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Lawrence: Welcome to The FED Weekly
for 4-10 January 2026, your essential

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weekly briefing on the policies
and proposals shaping your career,

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your benefits, and your retirement.

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Whether you’re a current federal employee
navigating changes in the civil service,

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or a retiree keeping a close watch on your
hard-earned pension and healthcare, this

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is your source for the latest news from
Capitol Hill and the executive branch.

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Each week, we cut through the noise to
bring you the critical updates on budget

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negotiations, pay raises, workforce
policies, and the legislative battles that

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directly impact the federal community.

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Let's get you up to speed on
what happened this past week.

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Issues That Affect Current
and Retired Federal Workers

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The primary legislative development
this week concerns the Fiscal

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Year 2026 appropriations cycle.

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On 08 January 2026, the U.S.

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House of Representatives passed H.R.

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6938, a "minibus" appropriations package
titled the "Commerce, Justice, Science;

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Energy and Water Development; and Interior
and Environment Appropriations Act, 2026."

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The bill passed by a vote of 397 to 28.

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This legislation consolidates funding
for multiple federal departments,

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including Commerce, Justice,
Energy, Interior, the EPA, and NASA.

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The bill explicitly rejects cuts
proposed by the administration

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in its budget request.

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For instance, while the President’s budget
sought to reduce NASA’s funding to $18.8

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billion, H.R.

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6938 funds the agency
at approximately $24.4

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billion, maintaining levels
roughly equal to Fiscal Year 2025.

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Senator Patty Murray stated that the
bill utilizes line-by-line spending

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levels to assert congressional control
and prevent the Office of Management

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and Budget from impounding funds.

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Following House passage, H.R.

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6938 moved to the Senate
on 09 January 2026.

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Senate Majority Leader Chuck Schumer
filed cloture on the motion to

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proceed, scheduling a procedural
vote for Monday, 12 January 2026.

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While this bill addresses funding for a
significant portion of the government,

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other major departments—including
Defense, Labor, and Health and

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Human Services—remain funded by
a Continuing Resolution that is

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set to expire on 30 January 2026.

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Turning to compensation, the 2026
federal pay rates were finalized

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during this week, which serves as
the last week of the 2025 pay cycle.

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The new rates become
effective on 11 January 2026.

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Under the President’s alternative
pay plan, implemented by Executive

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Order, most General Schedule
employees will receive a 1.0

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percent across-the-board
increase to base pay.

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Locality pay percentages
remain frozen at 2025 levels.

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An exception exists for federal
law enforcement officers.

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The administration authorized a special
rate adjustment providing an additional

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increase for Law Enforcement Officers to
align their total pay raise with the 3.8

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percent increase authorized
for the military.

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For the remainder of the civil service,
the total increase remains capped at 1.0

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percent.

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Regarding workforce efficiency
measures, the Public Employees for

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Environmental Responsibility, or PEER,
released an analysis on 09 January

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2026 regarding the "Department of
Government Efficiency," or DOGE.

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The report alleges that the
administration’s strategy of placing

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employees on paid administrative
leave rather than utilizing formal

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reduction-in-force procedures
has resulted in financial losses.

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PEER estimates that over 154,000 federal
employees—approximately seven percent

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of the civilian workforce—have been
placed on paid leave or similar statuses.

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The report calculates the cost of
compensating these employees for work not

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performed at approximately $10 billion.

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PEER noted that this occurs while
agencies such as the National

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Park Service remain understaffed.

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Data released by the Office of
Personnel Management on 08 January

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2026 indicates that attrition across
the federal government is rising.

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Between January and November
2025, approximately 335,000

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workers left federal service.

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While layoffs accounted for
approximately 11,000 of these

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departures, the majority were
voluntary resignations or retirements.

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The Department of Education has lost
approximately 40 percent of its staff,

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and the Department of the Treasury is
down approximately 4,000 tax examiners.

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Issues That Affect Retired Federal Workers

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Retirees under the Civil
Service Retirement System,

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or CSRS, are receiving a 2.8

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percent increase.

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This figure is based on the rise
in the Consumer Price Index for

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Urban Wage Earners and Clerical
Workers from the third quarter of

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2024 to the third quarter of 2025.

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Retirees under the Federal
Employees Retirement System,

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or FERS, are receiving a 2.0

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percent increase.

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Under FERS regulations, if the
CPI-W increase falls between 2.0

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percent and 3.0

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percent, the COLA is capped at 2.0

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percent.

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Regarding tax administration, the Office
of Personnel Management announced a policy

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change on 08 January 2026 concerning
the delivery of tax form 1099-R.

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Electronic delivery is now the
default method for annuitants

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with an email address on file.

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OPM will not mail paper copies to
these individuals unless they actively

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opt out via the Retirement Services
Online portal or the telephone hotline.

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For annuitants who requested paper
copies or do not have an email on

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file, OPM scheduled mailings for
the last week of January 2026.

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Concurrent with this policy, OPM launched
a new online tool on 08 January 2026.

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This tool allows annuitants to
download 1099-R forms using alternative

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identity verification methods that
do not require a full login to the

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Retirement Services Online system.

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In investment news, the Thrift
Savings Plan, or TSP, reported updated

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interest rates and new features.

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The interest rate for the Government
Securities Investment Fund,

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the G Fund, increased to 4.250

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percent for January 2026, up from 4.125

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percent in December 2025.

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Additionally, the TSP implemented a
new policy in January 2026 allowing

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for in-plan Roth conversions.

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This feature permits participants
to convert existing traditional,

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pre-tax TSP balances to Roth,
after-tax balances within the plan.

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Participants must pay taxes
on the converted amount in the

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year the conversion occurs.

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The National Active and Retired Federal
Employees Association, or NARFE, announced

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governance changes on 06 January 2026.

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The association initiated a special
referendum to amend its bylaws,

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proposing to extend term limits for
National Executive Board members

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from two years to three years.

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NARFE leadership stated this change aims
to provide continuity during the current

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period of government restructuring.

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Voting for this referendum is
scheduled to open later in January.

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Issues That Affect Current Federal Workers

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On 07 January 2026, OPM Director
Scott Kupor issued a memorandum

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titled "Guide to Telework and Remote
Work in the Federal Government."

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This guidance establishes a "starting
presumption" that federal employees

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will perform their entire bi-weekly
work requirement at an agency worksite.

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The document states that remote
work is prohibited unless a

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specific exemption applies.

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Exceptions are limited to military spouses
requiring relocation, specific reasonable

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accommodations for disabilities, and
limited cases for households where

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both spouses are federal employees.

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The guidance instructs agencies
to verify that employees are

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working full-time in-person.

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Regarding the implementation of these
policies for employees with disabilities,

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reports published on 08 January 2026
indicate that some agencies are requiring

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employees with existing reasonable
accommodations to return to the office

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or undergo new recertification processes.

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OPM Director Kupor published a blog
post defending the policy, stating

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that remote work rates had risen
from 3 percent pre-pandemic to 10

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percent, and arguing that a reset was
necessary to improve collaboration.

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Union leadership responded
to this guidance.

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On 07 January 2026, AFGE National
President Everett Kelley issued a

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statement opposing the directive, citing
the Telework Enhancement Act of 2010.

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NTEU National President Doreen Greenwald
stated that the union would enforce

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existing Collective Bargaining Agreements
that include telework protections.

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In agency-specific news, the
Federal Emergency Management

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Agency, or FEMA, commenced workforce
reductions during this period.

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Leaked documents reported by major news
outlets on 05 January 2026 outlined a plan

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by the Department of Homeland Security
to reduce FEMA’s "CORE" workforce—the

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Cadre of On-Call Response and Recovery.

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The plan details a 41 percent
reduction in CORE disaster roles,

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equivalent to over 4,300 positions,
and an 85 percent reduction in surge

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staffing, approximately 6,500 roles.

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Reports confirmed that terminations
began on New Year's Eve and continued

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through the week of 04 January 2026.

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These reductions impacted FEMA
Region 10 during active flooding

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events in Washington state.

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Legal actions regarding workforce
reductions continued this week.

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Unions including AFGE and NFFE are
litigating against mass terminations

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based on "Section 120" of the
current Continuing Resolution.

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This section prohibits
agencies funded by the CR from

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implementing reductions in force.

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A preliminary injunction issued by
Judge Susan Illston in December 2025

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remained in effect through 10 January
2026, legally blocking the finalization

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of specific termination notices at
agencies covered by the Continuing

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Resolution, such as the State Department.

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And that’s a wrap on this week’s
Federal Workforce Roundup.

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The landscape for federal employees
and retirees is constantly shifting,

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with major decisions being made about
everything from pay and job security

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to retirement benefits and the very
structure of the civil service.

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Staying informed is your best tool.

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Be sure to subscribe wherever you get your
podcasts, so you never miss an update.

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Thanks for tuning in.

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We’ll be back next week to
track the latest developments

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and what they mean for you.

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Until then, stay engaged and be well.