERS)?
A
This is a provision that allows you to retire with an annuity payment beginning immediately if you have 10 years of creditable federal service (but less than 30 years) and have reached your FERS MRA upon separation from federal service. Your
FERS MRA is based on your year of birth. Refer to the following webpage if you don’t know your FERS MRA: www. opm.gov/retirement-services/ fers-information/eligibility/. This type of retirement also applies to a FERS employee who is 60-61 years old and has at least 10 years of creditable federal service (but less than 20 years). The annuity is permanently reduced for “early age” based on the number of months that you are under age 62. The reduction equals five percent per year (or 1/12 of five percent for each month) that you are younger than age 62. To avoid the reduction, you can postpone payment upon separation from federal service. Instead of applying for your retirement upon separation from federal service, you can later apply for the benefit by writing to OPM or filing an “Application for Deferred or Postponed Retirement,” Form RI 92-19. OPM recommends that you submit the form two months before you want the benefit to begin. If you separate from federal service with at least 10 years but less than 20 years of service, your full, unreduced annuity will be waiting for you at age 62. If you separate from federal service with at least 20 years but less than 30 years of service, your full, unreduced annuity will be waiting for you at age 60. You could also avoid the reduction by continuing federal
service a little longer, and then separate when you have reached a specific age and service that allows you to file for an immediate retirement upon separation with no reduction for early age. Those age and service criteria upon separation from federal service include: • MRA with 30 or more years of creditable service • Age 60 or 61 with 20 or more years of creditable service • Age 62 with at least five years of creditable service This permanent reduction for early age does not apply to special category employees (i.e., law enforcement officers, firefighters, air traffic controllers, or certain congressional employees) who retire under special group provisions. This reduction for early age does not apply to FERS employees who separate under disability retirement, Voluntary Early Retirement Authority (VERA), or a Discontinued Service Retirement (DSR). Note: If you are a non-special category FERS employee, have more than five years of CSRS service before electing to transfer to FERS and separated for retirement under VERA or DSR before your 55th birthday, then the CSRS component of your annuity from OPM would have a permanent reduction for early age. The reduction to the CSRS portion of your annuity would equal two percent per year (or 1/12 of two percent for each
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Questions & Answers
month) that you are younger than age 55.
RETIREMENT PROCESSING TIMEFRAME
Q
I’m thinking about retiring from federal service at the end of this year. How long will it take the Office of Personnel Management (OPM) to process my retirement?
A
It depends. OPM’s Retirement Services strives to complete retirement claims within 60 days. If OPM needs additional information from you or your agency, however, your claim could take longer to process. It may take
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more time than average if, for example, your retirement claim has special circumstances (e.g., applying a specific retirement law, evaluating a court order, etc.) It may also take more time if OPM needs to contact you to make a benefit election (e.g. a service credit deposit), or your former employing agency for additional information, or another agency such as the Social Security Administration, if a benefit from them affects your claim. NARFE Magazine tracks average processing times in the monthly column “For the Record,” which is on page 44 this month. You also can refer to the following OPM webpage to see
publicly available information, including monthly updates to their rolling two-year window of average processing times: www.opm.gov/about-us/budgetperformance/strategic-plans/ retirement-processing-status.pdf. “Map Your Way to a Smooth Retirement” is a webinar that is archived and available for logged-in NARFE members on the NARFE Federal Benefits Institute webpage (www.narfe. org/federalbenefitsinstitute/). The webinar includes information on how to avoid or minimize many of the problems or issues that can cause retirement processing delays.
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Questions & Answers
RETIREES CSRS SURVIVOR BENEFIT AND SOCIAL SECURITY
Q
I’m a retired Civil Service Retirement System (CSRS) employee. When I retired, I elected a full survivor benefit for my spouse. If I predecease my spouse, will my spouse’s Social Security be affected when she begins to receive her CSRS spousal survivor benefit?
A
The Social Security benefit that your spouse earned based on her own work record will not be affected by any CSRS survivor benefit that she might receive from OPM upon your death.
CHANGE OF ADDRESS WITH SOCIAL SECURITY
Q A
How can I change my address with Social Security?
If you receive Social Security benefits (retirement, survivors or disability) or are enrolled in Medicare, you can change your address online by using the “My Social Security” feature at the following link: www.ssa.gov/ myaccount/. Once you are logged in, go to the “My Profile” tab to access the address change option. This service is not currently available to people who receive Supplemental Security Income (SSI) or do not have a U.S. mailing address. However, if you are receiving SSI, you can still check the address they have on record through this site. If you get SSI, do not have a U.S. mailing address, or are
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unable to change your address online, you can: • Call Social Security at 800772-1213 (TTY 1-800-3250778), Monday–Friday from 7 a.m. to 7 p.m.; or • Contact your local Social Security office. If you do not receive Social Security benefits, SSI or Medicare, you do not need to change your address.
CSRS REFUND AND SOCIAL SECURITY
Q
My spouse was in the CSRS from 1978 to 1989. She withdrew her contributions upon separation and never returned to federal service. She is now applying for Social Security and needs proof that she is not eligible for a CSRS government pension. How can she obtain this proof?
A
She can ask her claims specialist from the Social Security Administration (SSA) to fax a request to OPM for this proof. The SSA knows how to make this request for her. The fax number is a private number between OPM and the SSA.
FEDERAL EMPLOYEES HEALTH BENEFITS (FEHB) AND TRICARE
Q
I’m retired from federal civil service, and my husband, who is retired from military service, is under my FEHB plan. I’m thinking about dropping him from my FEHB plan now that he is signing up for Medicare Parts A and B and will have TRICARE for Life coverage through his military retirement. Even though he was never a federal civilian, can he
suspend FEHB for his TRICARE coverage? If he outlives me, I’d like him to have the option to return to FEHB if TRICARE isn’t meeting his needs later in life. I heard that if you suspend FEHB for TRICARE, you can later return to FEHB if desired.
A
Since your husband was never a federal employee, he can never have his own Self-Only FEHB plan unless he is listed on your FEHB plan on the date of your death and is eligible for a spousal survivor benefit. In that situation, as a widower, he could suspend his FEHB for TRICARE for an indefinite period of time, and as a surviving spouse in receipt of a monthly survivor benefit from OPM, he could use any future open season to unsuspend FEHB coverage. But if he previously waived his right to a spousal survivor benefit when you retired and you predecease him, then he wouldn’t be allowed to keep the FEHB coverage. An annuitant such as yourself does not need an open season to drop a family member from the FEHB plan. For example, an annuitant may contact OPM and switch from a Self-Plus-One to a Self-Only plan any month of the year. But if the annuitant wants to later add an eligible family member back to his/her FEHB plan, they must wait for either a qualified life event (QLE) or a future open season. In your case, based on the information you shared, if your husband is not covered under your FEHB plan on the date of your death, he would never be allowed to reenroll back into FEHB as a widower. But as we mentioned previously, if he is
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Questions & Answers
enrolled under your FEHB plan on the date of your death, he would be allowed to continue the FEHB coverage for the rest of his life with the option to suspend FEHB for TRICARE any month of the year. Since you also have access to TRICARE, another option you might consider would be to suspend your SelfPlus-One FEHB plan for TRICARE. As an annuitant, you can suspend your FEHB coverage for TRICARE any month of the year. If you find that the TRICARE coverage isn’t meeting your needs or expectations, you could always unsuspend FEHB coverage
during any future open season. And if you predecease your husband while your Self-PlusOne FEHB plan is suspended for TRICARE, and if he didn’t previously waive his right to a spousal survivor benefit from OPM, then he would have the option to unsuspend FEHB coverage during any future open season as a surviving spouse. To obtain an answer to a federal benefits question, NARFE members should call 800-456-8410 and select option 2 for the Federal Benefits Institute; send the question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@ narfe.org.
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Cover Story 24
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FEDS AND THE COURTS Actions by the president and Congress affecting the federal civil service and federal benefits have long been the focus of federal employees’ and retirees’ interest and scrutiny. But there is, of course, a third branch of government that matters a great deal when it comes to the federal civil service: the federal court system. Court cases involving federal employees and their agencies are as old as the country. For example, in 1803, in Marbury v. Madison, 5 U.S. (1 Cranch) 137, the U.S. Supreme Court issued a decision establishing the principle of judicial review in the United States, meaning that American courts have the power to strike down congressional laws, statutes,
and some government actions that contravene the Constitution. The Court held that newly elected President Thomas Jefferson was wrong to prevent William Marbury, a civil servant appointed by outgoing political President John Adams, a Jefferson rival, from taking office as a justice of the peace in the District of Columbia. At present, a highly assertive administration is taking actions that interpret the powers of the executive branch broadly in a number of areas, including actions that affect employee rights, leading to conflicts with some in Congress and some employee groups who assert that the moves diminish and/or bypass statutory worker protections. W W W. N A R F E . O R G
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“There is an increasing effort by the Trump administration to remove the employment rights of federal employees across the board,” says John P. Mahoney of John P. Mahoney, Esq., Attorneys at Law, a Washington, D.C.-based federal government employment lawyer and former federal administrative judge who has represented many federal employees in adverse action proceedings. “There is a struggle right now between the executive branch, the judiciary and Congress over the direction of federal employment law.” And some say there are likely more court challenges for them to follow, given Trump administration successes in appointing new judges and Supreme Court justices who may look favorably on administration actions and interpretations of its powers and laws on the books. “I think it is certainly true that the administration wants to appoint judges who are skeptical of the administrative state,” says David Eric Lewis, a professor of political science at Vanderbilt University. “There is a dislike of regulations, bureaucracy and enforcement and a skepticism of delegations of authority to agencies. I think the administration is willing to break the machinery of government to stop it from doing things they don’t like.” “ I think it is certainly true that the administration wants to appoint judges who are skeptical of the administrative state” —John P. Mahoney of John P. Mahoney, Esq.
However, the status quo has proven resilient in a number of cases. According to a Brookings Institution tally of court challenges to Trump-era deregulatory rules through early March 2019, the administration has prevailed in two cases and either lost or abandoned its position in 32 cases. The Brookings Institution analysis said that this “win rate” is far below the normal agency win rate, which averaged 69 percent across 11 studies. 26
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The reason for this, says Debra D’Agostino, a partner at Washington, D.C.-based law firm, the Federal Practice Group, is that legislation and due process protects the jobs and benefits of federal employees. “The bottom line is that the Civil Service Reform Act is still good law and agencies have to comply with it, although we fear there will eventually be a replacement that doesn’t provide as much protection to the civil service workers,” D’Agostino says. “The Supreme Court also long ago clearly established that the Constitution requires due process before federal employee employment or benefits are removed, finding that federal employees have a property interest in their jobs.
EXECUTIVE ORDERS CHALLENGES
Exhibit A in the current court battles over federal civil service protections is a federal court challenge to three executive orders signed in May 2018 under which President Trump made it easier to fire federal workers and reduce the bargaining authority of federal employee unions. On August 24, 2018, U.S. District Court Judge Ketanji Brown Jackson struck down many of their provisions, finding that nine of the provisions in the three executive orders conflicted with the original intention Congress had in drafting and passing the Civil Service Reform Act and Federal Service Labor-Management Relations Statute back in 1978. However, the Justice Department appealed that court decision to the U.S. Court of Appeals for the D.C. Circuit, where in early April it remained pending. A similar reform enacted by Wisconsin’s state legislature ended up in state court. A Wisconsin statute enacted in 2011, Wisconsin Act 10, dramatically reduced civil service protections for state employees in a variety of areas, including collective bargaining, compensation, retirement, health insurance, and the sick leave of Wisconsin public-sector employees. That law was challenged and ultimately was ruled to be constitutional by the Wisconsin Supreme Court in July 2014, after three years of litigation, in Madison Teachers, Inc. v. Walker, 851 N.W.2d 337 (Wis. 2014), Mahoney notes.
LIMITS TO COURT VICTORIES
In many cases, court legal victories for federal employees can be temporary ones. Even if they are not overturned on appeal, they can sometimes be circumvented. Congress can just pass another statute, or the president can just issue another executive order that steers clear of the precise practices that a court found to be problematic.
For example, despite the District Court Executive Orders’ decision, federal agencies are nonetheless seeking to curtail worker protections, in part by insisting upon renegotiating provisions that in previous years had been included in collective bargaining agreements and would not have been controversial or by refusing to negotiate on key points, says Sarah E. Suszczyk, deputy general counsel of the National Association of Government Employees, a labor union, and co-chair of the Federal Workers Alliance. “ The bottom line is that the Civil Service Reform Act is still good law and agencies have to comply with it.” —Debra D’Agostino. “We are seeing four to five times the number of [bargaining] contracts being renegotiated by the administration at any given point in the year because agencies are choosing to open them up rather than renew them,” Suszczyk says. “[The Office of Personnel Management] is calling upon agencies to use disapproved sections of the executive orders as bargaining positions in negotiations. We are seeing agencies seeking to limit what they will negotiate over and attempt to limit employees’ rights to challenge performancebased adverse actions, raise grievances and have unions able to represent them.” Agencies also appear to be moving faster to discipline employees for alleged misconduct or sub-standard performance, some say. “I think we are seeing more efforts by agencies to accelerate progressive discipline,” says Greg T. Rinckey, a founding partner at law firm Tully Rinckey, PLLC. “I think cases are moving from a letter of reprimand to a proposed suspension faster than they did in the past. That is why it is important to realize that if you are a federal employee and you get a letter of reprimand or a notice proposing a brief, say three-day, suspension, the agency is progressively disciplining you, and you need to quickly speak to a union representative or to a lawyer. If you get a letter of reprimand and you are able to successfully counter that, you can knock it out. But next could come suspension and removal. After each level of discipline takes place, it is harder to knock out actions against you because you have strikes against you.” A July 2013 NARFE Magazine article described how federal employees can challenge adverse agency actions. It notes that there are prescribed deadlines for certain actions that employees must
take to pursue their claims. In some cases, since that article’s publication, those deadlines have been accelerated by new agency procedures and a 2017 federal statute applicable to Department of Veterans Affairs (VA) employees, but which D’Agostino said appears to be a test case before the same changes are implemented across the federal government. The statute shortened the appeal time for VA employees protesting their dismissals and expanded VA leadership’s ability to remove most workers, including senior executives, for misconduct or poor performance. “The law had several reforms that make it really hard for VA employees to defend themselves against allegations of misconduct or poor performance,” says D’Agostino. “Data shows suspensions and demotions are down, and firings are up.”
FEDERAL EMPLOYEE GRIEVANCES
Many federal employees have probably never heard of the Merit Systems Protection Board (MSPB). However, it plays an outsized role in determining cases affecting federal employee grievances, such as discrimination and adverse actions. It is a quasijudicial federal agency that functions in large part like a court, with administrative judges deciding cases that can be appealed to a three-person Board. “ The law had several reforms that make it really hard for VA employees to defend themselves against allegations of misconduct or poor performance.” —Debra D’Agostino. A major problem in federal employment law is that the MSPB has lacked a quorum of presidentialappointed members for the entire duration of the Trump administration. Consequently, petitions for review in thousands of employee appeals are stayed and backlogged, with more than 1,900 petitions for review pending. “Without confirmed MSPB members, federal employee termination appeals can drag on for years while the affected former employees remain unemployable,” Mahoney says. “A lack of a MSPB quorum undermines the constitutional and statutory due process rights of federal employees to be able to defend against proposed disciplinary actions that are unsupported by sufficient evidence of misconduct or unacceptable performance, are unreasonably harsh in terms of their penalties, and that constitute prohibited personnel actions (PPP), such as EEO W W W. N A R F E . O R G
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discrimination, retaliation for political affiliation, and whistleblower retaliation,” Mahoney added. In addition, given performance metrics, MSPB administrative judges are under great pressure to process cases more rapidly than in the past leading to less time extensions for federal employees, Rinckey says. Further, now many agencies cannot offer employees accused of misconduct the option to leave their agency with a clean record if they agree to resign, a compromise in adjudications before the MSPB that was acceptable to both sides in some situations, Rinckey says. That leaves federal employees with a grievance with unenviable choices. They can either wait in a
queue in hopes that the quorum will be restored at the body and the backlog rapidly whittled down, or they can bring an action in federal court. Federal court, however, is a more costly venue and one where self-representation is difficult and perilous for those unfamiliar with court rules, Mahoney and Rinckey note.
FEDERAL BENEFITS
Federal pensions are increasingly out of step with the private sector, which has largely eliminated such defined benefit plans. Many executive and legislative branch proposals center around reducing such benefits.
KEY FEDERAL DECISIONS AFFECTING FEDERAL EMPLOYEES 1.
2.
3.
Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985): Recognizes that tenured government employees have a Constitutionally protected property right to their continued employment that cannot be taken away without due process. McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973): Sets up the typical burden shifting analysis in an EEO complaint, i.e., the employee has the initial burden of establishing a prima facie case; the agency may rebut that case by articulating a legitimate nondiscriminatory reason for the challenged personnel action; and the employee may then attempt to establish that the “legitimate reason” was pretextual. Navy v. Egan, 484 U.S. 518 (1988): Recognizes that federal security clearances are privileges, not rights, in that they can be granted and revoked solely by the president in interests of national security, and that not even EEO discrimination is an affirmative defense to the revocation of a security clearance.
4. Douglas v. Veterans Administration, 5 M.S.P.R. 280 (1981): Holds that the MSPB will review an agency-imposed penalty only to determine if the agency considered all the relevant mitigating factors and exercised management discretion within tolerable limits of reasonableness.
5.
Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57 (1986) and Faragher v. Boca Raton, 524 U.S. 775 (1998): Recognizes that harassment is actionable under the Civil Rights Acts.
6.
NLRB v. Weingarten, Inc., 420 U.S. 251 (1975): Recognizes the public policy that supports the rights of unionized employees to be represented by a union representative during employer investigations likely to result in discipline.
7.
Garrity v. New Jersey, 385 U.S. 493 (1967): Recognizes that an employee’s refusal to answer questions in a criminal investigation may not be used against him in taking disciplinary action.
8. Kalkines v. United States, 473 F.2d 1391 (Ct. Cl. 1973): Requires employee to answer all employer questions in a purely administrative, noncriminal investigation or when criminal prosecution is declined. 9.
Giglio v. United States, 405 U.S. 150 (1972): Requires that investigative agencies turn over to prosecutors potential impeachment evidence with respect to the federal law enforcement agents involved in the case.
10. Bivens v. Six Unknown Agents of the Fed. Bureau of Narcotics, 403 U.S. 388 (1971): Finds immunity from tort liability for federal officials acting within the scope of their employment.
— JOHN MAHONEY 28
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For many types of statutory benefits actions that could harm federal rights, legal challenges are unlikely to be successful. For example, few doubt Congress can lawfully decide to make new federal employees pay more toward their annuities, as did federal legislation signed into law by President Obama in 2012 that was not challenged in court. Whether other presidential or statutory actions to reduce federal employee and annuitant benefits can successfully be challenged in court could depend on how benefits were reduced and for which classes of employees. A more challenging set of scenarios, moving along the continuum of more difficult to dispute to potentially more actionable, is whether federal law could require existing federal employees to contribute more to their federal annuities prospectively, such as increasing the employee’s contribution so that employers and employees each pay half of the normal cost and eliminate the FERS supplement benefit for those who retire prior to 62; requiring increased contributions for past periods for the same annuity benefits; or reducing benefits under existing pensions already promised, such as by, as proposed by the current administration, eliminating the cost-ofliving adjustment for FERS retirees. This kind of action essentially would reduce existing pension payouts to annuitants. In some cases, bankruptcy courts have allowed states and cities to set aside pension commitments. Most observers, however, think this would be politically unlikely, particularly since statutory action would be required but control of the two houses of Congress is now divided between the two major parties, and these proposals failed to advance when Congress and the White House was entirely controlled by one party.
AGENCY OPERATIONS AND FUNCTIONS
One contested practice that is appearing before the courts is that there are efforts to restructure federal agencies or challenge agency functioning. On January 14, 2019, the U.S. Supreme Court allowed the Consumer Financial Protection Bureau (CFPB) to continue operating by refusing to hear a challenge that had argued the agency, which was set up after the 2008 financial collapse, was unconstitutional because it was not accountable to the president. However, other cases challenging the CFPB’s structure are winding their way through lower courts and may 30
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eventually be decided by the Supreme Court on the merits, Mahoney says. Agency policy shifts are common between presidential administrations. Some question whether a line can be breached where an agency is effectively being stifled from achieving its statutorily established purpose or not following statutory requirements, as critics of the administration have alleged with respect to Environmental Protection Agency (EPA) and the CFPB, given that Trump Administration policy shifts have defined their mandates more narrowly than in the past under the Trump Administration. “We have never seen people at the helm of agencies that have vigorously opposed them,” D’Agostino notes. Former EPA Administrator Scott Pruitt, for example, brought lawsuits against the EPA on behalf of states before he was appointed to be secretary of that agency. A number of the successful challenges of Trump’s deregulatory efforts tallied above by the Brookings Institution, as noted earlier, reflected such assertions. Whether other presidential or statutory actions to reduce federal employee and annuitant benefits can successfully be challenged in court could depend on how benefits were reduced and for which classes of employees.
At the employee level, according to Mahoney, under the Civil Service Reform Act, it is a prohibited personnel practice for the federal government to take a personnel action against a federal employee for partisan political reasons. See 5 U.S.C. §§ 2302(b)(1)(E), (3). Some lawsuits have also targeted alleged failure of federal agency to adequately protect federal employees. The American Federation of Government Employees and the National Treasury Employees Union filed lawsuits over harm to their members and other federal employees resulting from OPM’s 2015 data breaches. In November, the two unions argued before the D.C. Circuit Court of Appeals that their lawsuits against OPM over the data breaches were wrongfully dismissed by a lower court on grounds they lacked sufficient standing to bring the lawsuits. —DAVID TOBENKIN IS A FREELANCE WRITER BASED IN THE GREATER WASHINGTON, D.C. AREA.
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for a
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Successful
By Everett A. Chasen
Retirement
Many federal retirees want new ways to fill their days. Here are some great ways to keep yourself occupied. W W W. N A R F E . O R G
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Whether they’ve saved enough money for retirement or not is a question that concerns many American households. According to an economist for the Federal Reserve bank, 35 percent of all U.S. households had no money saved in any type of retirement account. For them, a recent television commercial depicting 85-year-old firefighters, lifeguards and club DJs is no joke. Most federal retirees and their spouses don’t share those concerns, however. They have a CSRS or FERS pension to look forward to; a Thrift Savings Plan account; and a health care plan they can take with them into retirement. Many also have other savings and investment accounts. If they retire in good health, they can look forward to a long and productive retirement. But will that retirement be fulfilling? There are 24 hours in a day for retirees, just like for everyone else, and if you have nothing to do but watch TV or surf the internet, there’s no guarantee your financial security will translate into bliss. Here are 10 activities that those who don’t want or need to work anymore can consider to fill their retirement years:
1
Travel: Just about everyone who retires
hopes to travel, but health limitations may determine the type of travel you can take. Be realistic about your mobility, what you are capable of and any special arrangements you’ll need. Take part in travel rewards plans by signing up for the right credit card (and remember, you can take frequent flyer miles you accumulated while working for the government into retirement with you.) Many retirees choose to take cruises because just about all the planning is done for you; the food is good; there are always things to do on the ship; and you can visit a multitude of destinations, or no destination at all. If you don’t have family or other responsibilities, there are cruises that last as long as 180 days and cost little more than the expenses you would have incurred if you had stayed at home. Remember that most hotel chains, Amtrak and some airlines offer discounts to seniors—and that there are a number of travel discounts on NARFE’s member perks webpage (www.narfe. org/Membership/?fa=memberperks). Websites like TravelZoo, Expedia, Hotwire and Groupon offer last minute deals as well as bargains on travel planned in advance. Many travel companies make it easy to join tours with other seniors or with people of all ages. Senior adventure and travel clubs get group rates for their members, and tour companies like Road Scholar offer learning expeditions throughout the world. 34
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“That’s the glory of owning an RV— whenever you want to go, wherever you want to go, you can.”
2
Purchase or rent an RV:
In 2014, The New York Times estimated that 750,000 to one million retirees call recreational vehicles (RVs) home, and their ranks are growing rapidly. Most RV owners spend weeks or months camped at particular locations and enjoy the company of other RVers. Living in an RV means you never have to shovel snow, mow the lawn or pay real estate taxes. With more than 8,000 RV parks throughout the United States, and many more in Canada, you can live anywhere you want—even off the grid! Of course, you can also keep your home and travel part of the year. That’s the glory of owning an RV—whenever you want to go, wherever you want to go, you can. Experienced RVers suggest that before buying one, rent one for a month or so. That way you’ll learn whether the RV lifestyle is right for you; whether you can handle driving what is essentially a bus-sized vehicle on the road; and whether you and your significant other can remain friends in somewhat cramped quarters. You’ll also get a sense of what it will cost to live in an RV: keep in mind they need gas, oil, maintenance and repairs, and if you stay in an RV park, you’ll need to pay rent to the park’s owner.
3
Go back to school: Many retirees
would rather expand their knowledge than watch TV or sit in the sun all day. If you want to continue your lifetime of learning in retirement, why not take classes at a local university—or go back to school full time? Not only do you gain
knowledge, but you’ll establish new social connections with your peers and with younger people. The Bernard Osher Foundation sponsors lifelong learning institutes at 123 colleges and universities across the country. There’s at least one in each of the 50 states and the District of Columbia. These institutes help older adults learn for the joy of learning, without examinations and grades, and help them keep in touch with the larger world. Costs are minimal, and the program offers scholarships for those in need. If you want to attend classes along with young adults, some colleges and universities offer senior citizen tuition waivers. Others allow retirees to audit classes for free with the permission of the instructor, if space is available. Money left over from 529 accounts for your children or grandchildren can be used to pay for your own tuition. And housebound retirees can learn from online education programs and companies that provide video lectures.
4
Get involved: Federal retirees include
some of the finest public servants our nation has ever had—and are highly qualified to help guide our nation, our states, and our local communities into the future. You’ve got time to invest, and your country needs you. Take part in a political campaign. Become active in an advocacy group for retirees, like NARFE’s Legislative Action Center. Volunteer at a political office and be part of the conversation between lawmakers and their constituents. Join
and support an organization that supports a cause you believe in. If you’re ready and willing, consider running for something yourself: school board, local governing council, higher office in an advocacy organization like NARFE—maybe even for a state assembly seat or for Congress.
5
Learn a language: It’s certainly harder for retirees to learn new language skills than for younger people—but it’s not impossible. New internet-based technology such as “chatbots” or online language courses such as those offered by Carnegie Mellon University teach you words and grammar through fun and engaging games, and even help with your accent. Learning a language later in life exercises the brain, making it more efficient and more flexible. It also helps you better understand other peoples and cultures. Barbara Jacksier, a recent retiree, is learning to speak Albanian, a language that has little in common with most other commonly spoken tongues. “I have friends who were born in Albania, and it sounded like a challenge,” she explains. Jacksier uses online YouTube instructional videos to learn the language. “I asked my friends which ones to consider, and I chose one where they liked the instructor’s accent.” As a retiree, she says, “I find it much easier to learn than I did in school, because I have more time to study.” She hopes to travel to Albania in the future to try out her new skill. W W W. N A R F E . O R G
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6
Join a fitness group: Most federal retirees know that maintaining regular fitness activity helps prevent many common diseases, including heart disease and diabetes. It improves overall immune function and mental health, decreases the risk of falling and lowers the risk of developing dementia. One of the best ways to start and stick to an exercise program is to join a fitness group with other seniors. SilverSneakers is a program encouraging adults over 65 to participate in physical activities. Unfortunately, enrollment fees are not subsidized by FEHB program health plans—although many Medicare Advantage plans cover it. There are, however, gyms for seniors only; yoga and Tai Chi classes for those who need to limit the impact on their joints; and senior-oriented activities at YMCAs, fitness centers and thousands of other locations. A 2018 study by researchers at the University of British Columbia found that older adults are more likely to stick with group exercise programs if they can do it with people their own age. “If you set up the environment so participants feel a sense of connection or belonging with other people, they’re more likely to stick with it,” explains Dr. Mark R. Beauchamp, the study’s lead researcher.
7
Take up a new sport: There are lots of interesting sporting pursuits active retirees may not have had time to pursue during their government careers. Golf and fishing are probably foremost among them. Other sports and activities perfect for those fit enough to participate include hiking, jogging, softball, swimming, cycling, tennis or just going for long walks with a friend or a group. Dancing is another good way to get a full body workout. If your mobility is more limited, try badminton, lawn darts, bocce or croquet. Remember—President George H.W. Bush went skydiving to celebrate his 90th birthday.
8
Learn to play an instrument:
In 2009, when I retired, I began to accomplish a lifelong dream: learning to play the piano. Ten years later, I’m still at it. I don’t play well, but I set aside an hour a day to practice and now have a repertoire that impresses my non-piano-playing friends. Learning an instrument exercises your brain. Reading sheet music, counting rhythm and trying to sound musical at the same time helps improve your processing speed and memory. Playing music relieves stress—scientists have shown that the
“One of the best ways to start and stick to an exercise program is to join a fitness group with other seniors.”
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“Your family will be interested in how you felt about the great events you lived through and the life lessons you learned.”
activity can increase levels of neurotransmitters like dopamine and serotonin that make you feel good. It offers you concrete goals to strive for, and gives you a sense of pride when you accomplish them. A good teacher will help you understand music theory as well, increasing your enjoyment of concerts and your understanding of the skill it takes to be a professional musician. If piano seems too daunting, you can learn guitar, ukulele, harmonica and even bongo drums—whatever gives you joy!
9
Write a book about your life:
Want to give your grandchildren, great-grandchildren, and generations yet unborn the opportunity to learn what you’ve accomplished in your life and federal career? Try writing your autobiography. John Miller, a U.S. Air Force and NOAA retiree, wrote about his life growing up; the decisions that led him to choose the Air Force and meteorology as a career; the scientific papers to which he contributed; and the many places in which he had lived during his government career. He added scanned-in copies of photographs and other documents, and self-published a book, copies of which he has loaned to friends. His principal audience, however, is his grandchildren and their descendants. “Since I was a physics major in school, I never wrote very much, so this was a new adventure for me,” he explains. You really don’t need a compelling story, or the ability to write well in order to do this. Your family will be interested in how you felt about the great events you lived through and the 38
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life lessons you learned. Think about your life, look through old family photos and talk to friends and family to jump-start your memory, and find some time to write every day.
10
Get your affairs in order:
No one, not even older retirees, ever plans to be sick or disabled. But planning can make all the difference in an emergency. Make sure all your important papers are in one place and that someone else knows where they are. Discuss your end-of-life preferences with your doctor, and give permission in advance for your doctor or lawyer to talk with whoever you trust with your medical decisions. Giving someone a durable power of attorney for health care lets them make medical decisions for you if you can’t make them yourself. Preparing a living will allows you to determine the kind of care you do or don’t want if you are too sick to make your wishes known. A durable power of attorney allows you to name someone to act on your behalf for any legal task and stays in place if you are unable to make your own decisions. Before getting started, talk to a lawyer specializing in these and other issues. There’s no reason for healthy federal retirees to be bored in retirement. Retirement should be a joyful time of life, with plenty of enjoyable ways to fill your days. Get out there and make things happen! — EVERETT A. “EV” CHASEN IS A WRITER AND COMMUNICATIONS CONSULTANT IN THE WASHINGTON, D.C. AREA. HE IS RETIRED FROM THE FEDERAL GOVERNMENT AFTER 35 YEARS OF SERVICE.
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More and more Americans are reaching the age where mobility is an everyday concern. Whether from an injury or from the aches and pains that come from getting older– getting around isn’t as easy as it used to be. You may have tried a power chair or a scooter. The Zinger is NOT a power chair or a scooter! The Zinger is quick and nimble, yet it is not prone to tipping like many scooters. Best of all, it weighs only 47.2 pounds and folds and unfolds with ease. You can take it almost anywhere, providing you with independence and freedom. Years of work by innovative engineers have resulted in a mobility device that’s truly unique. They created a battery that provides powerful energy at a fraction of the weight of most batteries. The Zinger features two steering levers, one on either side of the seat. The user pushes both levers down to go forward, pulls them both up to brake, and pushes one while pulling the other to turn to either side. This enables great mobility, the ability to turn on a dime and to pull right up to tables or desks. The controls are right on the steering
lever so it’s simple to operate and its exclusive footrest swings out of the way when you stand up or sit down. With its rugged yet lightweight aluminum frame, the Zinger is sturdy and durable yet convenient and comfortable! What’s more, it easily folds up for storage in a car seat or trunk– you can even gate-check it at the airport like a stroller. Think about it, you can take your Zinger almost anywhere, so you don’t have to let mobility issues rule your life. It folds in seconds without tools and is safe and reliable. It holds up to 275 pounds, and it goes up to 6 mph and operates for up to 8 hours on a single charge. Why spend another day letting mobility issues hamper your independence and quality of life?
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Managing Money
USING THE NEW TAX RATES TO YOUR ADVANTAGE IN ROTH CONVERSIONS
I
n May’s column, I illustrated the economic parity of traditional and Roth accounts to set the stage for how to capitalize on Roth conversions. This month, I’ll illustrate a
few instances when converting a traditional account to a Roth IRA may provide an economic gain. As I pointed out last month, there is no economic difference between a traditional and Roth account when all things are equal, which includes ordinary income taxes, stealth taxes, and the length of time the money remains in the taxadvantaged accounts. When things aren’t equal, however, opportunities will present themselves. And, many provisions of the Tax Cuts and Jobs Act (TCJA) are temporary—including the lower tax rates—which means all things will likely not be equal. An opportunity has been presented. Starting in 2026, the current TCJA rates of 12, 22, 24, 32 and 37 percent return to their pre-TCJA rates of 15, 24, 28, 33, and 39.6 percent, respectively (the 35 percent tax rate was not changed by the TCJA). Armed with this information, let’s continue the example from May, but this time I’ll take into consideration that the TCJA tax rates end with the 2025 tax year.
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Please recall from my May column, that after 10 years the future pre-tax value of the traditional account is $20,000, while the future value of the Roth account is $15,600. In 10 years, the TCJA rates will be a thing of the past, and the tax rate applied to the traditional account will have increased from 22 percent to 25 percent. As a result, the future federal tax liability on the traditional account is $5,000 versus the $4,400 (based on 22 percent) in the May example. While the after-tax value of the traditional account drops to $15,000 due to the increasing tax rates, the Roth value remains $15,600 since the taxes were paid at the time of the Roth conversion when tax rates were lower. As you can see, it’s possible to increase the economic value of a traditional account by converting it to a Roth account if tax rates are expected to increase. Conversely, the economic value of a traditional account would likely be reduced if
BY MARK A. KEEN,
CFP®
tax rates dropped after it had been converted to a Roth. Another condition required for the economic parity of a traditional and Roth account to play out is that the money must stay in the respective accounts during the entire period of comparison. For example, if the money stays in the Roth account for 10 years, it must also stay in the traditional account for the entire 10-year period. One of the differences between a traditional account and a Roth IRA, however, is that a Roth IRA is not subject to Required Minimum Distributions (RMDs) during the owner’s lifetime. It is, therefore, possible to keep the money in a Roth IRA longer when compared to a traditional account. To understand the financial impact, let’s revisit May’s example; this time, we’ll assume the comparison is during a period when RMDs apply. We’ll further assume the RMDs will be reinvested in a nonretirement account to match the return of the traditional TSP and Roth IRA. In this example, we need to compare the combined after-tax value of the traditional TSP and the invested RMD account to the value of the Roth IRA to
BENEFITS RESOURCES NARFE offers members a wide range of information on federal benefits. Visit www. narfe.org/federalbenefits and www.narfe.org/ FederalBenefitsInstitute.
determine if a Roth conversion is beneficial. Without getting into specific numbers, we can safely assume the value of the Roth IRA will be greater than the sum of the after-tax value of the traditional TSP and RMD account due to the tax drag on the earnings of the invested RMD account. Without a doubt, the biggest potential economic gains will be reaped when you pay
a lower tax rate on a Roth conversion than you, or your heirs, would otherwise pay when distributing your traditional retirement account. But, considering the effect of RMDs on a traditional account, it is possible for a Roth conversion to provide economic value even if tax rates remain level. When considering if a Roth conversion is right for you, it’s important to understand that it’s never an all or nothing proposition. In fact, the best strategy may involve a series of conversions over a period of years. I’ll discuss that and more in next month’s column. MARK A. KEEN, CFPŽ, IS PARTNER, KEEN & POCOCK, AND AN INVESTMENT ADVISER REPRESENTATIVE AND REGISTERED PRINCIPAL OF THE STRATEGIC FINANCIAL ALLIANCE, INC. (SFA). SECURITIES AND ADVISORY SERVICES ARE OFFERED THROUGH SFA.
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Alzheimer’s Update
NEW LAW AUTHORIZES ALZHEIMER’S PUBLIC HEALTH INITIATIVE
I
n December, the president signed into law S. 2076/H.R. 4256, the Building Our Largest Dementia Infrastructure for Alzheimer’s Act (the BOLD Act).
The bill creates a public health infrastructure for centers of excellence in communities around the country and provides funding to state and local public health departments to promote cognitive health, provide early detection services and support the needs of caregivers. In addition, the BOLD Act requires the Centers for Disease Control (CDC) to increase analysis and reporting of data related to cognitive decline and related care. It also funds prevention and qualityof-life outreach efforts. The bill enjoyed wide bipartisan support. Introduced in the Senate by Sens. Susan Collins, R-ME; Catherine Cortez Masto, D-NV; Shelley Moore Capito, R-WV; and Tim Kaine, D-VA; and in the House of Representatives by Brett Guthrie, R-KY; Paul Tonko, D-NY; Chris Smith, R-NJ; and Maxine Waters, D-CA, the law demonstrates that Congress is fully committed to the fight to end Alzheimer’s disease. The Alzheimer’s Impact Movement (AIM), the Alzheimer’s Association’s advocacy arm, was instrumental in seeing the bill through to passage. “The passage of the BOLD Infrastructure for Alzheimer’s Act is an important step to
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address the growing Alzheimer’s public health crisis,” said Harry Johns, Alzheimer’s Association and AIM President and CEO. “We are thankful to the bill’s bipartisan sponsors for their continued dedication and work to implement policies to improve the lives of all of those impacted by this devastating disease.” Among the benefits of this legislation: • There will be more resources available to public health departments, especially in rural areas where access to health care can be limited. • The improved access will lead to earlier diagnosis and interventions, which can slow down the progression of the disease. • Caregivers and family members will have increased resources and support. Alzheimer’s disease is widely recognized as a public health issue because it affects
BY OLIVIA A. WILLIAMS
NARFE-ALZHEIMER’S CHAIR
so many people, nearly twothirds of whom are Medicare and Medicaid recipients. Today, there are more than 5 million Americans living with Alzheimer’s disease, and by 2050, that number could increase to as many as 16 million. Alzheimer’s is also the most expensive disease in America. Health care costs for Alzheimer’s and other dementia disorders are expected to top $290 billion in 2019; those costs are likely to more than triple by 2050. NARFE joins the Alzheimer’s Association and AIM in thanking all of the elected officials who championed this legislation. Members of NARFE have contributed a cumulative total of more than $13 million to Alzheimer’s-related research projects through the NARFEAlzheimer’s Research Fund, and our goal is to reach the $14 million mark by 2020. For more information about the BOLD Infrastructure for Alzheimer’s Act or about Alzheimer’s disease and dementia generally, please visit the Alzheimer’s Association website at www.alz.org or contact them by phone at 800272-3900. OLIVIA A. WILLIAMS IS CHAIR OF THE NARFEALZHEIMER’S NATIONAL COMMITTEE. EMAIL: OEASHF3@GMAIL.COM THIS COLUMN APPEARS QUARTERLY.
Active and Retired Federal Employees ...
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(0219)
2019
G FUND
F FUND
C FUND
S FUND
I FUND
APRIL
0.21%
0.02%
4.05%
3.69%
2.92%
MARCH
0.23%
1.93%
1.95%
-1.03%
0.71%
FEBRUARY
0.20%
-0.06%
3.21%
4.98%
2.55%
YTD
0.88%
2.97%
18.25%
20.27%
13.31%
1 YEAR
2.90%
5.42%
13.48%
8.71%
-2.78%
3 YEAR*
2.43%
2.09%
14.87%
14.11%
8.04%
5 YEAR*
2.30%
2.88%
11.66%
9.42%
2.97%
10 YEAR*
2.30%
3.97%
15.36%
15.45%
8.37%
2019
L INCOME
L 2020
L 2030
L 2040
L 2050
APRIL
0.89%
1.16%
2.23%
2.62%
2.96%
MARCH
0.52%
0.61%
0.87%
0.96%
1.02%
FEBRUARY
0.80%
1.06%
2.00%
2.36%
2.68%
YTD
4.10%
5.46%
10.36%
12.27%
13.93%
1 YEAR
4.20%
4.56%
6.07%
6.54%
6.91%
3 YEAR*
4.53%
6.41%
8.87%
9.97%
10.99%
5 YEAR*
3.78%
4.98%
6.48%
7.15%
7.68%
10 YEAR*
4.77%
8.23%
10.07%
11.21%
N/A
*ANNUALIZED
RETURNS are net of the effect of accrued administrative expenses and investment expenses/costs. Source: TSP (For additional monthly returns, go to www.tsp.gov.) G Fund: Government securities (specially issued to the TSP) F Fund: Government, corporate and mortgage-backed bonds C Fund: Stocks of large- and medium-size U.S. companies S Fund: Stocks of small- to medium-size U.S. companies (not included in the C Fund) I Fund: International stocks of 21 developed countries L Fund: (Lifecycle) Invested in the G, F, C, S and I Funds (The proportion of L Fund balance invested in each of the individual TSP funds depends on the L Fund chosen.)
OPM OPMRETIREMENT RETIREMENTCLAIMS CLAIMS PROCESSING PROCESSINGSTATUS STATUS
Claims Received
Inventory Monthly FYTD (Steady State Average Processing Average Processing is 13,000) Time in Days Time in Days
2018
MARCH 7,767 18,730 49 57 APRIL 8,390 17,489 58 57 MAY 7,625 18,024 58 58 JUNE 9,397 18,198 65 59 JULY 8,281 18,334 57 59 AUGUST 8,826 17,513 56 58 SEPTEMBER 7,142 17,628 64 59 OCTOBER 9,012 19,729 63 63 NOVEMBER 7,510 19,162 61 62 DECEMBER 5,782 18,019 60 61 JANUARY 13,264 23,121 58 60 FEBRUARY 10,792 23,370 58 57 MARCH 10,048 20,201 50 55 FOR THE NUMBER of new retirement cases the Office of Personnel Management (OPM) receives each month by agency and the percent with errors that it returns to those agencies, go to www.opm.gov/retirement-services/. l Source: OPM 44
| J U N
The growing U.S. economy, healthy corporate earnings, and hope for progress on trade, coupled with optimism for continued low interest rates, contributed to broad based positive investor sentiment for U.S. and international stocks. The C Fund and the S Fund achieved strong gains. The I Fund also rose significantly, although to a lesser extent in part because of the rising dollar. The F Fund managed to finish just slightly ahead. All of the L Funds moved higher for the month.— BY SEAN MCCAFFREY, CHIEF INVESTMENT OFFICER, THRIFT SAVINGS PLAN
*ANNUALIZED
2019
For the Record
HEALTHY ECONOMY CONTRIBUTES TO MARKET GAINS
THRIFT SAVINGS PLAN FUND RETURNS
2 019
COUNTDOWN TO COLA
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased by 0.63 percent in March 2019. To calculate the 2020 costof-living adjustment (COLA), the 2019 third-quarter indices will be averaged and compared with the 2018 third-quarter average of 246.352. The percentage increase determines the COLA. March’s index, 247.768, is up 0.57 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 1.2 percent higher than the December 2018 base index of 244.786. The CPI represents purchases of food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. Included are various government fees, such as water charges, auto registration fees, and sales and excise taxes.
MONTH
CPI-W
Monthly % Change
% Change from 246.352 239.668
OCTOBER 2018 2017
240.573 247.038
-0.15 0.19
0.28 0.38
NOVEMBER
245.933 240.666
-0.45 0.04
-0.17 0.42
DECEMBER
244.786 240.526
-0.47 -0.06
-0.64 0.36
JANUARY 2019 2018
245.133 241.919
0.14 0.58
-0.49 0.94
FEBRUARY
246.218 242.988
0.44
-0.05 1.39
MARCH
247.768 243.463
0.63 0.20
0.57 1.58
APRIL
244.607
0.47
2.06
MAY
245.770
0.48
2.55
JUNE
246.196
0.17
2.72
JULY
246.155
-0.02
2.71
AUGUST
246.336
0.07
2.78
SEPTEMBER
246.565
0.09
2.88
Donate to NARFE Programs Support Alzheimer’s Research
YOUR CHARITABLE CONTRIBUTION IS TAX-DEDUCTIBLE TO THE FULLEST EXTENT ALLOWED BY LAW.
WRITE YOUR CHAPTER NUMBER ON CHECK; MAKE IT PAYABLE TO: NARFE-Alzheimer’s Research
Enclosed is my NARFE-Alzheimer’s contribution: $______________ Every cent that is contributed is used for research.
AND MAIL TO: Alzheimer’s Association 225 N. Michigan Ave., 17th Floor Chicago, IL 60601-7633
Name:____________________________________________________
Please circle: Mr.
Mrs.
Miss
Ms.
Address:__________________________________________________ City:______________________________________________________ State:_____________________________________________________
NARFE MEMBERS CONTRIBUTED FOR ALZHEIMER’S RESEARCH: $14 Million Fund
$13,076,053.48*
*Total as of March 31, 2019 100 percent of all contributed funds go to Alzheimer’s research.
Join the Silver CIrcle
If you have any questions, write to:
CLIPCOMMITTEE THIS CONTRIBUTION NATIONAL CHAIR FORM AND MAIL TO: Road Olivia Williams, 22 Garden Springs NARFE Silver Circle Columbia, SC 29209 606 N. Washington St.
EMAIL:Alexandria, oeashf3@gmail.com VA 22314
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The NARFE-FEEA Fund supports NARFE members during disasters; provides scholarships to their children, grandchildren and great-grandchildren; and funds other programs to support NARFE members at the direction of NARFE and FEEA.
Enclosed is my NARFE-FEEA Fund Contribution: $______________ Name:____________________________________________________ Address:__________________________________________________ City:______________________________________________________
YOUR CHARITABLE CONTRIBUTION IS TAX-DEDUCTIBLE TO THE FULLEST EXTENT ALLOWED BY LAW.
State:_____________________________________________________ ZIP:______________________________________________________ Email:____________________________________________________ To make credit card or e-check contributions, visit www.feea.org/ givenarfe.
NARFE News
NARFE ANNUAL MEETING The 2019 NARFE Federation Presidents Meeting and Association Annual Meeting will be held July 7-10, 2019, at Westin Kierland Resort and Spa in Scottsdale, AZ. The registration deadline for this event is June 14. Learn more and register at www. narfe.org/fpm.
NEW STAFF AT NARFE HQ
N
ARFE announces the addition of a key member of our Finance team.
DANIELA CHUNCHUROVA
recently joined NARFE’s Finance Department as the new senior accountant. Chunchurova holds a bachelor’s degree in accounting from George Mason University. She most recently worked at Thompson, Hughes, & Trollinger,
P.L.L.C., where she served as a staff accountant. She brings a wealth of experience in accounting practices to NARFE. As senior accountant, Chunchurova will be responsible for processing payroll, preparing financial statements and reports,
and conducting analysis of monthly budget variances. Please join us in welcoming her to our organization.
CORRECTION On page 2 of the May 2019 issue of NARFE Magazine, the Region I Vice President was incorrectly listed. The information is correct in this issue. We regret any confusion this may have caused.
Order your copy of NARFE’s CONGRESSIONAL DIRECTORY for the 116th CONGRESS (2019-2020) today! Clip and mail to: NARFE Congressional Directory / 606 N. Washington Street / Alexandria, VA 22314-1914 Name___________________________________________________________________ Address _________________________________________________________________
Only $20
City _________________________________________ State ______ ZIP ___________ Member ID# (as it appears on NARFE Magazine label) ________________________________________________________________________
o Check (payble to NARFE) or cash enclosed o Charge to my credit card o MasterCard
o VISA o Discover o AMEX
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_______ (mm)
/ _______ (yy)
Name on card (print) ______________________________________________________ Signature ____________________________________________ Date _____________
Quantity ________________ $20 each (includes shipping and handling) VA sales tax _____________ VA residents add 6% tax ($1.20 per book) Total cost _______________
Please allow 2-3 weeks for delivery. Call NARFE’s Advocacy Department at 800-456-8410, option 3, to order by phone. 46
| J U N
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Special Section
National Active and Retired Federal Employees Association
Consolidated Financial Statements for the Year Ended December 31, 2018
REPORT OF THE NATIONAL SECRETARY/TREASURER NARFE’s Consolidated Statement of Financial Position showed total assets as well as liabilities and net assets of $11,610,227, an 8 percent decrease from the previous year. Available cash and cash equivalent to cover current liabilities (excluding deferred revenue) was $1,214,037, compared to $666,365 in payables. The Consolidated Statement of Activities showed total revenue of $11,607,636 and expenses of $12,102,287, resulting in a decrease in net assets from operations of $494,651. Investment losses in 2018 were ($284,093), which contributed to the change in net assets after investment income/(loss) of ($778,744). Investment income from NARFE’s portfolio showed results depending on the market performance. NARFE’s income from investment showed a ($1,172,264) swing; from a gain of $888,671 in 2017 to a loss of ($284,093) in 2018. NARFE’s portfolio is invested on a 50/50 bonds/equity split. Total revenue was lower than the previous year, $11,607,636 compared to 11,635,931, a reduction of $28,295. However, total advertising income of $942,199 was $102,137 higher than the 2017 amount. Contribution from NARFE’s fundraising efforts, including calendars, notepads and cards, were $2,307,290, or $367,685 lower than the previous year. The generous fundraising contributions of NARFE members are a critical component of operations. These contributions allow NARFE to continue its important work of protecting the benefits of active and retired federal employees and annuitants. Thank you! We appreciate your strong, continued support. Membership dues were $6,666,773, or $147,825 lower than the 2017 amount of $6,814,598. Total membership count as of December 31, 2018 was 200,982, 3.8 percent lower than previous years. Staff continues to slow the rate of membership loss through a targeted marketing approach. Through efforts to streamline procedures for effective operations, NARFE’s support services (including general and administrative) showed decreased expenses. Program services expenses increased by $668,882, mostly from expenses associated with FEDcon 2018; $415,407 was the previous average for annual meeting expenses. NARFE-PAC, a separate legal entity, but consolidated with NARFE for reporting purposes, showed increased contributions from members. 2018 contributions were $1,017,542, compared to the 2017 amount of $870,852. —Kathryn E. Hensley
REPORT OF THE NATIONAL EXECUTIVE BOARD AUDIT COMMITTEE The National Executive Board (NEB) Audit Committee held a conference call on March 19, 2019, with Julia Lafferty of the audit firm of Councilor, Buchanan, and Mitchell, P.C., (CBM), certified public accountants, first with NARFE National Officers and staff and then privately to review the audit of NARFE’s finances for the calendar year ended December 31, 2018. The NEB Audit Committee members participating were Region VII Vice President Rodney L. Adelman (chair), Region VI Vice President Marshall Richards, and Region II Vice President Kathy Adams. The auditors provided a comprehensive review of NARFE’s Consolidated Financial Statements audit. The auditors reported finding no weakness in internal controls and have provided an unmodified opinion on our financial statements. In addition, they advised the committee of coming changes related to leases, revenue recognition and contributions. They also covered estimates of investments, life member dues, expense allocation, and depreciation. The audit confirmed the ($778,744) loss in net assets at 2018 year-end, of which ($284,096) was from investments. It should be noted that our Consolidated Financial Statements cover NARFE’s Operating Fund, Contingency Fund, Building Fund, Life Member Trust Fund, NARFE-PAC Fund, and Alzheimer’s Fund. The continuing decline of NARFE membership has begun to take its toll on our financial resources. The NEB Audit Committee accepts the draft audit. Based on the audit, the committee commends NARFE senior management and staff for their contributions to qualitative financial reporting. —Rodney L. Adelman, Chair
48
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Independent Auditors’ Report To the Executive Board National Active and Retired Federal Employees Association Alexandria, Virginia We have audited the accompanying consolidated financial statements of National Active and Retired Federal Employees Association which comprise the consolidated statement of financial position as of December 31, 2018, and the related consolidated statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 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 as of December 31, 2018, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As noted on page 55 of this publication, National Active and Retired Federal Employees Association adopted Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, for the year ended December 31, 2018. Our opinion is not modified with respect to this matter. Report on Summarized Comparative Information We have previously audited the 2017 and 2016 consolidated financial statements of the Association, and our reports dated March 29, 2018, and April 3, 2017, respectively, expressed an unmodified audit opinion on those consolidated audited financial statements. In our opinion, the summarized comparative information presented herein as of and for the years ended December 31, 2017 and 2016, is consistent, in all material respects, with the 2017 and 2016 audited financial statements from which it has been derived. Bethesda, Maryland March 19, 2019
Councilor, Buchanan & Mitchell, P.C. Certified Public Accountants W W W. N A R F E . O R G
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National Active Nand Retired Employees Association and ATIONAL ACTIVE Federal AND RETIRED FEDERAL EMPLOYEES ASSOCIATION ANDAffiliate AFFILIATE Consolidated Statement ofCFinancial Position For the Year Ended December 31, 2018 ONSOLIDATED STATEMENT OF FINANCIAL POSITION (With Comparative Totals for the Years Ended31,December 31, 2017 and 2016) 2018 DECEMBER (W COMPARATIVE TEmployees OTALS AS OF DEECEMBER 31,A 2017 ANDand 2016)AND National Active Nand Retired Federal Association Affiliate ATIONAL AITH CTIVE AND RETIRED FEDERAL MPLOYEES SSOCIATION AFFILIATE Consolidated Statement ofCFinancial Position ONSOLIDATED STATEMENT OF FINANCIAL POSITION 2018 December 31, 2017 (With Comparative Totals as of December 31, 2016 and 2015) 31, 2017 DECEMBER Without Donor Restrictions (WITH COMPARATIVE TOTALS AS OF DECEMBER 31, 2016 AND 2015) Board With Donor 2018
Operating Assets Current Assets Cash and Cash Equivalents Accounts Receivable - Assets Net Interorganization Receivables Prepaid Expenses Current Assets and Deposits Investments Cash and Cash Equivalents Accounts Receivable - Net Total Current AssetsReceivables Interorganization Prepaid Expenses and Deposits Investments Property and Equipment
$
Designated
Total
Restrictions
2016 Total
2017 Unrestricted Board Total Temporarily 2017 2016 2015 568,776 $ 44,576 $ 613,352 $ 600,685 1,214,037 $ 1,578,129 $ 1,374,385 Operating Designated Unrestricted Restricted $ Total Total Total 190,135 190,135 190,135 180,455 187,008 49,613 15,053 64,666 - * - * - * 316,234 366,897 ETIRED 1,820 EDERAL 368,717 258,526 SSOCIATION 124,754 ATIONAL 50,663 CTIVE AND MPLOYEES 6,526,079 $3,221,094 821,419 $3,304,985 122,336 $ 943,755 $391,060 634,374 $ 6,917,139 1,578,129 $ 7,602,478 1,374,385 $6,281,358 1,230,390 166,436 166,436 14,019 180,455 187,008 355,496 4,345,852 3,415,277 100 7,761,1291,106 993,565 8,690,028 *- * 9,619,588 *- * 7,967,505 * - * 1,006 ONSOLIDATED TATEMENT OF INANCIAL OSITION 256,486 256,486 2,040 258,526 124,754 132,473 3,938,873 3,262,607 7,201,480 400,998 7,602,478 6,281,358 5,835,422 ECEMBER
N
A
R
F
E
S D
C
Land Total Current Assets Buildings
2017 Total
Total
A
F 31, 2017
AND AF
P
700,000 700,00031, 2016 700,000 (W- ITH COMPARATIVE TOTALS AS700,000 OF DECEMBER AND 2015) 3,385,043 8,569,263 1,051,431 9,619,588 * 4,520,625 7,967,505 * 4,516,999 7,553,781 * 4,616,216 4,616,216 1,903,681 1,903,681 1,872,326 1,937,150
700,000 5,184,220 4,616,216 1,903,681
Furniture, Equipment, and Software Property and Equipment Less Accumulated Depreciation and Land 700,000 - (4,299,698) 700,000 700,000 700,000 700,000 Amortization (4,299,698) (4,299,698) (3,964,778) 2017 (4,113,796) Buildings 4,520,625 4,520,625 4,520,625 4,516,999 4,355,237 Unrestricted Furniture, Equipment, and Software 1,872,326 - E 1,872,326 -AND 2,920,199 1,872,326 1,937,150 2,056,090 Net Property and Equipment 2,920,199 2,920,199 2,979,155 3,189,371 NATIONAL ACTIVE AND RETIRED FEDERAL MPLOYEES ASSOCIATION AFFILIATE Less Accumulated Depreciation and Board Total Temporarily Amortization (4,113,796) (4,113,796) (4,113,796) (3,964,778) (3,741,769) Total Assets $ 7,266,051 S$TATEMENT 3,415,277 10,681,328 POSITION $Designated 993,565 $ 11,610,227 * $ 12,598,743 Restricted * $ 11,156,876 * OF$FINANCIAL - CONTINUED CONSOLIDATED Operating Unrestricted Net Property and Equipment Assets
31, 2,979,155 2018 DECEMBER -
2,979,155
$
Total Assets
8,163,375
$
3,385,043
$
11,548,418
Current Assets 2018 Cash and Cash Equivalents 821,419 Without Donor$Restrictions Board Accounts Receivable - Net 166,436 Operating Designated Total Interorganization Receivables 1,006 Liabilities and Net Assets Prepaidreceivables Expenses and Deposits 256,486 * Interorganizational and payables eliminated in consolidation. Current Liabilities Investments 3,938,873 SeeAccounts accompanying Notes to Consolidated Financial Statements. Payable and Accrued Expenses $ 586,030 $ Interorganization Payables Assets 15,053 49,613 Total Current * Interorganizational receivables and payables eliminated in consolidation. Chapter Dues Payable 66,996 Deferred Revenue 2,441,035 See accompanying Notes to Consolidated Financial Statements. 20,968
Property and Equipment Total Current Liabilities 3,109,114 Land Noncurrent Deferred Revenue 607,867 Buildings Furniture, Equipment, and Software Total Liabilities 3,716,981 Less Accumulated Depreciation and Net Assets Amortization Without Donor Restrictions With Donor Restrictions
70,581
$
586,030
-5-
3,009,206 -
3,549,070
3,009,206 $
3,415,277 $
$
1,051,431
122,336 100 3,262,607
With Donor Restrictions
$
64,666 5,184,220
66,996 2,462,003
-53,179,695
(4,113,796)
3,549,070 -
7,266,051
$
$
700,000 335,490 4,520,625 943,357 1,872,326 406,071 4,123,052
Net Property and Equipment
Total Net Assets
Total Liabilities and Net Assets Total Assets
-
13,339 -
13,339 13,339
6,558,276 -
980,226
6,558,276
980,226
2,979,155
$ 10,681,328 $$ 8,163,375
$
3,385,043
-
993,565 $ 3,385,043
$ 12,598,743 * $
$ 2018 Total
2,040 400,998
$
1,578 180
258 7,602
492,206 - * 1,051,431 103,203 2,420,681
3,016,090 *
9,619
700 4,520 1,872
-
(4,113
-
2,979
11,610,227 * $ 12,598,743$* $ 1,051,431 11,156,876 * $ 11,548,418
$ 12,598
(4,113,796)
776,718 *
3,792,808
6,558,276 980,226
7,279,426 1,037,820
6,657,647 706,421
7,538,502
8,317,246
7,364,068
2,979,155
* Interorganizational receivables and payables eliminated in consolidation.
See accompanying Notes to Consolidated Financial Statements. -52 019
634,374
*
-6-
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10,923,339 *
2016 14,019 Total
3,310,934 *
700,000 943,357 4,520,625970,563 1,872,326 4,071,725 * 4,281,497
See accompanying Notes to Consolidated Financial Statements.
$
599,369 $ 475,466 $ - * - * 8,569,263 66,996 81,218 2,462,003 2,754,250 3,128,368 *
3,369,558
11,156,876 * $
943,755 2017 166,436 Total 1,106 256,486 7,201,480
* Interorganizational receivables and payables eliminated in consolidation.
50
3,189,371
2,979,155
(WITH COMPARATIVE TOTALS AS OF DECEMBER 31, 2017 AND 2016)
2017 Total
NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE CONSOLIDATED STATEMENT OF CASH FLOWS NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE
EAR ENDED DECEMBERAssociation 31, 2016 FOR THE YFederal National Active and Retired Employees and Affiliate (WITH COMPARATIVE TOTALS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014) STATEMENT OF ACTIVITIES CONSOLIDATED Consolidated Statement of Activities For the Year Ended December 31, 2018 OR THE YEAR ENDEDDecember DECEMBER 31, (With Comparative Totals forFthe Years Ended 31,2018 2017 and 2016)
2016 ENDED DECEMBER 2015 (WITH COMPARATIVE TOTALS FOR THE YEARS 31, 20172014 AND 2016)
Cash Flows from Operating Activities Increase in Net Assets $ 343,246 $ 294,331 2018 Adjustments to Reconcile Increase in Net AssetsWithout Donor Restrictions Board With Donor to Net Cash Provided by Operating Activities Operating Designated Total Restrictions Depreciation and Amortization 385,066 534,414 Net Realized and Unrealized (Gains) Losses Revenues and Support on Investments 446,287 Membership Dues $ 6,688,978 $ (22,205) $ (154,618) 6,666,773 $ - $ Contributions - Calendar, Note Pads,and Equipment Loss on Disposal of Property 23 and Cards Decrease in Assets 2,307,265 25 2,307,290 (Increase) Contributions 1,017,542 Accounts- PAC Receivable - Net 168,488(230,808) Contributions - Silver Circle andDeposits Other 153,093 153,093 Prepaid Expenses and 7,719 17,069 Contributions - Protect America’s Increase (Decrease) in Liabilities Heartbeat 50 50 Accounts Payable and Accrued Expenses 77,069 (219,277) Advertising 942,199 942,199 Chapter Dues Payable (14,561) Royalties 110,888 110,888 -(362) Deferred Revenue (172,217) (152,791) Seminars and Conferences 28,300 28,300 National Convention Revenue 369,345 Other Net Cash Provided by Operating Activities 12,156 Net Assets Released from Restrictions 1,069,114
-
Cash Flows from Investing Activities Total Revenues and Support 11,681,388 Purchases of Investments Sales and Maturities of Investments Expenses Purchases of Property and Equipment Program Services Communications 1,905,892 Proceeds from Sale of Property and Equipment
369,345
(22,180)
1,069,114
(1,069,114)
11,659,208
(51,572)
(728,325) 321,993 (107,466) -
(349,732) 58,414 (205,802) 1,905,892 900
-
Rebates to Federations 625,933 Member to NetNew Cash UsedRebates in Investing Activities Federations and Chapters 69,040 Net Increase (Decrease) Legislative Program in Cash and Cash Equivalents 753,805 Federal Benefits Program Beginning of Year 265,341 Cash and Cash Equivalents, Protect America’s Heartbeat CashNational and Cash Equivalents, End of Year 415,407 Conference Membership Services 1,806,480 NARFE-PAC 1,033,217 Supplementary Disclosure of Cash Flow Information Alzheimer’s Fundfor Income Taxes 35,895 CashNARFE Paid during the Year
-
688,863 -
640,215 12,156
625,933
-
(513,798)
(496,220) - $ - $
69,040 143,995 753,805 265,341 1,230,390 1,374,385 415,407 1,806,480 1,033,217 35,895 833
$
$
175,065 1,055,325 1,230,390 -
$
148,245
2018 2017 Total 469,545 Total
68,880 6,666,773 $ 6,814,598
2016 Total $
7,081,151
2,998 2,307,290 2,674,975 1,017,542 89,746 870,852 153,093 (30,124) 55,972
2,170,576 723,686 150,680
1,730 840,062 126,223 222,966 28,553 -
2,280 812,146 138,987 54,192 351,085 80,025 -
11,607,636
11,635,931
11,564,808
625,933
706,823
1,727,176 686,217
69,040 81,781 (99,968) 922,417 753,805 265,341 1,155,293 358,232 $ 415,407 1,055,325 1,806,480 1,866,172 1,033,217 541,622 29,936 $ 35,895 230
72,510 627,049 313,985 81,191 395,645 1,834,146 823,776 27,917
50 129,620 942,199 (7,867) 110,888 (230,359) 28,300 369,345 640,684 12,156 -
(647,163) 245,000 (338,489) 1,905,892 - 1,735,145 (740,652)
Total Program Services
6,911,010
-
6,911,010
-
6,911,010
6,242,128
6,589,612
Supporting Services General Administration Membership Recruitment Fundraising
2,873,474 1,444,236 858,377
15,190 -
2,888,664 1,444,236 858,377
-
2,888,664 1,444,236 858,377
2,971,556 1,425,053 932,687
2,747,213 1,343,953 997,963
5,176,087
15,190
5,191,277
-
5,191,277
5,329,296
5,089,129
12,087,097
15,190
12,102,287
-
12,102,287
11,571,424
11,678,741
Increase (Decrease) in Net Assets from Operations
(405,709)
(37,370)
(443,079)
(51,572)
(494,651)
64,507
(113,933)
Investment Income (Losses)
(308,418)
30,347
(278,071)
(6,022)
(284,093)
888,671
457,179
(714,127) 4,263,197
(7,023) 3,016,229
(721,150) 7,279,426
(57,594) 1,037,820
(778,744) 8,317,246
953,178 7,364,068
343,246 7,020,822
Total Supporting Services Total Expenses
Change in Net Assets Net Assets, Beginning of Year Net Assets, End of Year
$
3,549,070
$
3,009,206
$
6,558,276
$
980,226
$
7,538,502
$
8,317,246
$
7,364,068
See accompanying Notes to Consolidated Financial Statements. -8-
In 2018, NARFE’s investments were held with these firms: The salaries of the National Executive Board, as of Decem- • Operating Fund: Morgan Stanley and See accompanying Notes to Consolidated Financial Statements. The Vanguard Group ber 31, 2018, are as follows: - 7• -Life Membership Trust Fund: Morgan Stanley President: $119,658 • Contingency Fund: Morgan Stanley Secretary/Treasurer: $107,141 • PAC Fund: Raymond James Regional Vice Presidents: $26,569
Additional NARFE Financial Data
W W W. N A R F E . O R G
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National Active and Retired Federal Employees Association and Affiliate NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE Consolidated Statement of Functional Expenses For the Year Ended December 31, 2018 STATEMENT OF FUNCTIONAL EXPENSES CONSOLIDATED (With Comparative Totals for the Years Ended December 31, 2017 and 2016) FOR THE YEAR ENDED DECEMBER 31, 2018
(WITH COMPARATIVE TOTALS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016)
Salaries and Benefits Program Services Communications Rebates to Federations New Member Rebates to Federations and Chapters Legislative Program Federal Benefits Program Webinars and Seminars National Conference Membership Services Protect America’s Heartbeat NARFE-PAC NARFE Alzheimer’s Fund
$
311,161 -
Contract and Professional Services
$
293,200 -
Travel
$
Postage
241 -
$
3,916 1,958 11,857 -
69,040 737,750 -
Total Program Services
2,384,419
1,110,096
183,336
877,135
42,513
549,854
-
5,447
19,409
1,432,723
Supporting Services General Administration Membership Recruitment Fundraising
1,693,688 498,624 -
336,456 492,863 858,377
15,684 13,702 -
50,317 274,894 -
27,266 4,791 -
7,452 130,890 -
185,902 -
121,572 -
129,064 1,783 -
-
2,192,312
1,687,695
29,386
325,211
32,057
138,342
185,902
121,572
130,846
-
$ 4,576,731
$ 2,797,791
$ 212,721
74,569
$ 688,196
Depreciation and Amortization
Property and Salaries Other Taxes and and Benefits Insurance
Contract and Utilities Professional and Services Maintenance
Program Services Communications 311,161 293,200 $ 527,890 $ $ $ $$ 1,678 Rebates- to Federations --New Member Rebates to -Federations and Chapters -3,916 Legislative Program 527,609 160,424 1,958 Federal- Benefits Program 219,718 36,349 - and Seminars --Webinars 593 Conference -National 250,28111,857 Services 1,325,706 277,688 SeeMembership accompanying Notes to- Consolidated Financial Statements. --Protect- America’s Heartbeat 5,447 21,239 NARFE-PAC 225 90,595132 Alzheimer’s Fund-NARFE 1,559-
877,135
42,513
549,854 Total Program Services -
5,447 2,384,419
19,409 1,110,096
50,317 274,894 -
27,266 4,791 -
Supporting Services 7,452 Administration 185,902 General 130,890 Membership Recruitment Fundraising
121,572 1,693,688 498,624 --
129,064 336,456 1,783 492,863 858,377-
325,211
32,057
121,572 2,192,312
130,846 1,687,695
$ $ 127,019 4,576,731
$ $ 2,797,791 150,255
52
138,342 Total Supporting185,902 Services
74,569
$ 688,196 $ 185,902 Total Expenses
625,933
5,447 -
5,613 3,999 3,193 26,056 1,949
$
$
1,678 -
-
187 5 814 14,065 97,307 473
$ 1,202,345
$
-
593 21,239 132
Printing
1,703 -
$
-
5,613 3,999 3,193 26,056 1,949
NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE $ 1,202,345
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$
$
185,902
$
127,019
$
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018
150,255
$
1,432,723
(WITH COMPARATIVE TOTALS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016)
(WITH COMPARATIVE TOTALS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016)
$
$
187 5 814 14,065 97,307 473
Total Expenses
764,284 -
$ 527,890 -
Utilities and Maintenance
11,871 3,312 27,962 97,363 10,805 31,782
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018
$
1,703 -
Depreciation and Amortization
160,424 36,349 250,281 277,688 90,595 1,559
Total Supporting Services
Postage
$
Printing
Political Contributions and Rebates to Chapters and Federations
527,609 219,718 1,325,706 225 -
NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE
Office and Telephone
764,284 -
Office and Telephone
Property and Other Taxes and Insurance
Political Contributions and Rebates to Chapters and Travel Federations
$$
Depreciation 2017 and Amortization Total
Property and Other Taxes 2016and Insurance Total
1,703 $ 527,890 $ 1,905,892 $ - 625,933 -
$ 1,735,145 706,823
-$ -
$1,727,176 686,217 -
Office and 2018 Postage MiscellaneousTelephoneTotal Printing
241 - $ $ 764,2845,735$ 625,933 -
Utilities and Maintenance
Political Contributions and Rebates to Chapters and Federations
$
$
1,678 -
625,933
69,040 11,871 3,312 - 27,962 97,363 - 737,750 10,805 31,782 -
44,185 187 5 132,564 814 53,747 14,065 69,849 97,307 473
- 69,040 5,613 753,805 3,999 265,341 3,193 415,407 593 26,0561,806,480 1,033,217 21,239 1,949 35,895 132
81,781 922,417 293,578 64,654 1,866,172 -8541,622 29,936
-
72,510 627,049 249,403 64,582 395,645 1,834,146 81,191 823,776 5,447 27,917 -
3,916 1,958 11,857 -
69,040 737,750 -
1,432,723 183,336
306,080 877,135
42,5136,911,010 549,854
6,242,128
-
6,589,612 5,447
19,409
1,432,723
15,684 13,702 -
-
321,264 50,317 26,692 274,894 -
27,2662,888,664 7,452 4,7911,444,236 130,890 - 858,377 -
2,971,556 185,902 1,425,053 932,687 -
2,747,213 121,572 1,343,953 997,963 -
129,064 1,783 -
-
29,386
-
347,956 325,211
32,0575,191,277 138,342
5,329,296 185,902
5,089,129 121,572
130,846
-
$ 12,102,287 $ 11,571,424 74,569 $ 688,196 $ 185,902$
11,678,741 $ 127,019
$$ 212,721 1,432,723 $ 1,202,345 $ 654,035$
$
150,255
$
1,432,723
Increase in Net Assets $ 343,246 $ 294,331 $ 148,245 Adjustments to Reconcile Increase in Net Assets NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE to Net Cash Provided by Operating Activities Depreciation and Amortization 385,066 534,414 469,545 STATEMENT OF CASH FLOWS CONSOLIDATED Net Realized and Unrealized (Gains) Losses on Investments 446,287 National Active and Retired Employees Association THE YEAR ENDED D(154,618) ECEMBER 31,and 2018Affiliate68,880 FORFederal Loss on Disposal of Property and Equipment 23 2,998 Consolidated Statement of Cash Flows For the Year Ended December 31,AND 2018 (WITH COMPARATIVE TOTALS FOR THE YEARS ENDED DECEMBER-31, 2017 2016) (Increase) Decrease in Assets (With Comparative for the Years Ended December 31,(230,808) 2017 and 2016) Accounts ReceivableTotals - Net 168,488 89,746 Prepaid Expenses and Deposits 7,719 17,069 (30,124) 2018 2017 2016 Increase (Decrease) in Liabilities Accounts Payable and Accrued Expenses 77,069 (219,277) 129,620 Cash Flows from Operating Chapter Dues Payable Activities (14,561) (362) (7,867) Deferred (172,217) (152,791) $ (230,359) $ Change in NetRevenue Assets $ (778,744) 953,178 343,246
Adjustments to Reconcile Change in Net Assets Net Cash Provided by Operating Activities to Net Cash (Used in) Provided by Operating Activities Depreciation and Amortization Cash Flows from Investing Activities Net Realized and Unrealized Losses (Gains) Purchases of Investments onMaturities Investments Sales and of Investments Loss on Disposal ofEquipment Property and Equipment Purchases of Property and Proceeds from Sale of Property and Equipment (Increase) Decrease in Assets Accounts Receivable - Net Net Cash Used in Investing Activities Prepaid Expenses and Deposits Increase (Decrease) in Liabilities Net Increase (Decrease) in Cash and Cash Equivalents PayableBeginning and Accrued Expenses Cash andAccounts Cash Equivalents, of Year Chapter Dues Payable Cash and Cash Equivalents, End of Year Deferred Revenue
688,863
640,215
640,684
215,927
185,902 (728,325) 667,315 321,993 (107,466) -
(647,163) (503,669) 245,000 12,432 (338,489) -
(154,618) 23
(496,220)
(9,680) (513,798) (110,191)
6,553 (740,652) (133,772)
168,488 7,719
143,995 1,230,390 $ 1,374,385
Supplementary Disclosure of Cash Flow Information Cash in)Income Provided by Operating Activities$ Cash PaidNet during the(Used Year for Taxes
833
Cash Flows from Investing Activities Purchases of Investments Sales and Maturities of Investments Purchases of Property and Equipment Proceeds from Sale of Property and Equipment Net Cash Used in Investing Activities Net (Decrease) Increase in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year
175,065
(99,968)
123,903 1,055,325 (14,222) $ 1,230,390 (319,453)
(16,740) 1,155,293 (21,985) $ 1,055,325 527,414
77,069 (14,561) (172,217)
(255,170) $
$1,039,338 230
640,215
-
(881,925) 899,949 (126,946) -
(2,621,641) 1,804,190 (19,691) 1,548
(349,732) 58,414 (205,802) 900
(108,922)
(835,594)
(496,220)
203,744 1,374,385
(364,092) 1,578,129
Cash and Cash Equivalents, End of Year Supplementary Disclosure of Cash Flow Information Cash Paid during the Year for Income Taxes
385,066
(349,732) 58,414 (205,802) 900
143,995 1,230,390
$
1,214,037
$
1,578,129
$
1,374,385
$
18,449
$
242
$
833
See accompanying Notes to Consolidated Financial Statements. -8-
National Active and Retired Federal Employees Association and Affiliate Notes to Consolidated Financial Statements December 31, 2018 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-four (54) 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 983 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
See accompanying Notes to Consolidated Financial Statements. -9-
the Association with the national dues. However, the Association rebates to the chapters one-third of the national fee charged for all new members joining chapters. 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
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and transactions were eliminated in consolidation. The financial information of the 54 federations and the 983 chapters is not included in the Association and Affiliate’s consolidated financial statements. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting: The consolidated financial statements 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 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 NARFE Magazine and royalties. 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, 2018, was $2,000. 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 debts expense and decreased by charge offs of the accounts receivable balances. Accounts 54
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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 3 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, 2018, was $185,902. Net Assets: The Association and Affiliate classify net assets into two categories, with donor restrictions and without donor restrictions. All contributions are considered to be available for unrestricted use unless specifically restricted by the donors. Net assets with donor restrictions 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’s executive board has several standing policies which effect the composition of net assets without donor restrictions. Included in unrestricted net assets as of December 31, 2018, 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 $904,608 for the life membership fund and $104,598 for the 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,” 2007, published in the National Vital Statistics Report, Volume 63, No. 7, published on November 6, 2014. Contributions: The Association and Affiliate report contributions as support when they are received. The Association and Affiliate report contributions as support with donor restrictions if
restricted for use for specific programs or time periods. When donor restrictions expire, that is, when purpose or time restrictions are accomplished, net assets with donor restrictions are reclassified to net assets without restrictions and are reported in the consolidated statement of activities as net assets released from restrictions. Income Taxes: The Association is exempt from federal income taxes under Section 501(c)(5) of the Internal Revenue Code and applicable state law. The accounting standard on accounting for uncertainty in income taxes addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under that guidance, the Association may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. Examples of tax positions include the tax-exempt status of the Association and various positions related to the potential sources of unrelated business income tax (UBIT). The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. There were no unrecognized tax benefits identified or recorded as liabilities for 2018. The Association’s policy would be to recognize interest and penalties, if any, on tax positions related to its unrecognized tax benefits in income tax expense in the consolidated financial statements. No interest and penalties were assessed or recorded during 2018. The Association’s Form 990, Return of Organization Exempt from Income Tax, is subject to examination by the taxing authorities, generally for three years after it was filed. NARFE-PAC is generally exempt from federal income tax under Section 527 of the Internal Revenue Code. 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, 2018, were not significant. NARFE-PAC’s tax return filed with the IRS is subject to
examination by the taxing authorities, generally for three years after it was filed. 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 $40,752 and $28,288, respectively, for the year ended December 31, 2018. Reclassifications: Certain 2016 and 2017 amounts have been reclassified to conform to the 2018 presentation. Such reclassifications had no effect on reported changes in net assets. 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, 2017 and 2016, from which the summarized information was derived. Functional Allocation of Expenses: The costs of providing the various programs and other activities have been summarized on a functional basis in the consolidated statement of activities and the consolidated statement of the functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. These expenses that are allocated include compensation, benefits, and general expenses, which are allocated on the basis of estimates of time and effort by employees. Expenses directly identifiable to specific programs and supporting activities are allocated accordingly.
New Accounting Pronouncements: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in (Topic 840), Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the consolidated statement of financial position for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the consolidated statement of activities. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Earlier application is permitted. Management of the Association has not evaluated the impact of this ASU on its financial statement. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. The ASU is required for annual reporting periods beginning after December 15, 2018, but may be early adopted. Management has not evaluated the impact of this ASU on its financial statements. ADOPTION OF ACCOUNTING STANDARDS UPDATE 2016-14 In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. The amendments in this ASU made improvements to the information provided in financial statements and accompanying notes of not-for-profit entities. The amendments set forth the FASB’s improvements to net asset classification requirements and the information presented about a not-forprofit’s liquidity, financial performance, and cash flows. The ASU became effective for fiscal years beginning after December 15, 2017. The changes in
this ASU should generally be applied on a retrospect basis in the year that the ASU first applied. However, a notfor-profit has the option to omit the analysis of expenses by both “functions” and “natural” classification as well as certain disclosures about liquidity and availability of resources, for any comparative periods of originally presented before the period adoption. These financial statements do not include a functional expense statement or the disclosure about Association’s liquidity for the year ended December 31, 2017. The Association maintained unrestricted net assets as previously presented, and restated as net assets without donor restrictions for $6,558,276, $7,279,426, and $6,657,647 as of December 31, 2018, 2017, and 2016, respectively. Of those net assets, $3,009,206, $3,016,229, and $2,792,463 were board designated as of December 31, 2018, 2017, 2016, respectively. The Association also maintained temporarily restricted net assets as previously presented, and restated as net assets with donor restriction for $980,226, $1,037,820 and $706,421 as of December 31, 2018, 2017, and 2016, respectively. These are included in the face of the consolidated statement of financial position. 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, 2018, bank deposits exceeded the $250,000 FDIC-insured limit by approximately $731,091. RETIREMENT PLAN The Association has a Retirement Savings Plan (the Plan). Employees are eligible to participate in the Plan on the first day of the month coinciding with or next following the employee’s hire date. Employees become eligible for employer matching funds on the first day of the Plan Year (January 1) or the first day of the seventh month of the Plan Year (July 1) coinciding with or next following the hire date. The Association matches 60 percent of each employee’s voluntary contribution (up to 6 percent of annual compensation). Total contributions made by the Association were $81,565 for the year ended December 31, 2018. W W W. N A R F E . O R G
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maintained in several different banks. As of December 31, 2018, bank deposits exceeded the $250,000 FDIC-insured limit by $731,091. 5. INVESTMENTS AND FAIR VALUE MEASUREMENTS INVESTMENTS AND FAIR VALUE MEASUREMENTS As of December 31, 2018, the Association and Affiliate’s only assets or liabilities measured at As of December 31, thea Association Affiliate’s assetsinvestments: or liabilities measured at fair value on a recurring fair 2018, value on recurring basisand consisted of theonly following basis consisted of the following investments: Level 1 Inputs
Fair Value
Level 2 Inputs
Level 3 Inputs
Equities Mutual Funds Corporate Bonds Certificates of Deposit
$
395,835 5,844,956 661,415 14,933
$
395,835 5,844,956 661,415 14,933
$
-
$
-
Total Investments
$
6,917,139
$
6,917,139
$
-
$
-
Financial assets valued using Level 1 inputs based on unadjusted quoted marketquoted pricesmarket withinprices active markets. Financial assets valued using are Level 1 inputs are based on unadjusted Financial assets valued using markets. Level 2 inputs are based primarily on quoted prices for similar assets in active or inactive markets. within active 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, allowing forare situations in whichonthere is little, any, market activity for the asFinancial assets valued thereby using Level 2 inputs based primarily quoted prices iffor similar set or liability at theassets measurement date. The fair value measurement objective is to determine an exit price from the perspective in active or inactive markets. of a market participant that holds the asset or owes the liability. Financial valued December using Level31, 3 inputs, if any, are of valued using unobservable inputs to Investment income for theassets year ended 2018, consisted the following: measure fair value to the extent that observable inputs are not available, thereby allowing for Without Donor With Donor situations in which there is little, Restrictions if any, market activity for the or liability at the Restrictions asset Total measurement date. The fair value measurement objective is to determine an exit price from the Dividends and Interest $ 366, 746 $ 16, 476 $ 383,222 perspective of a market participant that holds the asset or owes the liability. Net Realized and Unrealized Losses (644,817) 22,498 (667,315) Total Investment Loss
$ (278,071)
$
(6,022)
$ (284,093)
In 2018, the Association adopted ASU 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, for presentation of investment revenues and investment expenses. Accordingly, investment revenues are reported net of related external and direct internal investment expenses in the consolidated statement of activities for the year - 16 ended December 31, 2018.
NET ASSETS WITH DONOR RESTRICTIONS Net Assets with donor restrictions are available for the following purposes as of December 31, 2018: NARFE-PAC $ 979,052
NARFE Alzheimer’s Fund Net Assets with Donor Restrictions
1,174 $ 980,226
Net assets were released from donor restrictions by incurring expenses or otherwise satisfying the restricted purposes for the year ended December 31, 2018, as follows: NARFE-PAC $ 1,033,219 NARFE Alzheimer’s Fund Net Assets with Donor Restrictions
35,895
$ 1,069,114
LIQUIDITY AND AVAILABILITY OF RESOURCES The Association’s cash flows have seasonal variations due to the timing of dues billings and national meetings. The Association manages its liquidity to meet general expenditures, liabilities and other obligations as they come due. Excess cash flows not needed for day-to-day operations, or a period of three months, are invested in accounts consisting of equities, mutual funds, corporate bonds, and certificates of deposit. To meet unanticipated or seasonal needs, the Association maintains a primary operating fund, valued at $2,964,408 as of December 31, 2018, that can be used for general operating purposes with the Association’s executive board approval. As of December 31, the following financial assets and liquidity sources were available for general operating expenditure in the year ended 2019: Financial Assets Cash and Cash Equivalents $ 1,214,037 Accounts Receivable – Net 190,135 Investments Available for Operating Purposes 6,917,139
Total Financial Assets Available within One Year
$ 8,321,311
SUBSEQUENT EVENTS The Association and Affiliate have evaluated subsequent events through March 19, 2019, the date on which the consolidated financial statements were available to be issued.
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The Way We Worked
PROTECTING OUR WATERS In this 1972 photo, Environmental Protection Agency (EPA) personnel are operating out of EPA’s Gulf Coast Water Supply Research Laboratory at Dauphin Island, Alabama. Scientists are taking surface water and mud bottom samples from Mobile Bay, an inlet of the Gulf of Mexico, because of concerns that the bacteria count could harm the shellfish living in the bay. Today, EPA’s Gulf of Mexico Program protects, maintains and restores the health and productivity of the Gulf by instituting voluntary programs, engaging in partnerships, working to identify priority areas through state and coastal community leadership, and providing federal leadership in research, monitoring, scientific analysis and financial resources. PHOTO from the Records of the Environmental Protection Agency, National Archives, courtesy of the National Archives History Office; in collaboration with the Society for History in the Federal Government (SHFG), bringing together government professionals, academics, consultants, students and citizens interested in understanding federal history work and the historical development of the federal government. To join, visit www.shfg.org. 60
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DID YOU KNOW? The Federal Water Pollution Control Act was enacted in 1948; in 1972, it expanded and was renamed the Clean Water Act. It regulates the quality standards for surface water and manages the discharge of pollutants in the water of the United States. Under the Clean Water Act, it’s unlawful to discharge pollutants into surface water from any point source, pipe or man-made ditches, unless a permit is obtained. Pollutant discharges are controlled by the EPA’s National Pollutant Discharge Elimination System (NPDES) permit program. Visit www.epa.gov.
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