YAKIMA, WASH., August 26, 1963. Hon. CATHERINE MAY, House of Representatives, Washington, D.C. MADAM: As a Federal employee formerly employed as a State employee under a Federal-State cooperative agreement. I am interested in the House bill, H.R. 5376, by Representative Henderson, of North Carolina. I would appreciate knowing the present status of this bill. Thank you. W. J. IREY. PROSSER, WASH., August 13, 1963. Hon. CATHERINE MAY, U.S. House Office Building, Washington, D.C'. DEAR CONGRESSWOMAN MAY: I am vitally interested in House bill 5376 and Senate bill 991. I would appreciate very much knowing the present status of these two bills. I would like to know what position you are taking with respect to S. 991. If you are opposed to it, I would be interested in why. Sincerely yours, CLARENCE M. RINCKER. Mr. BARRY. If there are no other witnesses at the present time, the meeting will stand adjourned until 10 o'clock on Monday next. (Whereupon, at 12:45 p.m., the committee adjourned, to reconvene at 10 a.m. Monday, June 29, 1964.) RETIREMENT CREDIT AND FRINGE BENEFITS FOR FEDERAL-STATE SERVICE MONDAY, JUNE 29, 1964 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON CIVIL SERVICE OF THE COMMITTEE ON POST OFFICE AND CIVIL SERVICE, Washington, D.C. The subcommittee met, pursuant to adjournment, at 10 a.m. in room 215, Cannon House Office Building, Hon. James H. Morrison (subcommittee chairman) presiding. Mr. MORRISON. The subcommittee will come to order. The subcommittee resumes testimony this morning on two separate legislative proposals: H.R. 5376, a bill to amend the Civil Service Retirement Act to provide for the inclusion in the computation of accredited service of certain periods of service rendered States or instrumentalities of States, and for other purposes; and H.R. 8544, a bill to extend the benefits of the Annual and Sick Leave Act of 1951, the Veterans' Preference Act of 1944, and the Classification Act of 1949 with respect to employees of county committees established pursuant to section 8(b) of the Soil Conservation and Domestic Allotment Act, and for other purposes. Our first witness is the distinguished Chairman of the Civil Service Commision, Hon. John W. Macy, Jr., who is accompanied by Mr. Andrew E. Ruddock and Mr. Morton Horvitz. Will you gentlemen proceed? STATEMENT OF HON. JOHN W. MACY, JR., CHAIRMAN, CIVIL SERVICE COMMISSION; ACCOMPANIED BY ANDREW E. RUDDOCK, DIRECTOR, BUREAU OF RETIREMENT AND INSURANCE; AND MORTON HORVITZ, PROGRAM PLANNER Mr. MACY. Thank you very much, Mr. Chairman. Mr. MORRISON. Incidentally, Mr. Ruddock is Director of the Bureau of Retirement and Insurance, and Mr. Horvitz is the Program Planner. Mr. MACY. Yes, sir. I appreciate your permitting them to join me here at the witness table. I want to express my appreciation, Mr. Chairman, of your accommodating to my schedule and permitting me to testify this morning rather than Friday. I must say in appearing before you on this legislation I feel I am going through an act I have performed several times before, but I have tried to rewrite the words a little bit so that there will not be a boredom in stating them again. I am pleased at this time to appear in connection with your consideration of H.R. 5376 and H.R. 8544. I will discuss each bill separately. H.R. 5376 proposes to accord Civil Service Retirement Act credit for certain service performed as an employee of a State or State instrumentality where Federal funds are involved. Of the numerous programs in which the Government makes direct payments to States under cooperative arrangements, this bill selects 15 wherein employment would be credited. My letter of June 23, 1964, which you may wish to incorporate in the record, fully sets forth the Commission's position regarding this proposal. Mr. MORRISON. It is already in the record. Mr. MACY. Thank you, sir. H.R. 5376 raises an issue which has caused successive Commissioners much concern in the past several years. This issue is the growing and concerted trend to change the fundamental concept of the Government's civilian retirement system. This system was created exclusively for the retirement of Federal and District of Columbia employees. It was designed to provide retirement benefits as postemployment recognition for faithful service to the United States as an employer. The system's effectiveness as a personnel management instrument would be seriously and adversely affected if persons were able to spend most of their careers in non-Federal employment, secure in the knowledge that later Federal service of as little as 5 years would result in assumption by the Federal Government of responsibility for retirement income based on all their service. The United States fully meets its obligations to the individual who chooses it as an employer for only a part of his career. Five years of Federal civilian service vests in the worker a right to old-age retirement protection commensurate with the service performed. That an individual should wish more is a natural reaction. But there is no practical limit to which such proposals might be extended. For example, employees of independent contractors constructing buildings or producing goods for the Government could as reasonably point out that their labor constitutes a service equally deserving of consideration. In line with its consistent opposition in the past to crediting nonFederal service under the Civil Service Retirement Act, the Commission firmly opposes enactment of H.R. 5376. In other words, we oppose any proposal which departs from the concept that retirement credit is proper only where the employer-employee relationship existed between the Government and the individual. In 1955, the 84th Congress approved a bill substantially similar to the current H.R. 5376, but involving only six programs. Presidential veto at that time averted action to change the basic approach of the Government's retirement system. However, a breach in the system came in July 1960. Although the Commission offered strong adverse recommendation, Congress, over the President's veto, accorded retirement, life insurance, and health benefits coverage and credit to nonFederal employees of the agricultural stabilization and conservation county committees. It is the Commission's present hope that this approach will not be considered a precedent and will not be carried further by favorable action on H.R. 5376, or by any similar proposal. H.R. 8544 is addressed to a somewhat different situation than H.R. 5376, but has a similar objective. What it would do is make non Federal service creditable toward Federal employee rights and benefits. Specifically, H.R. 8544 would grant salary, leave, and retention credit in Federal employment for service performed with Agricultural Stabilization and Conservation Service county committees. It would also permit the transfer of unused annual and sick leave earned in county committee employment to the leave accounts of county committee employees who enter the Federal service. A Commission report of March 6, 1964, presents fully our reasons for recommending against this legislation. However, I would like to point up these reasons once more. While it is true that ASC county committees are part of a Federal program administered by the Department of Agriculture, and while it is also true that county committee employees resemble Federal employees in certain respects, the fact remains that county committee employees are not Federal employees. Proof that they are not Federal employees is the fact that legislation is needed to declare their service creditable for the purposes of Federal employee benefits. As long as they continue to be non-Federal employees there is no public policy reason for according them any further rights and benefits of Federal employment. If ASC county committee employees are non-Federal, then what is their actual status? Ostensibly they are and were intended to be employees of farmer-elected, farmer-composed committees of private citizens. Yet, over the years a combination of regulation and legislation has made it increasingly difficult to determine what their status really is. They seem to be somewhere "betwixt and between." Here are some examples of what I am referring to: County committee employees are Federal employees for certain benefits of Federal employment, but not for the protections and obligations of such laws as the Lloyd-La Follette Act or the Veterans' Preference Act. County office managers are hired by non-Federal county committees, but may not be appointed unless they meet the approval of the State committee which is Federal. County office employees are hired by and serve "at the pleasure of" the county office managers, but they can be fired by any of the following: The non-Federal county office manager, the non-Federal county committee, the State committee (Federal) or the Deputy Administrator (Federal). By granting additional rights and benefits arising out of Federal employment, this legislation would further complicate the already unclear relationship between the Federal Government and county committee personnel. There are several other factors that we believe are deserving of consideration. For one thing, this legislation would give ASC county committee employees an advantage not available to others outside of the Federal service, and would make it difficult if not impossible to draw the line at granting similar benefits to other non-Federal personnel employed in federally sponsored programs. Furthermore, not only would it give former ASC county committee employees an advantage over others outside of the Federal service, but in some situations would even give them an advantage over persons in the Federal service. For example, under the retention credit feature contained in section 3 of the bill, a former ASC county |