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Memorandum of Disapproval of Bill To Amend the Civil Service Retirement Act.

August 12, 1955

I AM WITHHOLDING approval of S. 1041, a bill "To amend the Civil Service Retirement Act of May 29, 1930, as amended, 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."

This bill would provide additional retirement benefits to those Federal and District of Columbia employees who also have been, are now, or in the future may become employees of the States or of State instrumentalities on Federal-State programs financed either wholly or in part by Federal funds, in 5 types of agricultural programs and in programs of vocational education.

The bill is not approved because it would ( 1 ) make improper use of Federal funds to pay for services never received by it, (2) result in an unsound shifting of fiscal responsibility from State to Federal Government, (3) set an undesirable precedent, and (4) constitute an unsound approach to a desirable goal of increased employee mobility.

First, and most important, these additional retirement benefits would not be based upon Federal employment but on State employment. States and State instrumentalities are responsible for paying for services rendered to them, and there is no assertion that such obligations are not met. Federal retired pay is a basic element in the compensation system provided by the Federal Government in exchange for work performed by its employees. To provide additional compensation payable out of the Federal Civil Service Retirement Fund on the basis of work performed for another employer appears to be an unnecessary and improper use of Federal funds.

Second, the financing principle followed in this bill is unsound. The Federal Civil Service Retirement Fund has been built up by contributions from Federal employees and from the Federal Government as an employer. Under the bill the affected employees would now pay retirement contributions for their State service as if it had been Federal service but since the ultimate annuity payments would average several times such contributions, the major portion of the cost of this bill would be borne by Federal taxpayers. This shift of fiscal responsibility from the actual employer, the State or State instrumentalities, to the Federal Government would be accomplished with no corresponding transfer of funds. This unsound fiscal policy could become an even more serious matter if the program were to be extended to all employee groups having similar claims.

Third, the bill appears to establish an undesirable precedent for making similar payments on the basis of employment in many other Federal-State cooperative programs. The record on the bill indicates that over 80 such programs have already been identified. Extension of similar benefits to employees of all such programs would lead far afield.

Fourth, although the bill seems to have the sound objective of encouraging transfers of employees between State and Federal employment, I do not believe that it moves toward this objective in a proper manner. A firmer, more acceptable step would be to extend the Federal old age and survivors system to include Federal employees. With employees of an increasing number of States also covered under that system, both Federal and State retirement systems would share a common base and all OASI benefits would be preserved in moving from one employer to another. Recommendations to the Congress will be made on this matter early in the next session.

DWIGHT D. EISENHOWER

Dwight D. Eisenhower, Memorandum of Disapproval of Bill To Amend the Civil Service Retirement Act. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/233486

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