Federal Employees

In response to a congressional request, GAO examined the Department of Defense's (DOD) management of the voluntary early retirement program authorized in fiscal year (FY) 1988 because of budget reductions, focusing on the cost and possible adverse effect of large numbers of DOD civilian employees choosing early retirement.

GAO found that: (1) employees are eligible for voluntary early retirement when an agency undergoes a major reduction-in-force due to budget reductions; (2) in FY 1988, 9,611 of the 65,216 DOD employees eligible for retirement elected to retire early, and DOD approved 96 percent; (3) 15,763 of the Army Materiel Command's employees were eligible for early retirement and 2,877 retired, while the Air Force Logistics Center in Oklahoma had 2,345 employees eligible and 634 retired; (4) the Army showed an average budgetary saving of $23,076 per retiree in FY 1988, but due to budget outlays from the Civil Service Retirement Fund, the net cost per retiree was $9,146; and (5) the Army Materiel Command filled 931 of its early retirement vacancies, while the Air Force Center hired 1,282 new employees. GAO also found that: (1) the Army Material Command and Air Force Center took actions to save money during FY 1988 in addition to granting early retirements, including a partial hiring freeze, which saved $25 million, release of temporary employees, which saved $10 million, and reductions in overtime, travel, and a summer hire program, which saved $12 million; (2) the Army received congressional approval to reprogram other appropriated funds in August 1988, which it used to hire more employees, while the Air Force Center substantially froze new hiring for FY 1988, limited overtime, and reduced temporary employees and performance awards; and (3) Army and Air Force officials stated that early retirements of employees in hard-to-fill positions did not affect their missions.