Federal Civilian Personnel

The cost of lump-sum payments to employees leaving the federal government totaled $562 million in 1996. Between 1985 and 1996, lump-sum payments averaged about $595 million per year. The costs ranged from a low of $355 million in 1991 to a high of $700 million in 1992, when downsizing led to large numbers of separations. The Office of Personnel Management has not provided formal written guidance on lump-sum payments since 1993, and other guidance that is available to agencies falls short of ensuring consistent agency payment practices. As a result, employees leaving different agencies with the same rates of pay and amounts of unused annual leave may not receive the same payment amount. The Congressional Budget Office estimates that agencies could save $18 million in personnel costs over five years if lump-sum annual leave payments were limited to the rate of pay at the time of separation, instead of the current method of assuming that the employee had remained in service until the entire leave balance had expired. Such a limitation would not, however, ensure consistent treatment of employees and might cause workforce disruptions if employees were forced to use all or a large part of their accumulated leave before separation.

GAO noted that: (1) in calendar year 1996, the cost of lump-sum leave payments to separating civilian employees was about $562 million governmentwide; (2) between 1985 and 1996, lump-sum payments averaged about $595 million per year (in constant 1996 dollars); (3) the costs ranged from a low of about $355 million in 1991 to a high of about $700 million in 1992, when downsizing resulted in large numbers of separations; (4) the Office of Personnel Management (OPM) has not provided formal written guidance regarding lump-sum payments since 1993, and the other sources of guidance that are available to agencies are insufficient to ensure consistent agency payment practices; (5) as a consequence, employees separating from different agencies with the same rates of pay and amounts of unused annual leave may not receive the same payment amount; (6) Congress gave OPM specific authority to prescribe lump-sum payment regulations in 1992, and OPM has drafted regulations and told GAO that it intends to publish them in the summer of 1997; (7) in the meantime, agencies must rely on the language of the statute and Comptroller General decisions, but these sources do not cover all situations; (8) an OPM survey of agency practices revealed that although there appeared to be a high degree of commonality in the types of pay that agencies were including in the payment, practices diverged for some types of pay; (9) based in part on GAO information and analysis, the Congressional Budget Office (CBO) estimated that agencies could realize personnel cost savings of $18 million over 5 years if lump-sum annual leave payments were limited to the rate of pay at the time of separation, instead of the current method of assuming the employee had remained in service until the entire leave balance had expired; and (10) however, such a limitation would not ensure consistent treatment of employees and might cause some workforce disruptions if it were to cause employees to use all or a substantial part of their accumulated leave before separation.