Recent OE IWG Meeting Minutes: a Retrospect

JULY 23, 2015

HR/OE Conference Room (Room 368, SA-44), 11 a.m. - noon

Present: Annaliese Pollock (SSA); Chang Lim (SSA); Maggie Crnic (DOE); Daniel Williams (USDA); Juliana Madrid (USDA/FAS); Fabienne Corcoran (DHS-ICE); William Olsen (DHS-ICE); Joseph Jackson (DOC/ITA); James Bedmon (DOD/ICASS); Alison Griffith (DOS/OGAC)

From OE: Mike Tulley, Jill Perry, Matt Klimow, Debbie Higgins, Richelle Cook, Ramona Payne, Kristin Murray and Pamela Scott (notes).

Additional participants from the Departments of Agriculture (APHIS), Commerce, Energy and Justice; Consumer Product Safety Commission, and other agencies took part by phone.

Introduction

Director Mike Tulley introduced Jill Perry, new Deputy Director, and Senior Advisor Matt Klimow.

HR-OE is moving to 1800 G Street NW in mid-October, (Farragut West metro).

The OPM security breach affects LE Staff minimally; we will keep agencies posted if this changes. Family member employees may be compromised. A June 4 message from the Office of the Under Secretary for Management stated that “data on State Department employees (Civil and Foreign Service, active and retiree; and Foreign Service National retirees under the old CSR system) was not on the OPM systems involved.”

2015 Salary Increases Update

· OE first authorized increases to the posts affected by Ebola (Liberia, Sierra Leone, Guinea)

· Like last year, we are sending out results to the field in groups of 10 every two weeks.

· To date, 80 FYI emails have gone out to posts, informing them of review results; a further ten will go out on Monday

· 50 of 110 increases have been fully authorized.

· If necessary, IWG members should email OE to enquire about the status of particular posts.

· Regarding authorized increases, payroll generally implements them within three pay periods of authorization.

· The process is going smoothly this year, with good interagency communication.

2016 Salary Increases

· Coming out of the Wage Freeze (i.e., in FY 2014), we used the 50% market percentile to establish increases; this year we targeted the 60% percentile, for all posts uniformly.

· Next year we hope to resume our former practice of establishing individual post-specific targets as we did before the freeze. Job markets vary widely and determining the market percentile involves many variables: attrition, unemployment, Local Compensation Questionnaire (LCQ) input (which incidentally, includes all agency participation and concurrence at post).

· OE will meet soon with Budget and Planning (BP) and Regional Bureau management to begin the process of determining posts’ market positions for 2016. We expect most posts will fall between the 60-70% percentiles of the local labor market.

Voluntary Contribution Plan (VCP) Update Richelle Cook and Ramona Payne

· The VCP is an end-of-service benefit plan.

· Every post will be reviewed but not every post will be legally eligible to implement VCP, depending on local law.

· L will determine which countries are eligible, country by country.

· VCP was implemented in the first pilot post (Saudi Arabia), on April 5, 2015.

· HR/OE selected Guatemala as the second pilot post with a tentative implementation date of November 29.

· Burundi, Qatar, Colombia and Bahrain have been approved by L for implementation.

Attached is a one page summary of the VCP.

The next IWG meeting will be in October; we may have to be flexible with the date due to our move.

Cuba

The Embassy is opening; there are few agencies there at this time, but this will change.

The address for HR OE documents on the ICASS website has changed to www.icass.gov/hr-oe, effective immediately.

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MARCH 13, 2015

HR/OE Conference Room (Room 368, SA-44), 11 a.m. - noon

Present: Shavon Beans (FAS); Cheryl Boudreau (DOD); Carmen Castro (DOS); Maggie Crnic; Jeremy Duermyer (DOD); Benedict Dichoso (DOD); Brad Doebel (DOS); Patti Hoffman (DOS); Maria Lau (DA); Chang Lim (SSA); Christopher Lynert (DOD); Joy Miller (FAS); Emily Nolte (DOS); Allison Schroeder (DOD); Daniel Williams (USDA); William Wong (Commerce).

From OE: Director Mike Tulley, Deputy Jack Hinden, Policy and Coordination Division Chief Debbie Higgins, Anne Amadou, Richelle Cook, Ramona Payne and Caroline Cole (notes).

Additional participants from the Departments of Agriculture, Defense, Energy and Justice; FAA, USAID, CDC, Consumer Product Safety Commission, Secret Service, CPSE and other agencies took part by phone.

Wage Defrost in 2015 Director Mike Tulley

Agenda items: a. Status and timeline

b. Prioritization list update

· This time last year, OE began sending out results of compensation reviews to the field.

· The budget process is going very slowly but the first tranche of analysis is completed and OE hopes to begin releasing results very soon.

· OE has sent results to the three posts affected by the Ebola crisis (Liberia, Sierra Leone, Guinea)

· Last year, we sent out results to the field in groups of 10. This year, we hope to proceed similarly. (We will have to coordinate this approach with our payroll offices in Charleston and Bangkok.)

· There has been some reprioritization of posts and some change in results from original estimates. E.g. Russia moved higher up, into the first tranche, since they are experiencing very high inflation; due to an error in the data source, there will be a proposed increase for Jakarta; and Kuwait, Jordan, and Brazil have moved higher up on the priority list. A representative from HR/OE will be in Namibia soon to assess the situation there, and Turkey dropped from a 12% increase to 6%.

· This year, we’re aiming for the 60th percentile

· Message for your posts: “We have met with HR/OE and some of our Headquarters budget officers are still finalizing the numbers internally and with OPM and the Hill. We have no final answers yet but hope to have them soon.

Merit Based Compensation (MBC) Division Chief Debbie Higgins

· Interest in participating is increasing

· There will be a workshop this summer in Washington DC from July 7-10

· It will take place in either Rosslyn or Crystal City

· Tuesday, July 7 will be open to anyone (employees of outside agencies, bureaus) who wants a comprehensive overview of the program

Alternate Retirement Plan (ARP) Deputy Director Jack Hinden

Agenda items: a. Reference Manual

b. Implementation and Pilot

c. Future plans

· This initiative has been in development for more than five years

· The new plan is designed to provide our employees with an end of service benefit.

· Employees will receive the benefit regardless of why they separate (i.e. not just for retirement.)

· We’re finally preparing for implementation

· The plan is referred to as the VCP

· Saudi Arabia is the first post piloting the plan

· OE has sent legal surveys to nine other countries to see whether VCP will be compatible with host country labor laws

· Funds will be paid to employee in a lump sum

· About 1200 US Citizen LE Staff employees will participate

· Any country with a DCP already in place will not be as high a priority

· A VCP can replace a current plan when legally acceptable however, the old plan will close for new hires

· VCP will be managed in Charleston rather than through a private bank

· We will onboard one or two posts this fiscal year and about three or four a year thereafter.

· We estimate about 30-40 posts in total will use the new plan

Attached is a one page summary of the VCP and a tentative list of posts that are in the second and third tranches. The list is for planning purposes only and is subject to change at a moments notice.

Finally, one representative suggested we establish a regular date and time for IWG meetings. We propose the last Friday of each quarter at 11a.m. Therefore, the next meeting will be Friday June 26, 2015. We may schedule another meeting before then if needed.

For those without access to IntraNet, ICASS enables you to access many of HR OE’s major materials at: https://www.icass.gov/home/Documents/Forms/hroe.aspx

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December 3, 2014

HR/OE Conference Room (Room 368, SA-44), 2-3 p.m.

Present: Nicole Buckey (DOD/DIA); Maria Caisa (DOJ/CRM); Sue Chan (DOJ); Benedict Dichoso (DOD); Sherri Fennell (USAID); Michelle Freeman (DOD); Alison Griffith (DOS/PEPFAR); Cliff Howlett (DOD/DIA); Taisha Jones (USAID); Samuel Kalonji (USAID); Richard Roberts (OSIS); Letitia Smith (USSS); William Plummer (Peace Corps); Pat Wexel (USAID); William Wong (Commerce).

From OE: Director Mike Tulley, Deputy Director Jack Hinden, Compensation Division Chief Kumiah Harrison; Policy and Coordination Division Chief Debbie Higgins, HRO Anne Amadou, HRO Ronnie McCall, Monica Bedi and Pamela Scott (notes).

About 70 participants from the Departments of Agriculture, Defense, Energy and Justice; FAA, USAID, CDC, Consumer Product Safety Commission, the Secret Service, FAS, CPSE, USDA and other agencies attended by phone.

Debbie Vaughn, HRO from Frankfurt Regional Center and MBC expert.

Status of the Wage Defrost Director Mike Tulley

OE Director Mike Tulley, using an updated spreadsheet similar to the one we saw at previous meetings, discussed the implementation of the wage defrost. The spreadsheet will be circulated electronically to all shortly; please remember that the information it contains is sensitive, represents estimates and should not be distributed further. There are fourteen new posts at the top of the list: Liberia, Eritrea, Vietnam, Central African Republic, Angola, Togo, Laos, Senegal, Timor-Leste, Gabon, Croatia, Haiti, Cameroon and Cambodia. These could have received increases in 2014 but did not due to a lack of funding and time for analysis, so will be prioritized in 2015.

An additional 30 posts moved up on the list as regional bureau priority selections. OE asked the bureaus to select priorities according to attrition, recruitment issues, interagency considerations and other relevant factors confronting posts. Where this occurred it did not “bump” any posts to a later cycle, so that the present cycle distribution is unevenly spread.

The Compensation team is well on track and aims to complete Cycle 1 reviews by the end of February. Division Chief Kumiah Harrison stressed that the chart provides budget estimates rather than definitive amounts, and that agencies should inform their colleagues to take this into account when planning budgets.

Last year about 70 posts received increases; if all participating agencies (including DOS) are able to fund to the 60th percentile that would mean that about approximately 110 will receive increases in 2015.

When increases are funded depends on Congress. An omnibus bill could be passed for the entire fiscal year before the impending Christmas recess for the best possible scenario, but last year we did not have budget certainty till late April/early May. So the timing of increases depends on the actions of Congress.

In 2015 HR/OE will be able to offer more flexibility than last year for posts to propose different increases by grades. This will be handled on a case-by-case basis and will depend on what the data shows.

Merit Based Compensation (MBC) Division Chief Debbie Higgins

Debbie explained the MBC system, which replaces the Within Grades Increases (WGIs) with a variable increase based on performance. London has been using merit based compensation for the past twenty years. It has several advantages: it allows LE Staff at the top of their grades to be rewarded for good performance; it improves communication between supervisors and employees; staff is evaluated against pre-agreed goals on a point system, and it is more in line with prevailing HR best practice.

Europe is rolling out MBC, and other regional bureaus have expressed an interest; however, it is unlikely that MBC will go global. Posts need a local legal opinion and Front Office support in order to initiate the process.

Debbie explained how present WGIs and MBC are funded by the Department of State (a 3% overall annual budget) and asked agencies to consider how they budget for employee within grade increases. MBC might increase costs for some agencies and decrease it for others. Performance pools will be separate for each agency since they have different funding. Implementing MBC takes about one year; it requires numerous briefings, training, a local legal opinion, and the LCP has to be changed. MBC uses a single evaluation form whereas there are currently three. In conclusion she urged agencies to contact her with any questions about MBC.


Alternate Retirement Plan (ARP) Deputy Director Jack Hinden

Jack outlined the ARP, which OE is finalizing, after major input from the IRS on the impact on US Citizens. We are working to implement a Variable Contribution Plan (VCP) for Locally Employed (LE) Staff overseas, with the intent of supporting their financial security in retirement. The VCP is one component of the Alternate Retirement Plan (ARP), with the other being the existing FSN Defined Contribution Plan (FSN DCP), which is in effect in approximately 30 countries and was established in 2003. The VCP is part of a category of plans referred to as a “defined contribution plan”—a retirement plan in which employer and employee make regular contributions into an account that will become payable to the employee when s/he leaves USG service. The amount of contributions will vary between posts, and is based on prevailing practice.

Once the VCP is finalized, OE’s first priority will be to implement it in posts with supplemental Defined Benefit (DB) plans, which exist in about 15 countries, where post management and/or the Department have concerns about the reliability, trustworthiness, and solvency of the current plan.

The Variable Contribution Plan (VCP) will in most cases consist of three sub-accounts: a) USG contributions; b) Required Employee contributions; and, c) Additional Employee Voluntary Contributions (up to a specified maximum). Determination of the amount of the USG contributions and employee deductions will be based on prevailing practice in each country; in some locations, local conditions will not allow for mandatory employee contributions. Posts will not be required to withdraw from LSSS to participate in this plan, and employees will not have the option to purchase prior service credit. The VCP will not be applicable to all posts due to local laws; it would be part of the Local Compensation Plan (LCP) and involve all agencies at post.

VCP funds will be managed in Washington and invested directly with the U.S. Treasury securities by the Department. Employees will have no claim to the contributions until actual payout because of the way the VCP has been structured to comply with U.S. tax regulations.

Nine posts are participating in local legal surveys (Albania, Burundi, Colombia, Grenada, Guatemala, Guyana, Norway, Saudi Arabia and Suriname). We aim to implement the VCP at a pilot post by April 1, 2015. Posts without viable retirement plans will be prioritized in the planned rollout; probably only a handful of posts will adopt it during that first year. Existing retirement plans will be phased out. Agencies requested further information as early as possible in order to prepare accordingly.