SCHEDULE C-GOVERNMENT CONTRIBUTIONS

HOUSE OF REPRESENTATIVES

DETAILED ANALYSIS OF CHANGE BY ORGANIZATION
GOVERNMENT CONTRIBUTIONS

Explanation of Changes Shown on Schedule C

ALLOWANCES AND EXPENSES
GOVERNMENT CONTRIBUTIONS

For House's share of various employee benefit programs outlined below, $201,350,000. The fiscal year 2005 budget request is an increase of $14,567,000 or 7.8% over the amount provided in fiscal year 2004 (after accounting for a possible rescission). This amount includes $200,600,000 for mandatory items, and an increase of $750,000 for program changes.

I. Personnel Details: FY'05 Request - $200,600,000

A. Base: $186,783,000

i. The estimated FY'04 personnel benefits will be $186,783,000

B. Budget Calculations:

i. Cost estimates are based on 30.95 cents in benefit costs for every personnel dollar estimated to be earned in FY'05, which is $608,146,000

ii. Workers' Compensation Bill, $1,379,000

iii. Student Loan Repayment Program - $11,000,000, which funds approximately 60% of the full authorization for the program

C. Requested Changes:

i. FY'05 Personnel Benefits - $13,817,000

■ Increased Personnel Budget - $10,471,000

■ Increased trend for percentage of House's portion of benefit cost per personnel dollar - $3,345,000

Restore rescinded funding - $1,000,000

D. Benefit Descriptions:

i. Federal Employees Retirement System (FERS): FERS is a retirement system
that is responsive to the changing times and Federal work force needs. Many
of its features are "portable" so that if an employee leaves Federal
employment, they may still qualify for the benefit. FERS is flexible in that it
allows each employee to select options that best suit their situation, thereby
enabling employees a more active role in securing their future. FERS
contributions were deemed mandatory coverage for employees hired after
January 1, 1984. Effective October 1, 1994, the government contribution for
FERS was reduced from 18.8% of gross pay to 16.9%. Effective October 1,
1997, the agency contribution was further reduced to 15.4% for Congressional
employees. The rate currently stands at 15.9% for Congressional
Employees.

ii. Civil Service Retirement System (CSRS)/ Civil Service Retirement Offset
(CSRO): Due to mandatory FERS coverage for new employees, the number
of CSRS and CSRO employees continues to decrease each year. As of
September 2000, there were 1,028 employees enrolled in the CSRS/CSRO
plans. One year later, there were 904 employees enrolled in the same plans, a
12% reduction under the participation level of one year earlier. There are
currently 251 employees covered by CSRO and 524 covered by CSRS as of
January 2004. Some returning employees with a break in federal service of

less than 366 days are eligible to return under CSRS. If an employee's break in service is greater than 366 days, they have 5 years of federal service and have not taken a refund of their deposit, they are eligible for the CSR-offset system. On August 5, 1997, the President signed into law Public Law 105-33, "The Balanced Budget Act of 1997". The legislation contained provisions which temporarily change the agency contribution rate for the CSRS. Effective October 1, 1997, the agency contribution rate for Congressional employees went from 7.5% to 9.01%. On October 1, 2002 the rate changed from 9.01% to 8.0%. The agency contribution rate reverted to 7.5% on January 1, 2003.

iii. Thrift Savings Plan (TSP): The percentage of government contributions to the Thrift Savings Plan continues to grow as employees shift to the FERS

retirement program. FERS employees automatically receive 1% of their gross pay effective the second Open Season after they become eligible to contribute to TSP, even if they elect not to contribute to the plan.

iv. Federal Insurance Contributions Act (FICA): FICA was also deemed mandatory coverage for employees hired after January 1, 1984. The Government matching portion of FICA remains at 6.2%. The maximum taxable wage base is adjusted annually. There is an increase in the taxable wage base from $87,000 in 2003 to $87,900 in 2004.

v. Medicare: The government contribution for Medicare is currently 1.45% of gross pay and is not subject to a maximum taxable wage base. The House has withheld the employee's portion of Medicare since January 1, 1983.

vi. Federal Employee Health Benefit Program (FEHB): This program provide health care benefits to employees who enroll in the program. The House subscribes to the same benefit providers as the Executive branch. The House pays 72% of the average premium towards the total cost of the health benefits premium, up to a maximum of 75% of the total premium for any plan. The employees cover the remaining portion. As a percentage of total employees, the number of employees enrolled has remained fairly constant. vii. Life Insurance: This program covers the cost of Basic Life for active

employees and is based on the Basic Life Amount. The employee pays twothirds of the total cost and the government pays one-third. The employee pays the total cost of additional optional insurance.

viii. Unemployment Compensation: Covers the House's share of unemployment cost for employees who are terminated either for cause or because their Member is not re-elected to Congress. The cost of this benefit rose dramatically in Fiscal Year 2003 and is partly responsible for the increased trend in percentage of benefit dollar per personnel dollar noted in the requested changes above in section I.C.i.

ix. Workers' Compensation: This bill was received from the Department of

Labor in the summer of 2003 and is included in every annual request.

x. Student Loan Repayment Program (SLRP): The House authorized the SLRP in Public Law 108-7. The Committee on House Administration in conjunction with the Chief Administrative Officer, implemented the SLRP in May 2003. Under this program, an employing office of the House of Representatives may agree to repay any federally insured student loan previously taken out by the employee. Offices are currently limited to 2% of their annual salaries and expenses budget (a budget is defined as the office appropriation if it is a fiscal-year office and Member/Committee authorizations if it is a calendar-year office), and one-twelfth of the annual

amount monthly. Participation has steadily grown since inception of the program, with participation rates of 1,391 employees by the end of fiscal year 2003.

xi. House Fitness Center Program: Authorized by the Committee on House Administration in March 2003, this program provides access to physical fitness services through a local provider. This partnership provides for a sharing of costs between the House and its staff who chose to enroll. The House has contracted with the a local provider for $50,000 to cover participation rates between 500 and 2000 staff (with escalation clauses for participation above 2000). Current enrollment in the program is approximately 1,300 House staff.

II. Program Details:

A. Proposed Changes:

i. Supplemental Benefits and Flexible Spending Accounts (FSA): $750,000 -
Provides a study to review the implementation requirements and a quarter-
year funding for expanded benefits (e.g., dental and vision) in the event that
the program is authorized in fiscal year 2005. It also provides partial-year
funding for a third party administration fee for managing the FSA
program.

The House has long been concerned about its ability to attract and retain wellqualified employees for the multitude of positions needed, whether directly in support of legislative functions or other positions that may be more administrative in nature. In order to provide competitive pay, efforts have been undertaken to enhance benefits to House employees. For example, a transit benefit has been created for those who commute by mass transit; a student loan reimbursement program has been established and Congressional Accountability Act protections have been provided for Family and Medical Leave Act coverage. The House assessed its current benefits offering through a survey of its employees in fiscal year 2002. The survey found that health enhancements were desired in three primary areas: vision, dental and physical fitness. For example, the majority of respondents in the survey (74.5%) gave their dental coverage a very low satisfaction rating and an almost equal portion of employees (77%) would be willing to pay an additional amount for a supplemental dental plan.

A short-term solution has already been implemented to provide physical fitness access through a contract with a local provider, though the House continues to assess long-term solutions in this area. The above request specifically addresses: (1) the administration fees for FSA; and (2) the possible expansion of benefits for dental and vision to fill the remaining gap identified by the survey. The study that is proposed in this request will identify the implementation requirements for expanded benefits and estimate the costs to the House, should it proceed with the expanded coverage.