Budget Cuts Are Delaying USPS and Federal Retiree Payments

Government efforts to save pennies always seem to end up costing dollars, as some U.S. Postal Service and federal retirees are learning the hard way. As a result, future efforts to downsize the Postal Service through early retirements may suffer.

USPS’s most successful efficiency tactic in recent years has been reducing its workforce by offering Voluntary Early Retirement (VERA). But reports of disgraceful nine-month waits to start receiving full retirement checks discouraged many other employees from taking the offers.

The federal Office of Personnel Management made remarkable progress last year, reducing the backlog of federal and USPS retirement applications by 55%, the agency reported yesterday. In the first quarter of this year, OPM processed more applications than ever in recent memory, putting it “on track to eliminate the pending case backlog” and to achieve “our target processing time of 60 days.”

But look for more backlogs and delays, OPM warned.

With the help of additional overtime and improved processes, the agency was able to keep pace when faced with a wave of about 21,000 early-retirement applications from postal workers early this year. OPM reported that it “was able to produce an average of 14,000 claims per month in February, March, and April rather than the 11,500 per month plateau envisioned in the strategic plan.”

Then OPM was hit by the sequester – budget cuts that kicked in because Congress couldn’t come to agreement on how to close the federal budget gap. The cuts were automatic, with Congress and the Obama Administration having little ability to preserve spending that would end up saving money.

“Beginning on April 28, 2013, all overtime for employees working in RS [Retirement Services] at OPM was suspended and call center hours were reduced,” the agency said. “The loss of funding through sequestration resulted in a reduction of 20 to 25 percent of case production. Our current processing capability generally matches the receipts each month, preventing us from reducing the inventory, which is needed to reach our goal to process 90% of the cases within 60 days of receipt.”

"Retirees should expect an increase in the time required to respond to inquiries."

The sequester has also prevented the agency from replacing employees and may cause it to lose many of the temporary workers it hired to battle the backlog. (When government employees get jerked around like this, is it any wonder that "good enough for government work" is so often substandard?)

“While it is our hope that process improvements developed over the past year will ameliorate some of the adverse effects of these necessary actions, retirees should expect an increase in the time required to respond to inquiries,” the agency wrote.

If normal funding is restored when the new fiscal year begins in October, the agency estimates it can whittle the backlog down to target levels by March 2014. But that’s a big if.

After all, a previous ill-advised cost-cutting program got OPM into the backlog mess in the first place. Claims-processing staff was reduced a few years ago in anticipation of an automation system that ended up being a total failure.

In any case, postal workers considering retirement will still need to consider how they’ll get by in the months between the paycheck stopping and the full retirement checks coming.

Related articles:

• It's Good News, Bad News For USPS and Fed Retirees 
• For Postal Service Retirements, Slow Going Ahead  
• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways 
• The Hidden Benefit of Postal Service Retirement