June/July 2020 NARFE Magazine

JUN/JUL

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COVER STORY

TELEWORK:

BANDING TOGETHER WHILE STAYING APART

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ZEROING IN ON DATA INSPIRED TO SERVE: REVAMPING FEDERAL PERSONNEL SYSTEMS

Volume 96 • Number 6

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SPECIAL FEATURE

36 Inspired to Serve:

Revamping Federal Personnel Systems

WASHINGTON WATCH

24

6

$2 Trillion Coronavirus Stimulus Package Signed Into Law

7

NAPA Begins Study of OPM Operations and Challenges

8

Advocacy More Important Than Ever During Coronavirus Crisis

9

August is NARFE’s Grassroots Advocacy Month

COVER STORY

10

TELEWORK: BANDING TOGETHER WHILE STAYING APART: Federal guidelines on remote work have been upended in the wake of the COVID-19 outbreak.

OPM Publishes Report on FY19 Human Capital Reviews

11

Bill Tracker

SPECIAL SECTIONS

51 NARFE 2019 Financial Statements

COLUMNS

30

ZEROING IN ON DATA: Learn how government agencies are using data analytics to improve their efficiency and decision-making

4 From the President 22 Benefits Brief 42 Managing Money 44 Alzheimer’s Update

JUN/JUL

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On the Web

DEPARTMENTS COVER STORY

TELEWORK:

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VISIT US ONLINE AT:

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NARFE National Headquarters

INSPIRED TO SERVE: REVAMPING FEDERAL PERSONNEL SYSTEMS

Volume 96 • Number 6

ON THE C OVER Illustration by GRAPHEK

16 Questions & Answers 46 For the Record 48 NARFE News 62 Member Perks 64 The Way We Worked

FOLLOW US ON TWITTER:

@narfehq

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JUNE/JULY 2020 | Volume 96 | Number 6

EDITORIAL DIRECTOR Helen Mosher SENIOR EDITOR Mabel Yu CREATIVE SERVICES MANAGER Beth Bedard COMMUNICATIONS ASSISTANT Precious Dorch-Robinson ADDITIONAL GRAPHIC DESIGN GRAPHEK EDITORIAL BOARD Kenneth J. Thomas, Kathryn E. Hensley, Barbara Sido CONTACT US NARFE Magazine 606 North Washington St. Alexandria, VA 22314-1914 Phone: 703-838-7760 Fax: 703-838-7781 Editorial: communications@narfe.org Advertising Sales: Anita Nelson advertising@narfe.org 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 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 Kathy 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: rvp10@narfe.org

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 “My Account”

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

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 © 2020, 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

OUR NEW REALITY

A

s I write this in mid-April, it appears that there will be no quick end to the coronavirus crisis. I

understand the health, safety and financial concerns you and your families have during these challenging and uncertain times.

But even as the nation’s economy struggles, as leaders argue the pros and cons of reopening states for business sooner or later, as the number of infected continues to climb—NARFE perseveres.

At times, it’s a contradictory reality. We remain optimistic that we will be able to hold FEDcon20 in late August, but we also remain vigilant about the challenge of hosting and attending a conference if the coronavirus remains a major concern. Stay tuned; we will update everyone just as soon as we can.

It’s contradictory also for the federal workers whose telework options were becoming more and more limited prior to the crisis, and who quickly had to do a 180-degree turn to keep vital government activities functioning while at home. NARFE has also had to adapt, with much of its

NARFE’s Mission Statement

communications, advocacy, membership and operations staff adjusting to working remotely.

At NARFE’s urging, Congress agreed to suspend required minimum distributions (RMDs) for 2020 so that retirees would not face mandatory withdrawals in the middle of a bear market. Congress also authorized several stimulus packages. But despite these encouraging steps, the assistance programs keep hitting administrative roadblocks, such as those that have slowed down payments to people who don’t have direct deposit information on file at the IRS and loan programs that have run out of funding.

And the bad news keeps coming: Price gouging. Scams. Infection hotspots in assisted living facilities. Millions of people unemployed. Millions without a rainy-day fund. Businesses closed.

But here’s the good news. Even with our lives changing, we’re finding new ways of staying connected and fostering community engagement. And every day, essential frontline workers are fighting this pandemic. They can be found in government offices and military bases, hospitals, clinics and research facilities, at local food stores and supply chain warehouses. Many of them are public servants.

All are risking their health to serve the people, and we are so grateful.

Stay safe.

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

CONTROL WHAT YOU CAN. INSURE WHAT YOU CAN’T. You plan for your tomorrow, but have you planned for the possibility of a tomorrow without you in it?

At a time when your loved ones should be focused on memories of you, they shouldn’t be troubled with thoughts of financial burdens.

The NARFE Senior Term Life Insurance Plan This plan, specifically designed for our members ages 50–74, offers coverage amounts between $5,000 and $25,000* for members ages 50–64 or coverage amounts of $5,000 or $10,000* for ages 65–74. Plus, coverage is available with no medical exam required.

Benefits include: Available to NARFE members and spouses age 50–74. No medical exam required.

• Spouse Coverage Available to help provide both you and your loved one with the protection you may need.

• Economical Group Rates negotiated with our insurance partners exclusively for our members.

• Choice of Coverage Amounts to custom fit your financial needs and budget.

• No Medical exam required! It’s that easy.

To learn more or enroll in the NARFE Senior Term Life Insurance Plan, call 1-800-233-5764 or visit us at www.narfeinsurance.com *At age 80, coverage, if greater than $5,000, will reduce to $5,000 with an appropriate adjustment in premium.

All benefits are subject to the terms and conditions of the policy. Policies underwritten by Hartford Life and Accident Insurance Company detail exclusions, limitations, reduction of benefits and terms under which the policies may be continued in force or discontinued. Coverage may vary and may not be available in all states. The Hartford® is The Hartford Financial Services Group, Inc., and its subsidiaries, including issuing company Hartford Life and Accident Insurance Company, Hartford, CT 06155.

Life Form Series includes GBD-1000, GBD-1100, or state equivalent.

Program Administered by Mercer Health & Benefits Administration LLC

AR Insurance License #100102691 CA Insurance License #OG39709 In CA d/b/a Mercer Health & Benefits Insurance Services LLC 89269 (6/20) Copyright 2020 Mercer LLC. All rights reserved.

Washington Watch

$2 TRILLION CORONAVIRUS STIMULUS PACKAGE SIGNED INTO LAW

T

he Coronavirus Aid, Relief and Economic Security (CARES) Act was passed by Congress and signed into law by the president on March 27, 2020. The bill

authorizes more than $2.2 trillion in economic stimulus and health care system aid in response to the coronavirus pandemic.

The package received broad bipartisan support from Congress, passing the Senate by a vote of 96-0 and the House with overwhelming support via voice vote. Here are some highlights of interest to NARFE members.

RMDS SUSPENDED The package includes a provision, advocated for by NARFE, to suspend required minimum distributions (RMDs) on retirement accounts, including Thrift Savings Plan (TSP) accounts, for calendar year 2020. For 2020, the RMD calculation is based on the retirement account balance as of December 31, 2019. With stock markets losing substantial value since that time, RMDs would direct seniors to withdraw a far greater percentage of their retirement accounts than anticipated. They could also force seniors to sell assets at depressed values.

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DIRECT CASH PAYMENTS The highlight of the package for many individuals, including federal employees and retirees, will be its direct cash payments of $1,200 per adult ($2,400 for a married couple) and $500 per child. Both retirees and workers (and those unemployed) are eligible for the payments.

The only individuals excluded from receiving payment are nonresident aliens and those claimed as dependents on others’ tax returns.

The payments decrease or are eliminated for those with higher incomes, phasing out at a rate of $5 for every additional $100 in income above the following

thresholds: $75,000 in adjusted gross income for single filers, $112,500 for heads of household and $150,000 for married couples filing jointly. The phaseout is based on adjusted gross income as reported on 2019 tax returns, or 2018 returns if the taxpayer has not yet filed their 2019 taxes. By the time you read this article, you should have received your payment if you were eligible.

ADDITIONAL OPM FUNDING The package also included $12 million in increased funding for the Office of Personnel Management (OPM) to allow for the electronic transfer of retirement applications from agencies to OPM. With increased telework during the crisis, providing this functionality is more important than ever. The funding will accelerate a process that had already begun, and it allows for the increased printing capability OPM will need to continue its current paper-based process.

NARFE hopes this will be a jumping off point toward fully digitizing retirement processing.

The stimulus package also includes: • $500 billion in loans, loan guarantees and assistance to large companies and local governments.

• $377 billion in low- or zero-interest loans to small

businesses that could be partially forgiven under certain conditions.

• $260 billion to expand unemployment insurance benefits to provide an additional $600 per month for four months.

• $180 billion in health-related spending, including $100 billion to hospitals and public health funds.

The president also signed another smaller relief package on April 24.

—BY JOHN HATTON, DIRECTOR OF LEGISLATIVE AND POLITICAL AFFAIRS

NAPA BEGINS STUDY OF OPM OPERATIONS AND CHALLENGES

I

n March 2020, the National Academy of Public Administration (NAPA) officially entered into a yearlong contract with the Office of Personnel Management (OPM) to conduct a comprehensive analysis and assessment of the challenges facing OPM. The contract follows a directive from Congress, approved as part of the FY20 National Defense Authorization Act, to halt any OPM reorganization proposal until at least 180 days after a year-long study by the Academy detailing OPM’s challenges and recommending solutions.

NARFE played a leading role in advancing the language included in the bill.

A team composed of five nonpartisan Fellows of the Academy and a professional research team will work closely with OPM. The report will include a comprehensive assessment of any reorganization proposal as well as OPM’s statutory functions.

The Academy plans to conduct

a cost-benefit analysis, identify a timetable, and examine what kind of legislative and administrative changes would be needed to implement any plan moving forward. It also plans to collect the views of agencies who would be affected by any OPM reorganization plan and stakeholders who represent customers of OPM’s services.

The finished report and recommendations are expected to be submitted to Congress in March 2021.

The Trump administration’s reorganization plan proposed moving OPM’s personnel policy functions to the White House and moving the agency’s programmatic functions, like retirement services, to the General Services Administration. NARFE has been a consistent critic of the proposal and believes the changes would, respectively, subject the federal workforce to partisan political influence and put critical OPM services at risk of not receiving the attention

and resources necessary to adequately serve the federal community.

—BY SETH ICKES, GRASSROOTS ASSISTANT

MYTH vs.

REALITY Myth: Members of Congress only work onethird of the year.

Reality: Congress typically reserves more than onethird of each year for legislative sessions in Washington, DC. These sessions are spread out across the year and are separated by congressional recesses. Congressional recesses allow members to return to their home districts to perform their representative duties, such as meeting with constituents.

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Washington Watch

ADVOCACY MORE IMPORTANT THAN EVER DURING CORONAVIRUS CRISIS

W

ho would have thought that in 2020 there would be a global crisis caused by a lifethreatening virus? The unsettling COVID-19 outbreak is the perfect example of how life can change for all of us in an instant. What is now apparent is that this pandemic has fundamentally altered our political discourse, health care system, lifestyles and more.

The swift passage of the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act stimulus package will help Americans, businesses and the health care system weather some effects of the outbreak. As Americans hunkered down at home to slow the spread of the virus, local governments called on the public to support local businesses such as restaurants and mom-and-pop retailers that closed due to social distancing measures. Getting takeout and delivery from restaurants no longer able to seat patrons on-site and ordering online from retailers whose doors are closed have both served consumers’ needs and helped mitigate some of the financial fallout from stayat-home mandates.

NARFE, too, has issued a call to action, asking its members to keep advocacy efforts alive.

NARFE emphasizes safety and urges members to adhere to protocols recommended by health experts. But even if advocacy can’t currently be done in person, members should remain engaged with

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lawmakers and keep asking important questions, not only to understand the long-term impact of COVID-19 but also to keep communication flowing on our ongoing legislative issues.

Despite the uncertainty of these times and the lack of a fully operational economy, NARFE continues its advocacy on behalf of the federal community. While the crisis evolves daily, NARFE is providing critical updates to members through its website, electronic newsletters and social media platforms. Additionally, as the disruption of the federal workload continues, NARFE is engaging with the Office of Personnel Management (OPM) and other key agencies to ensure delivery of vital services members rely on.

With social distancing in place, lawmakers have ramped up constituent communications on social media and through online town hall forums.

Engaging in these channels is important for our continued advocacy efforts. One way to ensure that you receive invitations to participate is to visit the Town Hall Project website at www.townhallproject. com and enter your ZIP code for a list of events in your area. You can also visit www.house.gov and www.senate.gov to access lawmakers’ websites and sign up to receive newsletters and notifications.

Engaging in NARFE’s letterwriting campaigns via the Legislative Action Center at www.narfe.org/legislation and

scheduling online meetings with lawmakers to discuss NARFE issues are other ways to continue advocacy efforts.

NARFE thanks you for your advocacy. Your continued support helps us help you.

—BY MARSHA PADILLA-GOAD, GRASSROOTS PROGRAM MANAGER

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.narfe.org/ legislation.

AUGUST IS NARFE’S GRASSROOTS ADVOCACY MONTH

N

ARFE members will engage in Grassroots Advocacy Month this August. The campaign is an effort to reach members of Congress while they are at home in their states or congressional districts and continue the dialogue about policies that threaten our members’ earned pay and benefits. The campaign coincides with Congress’ summer recess, which normally presents ample opportunities to interact with lawmakers face-to-face before they return to Washington.

This year, of course, is different. With stay-at-home orders and social distancing in place due to the COVID19 pandemic, NARFE is encouraging members to engage with lawmakers even if they can’t do so in person. Congress has ramped up communications through online meetings, Facebook and other social media, and wants to boost participation. NARFE members can visit townhallproject.com to find online events or go to www. house.gov and www.senate.gov to sign up for newsletters and notifications.

Writing a letter to the editor is another great way to get lawmakers’ attention. Through NARFE’s Legislative Action Center, members can access template messages on NARFE’s top issues and submit letters directly to local papers.

Even when a meeting is virtual, preparation is integral to success. That’s why NARFE

has prepared issue briefs, talking points and more; these are available at www.narfe.org/ legislation.

GRASSROOTS ADVOCACY MONTH PRIORITIES This year, Grassroots Advocacy Month focuses on securing accurate cost-of-living adjustments (COLAs) for seniors and supporting bipartisan reform of the Windfall Elimination Provision (WEP).

THE FAIR COLA FOR SENIORS ACT COLAs for federal civilian and military retirement annuities, as well as Social Security and veterans’ and disability benefits, are currently determined by the Consumer Price Index for Urban Wage and Clerical Workers (CPI-W). This index doesn’t accurately account for seniors’ spending habits.

NARFE supports the Fair COLA for Seniors Act, which would require that COLAs be calculated using the Consumer Price Index for the Elderly (CPIE). The CPI-E better accounts for seniors’ spending habits, especially on medicine, health care, shelter and related costs.

Switching from the CPI-W to the CPI-E would provide more accurate calculations, increasing adjustments by an estimated 0.27 percentage points per year.

REFORM OF THE WINDFALL ELIMINATION PROVISION The Windfall Elimination Provision (WEP) reduces the Social Security benefits

of local, state and federal retirees who worked in private sector jobs covered by Social Security and who also receive an annuity from government employment not covered by Social Security.

The Public Servants Protection and Fairness Act introduced by House Ways and Means Committee Chairman Richard Neal, D-MA, and the Equal Treatment of Public Servants Act from Ways and Means Ranking Member Kevin Brady and Senator Ted Cruz, both R-TX, would each offer relief for current and future retirees.

There are subtle differences, but both bills would provide a rebate for those currently eligible for Social Security benefits and introduce a new formula for those eligible in the future. While the legislation does not fully repeal the WEP, it represents a significant improvement for Civil Service Retirement System (CSRS) retirees unfairly penalized for their public service.

Please visit NARFE’s Grassroots Advocacy Month webpage, www.narfe.org/GAM, to access all the documents necessary to help you prepare for your advocacy activities. If you have any questions, please contact NARFE’s advocacy team at advocacy@narfe.org.

NARFE thanks you in advance for your participation in Grassroots Advocacy Month.

—BY MARSHA PADILLA-GOAD, GRASSROOTS PROGRAM MANAGER

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Washington Watch

OPM PUBLISHES REPORT ON FY19 HUMAN CAPITAL REVIEWS

I

n March 2020, the Office of Personnel Management (OPM) released its Human Capital Reviews (HCR) Report for fiscal year 2019 (FY19). HCRs are used to help agencies determine whether their human capital management practices enhance and support agency missions and goals. Human capital management includes hiring, managing, training, developing, compensating and retaining employees; all are crucial to maintaining an efficient and dedicated workforce.

OPM collects perspectives from the Chief Human Capital Officers (CHCO) Council on both internal and external issues, painting a picture of the kind of topics that need to be addressed and the way programs could be improved on a governmentwide scale. The survey was completed by CHCOs from 24 agencies, including every federal department and select agencies.

According to the report, the outdated General Schedule (GS) pay structure is a serious obstacle for agencies and causes myriad problems related to recruitment, retention and overall human capital management. Most agencies expressed a need for new pay systems that help agencies react quickly to labor market shifts and fill highdemand technology jobs, especially in science, technology, engineering and mathematics (STEM). Many consider the archaic GS pay structure to be the single greatest hindrance to recruiting employees with

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STEM skills, who are critical to bringing public service into the 21st century in every area of government. Other challenges include providing continuous employee development, retraining employees with STEM in mind, effective performance management systems and more.

The report also found agencies struggling to identify emerging needs. Most agencies are just beginning to make progress on understanding and closing critical skills gaps in areas such as cyber security, human resources expertise and information technology. An important factor in addressing these gaps is human capital analysis, in which agencies collect and analyze data about recruitment, retention, training and more. Currently, most agencies track a large pool of data in a variety of areas but struggle to use it in a meaningful way due to nonstandardized data collection methods and differing cultures among agencies. Many agencies noted that better data analysis and tracking and reporting tools would help improve human capital management.

While the aforementioned issues persist and comprehensive action is needed to properly address them, OPM noted some progress in tightening skills gaps and improving efficiency. Many agencies have implemented improvements to performance management systems that lead to “organizational results, set high standards for success, and

streamline multilayer processes.”

These changes include an increased focus on transparency and addressing workplace concerns from all employees, top to bottom. In this vein, most agencies reported carefully reviewing and tracking Federal Employee Viewpoint Survey results, which gauges employees’ overall satisfaction with their work and agency, to improve their workplaces. A number of agencies have also implemented robotic process automation, which streamlines administrative tasks so that HR professionals can focus on more pressing or important work.

—BY SETH ICKES, GRASSROOTS ASSISTANT

LEGISLATIVE RESOURCES • NARFE NewsLine: A weekly newsletter that goes out to NARFE members on Tuesdays and includes weekly recaps of legislative news, compiled

by NARFE’s advocacy and communications teams.

• Legislative Action Center: A one-stop site to send a letter to Congress, and more, at www.narfe.org.

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

THRIFT SAVINGS PLAN

BILL NUMBER / NAME / SPONSOR H.R. 5018/S. 2791: Taxpayers and Savers Protection (TSP) Act / Rep. Mark Meadows, R-NC / Sen. Marco Rubio, R-FL

WHAT BILL WOULD DO Removes Chinese companies from the Thrift Savings Plan international fund, putting investors at a distinct disadvantage compared to private-sector retirement funds.

Cosponsors: H.R. 5018: 0 (D) 16 (R) S. 2791: 2 (D) 5 (R)

LATEST ACTION(S) Referred to the House Committee on Oversight and Reform (H.R. 5018) / Referred to the Senate Committee on Homeland Security and Governmental Affairs (S. 2791)

H.Res. 23: Rep. Susan Davis, D-CA

Expresses the sense of the Referred to the House House that the United States Committee on OverPostal Service should take all sight and Reform Cosponsors: 207 (D) 54 (R) appropriate measures to ensure the continuation of door delivery for all business and residential customers.

H.Res. 33/S.Res. 99 Rep. Stephen Lynch, D-MA / Sen. Gary Peters, D-MI Cosponsors: H.Res. 33: 225 (D) 42 (R) S.Res. 99: 44 (D) 8 (R) 2 (I)

POSTAL REFORM1

H.Res. 54: Rep. Gerald Connolly, D-VA Cosponsors: 217 (D) 75 (R)

H.Res. 60: Rep. David McKinley, R-WV Cosponsors: 180 (D) 26 (R)

H.R. 2382/S. 2965: USPS Fairness Act / Rep. Peter DeFazio, D-OR / Sen. Steve Daines, R-MT

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 (H.Res. 33)

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

Repeals the USPS’ prefunding requirement.

Passed the House of Representatives 309-106 (H.R. 2382) on February 5, 2020 / Referred to the Senate Committee on Homeland Security and Governmental Affairs (S. 2965)

H.R. 2382: 232 (D) 69 (R) S. 2965: 3 (D) 2 (R)

NARFE’s Position:

Support

Referred to the Senate Committee on Homeland Security and Governmental Affairs (S.Res. 99)

Oppose

No position

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Washington Watch

EDITOR’S NOTE: These bills are all listed online at www.narfe.org/legislation/votervoice.cfm.

BILL NUMBER / NAME / SPONSOR

ISSUE

H.R. 141/S. 521 Social Security Fairness Act of 2019 / Rep. Rodney Davis, R-IL / Sen. Sherrod Brown, D-OH

WHAT BILL WOULD DO 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)

Reforms the Windfall Elimination Provision (WEP), to provide WEP-affected individuals who are eligible for benefits before 2022 a $100 monthly rebate and $50 for an affected spouse.

Changes the WEP calculation moving forward.

Referred to the House Committee on Ways and Means (H.R. 3934)

Cosponsors: H.R. 141: 186 (D) 59 (R) S. 521: 31 (D) 5 (R) 2 (I) H.R. 3934/S. 3401 The Equal Treatment of Public Servants Act / Rep. Kevin Brady, R-TX / Sen. Ted Cruz, R-TX

GPO/WEP

Cosponsors: H.R. 3934: 3 (D) 42 (R) S. 3401: 1 (R)

Referred to the Senate Committee on Finance (S. 340) Referred to the House Committee on Ways and Means

H.R. 1254: The Equal COLA Act / Rep. Gerry Connolly, D-VA

Provides Federal Employees Retirement System (FERS) retirees with the same annual cost-of-living adjustment (COLA) as Civil Service Retirement System (CSRS) retirees.

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 (CPIE) 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

Allows federal employees who started their careers in temporary positions before transitioning into permanent roles to retroactively contribute toward their retirement for the years they held a temporary position.

Referred to the House Committee on Oversight and Reform

H.R. 1553: Fair COLA for Seniors Act of 2019 / Rep. John Garamendi, D-CA Cosponsors: 35 (D) 3 (R)

H.R. 2478: The Federal Retirement Fairness Act / Rep. Derek Kilmer, D-WA Cosponsors: 45 (D) 13 (R)

DC STATEHOOD

Referred to the Senate Committee on Finance (S. 521)

H.R. 4540 Public Servants Reforms the Windfall EliminaProtection and Fairness Act tion Provision (WEP), to provide / Rep. Richard Neal, D-MA WEP-affected individuals who are eligible for benefits before 2022 a $150 monthly rebate.

Changes the WEP calculation Cosponsors: moving forward.

139 (D) 2 (R)

Cosponsors: 15 (D) 3 (R)

FEDERAL ANNUITIES

LATEST ACTION(S)

H.R. 51/H.R.5803: Washington, D.C. Admission Act / Del. Eleanor Holmes Norton, D-DC

Provides for the admission of the Approved by the State of Washington, D.C. into House Committee on the Union.

Oversight and Reform on February 11, 2020.

Cosponsors: 223 (D) NARFE’s Position: 12

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Support

Oppose

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

WHAT BILL WOULD DO

H.R. 5690/S. 3231: Federal Provides federal employees with Adjustment of Income a 3.5 percent pay raise in 2021.

Rates (FAIR) Act / Rep. Gerry Connolly, D-VA / Sen. Brian Schatz, D-HI H.R. 5690: 32 (D) S. 3231: 10 (D)

FEDERAL PERSONNEL POLICY

H.R. 3348/S. 1898: Modern Employment Reform, Improvement, and Transformation (MERIT) Act of 2019 / Rep. Barry Loudermilk, R-GA / Sen. David Perdue, R-GA

Streamlines the employee removal process for agencies by weakening due process for federal employees.

H.R. 3348: 19 (R) S. 1898: 5 (R)

NARFE’s Position:

Support

LATEST ACTION(S) Referred to the House Committee on Oversight and Reform (H.R. 5690) / Referred to the Senate Committee on Homeland Security and Governmental Affairs (S. 3231) Referred to the House Committee on Oversight and Reform (H.R. 3348) / Referred to the Senate Committee on Homeland Security and Governmental Affairs (S. 1898)

Oppose

No position

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13

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All benefits are subject to the definitions, limitations, and exclusions in the Blue Cross and Blue Shield Service Benefit Plan brochure. The Blue365® Discount Program offers access to savings on items that you may purchase directly from independent vendors, which may be different from items covered under the Service Benefit Plan or any other applicable federal healthcare program. For hearing aids, acupuncture, chiropractic and vision services, you must exhaust your Service Benefit Plan benefit first before accessing the savings of the Blue365® Discount Program. To find out what is covered under your policy, contact the customer service number on the back of your member ID card. The products and services described herein are neither offered nor guaranteed under any local Blue company’s contract with the Medicare program. These items are not subject to the Medicare appeal process. Any disputes regarding these products and services are not subject to the Disputed Claims process. Blue Cross and Blue Shield Association (BCBSA) may receive payments from Blue365 vendors. Neither the Service Benefit Plan, nor any local Blue company recommends, endorses, warrants or guarantees any specific Blue365 vendor or item. The Service Benefit Plan reserves the right to change, modify, or terminate any item and vendors made available through Blue365, at any time. † Price shown does not include cost of comprehensive hearing exam. Examination and testing for prescribing of hearing aids is covered under the Blue Cross and Blue Shield Service Benefit Plan. The member should confirm that the provider rendering the hearing exam is a Preferred provider. If the provider is Non-preferred, the member may be

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TruHearing is offered through Blue365, which provides exclusive health and wellness deals and is a program of Blue Cross Blue Shield Association, an association of independent Blue Cross and Blue Shield companies. The Blue Cross® and Blue Shield® words and symbols, Federal Employee Program®, FEP® and Blue365® are all trademarks owned by Blue Cross Blue Shield Association. ‡ Smartphone compatible hearing aids connect directly to iPhone®, iPad®, and iPod® Touch devices. Connectivity also available to many Android® phones with use of an accessory.

All content ©2019 TruHearing, Inc. All Rights Reserved. TruHearing® is a registered trademark of TruHearing, Inc. All other trademarks, product names, and company names are the property of their respective owners. Listed benefit amount may differ from customer's actual benefit. Actual customer payment will vary. Three follow-up visits must be used within one year after the date of initial purchase. Hearing aid repairs, and replacements subject to provider and manufacturer fees. For questions regarding fees, contact TruHearing customer service. FEP_NARFE_AD_1118

TruHearing is an independent company that provides discounts on hearing aids.

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 CANCELLING VERSUS SUSPENDING FEHB

Q

When United States Postal Service (USPS) employees retire and are not interested in keeping/paying for their Federal Employees Health Benefits (FEHB) program insurance, they are required to sign a form to either cancel their health benefits or suspend them. Why not remove the cancel option on the form and only offer to suspend accounts? This would allow the retiree to get back into the FEHB program during any future open season. Many employees do not understand that once they retire, if they cancel FEHB coverage, they will never be allowed back into the system.

A

That’s a good question, and it’s one that applies to employees at all agencies in the federal government.

First of all, employees cannot suspend FEHB coverage until they retire from federal service.

If you take a closer look at the instructions on any government form that allows you to suspend FEHB coverage as an annuitant (e.g., SF 2809, www.opm.gov/ 16

| J U N E / J U L Y

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forms/pdf_fill/sf2809.pdf; OPM Form 2809, www.opm. gov/forms/pdf_fill/opm2809. pdf; or RI 79-9, www.opm.gov/ forms/pdf_fill/ri79-9.pdf), you will notice that they only allow you to suspend FEHB coverage as an annuitant if you are covered under one of the following: • A Medicare Advantage plan (that falls under Medicare Part C)

• TRICARE or TRICARE for Life • Peace Corps insurance • CHAMPVA • Medicaid Annuitants can’t suspend FEHB coverage for just any reason. And as you mentioned, if an annuitant cancels his or her FEHB coverage in retirement, the individual won’t typically be allowed to reenroll later. There are at least three exceptions where an annuitant who has cancelled their FEHB can reenroll: 1. I f a federal annuitant is married to a Fed and cancels FEHB coverage to be covered under his or her spouse’s FEHB plan, the annuitant can later reenroll in FEHB if the annuitant loses his or her spouse (death or divorce), if the annuitant’s spouse loses his or her FEHB coverage, or if the annuitant’s spouse switches to a Self Only plan.

2. I f a federal annuitant cancels his or her FEHB coverage and later returns to federal service as a reemployed annuitant with a position that allows FEHB coverage, he or she can reenroll.

3. If a reemployed annuitant returns to federal service, signs up for FEHB coverage as soon as he or she becomes eligible and continues reemployment under CSRS or FERS for at least 1 year (and qualifies for a supplement to his or her annuity) or returns to federal service under CSRS or FERS for at least 5 years (and qualifies for a redetermined annuity), he or she can keep the FEHB coverage into retirement.

FERS RETIREMENT ANNUITY SUPPLEMENT

Q

I am 59 years old and plan to retire this year with 30 years of FERS service. Most of my career has been part-time. I know my regular annuity will be prorated based on my part-time service. However, I’m wondering if the supplemental annuity that I will receive until I turn 62 is also prorated?

A

The procedure for computing the annuity supplement for a regularly scheduled part-time employee is no different from that for a fulltime employee. Since your actual earnings are used in the majority of the computation, the fact that you typically earned less salary than your full-time counterparts is

already factored into the method for computing the supplement amount.

For more details, you can refer to the following chapter in the CSRS/FERS Handbook: www. opm.gov/retirement-services/ publications-forms/csrsfershandbook/c051.pdf.

CSRS EMPLOYEE AND FORMER SPOUSE’S SOCIAL SECURITY

Q

I am a Civil Service Retirement System (CSRS) employee and have reached my full retirement age (FRA) for Social Security.

Although I don’t have the necessary credits to qualify for Social Security based on my work record, I was previously married for well over 10 years before my former spouse and I divorced.

Although she has remarried, I have not. My former spouse is 65 years old and still working. Can I claim Social Security based on her work record?

A

Yes, and any benefit you claim will not affect her Social Security at all. It also won’t affect your future CSRS annuity, but it will most likely be reduced or eliminated once you retire from federal service.

As an active CSRS employee who has reached his FRA for Social Security: • You are no longer subject to any earnings test that prevents you from claiming Social Security.

• You are not subject to the Government Pension Offset (GPO) until you retire from the government.

• Since you were previously married for more than 10 years and your former spouse has passed the age of 62, you can currently claim 50 percent of her primary insurance amount from Social Security.

The SSA will only allow you to claim up to 6 months of retroactive payments. If you passed your FRA more than 6 months ago, apply before the end of this month—otherwise you might miss out on another benefit payment. Note: The day you call SSA is the date from which the agency can retroactively pay you for up to 6 months.

Claim what you can while you can because any spousal benefit that you receive from SSA will be affected by the GPO once you retire from CSRS. For more details regarding the GPO, visit www.ssa.gov/planners/retire/ gpo.html.

TSP AND REQUIRED MINIMUM DISTRIBUTIONS FOR ACTIVE EMPLOYEES

Q

I’m currently age 75 and plan to retire from federal service in December 2021. When will my Thrift Savings Plan (TSP) account be subject to a required minimum distribution (RMD)?

What if I retire a month later in January 2022?

W W W. N A R F E . O R G

|

17

Questions & Answers

A

There is no RMD from your TSP while you remain federally employed beyond your required minimum distribution age. But once you retire from federal service, your TSP account will be subject to RMDs. The required distribution date for your first year’s RMD is April 1 following the year that you first become subject to RMDs. The required distribution dates for all of your remaining RMDs will be December 31 each year.

So, if you retire in December 2021 (or any other month in 2021), your first year’s RMD (based on your TSP account balance as of 12/31/2020) must be taken by April 1, 2022. But if you decide to retire in January 2022 (or any other month in 2022), your first year’s RMD (based on your TSP account balance as of 12/31/2021) must be taken by April 1, 2023.

RETIREES AVOIDING TWO RMDS IN ONE TAX YEAR

Q

My 72nd birthday is in August 2021. I know that my first year’s RMD must be taken by April 1, 2022, but then my second year’s RMD must be taken by December 31, 2022. How do I avoid taking two RMDs in one tax year?

A

If you simply take your first year’s RMD before December 31, 2021, you can avoid taking two RMDs in one tax year. You will then have all of 2022 to take your second year’s RMD.

18

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NARFE at Your Service

STARTING AND STOPPING TSP LIFE EXPECTANCY PAYMENTS

Q

I am currently receiving monthly payments from my TSP account based on life expectancy computations, which ensures that I receive my RMD each year. Since the Coronavirus Aid, Relief, and Economic Security (CARES) Act has waived RMDs for 2020, I’m thinking about stopping my TSP payments until next year. But it’s my understanding that if I stop this payment, I won’t be allowed to choose a payment based on life expectancy when I restart. Is that true?

A

Yes, if you change the amount or stop a periodic payment based on life expectancy, the TSP will not allow you to choose this payment option again later. However, as of press time, we are currently waiting to see if there will be an exception this year due to COVID-19.

If the rule doesn’t change and you can’t restart your periodic payment based on life expectancy, you always have the option to either use the TSP’s online calculators to compute this payment yourself, or simply wait until December of each year to receive the automatic RMD payment from TSP. The latter could simultaneously allow the money you have in the TSP to grow for a longer period of time versus taking your RMD sooner through 12 monthly payments.

SETTING UP AN IRA TO RECEIVE A ROLLOVER FROM TSP

Q

I’m currently in my late 70s and no longer working. Am I allowed

At NARFE headquarters, experts are available to answer questions and to assist in helping with a variety of benefit matters.

Call NARFE at:

800-456-8410, Option 2 to set up a new IRA to roll over a qualified distribution from my TSP account?

A

Yes. There is no age restriction on setting up a new traditional IRA into which you can roll over or transfer funds from another eligible retirement account, such as the TSP. Since the recent CARES Act waived RMDs for 2020, you have 60 days from the date that you receive any distribution from your TSP account to roll over the distribution into a qualified IRA or back into the TSP using the TSP-60 form.

Just keep in mind that the total amount that you are allowed to roll over is the amount you actually received plus the amount that the TSP might have withheld for taxes.

Example: Evander withdrew $10,000 from the traditional portion of his TSP less than 60 days ago. The TSP withheld $2,000 for taxes and directly

NARFE’s Dues Withholding Program What is dues withholding?

It is a dues-payment method available to retired NARFE members, their spouses and annuitant survivors giving them the option to have their annual NARFE membership dues deducted from their annuities each month.

Advantages • Save 15% off your annual NARFE dues • Sign up your spouse and double your savings • You’ll never get another dues reminder from us • Your monthly payment is affordable and convenient • You may cancel your dues withholding at any time

How does it work?

One-twelfth of your total dues is automatically deducted from your monthly annuity. Your monthly deduction is determined by the following formula: ($34 NARFE dues ÷ 12) + (Chapter dues - if applicable ÷ 12) = total monthly deduction How do I sign up?

It takes 60-90 days to process your application. Once the process is complete, you will receive a special membership card distinguishing you as a NARFE dues-withholding member.

To learn more about dues withholding, call 800-456-8410.

NARFE Dues Withholding Application for NARFE Members who are Retirees, Spouses of Retirees or Annuitant Survivors Complete this section ONLY if you are signing up for Dues Withholding. If so, DO NOT send payment

o YES. I want to enroll in NARFE’s Dues Withholding Program.

NARFE dues of $34 (a 15% discount off NARFE dues) and chapter dues, if applicable, to be withheld annually.

Civil Service Annuity Number

Social Security Number (9-digit number)

–

C S

–

–

–

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

o Mr. o Mrs. o Miss o Ms. Full Name ____________________________________ Street Address ________________________________ Apt./Unit _____________________________________ City _________________________ State _____ ZIP __

NARFE MEMBERSHIP INFORMATION

NARFE Membership ID _______________________________ NARFE Chapter Number ______________________________

o YES. I also authorize my (NARFE member) spouse’s dues to be withheld from my annuity. (Additional annual dues of $34 and chapter dues, if applicable, to be withheld annually. If YES, enter spouse’s information below.)

Phone (__________) ___________________________ Email _______________________________________ Date of Birth _________ /_________ /__________________ mm

–

dd

yyyy

STOP

Complete ONLY if signing up for Dues Withholding option.

Spouse’s Name ____________________________________ _________________________________________________ Spouse’s Membership ID _____________________________ Spouse’s Email _____________________________________

AUTHORIZATION (Withholding will begin in 60-90 days). Send NO PAYMENT with Dues Withholding Application!

I authorize the United States Office of Personnel Management to make appropriate deductions from my annuity payments, not to exceed the amount certified by the National Active and Retired Federal Employees Association as the amount of dues for which I am annually obligated, in accordance with elections I made above, and to pay the deducted sum to the National Active and Retired Federal Employees Association (NARFE). This authorization shall also apply to any and all dues changes certified by NARFE membership in accordance with elections I made. Please allow 60-90 days for processing.

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

Signature of Annuitant or Survivor-Annuitant

______________________________

Date

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

MAIL THIS FORM TO: NARFE, ATTN: Member Services, 606 N. Washington St., Alexandria, VA 22314-1914 800-456-8410

memberrecords@narfe.org

Do not send money with this form

(DW-2 06/19)

Questions & Answers

deposited the remaining $8,000 into his bank account. Evander is allowed to roll over $10,000 into his IRA (or back into his TSP) within 60 days of this distribution, and the entire $10,000 will not be considered taxable. He will still receive a 1099-R form from the TSP next January for the $10,000, but he will be able to provide the IRS with information about the qualified rollover when he files his tax return next year.

Although the RMDs for 2020 were waived, you should be aware of how rollovers and transfers are affected by RMDs in future years.

You can call the TSP ThriftLine at 1-877-968-3778 and speak with

one of their participant service representatives for assistance.

ROTH TSP AND RMDS

Q

The Roth portion of my TSP has already been taxed and, therefore, won’t be taxed when I withdraw income from this portion of my account, but will it be subject to an RMD once I reach age 72? If so, is there a way to avoid this?

A

Yes, the Roth portion of your TSP account is subject to the same RMD rules that affect the traditional portion of your TSP account. To avoid

this, before you reach the year of your 72nd birthday, you could transfer the Roth portion of your TSP account to a Roth IRA. Although the management fees—as well as other considerations—may be different, current IRS rules don’t apply RMDs to Roth IRAs. 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

Webinars for the Federal Community UPCOMING WEBINARS:

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| J U N E / J U L Y

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More questions? Call or email NARFE’s federal benefits experts for one-on-one help.

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Benefits Brief

NEW LAW SUSPENDS RMDS FOR 2020

W

ith the swiftness that legislation related to the coronavirus is moving through Congress, you may have missed a piece of crucial information

regarding required minimum distributions (RMDs). RMDs are the amount of money that must be withdrawn from certain types of individual retirement accounts (IRAs) and employer-sponsored retirement plans, such as the Thrift Savings Plan (TSP), when the owner reaches a specific retirement age.

RMD rules are designed to spread out the amount in one’s retirement savings account(s) over one’s life expectancy.

The purpose is to ensure that people aren’t allowed to accumulate money in taxdeferred retirement accounts and then ultimately leave everything as an inheritance.

For individuals who reached age 70½ prior to the end of 2019, their retirement age for RMDs remains 70½. However, the recent Setting Every Community Up for Retirement Enhancement (SECURE) Act changed the retirement age to 72 for individuals who reached (or will reach) age 70½ after 2019. In other words, if you were born on July 1, 1949 or later, you do not have to begin taking withdrawals until you reach age 72.

For civil servants still working beyond their specific retirement age for RMDs, the TSP is exempt from RMDs 22

| J U N E / J U L Y

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while they remain federally employed. If this applies to you, you can also shelter your IRAs from RMDs if you use the TSP-60 form to transfer qualified IRA(s) into your TSP account before it becomes subject to RMDs. When you are subject to an RMD, the amount is based on the account balance as of the end of the preceding calendar year. For example, if you reach age 72 in 2022, your first RMD would be based on your TSP account balance as of December 31, 2021. The account balance is divided by a distribution period determined by the IRS’s Uniform Lifetime Table. The required distribution date for your first RMD is different than the required distribution dates for all your remaining RMDs. You can always withdraw more than the required amount, and any amount that you choose to withdraw

BY JAMES MARSHALL

FEDERAL BENEFITS EXPERT

will count towards that year’s RMD. However, if you haven’t withdrawn enough to meet the RMD, the plan will typically distribute the remaining required amount automatically by the required distribution date.

For those of you who reached age 70½ prior to the end of 2019, be aware that the recent Coronavirus Aid, Relief and Economic Security (CARES) Act waived RMDs in 2020, a move for which NARFE advocated. As NARFE noted in its March letter, “The RMD calculation for 2020 is based on the retirement account balance as of December 31, 2019. Unfortunately, with the S&P 500 stock market index down by more than 25 percent since the beginning of the year, seniors will be forced to withdraw a far greater percentage of their retirement accounts than expected.”

NOTE: This article briefly addressed RMD rules for plan participants but did not address RMD rules for inherited IRAs and/or surviving spouses. The Managing Money column often addresses these rules in more detail.

—JAMES MARSHALL IS THE PRINCIPAL AT FEDERAL RETIREMENT PLANNING, LLC (WWW. FEDERALRETIREMENTINFO.COM) AND A REGULAR CONTRUIBUTOR TO NARFE’S FEDERAL BENEFITS INSTITUTE WEBINARS AND NARFE MAGAZINE.

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Cover Story 24

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Telework: Banding Together While

Staying Apart

By David Tobenkin The availability of telework—the workplace flexibility allowing employees to work remotely from home or from a more convenient alternate work site—was being reduced in many federal agencies when COVID-19, the disease tied to the novel coronavirus, arrived in the United States in January. Through subsequent months, the virus has caused a rapid about-face, with some agencies vastly expanding the availability and use of telework as a safety imperative.

While the long-term trajectory for telework in the federal government remains in question, the COVID-19 response could well prove a turning point over the longer term.

“COVID-19 will probably change the use of telework in the federal government, at the very least by requiring agencies to be telework ready in the event of emergencies,” says Jeffrey Neal, a publisher at ChiefHRO.com and a former Department of Homeland Security chief human capital officer. “COVID-19 has driven home that every employee who can telework needs to be ready to telework. More broadly, it could greatly change the debate over federal telework from one based upon political leanings and biases to one based upon actual evidence of outcomes.

We will soon have a wealth of information about how agencies are performing under levels of telework that are greatly expanded over what they previously had. My guess is that since we have not heard of major problems so far, they are doing okay. And maybe the next administration will use that evidence to support a more reasonable and forward view of the use and potential of telework.”

“

M ass federal telework scenarios have occurred in the past ... but the extended COVID-19 pandemic has caused telework on a scale never before seen.

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“Many managers are reluctant to support telework due to concerns regarding the ability to supervise, and our command has never supported telework with the exception of medical situations,” says Linda Lentjes, a regional director of the Federal Managers Association who works as a resource director at U.S. Naval Forces Southern Command/U.S. Fourth Fleet. “I work for the Department of Defense, which is now heavily relying on telework for social distancing.

In my experience, telework is functioning very well. I think this experience will demonstrate the positive side and value of telework, and agencies will be more willing to implement the program. Use of the program on a routine basis will enable agencies to be more prepared to support future crisis or contingency situations.”

COVID-19 AND TELEWORK

Mass federal telework scenarios have occurred in the past following snowstorms and, in 2015, Pope Francis’ visit to the states. But the extended COVID-19 pandemic has caused telework on a scale never before seen.

On March 7, 2020, the Office of Personnel Management (OPM) provided some telework guidelines related to COVID-19 in a general coronavirus update to federal agencies.

On March 12 and March 15, 2020, the Office of Management and Budget (OMB) in the White House published updated guidance recommending that agencies in the National Capital Region—which encompasses Washington, DC and parts of Maryland and Virginia—allow expanded use of telework.

OMB encouraged: • Agencies to maximize telework flexibilities for telework-eligible employees.

For nontelework-eligible employees located within the region who are at higher risk for serious complication from COVID19, OMB encouraged agencies to offer weather and safety leave.

• Agencies across the country to expand telework options as much as possible for those at higher risk.

• Agencies to consider extending telework options to all eligible workers if state and local responses, like school closures, warrant.

The directive was not mandatory and left decisions about teleworking up to each individual agency, resulting in a variety of different policies.

On March 16, 2020, The Washington Post published an editorial calling the OMB guidance inadequate, noting that while leading public health experts have pleaded for employees to stay at home as much as possible to prevent the spreading of COVID-19, the federal government has trailed state and local governmental bodies and many private companies in allowing their workers to telework, and thus far, it has lacked a government-wide plan or approach to telework.

AGENCY RESPONSES

In response to the COVID-19 outbreak and OMB’s directive, many agencies requested that employees who could telework at home do so, and, in some cases, directed them to do so.

In mid-March, the Securities and Exchange Commission transitioned to full telework for employees, with some exceptions. In addition, the Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, the IRS and the Federal Communications Commission implemented mandatory telework for much or all of their workforces. Around the same time, NASA had employees at two of its centers test positive for COVID-19 and mandated telework for those centers.

Some agencies that had previously taken steps to limit telework reversed course. The Social Security Administration (SSA) has a complex approach to telework in which availability varies by location and employee type. In October 2019, SSA eliminated telework for regional offices and central operations staff, including a pilot program that allowed employees to telework three days a week. In March 2020, SSA revamped its telework policies to restore some telework in several regional offices in light of the COVID-19 situation in those locations, says American Federation of Government Employees (AFGE) spokesman Tim Kauffman.

ADVERSE HEADWINDS

Some aspects of telework at federal agencies are a matter of federal law. The Telework Enhancement Act of 2010 (TEA) established a framework to guide implementation of telework across the federal government and directed OPM to prepare an annual report to Congress on the availability of telework. The act required management training on telework and clear notice to federal employees regarding the availability of telework.

“

F or many years, the OPM annual telework reports were cheerleading more telework. But under the Trump administration, the White House has questioned the utility and extent of telework.”

But federal agencies were given great flexibility in whether and how they would make telework available to their employees on a regular basis. Some positions never have been and almost certainly never will be available for telework, such as law enforcement and public security positions that require staffing at a certain site, other employees who must physically interact with the public in person, factory employees, and employees dependent on access to physical records or key equipment that cannot be accessed remotely to perform their jobs.

More than 43 percent of 2.1 million civil servants were eligible for one or more days of remote work in fiscal year 2017, the most recently reported data, down slightly from 44 percent in fiscal year 2015.

For many years, the OPM annual telework reports were cheerleading more telework.

But under the Trump administration, the White House has questioned the utility and extent of telework.

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“

T he demands of Internet traffic, particularly of large numbers of individuals trying to remotely stream video and audio conferencing, can tax agency IT systems.”

“Agencies have been digging deep to say, ‘The way of work in our agency—is it achieving mission, service and stewardship objectives?’

Particularly when it comes to service, we have to ask the question, ‘What is the best modality for delivering service?,’ ” said Margaret Weichert, former deputy director for management at OMB, to The Washington Post in January 2020.

“Telework is not proving the most effective way of delivering.”

Leadership at many agencies, such as the Department of Agriculture, the SSA, and the Department of Education, have expressed concern in recent years that extensive telework might lead to abuse or impaired service, and have consequently reduced the availability of telework.

MANAGEMENT, IT AND SECURITY CONCERNS

Among the biggest impediments to successful implementation of telework has been managerial opposition. “I, myself, as a manager expressed reluctance to use telework,” FMAs Lentjes says. “I believe the decision to allow telework must be managed at the command/agency level and not at the individual manager’s level.

I am not sure that telework would make it more difficult, but I believe it would increase a manager’s supervisory workload. I believe that 28

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can be addressed by a reduction in manager’s nonsupervisory responsibilities. I do not feel that training is adequate for either managers or employees. We received online training only, understandably given the [COVID-19] situation; however, this was the first telework training offered in years.”

Telework penetration, particularly the move to full remote operations, also presents a host of IT issues for agencies. The demands of Internet traffic, particularly of large numbers of individuals trying to remotely stream video and audio conferencing, can tax agency IT systems.

The enterprise-wide virtual private networks (VPNs) many agencies run are expensive to maintain, and sometimes IT problems are difficult to resolve remotely.

“Speaking for the Navy and my command, IT is not adequate to allow broader use of telework,” says Lentjes. “Limited funds restrict the command’s ability to purchase additional laptop computers or refresh/ upgrade those on hand for telework. In the current situation, it was a struggle to support personnel who required network- and Wi-Ficapable computers. More investment in equipment to support telework is needed.”

—DAVID TOBENKIN IS A FREELANCE WRITER BASED IN THE GREATER WASHINGTON, DC AREA.

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ZEROING IN ON

DATA —By David Tobenkin

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The size and complexity of the federal government and the services it administers are formidable.

But better tracking and analysis by federal agencies of the vast quantities of data that they generate and affect their operations is helping them rise to the challenge.

In 2016, then newly appointed Department of Veterans Affairs (VA) Inspector General Michael Missal called for improvements in how the VA Office of Inspector General (OIG) provides oversight of VA programs and services at the agency, whose 380,000 employees serve an estimated 19.6 million veterans.

A key reform Missal implemented was to better use the power of big data to improve the speed with which the VA OIG evaluates programs for efficiency and potential fraud. In 2018, for example, the VA OIG partnered with the National Technical Information Service and data scientists from Booz Allen Hamilton to establish and support a Predictive Data Analytics and Modeling Program (PDAMP) to more proactively detect and mitigate the risk of waste and abuse across VA programs and services, says Melanie R. Krause, assistant inspector general for management and administration at the VA OIG. “Our data scientists use two primary analytic approaches,� says Krause. “First, we define the collection of suspicious features associated with entities that have been

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successfully investigated and prosecuted in the past, and then [we] leverage that data to identify other entities that have identical or highly similar profiles. Second, we analyze all available data for a VA program or service to identify those entities that are extreme outliers in one or multiple ways. Our data scientists then collaborate with other data and subject matter experts to explore possible explanations for the findings and partner with managers and senior executives to initiate or reprioritize resources for investigations or audits, when appropriate.”

The new approach has yielded positive outcomes. “The PDAMP has helped us to detect potential waste, fraud and abuse and focus our limited resources on the most impactful cases irrespective of whether we have received a tip,” Krause says, noting that previous efforts tended to be reliant, in part, on tips that sometimes disclosed abuse late or not at all.

One application of the PDAMP has been to root out fraud and waste in the VA’s $12.4 billion educational benefits programs for veterans, which had encountered an assortment of high-profile abuses of the program. For example, after reviewing results from early versions of an educational institution risk model developed as part of the PDAMP, the VA’s

Data analytics is the process of gathering and refining large amounts of data and using various analytical techniques, often statistical or computer-driven, to uncover useful information, such as patterns that help managers and employees make better decisions.

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Office of Investigations reprioritized resources to bolster an ongoing investigation involving the owners of a technical training program for veterans, which Krause says played a major role in the owners recently pleading guilty to defrauding the VA of nearly $30 million.

Data Analytics and Its Increasing Deployment by Federal Agencies Data analytics is the process of gathering and refining large amounts of data and using various analytical techniques, often statistical or computer-driven, to uncover useful information, such as patterns that help managers and employees make better decisions. Those efforts range from, on the simple end, detection and reporting of various data patterns, to more elaborate processing of such data that aids more intelligent decisionmaking, to predictive analytics—a complex endeavor that seeks to use past data patterns to predict future patterns and conditions as well as recommend optimal prioritization of potential future activities and initiatives.

“In federal civilian agencies, there is widespread consensus that data is a strategic asset and that if I am able to mine that data for insights, it will make mission execution more efficient,” says Vishal Kapur, a principal at Deloitte Consulting LLP. “The challenges that agencies face is that they have short-term imperatives, and amidst budget constraints, the explosion of data, the rapid expansion of the regulated community they serve, and citizens demands, they are just having to do more with less.”

While data analytics has existed for some time, its use and reach has expanded particularly over the last two years, Kapur says.

“There has been a dramatic shift in technology and tools that now makes data analytics solutions possible at the right price points and the right time frames. Things that used to take three months five years ago now take a few hours. Project pilots that used to cost $1 million can now be done for a fraction of that.”

According to Kapur, several streams of agency information can be processed together,

using data analytics to make the most advantageous decisions. “From operations data, you learn what work is being done; from HR data, who is doing the work and their skills; and from finance data, where the money is going and whether there is a strong correlation to results,” Kapur says. “If you overlay operational data and the financial data, you can compare two agency work sites that appear similar but have different spends. You might see one is spending twice the amount as the other but then look at the operational data and find out that its workload is higher, rather than basing budgeting on the nondata approach of what was done last year.”

Data analytics also includes automation of data analysis and processes, Kapur notes.

The rise of automation in federal agencies was described in a January 2020 NARFE Magazine story.

The Spread of Data Analytics

Among the leaders in implementing data analytics are the larger agencies, like the VA and the Department of Defense (DoD), that need to better analyze and manage their far-flung operations and have the budgets to be able to afford the applications and employees necessary to implement cutting-edge analytics approaches.

In 2016, for example, the DoD established a new Office of People Analytics (OPA) that used available data and advanced analytics to understand key components of service members’ career paths and how policy as well as organizational and environmental factors impact the DoD workforce, says Kirby Hayes, director of OPA’s Division of Data Science.

“Our mission is to provide the go-to expertise for scientific assessments, data analytics and outreach to improve the lives of the DoD community,” Hayes says. “Prior to OPA, DoD had limited visibility into the characteristics of its people and the ways in which policy and programmatic choices affected the performance and composition of its work force.

OPA focuses on not only describing the force and (its) problem areas, but also identifying intervention and opportunity points to inform policy decisions.”

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In another application, OPA has used data analytics to make its Gender Relations Survey more robust, says Ashlea Klahr, director of OPA’s Division of Health and Resilience Research. For more than a decade, the survey has served as a barometer of progress for the DoD on reducing sexual assault in the military.

“The data analytic techniques are allowing the department to use the data collected on the Gender Relations Surveys to answer complex questions about risk for sexual assault, such as who is most at risk for experiencing sexual assault, such as 17-24 year olds; situational factors that increase risk, such as the role of alcohol; and climate factors, such as workplace hostility, that are associated with increases in risk,” says Klahr. “Improvements in the sexual assault response system, which have been largely data-driven, have resulted in substantial increases in the rate of sexual assault reporting, which has more than tripled over the past decade.”

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(OIG) has used analytics models to identify medical providers with suspiciously large increases in workers’ compensation billing over a short amount of time, according to a March 2017 Government Accountability Office (GAO) report, “Data Analytics to Address Fraud and Improper Payments: Highlights of a Forum.”

USPS OIG analysts looked at Postal Service data on workers’ compensation costs and used heuristics—a type of practical, exploratory analysis—to identify a $68.6 million increase in certain workers’ compensation drug costs from 2014 to 2015.

Spurred by legislation, federal agencies are also using analytics to make the vast troves of data they possess more meaningful and accessible to users. The implementation of the federal DATA Act of 2014 required the federal government to connect financial data with award-level data on contracts and financial assistance for the first time, notes Amy Edwards, deputy assistant secretary, accounting policy and financial transparency, in the Office of the Fiscal Assistant Secretary at the Department of the Treasury. She

notes that the website USAspending.gov allows taxpayers to examine nearly $4 trillion in federal spending each year and see how this money flows from Congressional appropriations to local communities and businesses. Users can, for example, search by location (state, city, county), by federal agency, or by keyword for a specific policy or type of spending.

“Federal agencies now have a more complete view into the categories of spending across the agency, allowing CFOs and others to make more informed strategic decisions about allocating funds,” Edwards says. “Agencies can also explore how to link other administrative and performance data to improve outcomes.”

In 2018, the Treasury Department implemented Data Lab, an analytics portal on the USAspending.gov website that publishes analyses and visualizations to help the public better understand government spending.

For example, last year, on Tax Day, the agency released “Your Guide to America’s Finances,” a digital guide that raises public awareness of the federal government’s finances by translating the complicated aspects of federal finance into a simple, straightforward and interactive product.

Challenges to Realizing the Full Potential

The progress of data analytics across federal government has been disproportionate, says Seto Bagdoyan, a director of forensic audits at the GAO. “It is at a very nascent stage for a lot of these agencies and, within agencies, its use and sophistication is very uneven within different departments and components of departments,” says Bagdoyan. “The issue is getting traction, execution and results from these efforts and then ensuring a willingness to act on the results. The last is an area where many agencies fall down: they have elegant fraud detection systems and good analytics, but then decisionmakers don’t act on the results because they don’t want to rock the boat. Some of the best data analytics results have been from agency OIGs because it is their mission to look for and react to these problems. But it will take a long-term cultural change to get more of the

“Humans and machines working together may cause agencies to reimagine the work and the workforce they have and how people do their work.” agencies’ line mission teams to respond.”

Access to data is also a barrier to analytics at many agencies. Bagdoyan notes that the IRS and the Department of Health and Human Services limit access to key tax and U.S. citizen income data that many agencies need to test whether federal benefits are being appropriately disbursed.

The GAO itself is bulking up its data analytics efforts. In 2018, Congress directed GAO to form a new team—Science, Technology Assessment and Analytics (STAA)—to provide Congress with foresight, oversight and insight of science and technology issues to support American innovation, competitiveness, security and well-being.

According to Kapur, data analytics is making some agencies reexamine their workflow. “Humans and machines working together may cause agencies to reimagine the work and the workforce they have and how people do their work.” The workforce skill set may have to change, too. A different breed of employee will be needed to drive data analytics.

“To scale AI, advanced analytics and predictive analytics require different disciplines, such as data scientists and data engineers,” Kapur says. “But in addition to IT skills, employees must also know the business to ask the right questions and design the right interfaces with humans. All employees will find themselves in a world where the skills they need will be constantly evolving. This is already happening in our personal lives, where technology is becoming part and parcel of everyday life.”

— DAVID TOBENKIN IS A FREELANCE JOURNALIST BASED IN THE GREATER WASHINGTON, DC AREA .

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TO

INSPIRED

SERVE REVAMPING FEDERAL PERSONNEL SYSTEMS By the National Commission on Military, National and Public Service

Public servants perform critical roles that touch the lives of every American—defending the homeland, maintaining infrastructure, ensuring public safety, responding to disasters and much more. As the nation battles the coronavirus pandemic, public servants are on the frontlines of the response—working tirelessly to provide care, develop treatments, bring economic relief and save lives.

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The National Commission on Military, National and Public Service was created amid a 2016 debate over whether women should be required to register for selective service. Former Senator John McCain, the then-chairman of the Senate Armed Services Committee, and ranking member Senator Jack Reed promoted creating this Commission to examine that issue and to take a broader look at service in the United States by recommending ways to increase the participation of Americans in military, national and public service to meet critical national security and domestic needs.

“

The average time to hire a federal employee is

three times

as long as that in the private sector.”

While the role of public servants is more important than ever, the Commission found that federal personnel systems are outdated, inflexible, and in need of urgent attention to ensure the government effectively and efficiently serves the American people. Released in March 2020, Inspired to Serve, the Commission’s final report to Congress, the President and the public, provides a comprehensive plan to address these long-standing challenges, as well as recommendations to modernize the Selective Service System; suggestions include extending registration to all Americans, increasing awareness of military service opportunities, expanding national service opportunities to one million Americans by 2031, and enhancing civic education and service learning. The report’s recommendations to fix federal hiring, engage the next generation in 38

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public service and empower agencies to attract talent are critical steps toward ensuring that the federal government can meet evolving needs and better serve the American people.

The Commission begins by addressing federal hiring processes that are inefficient, ineffective and not competitive with other employers. For example, the average time to hire a federal employee is three times as long as that in the private sector. Compounding this, repeated failures to elevate highly qualified candidates results in hiring managers returning more than half of all certificates of eligibles—the lists of finalists for federal civil service jobs—without hiring anyone.

These problems have caused agencies to seek direct-hire authority and other exemptions to Title 5 (which outlines the role of government organizations and employees in the United States Code) from Congress, the President and the Office of Personnel Management (OPM).

The Commission proposes several solutions to update federal hiring: simplifying job descriptions; revamping USAJOBS; utilizing third-party sites, like LinkedIn, for recruiting; and accepting standard one-page resumes instead of the typical five- to 10-page federal resume. The report also suggests transforming processes that assess the qualifications of applicants, including eliminating the easily gamed applicant self-assessment, in which poorly qualified applicants can answer “expert” to every question to advance in the process; involving hiring managers and subject-matter experts in reviewing resumes; and promoting the use of job-specific online assessment tools, especially for entrylevel jobs that attract many applicants.

Complex hiring preferences and noncompetitive hiring systems have often made the federal hiring process challenging, and reforms are necessary. The Commission found that veterans’ preference is not working well for many veterans or for agencies that need to hire highly qualified talent. The report proposes modernizing veterans’ preference by making it a tiebreaker between equally qualified candidates and refocusing the preference on recently discharged veterans who are transitioning to civilian employment. In addition, the Commission would expand authorities that allow agencies to noncompetitively hire qualified veterans, as well as national service alumni of

NARFE’s Recommendations Included in National Commission Final Report NARFE’s testimony before the National Commission on Military, National and Public Service in May 2019 helped shape the organization’s final report to Congress, the President and the American public.

The Commission’s overall goal is to inspire future generations to serve at all levels of government.

Included in the Commission’s final report were several of NARFE’s recommendations for enhancing public service. NARFE’s testimony broached several key topics, including recruiting and retaining federal employees through incentive benefits compensation plans. In agreement with NARFE, the Commission provided strategies to improve communication about the benefits federal employment offers and to collect data on those benefits. The report also makes clear that the federal government must offer a

programs like AmeriCorps, and create a new hiring roster within USAJOBS to connect agency hiring managers with qualified workers who are eligible for these noncompetitive appointments.

In addition to overarching reforms to personnel processes, Inspired to Serve offers several mechanisms for addressing the urgent need to attract new generations of Americans to public service. More than one-third of federal employees will be eligible to retire in the next five years, and only 6 percent of the federal workforce is under age 30. Yet, since 2010, new hires of student interns have dropped by 90 percent. The Commission would like to reform federal internship and recent-graduate hiring

comprehensive employee salary and benefits package in order to compete with the private sector for the best and brightest workers.

The Commission adopted NARFE’s recommendations to counter the public’s negative perceptions about the federal government. The Commission’s legislative proposal would limit restrictions on and increase agencies’ communications through additional funding aimed at raising public awareness of their missions. Furthermore, the report recommended expanding civic education for all Americans with a program that begins in kindergarten and goes through 12th grade and beyond. These proposals will not only improve public perception of federal employees and government but also promote public service through education.

—By Seth Ickes, Grassroots Assistant

programs, increase the cap on direct-hire authority for students and recent graduates, and establish a government-wide statutory goal of 30,000 annual recent-graduate hires by 2026, increasing that to 50,000 per year by 2031.

The report also offers new approaches to building a pipeline between postsecondary education and public service—such as a Public Service Corps that is similar to the Reserve Officers’ Training Corps (ROTC)—through which federal agencies would grant scholarships to university students in exchange for a fouryear commitment to work at that agency.

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“

include a clear pathway to hiring successful participants, the Commission recommends creating a Federal Fellowship and Scholarship Center to streamline and enhance programs to develop individuals who have critical skills and leadership potential for federal employment.

The Commission also provides ways to increase the flexibility and portability of federal employee benefits.”

To further enhance the ability of federal agencies to attract and retain workers with crucial skills, the Commission would expand special personnel systems for cybersecurity professionals, pilot a Civilian Cybersecurity Reserve to enable agencies to quickly expand their cybersecurity workforce in an emergency, and allow agencies to reappoint graduates of reskilling programs to new positions without loss of salary or grade. Additional proposals seek to replace the three personnel systems at the Veterans Health Administration with a single streamlined system with marketcompetitive pay and expand licensure portability for agency health care providers practicing in the scope of their federal duties.

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In recognition of the critical role of HR professionals, the Commission recommends steps to aid them in developing a highperforming personnel culture. These include establishing competency standards and investing in training for HR professionals; designating a senior executive at each agency responsible for workforce planning, including hiring, retention and reskilling; and basing a significant portion of every supervisor’s performance evaluation on human capital responsibilities. Additionally, the Commission proposes statutory changes to clarify that anti-propaganda appropriations riders do not prevent agencies from communicating with the public about their missions and the importance of public service.

The Commission also provides ways to increase the flexibility and portability of federal employee benefits, particularly for workers who do not seek career-long government employment. It recommends the establishment of a cafeteria plan that allows federal employees to apply an agency contribution to supplemental benefits, including life insurance, dental and vision coverage, a new short-term disability benefit, and flexible spending arrangements.

For example, under current law, agencies contribute to life insurance but not to dental or vision coverage. Under the Commission’s proposal, an employee could choose to shift that agency contribution from life insurance to dental. Also, the Commission proposes piloting a benefit option in which newly and recently hired employees can choose between the current benefit package and a

“Policymakers have an opportunity—and an imperative—to take action to bolster the federal workforce and bring new generations of Americans into public service.”

new one, of equivalent value, featuring fully portable retirement benefits, agency-paid disability-income insurance and flexible time off. The report calls on agencies to increase communication with employees about benefits and on OPM to collect more data about employee views of current and potential new benefits.

In addition to its recommendations to improve the federal personnel system now, the Commission advocates for transitioning toward a modern talent-management system that enables agencies to better compete for the workers they need to achieve their important missions. The report seeks an evidencebased approach to test, refine and expand new personnel approaches. Specifically, the Commission would expand OPM’s demonstration authority, require rigorous third-party evaluations of pilot programs, and allow an administrative pathway to expand successful pilots. Using this expanded authority, the report proposes piloting a comprehensive new personnel system that covers classification, compensation, hiring and promotion pathways at agencies that employ many STEM professionals because these agencies have greater difficulty maintaining highly skilled workforces. Finally, the Commission would engage the Government Accountability Office (GAO), the Office of Management and Budget (OMB), and the National Academy of Public Administration (NAPA) to develop comprehensive proposals for replacing Title 5 with a modern talent-management system.

Inspired to Serve is a clarion call to legislators and public officials stating that the

time to act is long overdue. As the COVID19 pandemic has made clear, public service is vital to the security, public health and prosperity of the nation. The challenges facing federal personnel systems have compounded over many years. In fact, GAO has identified federal strategic human capital management as a high-risk area for nearly two decades and recently highlighted that inadequate talent management has led to mission-critical skills gaps that significantly contribute to 16 of the 34 other high-risk areas identified.

“As the COVID-19 pandemic has made clear, public service is vital to the security, public health and prosperity of the nation.”

Policymakers have an opportunity —and an imperative—to take action to bolster the federal workforce and bring new generations of Americans into public service to address the nation’s critical needs.

To learn more about the Commission’s recommendations, please read the Commission’s executive summary, final report and legislative annex at www.inspire2serve.gov/reports.

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Managing Money

NAVIGATING THE PROPORTIONAL WITHDRAWAL RULE TO AVOID SELLING STOCKS AT A LOSS

T

here’s a simple formula for making money in the stock market—buy low, sell high. Sometimes, this is easier said than done. Especially when rules, such

as the Thrift Savings Plan’s (TSP) proportional withdrawal rule, forces TSP participants to sell stock funds even in down markets. But with a little extra effort, participants can act to “undo” the stock sales to ensure they’re not selling low.

Ideally, participants could avoid selling in a down market by directing a withdrawal to come from fixed income funds, such as the F and G Funds.

Unfortunately, participants have no choice in the matter, as all TSP withdrawals come proportionately from the investment funds held in the TSP account.

Take Celia for example, who has $100,000 in her TSP account, with 20 percent allocated to each of the five funds—C, S, I, F and G—when she requests a $10,000 single payment. In this case, $2,000 of the withdrawal will come from each fund, with $4,000 coming from the G and F Funds and $6,000 coming from the C, S and I stock funds. If Celia requested the withdrawal now, not only would she be selling her stock funds in a down market, but she’d be selling about 30 percent more units now (at the time

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2020

of this writing) compared to the time the market was at its high point. Not ideal.

To offset the potential negative impact caused by the proportional withdrawal, a TSP participant may rebalance the TSP account immediately after the distribution to reverse the stock fund sales. For example, after Celia’s $10,000 withdrawal, her TSP will have $90,000 remaining, with $18,000 allocated to each of the five funds. To reverse the sale of the C, S and I funds, Celia needs to increase them back to $20,000 each—their prewithdrawal value—by moving a total of $6,000 from the G and F Funds back into the C, S and I Funds.

Once Celia rebalances, she would have, in effect, accomplished the goal of taking the withdrawal from her G and F Funds.

However, rebalancing isn’t a simple matter of telling the TSP to take $3,000 from the

BY MARK A. KEEN,

CFP®

G fund and $3,000 from the F Fund (splitting it evenly since that’s how Celia had the money divided between the G and F Funds) and moving it to the C, S and I Funds. Instead, the rebalance is accomplished by providing the TSP with the percentage of the total account you want to hold in each fund.

For example, after the distribution, Celia wants her TSP account to be allocated like this: Fund G F C S I Total

Value $15,000 $15,000 $20,000 $20,000 $20,000 $90,000

% 16.67 16.67 22.22 22.22 22.22 100

To calculate the percentages to rebalance each fund to, divide the target dollar amount for each fund by the total value of the TSP account. You must rebalance to whole numbers, but don’t worry, it doesn’t need to be exact.

Going through the rebalancing routine may become a bit onerous if you’re taking monthly withdrawals; it may be more convenient to change the periodic payments to quarterly or annual payments, if possible.

Some participants have transferred their TSP account

BENEFITS RESOURCES NARFE offers members a wide range of information on federal benefits.

Visit www.narfe.org/ FederalBenefitsInstitute.

to an IRA, but that means giving up the TSP account. Alternatively, a participant could take a year’s worth of withdrawal needs as a partial single payment from the TSP each year, transfer the payment to an IRA account, and then take withdrawals as needed from the IRA account.

If you’re taking that route, the IRA could be invested entirely in fixed-income investments so that any withdrawal would always come from those investments. After each partial single payment transferred from the TSP to the IRA, the TSP would need to be

rebalanced in a similar fashion as described above to offset any sale of the stock funds in the TSP account.

It would be great if TSP participants had the flexibility to choose which investment fund(s) their TSP withdrawals come from. Until that happens, a little extra effort is needed to ensure participants aren’t selling low.

MARK A. KEEN, CFP®, 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.

ShopNARFE Show Your NARFE Pride ShopNARFE is the official online store offering NARFE-branded merchandise, including apparel, drinkware, pins, officer badges and business cards.

A portion of the proceeds from all purchases support the organization.

Shop now at www.narfe.org/shopnarfe.

NARFE.org/shopnarfe W W W. N A R F E . O R G

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43

Alzheimer’s Update

CARE IN THE TIME OF CORONAVIRUS

E

veryone has faced additional challenges since COVID-19 began its march into our lives this past winter. From the chaos of securing basic toiletries,

to not being able to visit doctors for important check-ups, to the difficulty of finding basic ingredients for preparing meals, to social distancing even among close friends and family, the coronavirus has transformed how we interact with the people we care about.

It’s that much more challenging for people with Alzheimer’s disease or other forms of dementia and the people who care for them. Even the simplest precautions like handwashing can be easily overlooked, putting people with dementia and their caregivers more at risk of contracting the virus.

Those empty shelves at the store make it harder for caregivers to keep people with dementia or who otherwise can’t shop for themselves well stocked with important supplies.

Caregivers have to make alternate plans for things like adult day care or respite care in addition to finding personal protective equipment that’s in short supply even for paid health care providers.

Put together, these challenges can seem insurmountable. There 44

| J U N E / J U L Y

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is much anxiety afoot, and caregivers in particular face a lack of understanding from the general public about the formidable task of keeping things comfortable and familiar for people living with dementia. It can be even more difficult for those who are newly thrust into the role as full-time, unpaid caregivers because some

BY OLIVIA A. WILLIAMS,

NARFE-ALZHEIMER’S CHAIR

paid providers are no longer able to conduct home visits, or because their financial or insurance situation has abruptly changed. Shifts in routine can trigger agitation and wandering for people living with dementia.

Yet through the hardships, human affection and ingenuity prevail. Amid the dire news are uplifting tales of kindness and connection: a family starting a makeshift open pantry for community members in need; children playing their instruments on the porch of an elderly neighbor who lives alone; a nurse printing photos of loved ones for hospital-bound patients who can’t receive visitors; heartwarming tales of milestone birthdays being

observed as a parade of cars passes with horns blaring in celebration.

As NARFE members, we can keep friends and loved ones who are dealing with or caring for someone who has dementia close to our hearts. Write a short note or a “thinking of you” card to keep caregivers’ spirits up. Figure out a strategy for no-contact “porch drops” of necessary supplies that are hard to find in stores. Phone calls help ease the lack of face-to-face contact and, if you or someone in your close circles is techsavvy enough to try out a video chat, there are a number of ways to make “video calls” to stay in

touch. For those with dementia living in care facilities, contact staff about setting up virtual visits and other alternatives that can help make up for the lack of face-to-face time.

Whatever your concern about Alzheimer’s and other dementias, the Alzheimer’s Association has resources to help you. They are always available by telephone through their 24/7 helpline at 800-272-3900.

If you’re looking for resources specifically to support caregivers in the coronavirus crisis, visit www.alz.org/covid19. This site contains helpful tips from the Centers for Disease Control, and

offers health and safety pointers for professional and family caregivers.

They have also developed a resource portal specifically for NARFE members at www. alz.org/NARFE. There, you can sign up to receive the monthly NARFE-Alzheimer’s e-newsletter, connect with local resources, and check out their free online tools, which are brimming with useful information and links to important services.

OLIVIA A. WILLIAMS IS CHAIR OF THE NARFE-ALZHEIMER’S NATIONAL COMMITTEE. EMAIL: OEASHF3@GMAIL. COM. THIS COLUMN APPEARS QUARTERLY.

Use your NARFE Perks, and your membership will more than pay for itself!

For more information, please see the NARFE Perks Directory in this issue of your magazine or go to www.narfe.org/memberperks.

W W W. N A R F E . O R G

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45

2020

G FUND

F FUND

C FUND

S FUND

I FUND

APRIL

0.07%

1.78%

12.81%

15.81%

6.42%

MARCH

0.11%

-0.64%

-12.40%

-21.40%

-13.87%

FEBRUARY

0.13%

1.82%

-8.24%

-8.01%

-7.74%

YTD

0.47%

4.94%

-9.35%

-16.78%

-17.74%

1 YEAR

1.83%

10.76%

0.77%

-11.46%

-11.09%

3 YEAR*

2.38%

5.24%

9.00%

2.60%

-0.23%

5 YEAR*

2.24%

3.96%

9.12%

4.45%

0.19%

10 YEAR*

2.16%

4.19%

11.71%

9.46%

3.96%

L 2040

L 2050

*ANNUALIZED

L INCOME 2020

APRIL

L 2020

L 2030

2.52%

2.61%

6.71%

8.02%

9.16%

MARCH

-3.09%

-3.52%

-8.72%

-10.42%

-11.90%

FEBRUARY

-1.52%

-1.76%

-4.65%

-5.58%

-6.39%

YTD

-2.15%

-2.76%

-7.54%

-9.17%

-10.63%

1 YEAR

1.13%

0.86%

-1.47%

-2.37%

-3.25%

3 YEAR*

3.27%

3.94%

4.50%

4.72%

4.88%

5 YEAR*

3.21%

3.91%

4.69%

5.00%

5.22%

10 YEAR*

3.86%

5.98%

7.11%

7.79%

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 RETIREMENT CLAIMS PROCESSING STATUS

Claims Received

Inventory Monthly FYTD (Steady State Average Processing Average Processing is 13,000) Time in Days Time in Days

2019

MARCH 10,048 20,201 50 55 APRIL 6,993 17,802 56 55 MAY 7,877 17,228 62 56 JUNE 8,201 18,501 60 56 JULY 8,000 18,413 55 56 AUGUST 8.878 17,576 50 56 SEPTEMBER 7,456 17,376 57 56 OCTOBER 7,044 17,882 59 59 NOVEMBER 7,822 18,390 62 61 DECEMBER 5,205 16,908 66 62 JANUARY 17,134 23,983 58 61 FEBRUARY 9,273 23,629 54 59 MARCH 6,566 21,264 61 60 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

2020

For the Record

DESPITE MARKET TUMULT, EQUITY MARKETS RISE

THRIFT SAVINGS PLAN FUND RETURNS

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Ongoing restrictions prompted by the coronavirus pandemic continued to hamper economic activity, as indicated by historic spikes in unemployment and a precipitous drop in the demand for oil. Nevertheless, equity markets experienced substantial growth, prompting some observers to question whether the rally was merely a reflection of the additional liquidity provided by central banks. The C and S Funds posted significant gains. The I Fund also rose, driven in part by a weaker U.S. dollar. The F Fund posted a gain. All of the L Funds finished higher.

—BY MICHAEL JERUE, FINANCIAL ANALYST, THRIFT SAVINGS PLAN

COUNTDOWN TO COLA

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased by 0.22 percent in March 2020. To calculate the 2021 costof-living adjustment (COLA), the 2020 third-quarter indices will be averaged and compared with the 2019 third-quarter average of 250.200. The percentage increase determines the COLA. March’s index, 251.375, is up 0.47 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 0.37 percent higher than the December 2019 base index of 250.452 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 250.200 239.668

OCTOBER 2019 2017

240.573 250.894

-0.15 0.26

0.28 0.38

NOVEMBER

250.644 240.666

-0.10 0.04

0.18 0.42

DECEMBER

250.452 240.526

-0.08 -0.06

0.10 0.36

JANUARY 2020 2018

251.361 241.919

0.36 0.58

0.46 0.94

FEBRUARY

251.935 242.988

0.23 0.44

0.69 1.39

MARCH

251.375 243.463

-0.22 0.20

0.47 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 NARFE members contributed for Alzheimer’s research: $14 Million Fund

$13,528,383.64*

*Total as of March 31, 2020 100 percent of all contributed funds go to Alzheimer’s research.

If you have any questions, write to: NATIONAL COMMITTEE CHAIR Olivia Williams 22 Garden Springs Road Columbia, SC 29209

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

q Mr. q Mrs. q Miss q Ms. Name:____________________________________________________ Address:__________________________________________________ City:______________________________________________________ State:_____________________________________________________ ZIP:______________________________________________________

EMAIL: oeashf3@gmail.com

Chapter Number:___________________________________________

WRITE YOUR CHAPTER NUMBER ON CHECK; MAKE IT PAYABLE TO:

Credit Card Information:

q MasterCard

q VISA

AND MAIL TO:

q Discover

q AMEX

Alzheimer’s Association 225 N. Michigan Ave., 17th Floor Chicago, IL 60601-7633

Card Number:______________________________________________

NARFE-Alzheimer’s Research

YOUR CHARITABLE CONTRIBUTION IS TAX-DEDUCTIBLE TO THE FULLEST EXTENT ALLOWED BY LAW.

Expiration Date:_____(mm)/____ (yy) 3-Digit Security Code:______ Signature:_______________________________ Date:___ /___ /____ Name: (please print)________________________________________

Give to the NARFE-FEEA Fund MAKE CHECK PAYABLE TO: NARFE-FEEA Fund PLEASE MAIL COUPON AND CHECK TO:

FEEA 1641 Prince St. Alexandria, VA 22314

q YES!

I would like to help with my contribution.

The NARFE-FEEA Fund supports NARFE members during disasters; provides scholarships to their children, grandchildren and greatgrandchildren; and funds other programs to support NARFE members at the direction of NARFE and FEEA. Enclosed is my NARFE-FEEA Fund Contribution: $______________

YOUR CHARITABLE CONTRIBUTION IS TAX-DEDUCTIBLE TO THE FULLEST EXTENT ALLOWED BY LAW.

Name:____________________________________________________ Address:__________________________________________________ City:______________________________________________________ State:_____________________________________________________ ZIP:______________________________________________________ Email:____________________________________________________ To make credit card or e-check contributions, visit www.feea.org/ givenarfe.

NARFE News

TIMELY NEW WEBINARS FROM FEDERAL BENEFITS INSTITUTE

2020 NARFE ELECTIONS

T

he NARFE Standing Bylaws and Resolutions Committee (BRC) has the responsibility of assessing and making recommendations regarding proposed bylaws and standing rules amendments and resolutions for placement on a ballot for a vote of the membership. The Committee may submit proposed amendments and edit, combine, substitute, reject, or rule out of order the proposals. This year, for the first time, a proposer whose submission had been rejected or declared out of order by the Committee could appeal to the National Executive Board (NEB) whose decision by a two-thirds vote is final.

The BRC’s charge was to consider the submitted bylaws and standing rules amendments and resolutions for a ballot vote in 2020. BRC met online from January through March 2020 and, supported by the NARFE

Despite headquarters being closed this spring, the Federal Benefits Institute produced two new webinars­—one on rejoining the workforce if you’re a retired Fed, the other on financial planning through a crisis. Check out these and other archived webinars or register for upcoming ones at www.narfe. org/federalbenefitsinstitute/?fa= webinars.

parliamentarian, reviewed a total of 29 submissions, including 21 bylaws amendments, five standing rules amendments, and three resolutions. The Committee approved 21 submissions for the ballot and ruled four out of order. A proposal was ruled out of order based on conflict within National Bylaws or other reasons.

In addition, BRC combined three amendments (B-20-03, B-20-12 and B-20-19) into one amendment as BRC-01. The proposers of two amendments withdrew their submissions.

Of the 21 ballot items, BRC recommended 12 for adoption and nine for rejection. The NEB overruled one appeal of an out-oforder decision of the Committee.

The full text of all bylaws and standing rules amendments and resolutions, as well as the Committee report, are on the NARFE website. Voting takes place

in August 2020 by paper ballot published in the August NARFE magazine and by online voting commencing July 20. Voting closes on August 31, 2020 at 11:59 EDT. The ballot will ask members to vote on each bylaws and standing rules amendment and resolution individually. Members may choose to not vote on a particular item without penalty.

Please take the time to study the issues, discuss them with other members in your chapter and federation, read articles published in chapter/federation newsletters and NARFE publications, and cast your vote online or by paper ballot.

Voting is one of the most important privileges you have as a NARFE member. —BY ROBERT ALLEN, CHAIR, BYLAWS AND RESOLUTIONS COMMITTEE A summary of the proposals and the BRC’s recommendations continues on page 50.

Complete information about the election can be accessed at www.narfe.org/2020balloting.

FEDERATION CONFERENCES 2020 Many federations cancelled their conferences this year due to pandemic concerns. As of press time, the following conferences are either proceeding on schedule or have been rescheduled as listed.

48

Connecticut, September 30, Cromwell

Nebraska, August 13-14, Lincoln

Maine, postponed to date TBD

Oregon, June 28-30, Newport

Michigan, October 14-16, East Tawas

Pennsylvania September 23-24, York

Mississippi, October 1-3, Louisville

West Virginia, July 21-22, Martinsburg

| J U N E / J U L Y

2020

NARFE MEMBER BENEFITS • Access the NARFE Federal Benefits Institute for powerful resources to help you fully understand and manage your benefits.

Active and Retired Federal Employees ...

Join NARFE Today!

The only organization dedicated solely to protecting and preserving the benefits of all federal workers and retirees, NARFE informs you of any developments and proposals that affect your compensation, retirement and health benefits, AND provides clear answers to your questions.

Who Should Join NARFE?

If your future security is tied to federal retirement benefits—federal retirees, current employees, spouses and individual survivors—you should join NARFE.

• Visit the Legislative Action Center to contact your representatives about bills affecting federal benefits.

• Get monthly issues of NARFE Magazine with news and insights for the federal community.

• Visit the Member Perks page for a full listing of the many time-, money- and hassle-saving benefits available only to NARFE members.

• The opportunity to get involved at the local level by joining a chapter in your area.

1Q6

NARFE MEMBERSHIP APPLICATION YES. I want to join NARFE for the low annual dues of $40.

q

q Mr. q Mrs. q Miss q Ms.

PAYMENT OPTIONS q Check, Money Order or Bill Pay (Payable to NARFE) q Bill me (NARFE membership will start when payment is received.) q Charge my: q MasterCard

______________________________________________

Full Name

______________________________________________

Street Address Apt./Unit

______________________________________________

City

State

ZIP

______________________________________________

Phone

q Discover

q AMEX

___________________________________________ Card No. Expiration Date _____ /________ mm

______________________________________________

q VISA

yyyy

___________________________________________ Name on Card ___________________________________________ Signature ___________________________________________ Date

TOTAL DUES

______________________________________________

$40 Annual Dues X ___________ = ___________ Per Person # Enrolling Total Dues

I am a (check all that apply)

Dues payments are not deductible as charitable contributions for federal income tax purposes.

Email

q Active Federal Employee q Annuitant

q Active Federal Employee Spouse

q Annuitant Spouse

q Survivor Annuitant

q Please enroll my spouse _________________________________________

Spouse’s Full Name

LOOKING TO MEET OTHERS in the federal community and participate in NARFE at a local level? Call 800-456-8410 to learn about a NARFE chapter in your area.

_________________________________________

Would you like to receive a FREE one-year chapter membership? Choose one: q Chapter closest to home OR q Chapter #____________

THREE EASY WAYS TO JOIN

MAY WE THANK SOMEONE? Did someone introduce you to NARFE? Please provide their Name and Member ID.

Spouse’s Email

1. Complete this application and mail with your payment to NARFE Member Services / 606 N Washington St / Alexandria, VA 22314-1914.

2. Join online at www.NARFE.org.

3. Call 800-456-8410, Monday through Friday, 8 a.m. to 5 p.m. ET.

___________________________________________ Recruiter’s Name ___________________________________________ Recruiter’s Membership ID NARFE respects the privacy of our members. Personal information is used to provide content and relevant communications to our members, and will not be sold or rented to third parties.

(08/19)

BYLAWS AMENDMENTS The Bylaws and Resolutions Committee report is below. For additional details, visit www.narfe.org/2020Balloting to download a PDF book that contains this report as well as proposals to amend NARFE bylaws (ballot items and all submissions), the content of proposals acted on by the committee, and the 2020 Bylaws Committee rationale.

NARFE will offer members the opportunity to vote on bylaws and resolutions online or by mail via a ballot that will be included in the August issue of the magazine, with instructions for print and online voting.

BYLAWS AMENDMENTS AND STANDING RULES RECOMMENDED FOR ADOPTION NUMBER

SUBJECT

EFFECT

RECOMMENDATION

B-2004

National Executive Board Authority

Clarifies NEB governance authorities

ADOPT

B-2005

National Officers’ Vacancies

Updates national officers

ADOPT

B-2006

Bylaws Revision

Eliminates general revisions of bylaws

ADOPT

B-2007

Voting

ADOPT

B-2009

Federation Mergers

B-2010

Secretary/Treasurer Term Limits

Eliminates resolutions from bylaws Permits two or more states to merge federations Limits to three consecutive terms

B-2011

National Officer/RVP Office Terms

Beginning date of terms changed to January 1

ADOPT

B-2015

Executive Director Duties

Streamlines duties enumerated in the bylaws

ADOPT

B-2020

Dues Increases

Increases member dues

ADOPT

S-2003

NARFE Audit Publication Deadline

Eliminates June deadline for publication of audit

ADOPT

S-2005

Chapter Payments

Reduces new member dues rebates to chapters

ADOPT

BRC-01

Member Categories (Combines B-2003, B-2012 and B-2019)

Reorders membership categories and eliminates “supporting” members

ADOPT

ADOPT ADOPT

BYLAWS AMENDMENTS AND STANDING RULES RECOMMENDED FOR REJECTION NUMBER

SUBJECT

B-2002

Ballot Design Standards

B-2008

Equality in Proposing Amendments

B-2014

Simplify Voting Process

B-2017

Voting Member Privileges

B-2018

Add Spousal Members

B-2021

Federation Payments

S-2002

Ensure Committee Diversity

R-2001

Eliminate WEP1

R-2002

Increase Social Security2

1–Already supported by NARFE 2–Doesn’t account for other advocacy provisions B–Bylaw 50

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2020

EFFECT Adds ballot design standards to the bylaws Reduces number of members to propose amendments Permits voting on bylaws at national conference Requires voting after national conference Adds spouses to membership at no cost Reduces member dues rebates to federations Includes all member categories on committees Support legislation to end the WEP Social Security penalty Support legislation to increase Social Security

RECOMMENDATION REJECT REJECT REJECT REJECT REJECT REJECT REJECT REJECT REJECT

S–Standing Rule R–Resolution BRC–Bylaws and Resolutions Committee

Special Section

Consolidated Financial Statements for the Year Ended December 31, 2019 REPORT OF THE NATIONAL SECRETARY/TREASURER NARFE’s Consolidated Statement of Financial Position, for the year ended December 31, 2019, showed total assets as well as liabilities and net assets of $12,491,677, an eight percent (8%) increase from the previous year. Available cash and cash equivalent to cover current liabilities (excluding deferred revenue) was $1,313,779 compared to $1,028,780 in payables. Total revenue, as shown on The Consolidated Statement of Activities was $11,103,455 and accompanying expenses of $10,787,546, resulting in an increase in net assets from operations of $315,909. Investment income in 2019 was $1,169,386, an increase from the 2018 balance by $1,453,480. NARFE’s portfolio is invested on a 50/50 bonds/equity split.

Year over year revenue increased from gains from the aforementioned investment income but also from increases in advertising income and royalties. Contribution from NARFE’s fundraising efforts, including calendars, notepads and cards, were $2,232,628 or a three percent (3%) reduction from the previous year. The generous fundraising contributions of NARFE members continue to be 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 continued support.

Membership dues were $5,134,220 or 14% lower than the 2018 amount of $5,975,294. Total membership count as of December 31, 2019 was 187,827, or 5.7% lower than previous year’s ending of 199,220 members. Staff will introduce a new membership marketing plan in mid-2020 to combat the continued declining membership number.

Through cost mitigation and effective controls, year over year expenses were reduced by $619,768 or 5.4%. A breakdown of NARFE’s revenue and expenses can be found in the Consolidated Statement of Activities.

NARFE-PAC, a separate legal entity, but consolidated with NARFE for reporting purposes, showed 2019 contributions from members of $1,043,182 or $25,640 increase from the previous year.

—Kathryn E. Hensley

REPORT OF THE NATIONAL EXECUTIVE BOARD AUDIT COMMITTEE The National Executive Board (NEB) Audit Committee held a conference call on March 3, 2020, with our new audit firm, Marcum LLP, 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, 2019.

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 and their Management Letter. The auditors reported finding no weakness in internal controls and have provided an unmodified opinion on our financial statements, a “clean” audit. In addition, their Management Letter offered suggestions concerning NARFE-PAC Investment Income, Overhead Expense Allocation, and Executive and Board Compensation.

The audit confirmed a $315,909 gain in net assets. It should be noted that our Consolidated Financial Statements cover NARFE’s Operating Fund, Contingency Fund, Life Member Trust Fund, NARFE-PAC Fund, and Alzheimer’s Fund. The continuing decline of NARFE membership continues to take its toll on our financial resources, as 2019 investment income of $1,169,386 more than offset an operating deficit of $853,477.

Pursuant to the Audit Committee’s recommendation, the NEB unanimously voted on March 18 to accept the audit. Based on the results of the audit, the Committee commends NARFE senior management and staff for their contributions to qualitative financial reporting.

—Rodney L. Adelman, Chair

W W W. N A R F E . O R G

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51

Independent Auditors’ Report To the National Executive Board of National Active and Retired Federal Employees Association and Affiliate Report on the Financial Statements We have audited the accompanying consolidated financial statements of National Active and Retired Federal Employees Association and Affiliate (collectively referred to as the Association), which comprise the consolidated statement of financial position as of December 31, 2019, 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 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 consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers 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 consolidated 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 2019 consolidated financial statements referred to above present fairly, in all material respects, the financial position of National Active and Retired Federal Employees Association and Affiliate as of December 31, 2019, 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.

Report on Summarized Comparative Information The Association’s 2018 consolidated financial statements were audited by other auditors whose report dated March 19, 2019, expressed an unmodified opinion on those statements. The summarized comparative information presented herein as of and for the year ended December 31, 2018, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole.

The consolidating supplementary information is presented for purposed of additional analysis of the consolidated financial statements, and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The consolidating information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United Sates of America. In our opinion, the consolidating information is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole.

Marcum LLP Washington, DC March 20, 2020

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NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

December 31, 2019 and Affiliate National Active and Retired Federal Employees Association (WithofSummarized FinancialFor Information of December 31, 2018) Consolidated Statement Financial Position the Year as Ended December 31, 2019 _______________ (With Comparative Totals for the Year Ended December 31, 2018)

National Active and Retired Federal Employees Association and Affiliate Consolidated Statement of Financial Position 2019 December 31, 2017 (With Comparative Totals as of December 31, 2016 and 2015)

ASSETS Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $2,000 Prepaid expenses Investments Property and equipment, net

$

TOTAL ASSETS LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued liabilities Accrued vacation and payroll benefits Chapter dues payable Line of credit Deferred revenue TOTAL LIABILITIES Net Assets Without donor restrictions With donor restrictions TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS

1,313,779

2018 $

1,214,037

157,498 219,601 8,067,091 2,733,708

190,135 368,718 6,917,139 2,920,198

$ 12,491,677

$ 11,610,227

$

$

305,637 331,990 91,153 300,000 3,608,486

281,853 307,002 76,560 3,406,310

4,637,266

4,071,725

6,662,727 1,191,684

6,558,276 980,226

7,854,411

7,538,502

$ 12,491,677

$ 11,610,227

In 2019, NARFE’s investments were held with these firms: • Operating Fund: Morgan Stanley and The Vanguard Group • Life Membership Trust Fund: Morgan Stanley • Contingency Fund: Morgan Stanley • PAC Fund: Raymond James

Additional NARFE Financial Data

The salaries of the National Executive Board, as of December 31, 2019, are as follows: President: $123,008.67 Secretary/Treasurer: $110,174.40 Regional Vice Presidents: $27,312.88

The accompanying notes are an integral part of these consolidated financial statements.

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NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE

National Active and Retired Federal Employees Association and Affiliate STATEMENT ACTIVITIES Consolidated Statement ofCONSOLIDATED Functional Expenses For theOF Year Ended December 31, 2019 For the Year Ended December 31, 2019 (With Comparative Totals for the Year Ended December 31, 2018) (With Summarized Financial Information for the Year Ended December 31, 2018) _______________ Without Donor Restrictions

REVENUE AND SUPPORT Membership $ Contributions Investment income (loss) Advertising Royalties Conferences and meetings Other income Net assets released from restrictions: Satisfaction of program restrictions TOTAL REVENUE AND SUPPORT

5,134,220 2,160,330 1,169,386 1,066,845 227,322 220,807 9,065

With Donor Restrictions $

904,022

$

(904,022)

10,891,997

EXPENSES Program Services: Communications Membership services Political Action Committee Legislative program Federal benefits program Conferences and meetings

1,115,480 -

2019 Total

2018 Total

5,134,220 3,275,810 1,169,386 1,066,845 227,322 220,807 9,065 -

211,458

-

11,103,455

10,628,570

-

1,825,104 1,290,581 798,368 890,137 361,901 292,454

1,980,921 1,012,688 1,010,103 856,244 345,038 416,374

5,458,545

-

5,458,545

5,621,368

3,266,821 1,273,082 789,098

-

3,266,821 1,273,082 789,098

3,470,024 1,352,753 963,169

Total Supporting Services

5,329,001

-

5,329,001

5,785,946

TOTAL EXPENSES

10,787,546

-

10,787,546

11,407,314

Supporting Services: General and administrative Membership recruitment Fundraising

CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR

$

104,451

211,458

315,909

6,558,276

980,226

7,538,502

6,662,727

$

1,191,684

$

7,854,411

The accompanying notes are an integral part of these consolidated financial statements.

-4-

5,975,294 3,477,975 (284,094) 960,769 116,769 379,608 2,249

1,825,104 1,290,581 798,368 890,137 361,901 292,454

Total Program Services

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(778,744) 8,317,246 $

7,538,502

National Active and Retired Federal Employees Association and Affiliate NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES AND AFFILIATE Consolidated Statement of Functional Expenses For the Year Ended December 31,ASSOCIATION 2019 (With Comparative Totals for the Year Ended December 31, 2018) CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES

For the Year Ended December 31, 2019 (With Summarized Financial Information for the Year Ended December 31, 20 _______________

Program Services

Communications Salaries and benefits Printing and postage Contract services Political contributions Advertising Office expenses Meetings and conferences Professional fees Bank fees and taxes Depreciation

$

NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION TOTAL AND AFFILIATE EXPENSES

$

Political Action Committee

Membership Services

Conferences and meetings

228,046 9 26,528 6,487 4,302 96,529 -

$

361,901

$

108,282 $ 2,184,303 Salaries 1,001and benefits 1,273,631 Printing 9,997 and postage850,492 Contract services 616,000 Political contributions Advertising 15,484 88,294 Office expenses 155,502 191,464 Meetings and conferences 2,188 224,485 Professional fees Bank -fees and taxes 29,876 Depreciation 292,454

TOTAL $ EXPENSES 5,458,545

704,102 10,044 561,193 15,242 -

$

103,515 8,454 616,000 22,147 17,702 674 29,876 -

$

699,634 46,491 20,976 9,732 113,304 -

$

228,046 9 26,528 6,487 4,302 96,529 -

$

1,825,104

$

1,290,581

$

798,368

$

890,137

$

361,901

NATIONAL AND RETIRED FED $ 292,454 ACTIVE $ 5,458,545 $ 3,266,8 EMPLOYEES ASSOCIATION AND AFFI

$

2,184,303 1,273,631 850,492 616,000 88,294 191,464 224,485 29,876 -

$

1,816,7 187,4 117,3 1,3 7,4 366,1 204,1 109,5 270,1 186,4

CONSOLIDATED STATEMENT OF FUNCTIONA For the Year Ended December 31, 201 (With Summarized Financial Information for the Year End _______________

General and Membership Membership administrative recruitment Communications Services $ 1,816,702 $ 376,159 $ 187,460 444,239 $ 276,039 704,102 1,112,571 10,044 117,375 76,014 244,320 561,193 1,304 7,477 526,936 366,146 13,739 7,958 15,242 204,122 4,195 4,226 109,549 - 11,790 270,196- 186,490- $$ 3,266,821 1,825,104

108,282 1,001 9,997 15,484 155,502 2,188 -

General an administrat

$

Supporting Services Total Program Services

Total Program Services

Conferences and meetings

444,239 1,112,571 244,320 7,958 4,226 11,790 -

SOLIDATED STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended December 31, 2019 arized Financial Information for the Year Ended December 31, 2018) _______________

Federal benefits program

Federal benefits program

Legislative program

Program Services Total Political Supporting 2019 Federal 2018 Action Legislative Total benefits Total Conferences Fundraising Services Committee program program and meetings $ 105,150 $ 2,298,011 $ 4,482,314 $ 4,576,506 $ 73,545 $ 699,634 1,810,675 $ 228,046 1,846,964 $ 108,282 537,044 103,515 46,491 9 1,001 610,403 803,792 1,654,284 1,534,543 9,997 - 8,454 1,304 617,304 26,528 738,750 616,000 534,413 534,413 461,434 379,885 468,179 643,209 22,147 20,976 6,487 15,484 - 17,702 208,317 9,732 399,781 4,302 485,670 155,502 - 674 109,549113,304 334,034 96,529 603,437 2,188 - 29,876 270,196 300,072 330,898 186,490 186,490 185,903 -

$ $ 1,273,082 1,290,581 $

$ 789,098 798,368$

Total Program Service $

2,184, 1,273, 850, 616,

88, 191, 224, 29,

5,329,001 $ 10,787,546 $ 11,407,314 $ 890,137 $ 361,901 $ 292,454

$

5,458,

The accompanying notes are an integral part of these consolidated financial statements.

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NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION AND AFFILIATE CONSOLIDATED STATEMENT OF CASH FLOWS the Year Ended December 31, 2019 National Active and RetiredFor Federal Employees Association and Affiliate (With Summarized Financial Information for the Year Ended December 31, 2018) Consolidated Statement of Cash Flows For the Year Ended December 31, 2019 _______________

(With Comparative Totals for the Year Ended December 31, 2018) CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation and amortization Net realized and unrealized (gains) losses Changes in assets and liabilities: Accounts receivable Prepaid expenses Accounts payable and accrued liabilities Accrued vacation and payroll benefits Chapter dues payable Deferred revenue

2019 $

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment Purchases of investments Proceeds from sales of investments NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under line of credit NET CASH PROVIDED BY FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

315,909

2018 $

186,490 (799,698)

185,903 667,315

32,637 149,117 23,784 24,988 14,593 202,176

(9,680) (110,191) 102,642 21,260 (14,222) (319,453)

149,996

(255,170)

(469,256) 119,002

(126,946) (881,925) 899,949

(350,254)

(108,922)

300,000

-

300,000

-

99,742

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

(778,744)

(364,092)

1,214,037

1,578,129

CASH AND CASH EQUIVALENTS, END OF YEAR

$

1,313,779

$

1,214,037

SUPPLEMENTAL INFORMATION Interest paid Income taxes paid

$ $

4,763 15,519

$ $

18,449

National Active and Retired Federal Employees Association and Affiliate The accompanying notes areStatements an integral part of these consolidated financial statements.

Notes to Consolidated Financial December 31, 2019 -6NOTE 1: NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES National Active and Retired Federal Employees Association (NARFE) was established in October 1963 to advance the general welfare of its members and to aid them in securing their rights under federal retirement laws.

NARFE is incorporated under the laws of District of Columbia. Its programs include legislative, federal benefits,

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communications and conferences.

These activities are primarily funded by membership dues and contributions and revenue derived from advertising.

There are fifty-four (54) federations, located in the United States, District of Columbia, Panama, Puerto Rico, and the Philippines, that are affiliated with NARFE and conduct local independent programs. Ten percent of all eligible member national dues collected are passed-through to these federations to facilitate local activities. In addition,

there are 927 chapters affiliated with NARFE that are located in the United States and some international locations The chapters are established by members to increase the scope and effectiveness of NARFE. Chapter dues are established by the chapters and are billed and collected by NARFE with the national dues. NARFE rebates to the chapters one-third of the national fee charged for all new members joining chapters.

The federations and chapters are independent and autonomous organizations. As NARFE has no economic interest in or control of federations and chapters affiliates, their financial activities are not included in the accompanying consolidated financial statements of NARFE. The federations’ bylaws must adhere to NARFE’s bylaws.

NARFE has created a political action committee called NARFE PAC.

Basis of Accounting: These consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP).

Consequently, revenue is recognized when earned and expenses are recognized when incurred.

Principles of Consolidation: The consolidated financial statements of the Association have been prepared on the accrual basis of accounting and include the accounts of NARFE and its affiliate, NARFE PAC (collectively referred to as the Association). All material intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents: Cash and cash equivalents are composed of demand deposits and money market funds.

Accounts Receivables: The Association uses the allowance method to record accounts receivable at their estimated net realizable value. The allowance for doubtful accounts is based on various factors, including management’s analysis of the collectibility of the accounts, historical write-off of expenses and current economic conditions. A provision for doubtful accounts is made when collection of the full amount is no longer probable. As of December 31, 2019, the accounts receivable balance was $157,498.

Investments: Investments consist of mutual funds, corporate bonds and certificate of deposit. Investments are recorded in the accompanying consolidated financial statements at their fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability through an orderly transaction between market participants at the measurement date.

Purchases and sales are reflected on a trade-date basis. Interest, dividends

and realized gains or losses are recorded when earned. Changes in the fair value of the portfolio are recorded as unrealized gains or losses.

Fair Value of Financial Instruments: In accordance with the accounting standards for fair value measurement for those assets and liabilities that are measured at fair value on a recurring basis, the Association has categorized its applicable assets and liabilities measured at fair value into a required fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level-input that is significant to the fair value measurement of the instrument.

Applicable financial assets and liabilities are categorized on the basis of the inputs to the valuation techniques as follows: Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the client has the ability to access.

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

As of and for the year ended December 31, 2019, only the Association’s investments, as described in Note 2 to these consolidated financial statements, were measured at fair value on a recurring basis.

Property and Equipment: All acquisitions of property and equipment greater than $1,500 and an economic life in excess of one year are capitalized at cost. Depreciation and amortization is computed by using the straight-line method based upon the estimated useful lives of the assets. Building and improvements are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 20 to 40 years. Furniture, equipment and software are recorded

at cost and depreciated using the straight-line method over their estimated useful lives of three to eight years. Expenditures for major repairs and improvements that extend the useful life of an asset are capitalized, whereas expenditures for minor repairs and maintenance costs are expensed when incurred. The cost of property and equipment retired or disposed of is removed from the accounts along with the related accumulated depreciation, and any gain or loss is reflected in revenue and support or expenses in the accompanying consolidated statement of activities.

Classification of Net Assets: NARFE’s net assets are reported as follows: • Net assets without donor restrictions represent the portion of expendable funds that are available for any purpose in performing the primary objectives of the Association at the discretion of the Association’s management and the National Executive Board (the Board). From time to time, the Board designates a portion of these net assets for specific purposes, which makes them unavailable for use at management’s discretion. The Board has designated $2,000,000 of net assets without donor restrictions to serve as a working capital reserve to secure the Association’s long-term financial viability. Also included in board-designated net assets is the life membership fund in the amount of $1,078,788.

• Net assets with donor restrictions represent funds that are specifically restricted by donors for use in various programs and/or for specific periods of time. These donor restrictions can be temporary in nature in that they will be met by actions of the Association or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated that the funds be maintained in perpetuity. As of December 31, 2019, the Association had no net assets with donor restrictions that are required to be maintained in perpetuity.

Revenue Recognition Membership Dues: Membership dues are on an anniversary-date basis and are recognized ratably over the membership period since there are no distinct performance obligations and the general member benefits are considered a bundled group of performance obligations that are delivered to members throughout the membership period.

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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 life expectancy tables.

Accordingly, dues paid by members in advance of the reporting period to which the dues pertain are reported as deferred revenue in the accompanying consolidated statement of financial position.

Contributions: Contributions received without conditions are recorded as revenue with or without donor restrictions, depending on the existence and/or nature of any donor stipulations. Donor restricted contributions are reported as an increase in net assets with donor restrictions, depending on the nature of the stipulation. When a restriction expires (that is, when a stipulated time restriction ends or purpose of a restriction is accomplished), net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the accompanying statements of activities as net assets released from restrictions.

Investment Income: Realized and unrealized gains and losses and investment income (loss) derived from investment transactions are included as income in the year earned.

Advertising: Advertising revenue is recognized based upon when the advertisements are published, which is consistent with when the performance obligation is satisfied. Revenue from these activities received in advance of the period to which the revenue pertains is reported as deferred revenue in the accompanying consolidated statement of financial position.

Royalties: The Association enters into several licensing and trademark agreements for use of the intellectual property of the Association. Revenue earned under the royalties is dependent on the performance obligation. Under fixed fee agreements, revenue is earned ratably over the period of the agreement for allowing the third party organization to use the Association’s intellectual property. Under variable agreements, revenue is recognized in the period in which sales of goods utilizing the Association’s intellectual property are reported.

Conferences and meetings: Conferences and meetings revenue consists of registrations, event sales and sponsorship fees and is recognized 58

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in the year in which the conference takes place. Revenue from these activities received in advance of the meeting is reported as deferred revenue in the accompanying consolidated statement of financial position.

Impairment of Long-Lived Assets: In accordance with the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 360, Property, Plant and Equipment, the Association reviews its property for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the fair value is less than the carrying amount of the asset, an impairment loss is recognized for the difference. As of December 31, 2019, the Association has not recognized an impairment loss.

Functional Allocation of Expenses: The costs of providing the various programs and other activities have been summarized on a functional basis in the accompanying statement of functional expenses. Expenses directly attributed to a specific functional area of the Association are reported as expenses of those functional areas and are charged directly to the programs those items support. Shared costs such as office expenses are allocated to the functional area and the programs pro rata based on estimated time and efforts by employees.

Estimates: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported

amounts and disclosures. Accordingly, actual results could differ from those estimates.

New Accounting Pronouncements: In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The Association adopted ASU 2014-09 and related amendments on January 1, 2019 using the modified retrospective method and elected to apply the standard only to contracts that were not completed as of that date. The adoption of the standard did not impact the results of operations or change in net assets.

In June 2018, the FASB issued ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made. This ASU provides additional guidance to be used to determine whether a contribution is conditional and when a transaction should be accounted for as a contribution versus an exchange. The Association adopted ASU 2018-08 as of January 1, 2019 and has applied the amendments of this standard on a modified prospective basis and elected to apply the standard only to agreements that were entered into after the effective date. This standard did not result in a material change to the consolidated financial statements or the timing of revenue recognition for the Association’s contributions and grants.

NOTE 2: INVESTMENTS AND FAIR VALUE MEASUREMENTS

The following table summarizes the Association’s assets measured at fair value on a recurring basis, aggregated by type and fair value hierarchy level within which those measurements were made:

For the year ended December 31, 2019, the Association used the following methods and significant assumptions to estimate fair value for investments recorded at fair value: Mutual funds – Value of these funds is derived from the net asset value of shares held at year-end and based on quoted market prices in active markets.

Certificate of deposit and corporate bonds – Certificate of deposit and corporate bonds are valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable characteristics

NOTE 3: PROPERTY AND EQUIPMENT AND RELATED DEPRECIATION

The association held the following property and equipment as of December 31, 2019: Land $ 700,000

Building and building improvements 4,616,216 Furniture and computer equipment 1,903,681

Building and building improvements 7,219,897 Less: Accumulated Depreciation (4,486,189)

Property and Equipment, Net

$ 2,733,708

Depreciation and amortization expense was $186,490 for the year ended December 31, 2019.

NOTE 4: NET ASSETS

As of December 31, 2019, the Organization’s net assets without donor restrictions were composed of the following: Undesignated $ 3,583,939

Board-designated life membership fund 1,078,788

Board-designated operating reserve 2,000,000

Net Assets Without Donor Restrictions $ 6,662,727

As of December 31, 2019, net assets with donor restrictions were available for the following purposes: NARFE-PAC $ 1,150,051

NARFE Alzheimer’s Fund

Net Assets with Donor Restrictions

41,633 $ 1,191,684

NOTE 5: REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table provides information about significant changes in the Association’s deferred membership revenue and deferred conference revenue for the year ended December 31, 2019: Deferred membership revenue, beginning of year $ 3,258,386

Revenue recognized that was included in deferred membership revenue at the beginning of year (2,984,611) Increase in deferred membership revenue due to cash received during the period 3,334,711

Deferred Membership Revenue, End of Year

$ 3,608,486

Deferred conference revenue, beginning of year $ Revenue recognized that was included in deferred conference revenue at the beginning of year Increase in deferred conference revenue due to cash received during the period

Deferred Conference Revenue, End of Year

$

147,924 (147,924) -

NOTE 6: CONCENTRATION OF CREDIT RISK

The association maintains its cash and cash equivalents with a certain commercial financial institution, which aggregate balance, at times, may exceed the Federal Deposit Insurance Corporation (FDIC) insured limit of $250,000 per depositor per institution.

As of December 31, 2019, the amount in excess of the maximum limit insured by the FDIC was approximately $526,000. The Association monitors the creditworthiness of this institution and has not experienced any credit losses on its cash and cash equivalents.

In June 2019, the Association obtained a line of credit with available borrowings of up to $500,000. The interest rate was 4.29% as of December 31, 2019. The interest rate is based on the Libor daily floating rate plus 2.5%. The line of credit is secured by investments and will mature in June 2020. The Association anticipates renewing the line of credit at maturity. The outstanding balance at December 31, 2019 was $300,000.

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NOTE 7: LINE OF CREDIT

NOTE 10: INCOME TAXES

The Association is exempt from federal income taxes under Section 501(c)(5) of the Internal Revenue Code (IRC). However, income from certain activities not directly related to the Association’s tax-exempt purpose is subject to taxation as unrelated business income. The Association generates unrelated business income from advertising. The Association’s provision for unrelated business income tax expense was $4,684 for the year ended December 31, 2019.

NARFE PAC is subject to federal income taxes under IRC NOTE 8: AVAILABILITY AND LIQUIDITY Section 527 with respect to certain investment income. For The Association regularly monitors liquidity required to the years ended December 31, 2019, no provision for federal meet its annual operating needs and other contractual or state income taxes was made, as there was no significant commitments, while also striving to preserve the principal taxable income. and return on the investment of its funds. The Association’s The Association follows the authoritative guidance relating financial assets available within one year of the statement of to accounting for uncertainty in income taxes included in financial position date for general expenditures at December FASB ASC Topic 740, Income Taxes. These provisions provide 31, 2019, were as follows: consistent guidance for the accounting for uncertainty in income taxes recognized in an entity’s financial statements and

Cash and Cash Equivalents $ 1,313,779 prescribe a threshold of “more likely than not” for recognition

Accounts Receivable 157,498 and derecognition of tax positions taken or expected to be Investments

8,067,091 taken in a tax return. The Association performed an evaluation

Total Financial Assets Available within One Year 9,538,368 of uncertainty in income taxes for the year ended December Less: 31, 2019, and determined that there were no matters that

Amounts unavailable for general expenditures within would require recognition in the consolidated financial

one year due to donor’s restriction with purpose statements or that may have an effect on its tax-exempt status.

restriction (1,191,684) As of December 31, 2019, the statute of limitations for tax

Financial Assets Available to Meet General years ended December 31, 2016, through December 31, 2018,

Expenditures Within One Year $ 8,346,684 remained open with the U.S. federal jurisdiction or the various The Association has various sources of liquidity at its disposal, states and local jurisdictions in which the Association files including cash and cash equivalents and investments, which tax returns; however, there are currently no audits for any tax are available for general expenditures, liabilities and other periods in progress. It is the Association’s policy to recognize obligations as they come due. Management is focused on interest and/or penalties related to uncertainty in income sustaining the financial liquidity of the Association throughout taxes, if any, in income tax or interest expense. As of December the year. This is done through monitoring and reviewing the 31, 2019, the Association had no accruals for interest and/or Association’s cash flow needs on a regular basis. As a result, penalties. management is aware of the cyclical nature of the Association’s NOTE 11: PRIOR YEAR SUMMARIZED FINANCIAL cash flow related to the Association’s various funding sources INFORMATION and is therefore able to ensure that there is cash available to The accompanying financial statements include certain prior meet current liquidity needs. As part of its liquidity plan, excess year summarized comparative information in total, but not by cash is invested in publicly traded investment vehicles, including net asset class. Such information does not include sufficient mutual funds, or to support organizational initiatives. The detail to constitute a presentation in conformity with GAAP. Association can liquidate its investments anytime, and therefore Accordingly, such information should be read in conjunction the investments are available to meet current cash flow needs. To with the Association’s financial statements for the year ended help manage unanticipated liquidity needs, the Association has a December 31, 2018, from which the summarized information committed line of credit of $500,000. was derived.

In June 2019, the Association obtained a line of credit with available borrowings of up to $500,000. The interest rate was 4.29% as of December 31, 2019. The interest rate is based on the Libor daily floating rate plus 2.5%. The line of credit is secured by investments and will mature in June 2020. The Association anticipates renewing the line of credit at maturity. The outstanding balance at December 31, 2019 was $300,000.

NOTE 9: PENSION 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 hire date. Once eligible, an employee is 100% vested. The Association matches 60% of each employee’s voluntary contribution up to 6% of annual compensation. Total contributions made by the Association were approximately $81,000 for the year ended December 31, 2019.

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NOTE 12: RECLASSIFICATION

Certain 2018 amounts have been reclassified to conform with the 2019 financial statements presentation.

NOTE 13 – SUBSEQUENT EVENTS

The Association’s management has evaluated, for potential recognition or disclosure, events and transactions through March 20, 2020, the date the financial statements were available to be issued. There were no subsequent events identified that require recognition or disclosure in these financial statements.

NATIONAL ACTIVE AND RETIRED FEDERAL

National Active and Retired Federal Employees Association and Affiliate EMPLOYEES ASSOCIATION AND AFFILIATE Supplementary Information for the Year Ended December CONSOLIDATING SCHEDULE OF FINANCIAL POSITION 31, 2019 December 31, 2019 Consolidating Schedules of Financial Position and Activities _______________ ASSETS Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $2,000 Prepaid expenses Investments Property and equipment, net TOTAL ASSETS LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued liabilities Accrued vacation and payroll benefits Chapter dues payable Line of credit Deferred revenue

Association $

524,938

NARFE PAC $

174,619 218,026 7,635,880 2,733,708

788,841

Eliminations $

1,575 431,211 -

1,313,779

(17,121) -

157,498 219,601 8,067,091 2,733,708

$

1,221,627

$

(17,121)

$ 12,491,677

$

$

28,111 -

$

(17,121) -

$

294,647 331,990 91,153 300,000 3,608,486 4,626,276

28,111

Net Assets Without donor restrictions With donor restrictions

6,619,262 43,465 41,633 1,150,051 NATIONAL ACTIVE AND RETIRED FEDERAL TOTAL NET ASSETS 6,660,895 1,193,516 EMPLOYEES ASSOCIATION AND AFFILIATE TOTAL LIABILITIES CONSOLIDATING SCHEDULE OF ACTIVITIES AND NET ASSETS 11,287,171 $ 1,221,627 $ For the$ Year Ended December 31, 2019 _______________ Association $

TOTAL REVENUE AND SUPPORT EXPENSES Program Services: Communications Membership services Political Action Committee Legislative program Federal benefits program Conferences and meetings

$

$ 11,287,171

TOTAL LIABILITIES

REVENUE AND SUPPORT Membership Contributions Investment income Advertising Royalties Conferences and meetings Administrative fee Other income

-

Total

5,134,220 2,232,628 1,127,166 1,066,845 227,322 220,807 73,818 7,817

NARFE PAC $

10,090,623

1,043,182 42,220 1,248 1,086,650

See independent auditors' report.

Total Program Services Supporting Services: General and administrative Membership recruitment Fundraising

(17,121)

4,637,266

-

6,662,727 1,191,684

-

7,854,411

(17,121)

$ 12,491,677

Eliminations $

305,637 331,990 91,153 300,000 3,608,486

(73,818) -

Total $

5,134,220 3,275,810 1,169,386 1,066,845 227,322 220,807 9,065

(73,818)

11,103,455

1,825,104 - 19 1,290,581 890,137 361,901 292,454

872,186 -

(73,818) -

1,825,104 1,290,581 798,368 890,137 361,901 292,454

4,660,177

872,186

(73,818)

5,458,545

3,266,821 1,273,082 789,098

-

-

3,266,821 1,273,082 789,098

Total Supporting Services

5,329,001

-

-

5,329,001

TOTAL EXPENSES

9,989,178

872,186

(73,818)

10,787,546

101,445

214,464

-

315,909

6,559,450

979,052

-

7,538,502

CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR

$

6,660,895

$

1,193,516

$

-

$

7,854,411

W W W. N A R F E . O R G See independent auditors' report.

|

61

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NARFE Insurance Services 800-233-5764 | www.narfeinsurance.com

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The Bekins team has been moving families with friendly professionalism for more than a century. We’ve been around all these years because we keep our word­—being on time, treating your possessions with care, and proactively communicating with you.

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Neptune Society 800-NEPTUNE (637-8863) | www.neptunesociety.com

Our prearranged plans cover all necessary expenses for one guaranteed price even if the services are not needed for 40 or 50 years. The Neptune Society offers a $100 discount to all NARFE members.

OTHER PARTNERS

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The Way We Worked

BUILDING OUR NATION’S DAMS This 1939 photo shows the construction of the Rio Grande Canalization Project. The project, which began in 1936 and was completed in 1943, provided flood protection and assured the release of waters from the upstream reservoirs to Mexico. The project extends along the Rio Grande from the Percha Diversion Dam in Caballo, NM to the American Dam in El Paso, TX, stretching 105.6 miles.

Today, the United States section of the International Boundary and Water Commission (IBWC) maintains the levees and bridges built as part of this New Deal project.

PHOTO from United States International Boundary and Water Commission, courtesy of Mark L. Howe, Cultural Resources Specialist, U.S. Section, International Boundary and Water Commission

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| J U N E / J U L Y

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DID YOU KNOW? The mission of the International Boundary and Water Commission is to ensure that the American and Mexican governments adhere to the obligations outlined under numerous treaties and agreements between the countries while also considering the social and economic welfare of the people on both sides of the boundary. The obligations include protecting the land along the rivers during construction of levee or floodway projects and conserving the waters of the Rio Grande.

Visit www.ibwc.gov/About_Us/ history.html

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