WEBVTT NOTE This file was generated by Descript 00:00:00.050 --> 00:00:06.000 Lawrence: Welcome to The FED Weekly for 21-27 September 2025, your essential 00:00:06.000 --> 00:00:09.720 weekly briefing on the policies and proposals shaping your career, 00:00:09.979 --> 00:00:12.140 your benefits, and your retirement. 00:00:12.760 --> 00:00:16.989 Whether you’re a current federal employee navigating changes in the civil service, 00:00:17.319 --> 00:00:22.530 or a retiree keeping a close watch on your hard-earned pension and healthcare, this 00:00:22.530 --> 00:00:27.360 is your source for the latest news from Capitol Hill and the executive branch. 00:00:28.043 --> 00:00:32.194 Each week, we cut through the noise to bring you the critical updates on budget 00:00:32.194 --> 00:00:37.844 negotiations, pay raises, workforce policies, and the legislative battles that 00:00:37.844 --> 00:00:39.844 directly impact the federal community. 00:00:40.493 --> 00:00:43.344 Let's get you up to speed on what happened this past week. 00:00:44.599 --> 00:00:47.760 Issues That Affect Current and Retired Federal Workers 00:00:48.363 --> 00:00:50.633 The Imminent Government Shutdown Crisis 00:00:51.215 --> 00:00:56.266 The most urgent news dominating the week ending 27 September 2025 00:00:56.565 --> 00:00:59.965 was the dramatic escalation of the government funding crisis. 00:01:00.426 --> 00:01:04.316 With the fiscal year set to expire on September 30, Congress must 00:01:04.316 --> 00:01:08.335 pass a continuing resolution (CR) or full appropriations bills 00:01:08.635 --> 00:01:10.335 to avoid a lapse in funding. 00:01:10.939 --> 00:01:14.219 This week saw the breakdown of stopgap negotiations. 00:01:14.590 --> 00:01:20.330 On Friday, 26 September 2025, a House-passed bill, intended to fund 00:01:20.330 --> 00:01:23.839 the federal government for seven weeks, failed to pass in the Senate. 00:01:24.479 --> 00:01:27.729 This legislative rejection immediately intensified the 00:01:27.729 --> 00:01:29.559 threat of a government shutdown. 00:01:30.139 --> 00:01:34.690 The political confrontation intensified further when Republican leaders reportedly 00:01:34.690 --> 00:01:40.070 canceled scheduled votes for September 29 and September 30, an action intended 00:01:40.070 --> 00:01:43.760 to pressure the Senate to agree to their continuing resolution proposal 00:01:44.039 --> 00:01:46.600 without further bipartisan negotiation. 00:01:47.435 --> 00:01:51.435 The failure to pass a short-term CR signals a critical breakdown 00:01:51.435 --> 00:01:55.985 in cross-chamber negotiations over funding specifics, elevating the risk 00:01:56.025 --> 00:01:58.025 beyond a typical temporary lapse. 00:01:58.376 --> 00:02:02.376 This situation imposes severe stress on active workers, potentially 00:02:02.376 --> 00:02:06.906 resulting in furloughs, and creates uncertainty regarding timely back pay. 00:02:07.715 --> 00:02:11.386 For annuitants, while annuity checks from the Civil Service Retirement 00:02:11.386 --> 00:02:16.726 System (CSRS) and the Federal Employees Retirement System (FERS) are generally 00:02:16.726 --> 00:02:21.155 protected, a shutdown severely jeopardizes the administrative functions of the 00:02:21.155 --> 00:02:23.545 Office of Personnel Management (OPM). 00:02:24.325 --> 00:02:29.305 A protracted funding lapse could delay the processing of new retirement applications, 00:02:29.505 --> 00:02:34.626 postpone benefit enrollment changes, and disrupt crucial communication and guidance 00:02:34.626 --> 00:02:39.806 from OPM, placing both current employees and applicants in a state of high alert. 00:02:40.399 --> 00:02:44.159 In response to this imminent threat, organizations like the National 00:02:44.159 --> 00:02:49.360 Treasury Employees Union (NTEU) urgently called upon Congress to find 00:02:49.360 --> 00:02:54.019 a bipartisan solution to prevent a shutdown and ensure adequate funding. 00:02:54.530 --> 00:02:58.669 Furthermore, the union proactively reminded members to seek information 00:02:58.669 --> 00:03:02.849 from OPM regarding pay and benefits in the event of a shutdown, and 00:03:02.849 --> 00:03:06.439 noted the availability of hardship loans through the Federal Employee 00:03:06.439 --> 00:03:08.679 Education and Assistance Fund. 00:03:09.339 --> 00:03:11.919 The Crucial FEHB Premium and Benefit Watch 00:03:12.602 --> 00:03:16.582 The latter half of September is typically the period when OPM releases 00:03:16.582 --> 00:03:21.751 the average Federal Employees Health Benefits (FEHB) program premium rates 00:03:21.751 --> 00:03:23.602 for the forthcoming Open Season. 00:03:24.121 --> 00:03:29.382 As of the end of this reporting period, 27 September 2025, OPM had not 00:03:29.382 --> 00:03:34.762 yet announced the final average rate increases for the 2026 plan year, creating 00:03:34.762 --> 00:03:37.622 considerable suspense for the nearly 8.3 00:03:37.622 --> 00:03:41.792 million federal employees and retirees enrolled in the program. 00:03:42.475 --> 00:03:46.606 This anticipation is heightened by the dramatic increase seen in the prior year. 00:03:47.126 --> 00:03:51.335 For the 2025 plan year, OPM announced that the average enrollee 00:03:51.335 --> 00:03:56.606 share of FEHB premiums increased by an unprecedented 13.5%. 00:03:57.305 --> 00:04:01.206 This figure represented the largest price hike in recent memory, nearly 00:04:01.206 --> 00:04:03.196 doubling the previous year’s increase. 00:04:04.026 --> 00:04:08.675 While the overall program-wide weighted average premium increase was 11.2%, 00:04:08.726 --> 00:04:12.815 the government’s average contribution increased by 10.1%, 00:04:13.206 --> 00:04:16.695 demonstrating that the financial burden of rising healthcare costs 00:04:16.936 --> 00:04:20.386 was disproportionately absorbed by the enrollees themselves. 00:04:20.967 --> 00:04:26.047 The high premium increase for 2025 is directly correlated with OPM’s successful 00:04:26.047 --> 00:04:28.748 negotiation to expand coverage mandates. 00:04:29.327 --> 00:04:33.537 For the 2025 plan year, all FEHB enrollees, both active 00:04:33.537 --> 00:04:37.157 and retired, gained access to comprehensive coverage expansions. 00:04:37.718 --> 00:04:41.688 These expansions include fertility benefits, requiring multiple nationwide 00:04:41.688 --> 00:04:45.778 plans to offer comprehensive in vitro fertilization (IVF) coverage. 00:04:46.458 --> 00:04:50.878 Furthermore, OPM mandated that all FEHB carriers cover at least one 00:04:50.878 --> 00:04:55.957 GLP-1 class anti-obesity drug, such as Wegovy or Ozempic, along with 00:04:55.957 --> 00:05:00.117 two additional oral anti-obesity medications, often coupled with required 00:05:00.117 --> 00:05:01.918 comprehensive behavioral therapy. 00:05:02.797 --> 00:05:06.578 Plan carriers are also now required to reimburse behavioral health services 00:05:06.578 --> 00:05:08.337 offered in primary care settings. 00:05:08.950 --> 00:05:14.329 This dynamic presents a benefits-cost conundrum: OPM successfully secured 00:05:14.329 --> 00:05:18.519 medically advanced and highly desired benefits, but the implementation of 00:05:18.519 --> 00:05:22.299 these high-cost treatments translated immediately into significant 00:05:22.299 --> 00:05:26.080 inflationary pressure on premium rates, underscoring the challenge 00:05:26.080 --> 00:05:31.119 OPM faces in balancing expanded access with affordability for 2026. 00:05:31.299 --> 00:05:36.199 OPM confirmed that carriers have been developing their 2026 proposals since 00:05:36.199 --> 00:05:42.749 January 2025, with continued emphasis on prior year initiatives such as fertility 00:05:42.749 --> 00:05:47.550 benefits and the prevention and treatment of obesity, alongside goals to ease 00:05:47.550 --> 00:05:49.559 administrative burdens on enrollees. 00:05:50.181 --> 00:05:52.782 Issues That Affect Retired Federal Workers 00:05:53.355 --> 00:05:55.716 Final 2026 COLA Projections 00:05:56.290 --> 00:06:00.439 The annual Cost-of-Living Adjustment is calculated based on the increase in the 00:06:00.439 --> 00:06:06.210 average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). 00:06:07.109 --> 00:06:11.969 The final rate is determined by comparing the average CPI-W of the third quarter 00:06:11.969 --> 00:06:16.549 of the current year (July, August, and September) against the average of the 00:06:16.549 --> 00:06:18.559 third quarter of the preceding year. 00:06:19.171 --> 00:06:23.941 As of 27 September 2025, the official calculation is nearly complete, 00:06:24.151 --> 00:06:28.682 requiring only the September CPI-W figure, which is scheduled for release 00:06:28.682 --> 00:06:31.321 on Wednesday, October 15, 2025. 00:06:31.871 --> 00:06:37.261 However, the August 2025 CPI-W figure (317.306) 00:06:37.562 --> 00:06:41.642 released earlier in September provides the definitive pre-announcement projection. 00:06:41.681 --> 00:06:45.752 This August data indicates that the CPI-W is 2.78 00:06:45.752 --> 00:06:51.282 percent higher than the average third-quarter 2024 baseline (308.729). 00:06:52.034 --> 00:06:53.863 Based on this 2.78 00:06:53.863 --> 00:06:59.264 percent inflationary index change, the 2026 COLA projections are highly certain 00:06:59.514 --> 00:07:03.933 and largely beneficial, though disparities between retirement systems remain. 00:07:04.633 --> 00:07:07.393 Projected 2026 Annuity Increases 00:07:07.995 --> 00:07:12.225 CSRS Annuitants: The COLA for Civil Service Retirement System (CSRS) 00:07:12.225 --> 00:07:16.656 annuities, military retirement annuities, and Social Security benefits is determined 00:07:16.656 --> 00:07:19.536 directly by the calculated CPI-W change. 00:07:19.986 --> 00:07:23.845 The projected 2026 COLA for this group is 2.8 00:07:23.845 --> 00:07:24.395 percent. 00:07:25.230 --> 00:07:29.710 FERS Annuitants: Federal Employees Retirement System (FERS) annuitants 00:07:29.710 --> 00:07:34.289 receive a COLA subject to statutory caps when inflation is moderate or high. 00:07:34.799 --> 00:07:39.179 Under current law, if the CPI-W increase is between 2 percent and 3 percent, 00:07:39.570 --> 00:07:41.830 the FERS COLA is capped at 2 percent. 00:07:42.260 --> 00:07:45.189 Since the projected CPI-W increase is 2.8 00:07:45.189 --> 00:07:50.539 percent, the projected 2026 COLA for FERS annuitants is capped at 2.0 00:07:50.539 --> 00:07:51.010 percent. 00:07:51.654 --> 00:07:55.163 FECA Benefits: Individuals receiving benefits under the Federal 00:07:55.163 --> 00:07:59.693 Employees Compensation Act (FECA) will see a projected COLA of 2.7 00:07:59.693 --> 00:08:00.254 percent. 00:08:01.144 --> 00:08:03.813 The FECA adjustment is calculated differently, based on the 00:08:03.813 --> 00:08:07.294 percentage change in the CPI-W from December to December. 00:08:07.867 --> 00:08:10.468 Issues That Affect Current Federal Workers 00:08:11.066 --> 00:08:15.215 The 2026 Pay Raise Proposal and Strategic Pay Targeting 00:08:15.779 --> 00:08:20.140 The compensation structure for the upcoming calendar year remains a major 00:08:20.140 --> 00:08:23.750 point of contention following the issuance of the President’s Alternative 00:08:23.750 --> 00:08:28.000 Pay Plan to Congress on August 28, 2025. 00:08:28.819 --> 00:08:33.399 This plan announced the President's decision regarding January 2026 pay 00:08:33.399 --> 00:08:38.430 adjustments: a modest 1 percent base increase for General Schedule (GS) 00:08:38.430 --> 00:08:44.910 employees and a complete freeze of 2026 locality rates at their 2025 levels. 00:08:45.645 --> 00:08:48.846 This proposal has drawn immediate and strong criticism from 00:08:48.846 --> 00:08:50.686 federal employee organizations. 00:08:51.175 --> 00:08:55.286 The National Treasury Employees Union (NTEU) characterized the 00:08:55.286 --> 00:09:00.225 proposed pay increase as "meager" and "inadequate," arguing that it fails 00:09:00.225 --> 00:09:04.296 to address the widening gap between federal and private sector salaries. 00:09:04.845 --> 00:09:07.935 This disparity, which the Federal Salary Council previously 00:09:07.935 --> 00:09:10.876 reported had increased to 27.54 00:09:10.876 --> 00:09:15.226 percent, persists due to administrations frequently overriding the Federal 00:09:15.226 --> 00:09:19.215 Employees Pay Comparability Act (FEPCA) formula, which would 00:09:19.215 --> 00:09:21.386 otherwise dictate a higher increase. 00:09:22.001 --> 00:09:25.622 Significantly, the Alternative Pay Plan includes a highly 00:09:25.622 --> 00:09:27.702 targeted compensation strategy. 00:09:28.332 --> 00:09:32.282 The President simultaneously directed OPM to leverage its special 00:09:32.282 --> 00:09:36.692 salary rate authority to implement an additional approximately 2.8 00:09:36.692 --> 00:09:40.152 percent pay increase for certain law enforcement officials. 00:09:40.771 --> 00:09:43.722 This special adjustment would grant targeted law enforcement 00:09:43.722 --> 00:09:46.611 personnel a total pay increase of 3.8 00:09:46.611 --> 00:09:51.541 percent in January 2026, aligning their compensation increase with 00:09:51.541 --> 00:09:53.681 the planned military pay increase. 00:09:54.302 --> 00:09:59.372 OPM is consulting with affected agencies to determine which specific front-line 00:09:59.372 --> 00:10:03.731 law enforcement employees, particularly those deemed critical to border security 00:10:03.731 --> 00:10:07.962 and immigration enforcement, will receive this accelerated compensation. 00:10:09.143 --> 00:10:12.923 This targeted approach fundamentally alters the traditional principle 00:10:12.923 --> 00:10:15.283 of uniform civilian pay increases. 00:10:15.913 --> 00:10:20.423 By providing a low 1 percent increase for the majority of the GS workforce 00:10:20.734 --> 00:10:24.683 while granting a substantially larger, strategically focused raise to a 00:10:24.683 --> 00:10:29.624 specific cadre of law enforcement, the Administration is utilizing the pay system 00:10:29.933 --> 00:10:35.433 to prioritize specific mission-critical functions while actively suppressing 00:10:35.433 --> 00:10:37.923 general civilian workforce compensation. 00:10:37.964 --> 00:10:42.453 Congress retains the ability to override this alternative pay plan through the 00:10:42.453 --> 00:10:47.094 final appropriations bills, a process that continues through December. 00:10:47.731 --> 00:10:51.432 Legislative Threats to Workforce Stability and Pay Structure 00:10:51.989 --> 00:10:56.229 Two pieces of legislation introduced in the House of Representatives, H.R. 00:10:56.229 --> 00:10:57.280 200 and H.R. 00:10:57.280 --> 00:11:02.680 201, represent fundamental threats to the current structure, stability, and 00:11:02.680 --> 00:11:05.249 compensation of the civilian merit system. 00:11:05.819 --> 00:11:10.789 Both bills were introduced in January 2025 and remain active, posing a 00:11:10.789 --> 00:11:13.289 significant risk to current employees. 00:11:13.966 --> 00:11:14.346 H.R. 00:11:14.346 --> 00:11:19.316 200, known as the Federal Freeze Act, proposes a strategy of retrenchment 00:11:19.566 --> 00:11:23.775 aimed at shrinking the size and cost of the federal government. 00:11:24.466 --> 00:11:27.226 The bill was referred to the House Committee on Oversight 00:11:27.226 --> 00:11:28.395 and Government Reform. 00:11:29.019 --> 00:11:33.659 Pay and Hiring Freeze: Upon enactment, the bill mandates a one-year 00:11:33.659 --> 00:11:37.869 prohibition on increasing the basic pay of any federal employee. 00:11:38.350 --> 00:11:41.409 Additionally, for the same period, agencies are prohibited 00:11:41.409 --> 00:11:44.779 from increasing their number of employees beyond the headcount 00:11:44.779 --> 00:11:46.660 present on the date of enactment. 00:11:47.289 --> 00:11:51.199 Narrow exceptions are made only for appointments related to law enforcement, 00:11:51.330 --> 00:11:53.849 public safety, or national security. 00:11:54.459 --> 00:11:58.959 Mandatory Reduction in Force (RIF): The most impactful provision is the 00:11:58.959 --> 00:12:01.550 mandatory workforce reduction requirement. 00:12:02.560 --> 00:12:06.569 The bill mandates reductions in force such that within three years of its 00:12:06.569 --> 00:12:11.760 enactment, the number of employees at each agency must be 5 percent lower than the 00:12:11.760 --> 00:12:13.870 number employed on the date of enactment. 00:12:14.485 --> 00:12:15.656 If enacted, H.R. 00:12:15.656 --> 00:12:20.945 200 would impose legislative controls that effectively suspend agency hiring 00:12:20.945 --> 00:12:25.645 and compensation adjustments, compelling agencies to undergo deep, mandatory 00:12:25.645 --> 00:12:30.806 staff reductions across the board, moving beyond typical hiring slowdowns to force 00:12:30.806 --> 00:12:33.445 a structural reduction in government size. 00:12:34.075 --> 00:12:34.445 H.R. 00:12:34.445 --> 00:12:39.345 201 proposes a strategy of restructuring the civil service by replacing 00:12:39.345 --> 00:12:43.515 traditional pay progression with a performance-based pilot program. 00:12:44.185 --> 00:12:48.056 The bill aims to implement a 5-year pilot program establishing 00:12:48.056 --> 00:12:51.896 a performance-based pay structure for certain federal employees. 00:12:52.523 --> 00:12:57.023 Performance-Based Compensation: The bill dictates a tiered pay outcome 00:12:57.023 --> 00:12:58.864 tied to yearly performance metrics: 00:12:59.459 --> 00:13:02.840 Employees who significantly exceeded established performance 00:13:02.840 --> 00:13:07.130 metrics must receive a pay increase of up to 10 percent. 00:13:07.735 --> 00:13:12.215 Employees who merely met established performance metrics are explicitly 00:13:12.215 --> 00:13:14.815 prohibited from receiving a pay increase. 00:13:15.411 --> 00:13:20.841 Employees who rate below expectations must receive a 10 percent reduction in pay. 00:13:21.523 --> 00:13:26.134 Ineligibility for Standard Increases: Crucially, employees participating in 00:13:26.134 --> 00:13:30.984 this pilot program are made ineligible for annual or locality-based pay increases 00:13:31.243 --> 00:13:33.573 otherwise authorized under current law. 00:13:34.226 --> 00:13:34.586 H.R. 00:13:34.586 --> 00:13:38.795 201 represents a direct challenge to the predictability and stability 00:13:38.795 --> 00:13:40.436 of the General Schedule system. 00:13:41.076 --> 00:13:45.326 By making compensation contingent on potentially subjective metrics and 00:13:45.326 --> 00:13:50.656 eliminating guaranteed annual and locality increases, the bill would fundamentally 00:13:50.656 --> 00:13:55.516 shift career financial outcomes away from tenure and standardized locality-based 00:13:55.565 --> 00:14:00.975 needs, eroding the core principles of the merit system and the economic stability 00:14:01.006 --> 00:14:02.985 long afforded to federal workers. 00:14:03.626 --> 00:14:05.605 Administrative and Policy Updates 00:14:06.262 --> 00:14:09.912 Beyond the major conflicts over funding and legislative structure, 00:14:10.251 --> 00:14:14.302 current employees should be aware of two key administrative updates. 00:14:14.907 --> 00:14:19.998 First, OPM issued a final rule pertaining to the Federal Wage System (FWS) that 00:14:19.998 --> 00:14:22.927 will become effective on October 1, 2025. 00:14:23.497 --> 00:14:27.677 This rule changes the regulatory criteria used to define FWS wage 00:14:27.677 --> 00:14:31.847 area boundaries for the appropriated fund system, impacting approximately 00:14:31.847 --> 00:14:34.138 10 percent of the FWS workforce. 00:14:34.688 --> 00:14:38.647 The purpose of this change is to align the FWS wage area criteria more 00:14:38.647 --> 00:14:42.768 closely with the General Schedule (GS) locality pay area criteria, 00:14:42.807 --> 00:14:47.647 aiming to simplify pay administration and harmonize pay boundaries across 00:14:47.647 --> 00:14:49.478 different major federal systems. 00:14:50.105 --> 00:14:53.345 Second, OPM continues to focus on the implementation of the 00:14:53.345 --> 00:14:57.575 Presidential Memorandum mandating the "Return to In-Person Work". 00:14:58.515 --> 00:15:02.706 OPM maintains centralized guidance, confirming that any previous telework 00:15:02.805 --> 00:15:06.746 policies inconsistent with the Presidential directive are rescinded. 00:15:07.455 --> 00:15:11.446 The agency reminds all federal organizations of the legal requirements 00:15:11.586 --> 00:15:16.356 under the Telework Enhancement Act of 2010 to integrate telework into Continuity 00:15:16.356 --> 00:15:22.386 of Operations (COOP) planning, ensure policy compliance, and designate Telework 00:15:22.445 --> 00:15:27.156 Managing Officers to manage the strategic implementation of telework programs. 00:15:27.767 --> 00:15:30.888 And that’s a wrap on this week’s Federal Workforce Roundup. 00:15:31.287 --> 00:15:35.548 The landscape for federal employees and retirees is constantly shifting, 00:15:35.957 --> 00:15:40.017 with major decisions being made about everything from pay and job security 00:15:40.328 --> 00:15:44.498 to retirement benefits and the very structure of the civil service. 00:15:45.117 --> 00:15:47.557 Staying informed is your best tool. 00:15:47.807 --> 00:15:52.437 Be sure to subscribe wherever you get your podcasts, so you never miss an update. 00:15:53.022 --> 00:15:54.221 Thanks for tuning in. 00:15:54.511 --> 00:15:57.471 We’ll be back next week to track the latest developments 00:15:57.471 --> 00:15:58.671 and what they mean for you. 00:15:59.102 --> 00:16:01.831 Until then, stay engaged and be well.