Will sequestration, retirement wave derail OPM's backlog goal

Thursday - 5/9/2013, 5:19pm EDT

Despite a surge in the number of federal employees putting in for retirement over the past few months, the Office of Personnel Management has made steady progress chipping away at a longstanding backlog of retirement claims.

But Oversight Committee lawmakers and other government watchdogs remain concerned that the absence of a long-term plan to overhaul the mostly paper-based process combined with across-the-board budget cuts and a lack of strong leadership within OPM could derail the progress the agency has made.

'Give credit where credit is due'

OPM's efforts over the past year to shrink the pension backlog received praise at a House Oversight and Government Reform Subcommittee on the Federal Workforce, U.S. Postal Service and the Census hearing Thursday.

"Let's give credit where credit is due," said Joseph Beaudoin, president of the National Active and Retired Federal Employees Association. "OPM laid out a strategic plan that predicted improvements in claims processing. ... OPM implemented the plan as intended, and it has worked."

Last January, faced with intense criticism, the agency deployed a multi-pronged strategic plan to shrink the backlog that by that time had ballooned to more than 60,000 claims.

Since deploying the new strategy, OPM has cut the backlog by 57 percent and reduced the average time it takes to process a claim — from 156 days to 136 days, said Ken Zawodny, director of Retirement Services at OPM.

The strategic plan calls for OPM to clear the inventory entirely by this July and fully process 90 percent of retirement claims within 60 days going forward.

A wrench in the plans

But recent developments may throw a wrench in OPM's best-laid plans.

Between January and April, OPM received about 60,000 new retirement applications, approximately 43 percent more than in a similar stretch of time last year and 51 percent more than OPM expected, Zawodny said.

At the end of April, the backlog stood at about 30,000 claims; OPM had expected to have the backlog down to about 23,000 claims by that time.

The automatic budget cuts, known as sequestration, could throw another wrench in the process. Last month, Zawodny announced OPM would suspend overtime hours for employees who work on processing retirement applications because of the cuts.

Last year, the use of overtime allowed OPM employees to process some 34,000 claims, about 26 percent of OPM's total processing output, Zawodny said.

"The recent setbacks ... have slowed us a down a bit," he told the committee. But it's still too early to tell exactly what the impact will be, he added.

"Within the next 30 days, after we have a full understanding of what our capabilities are without the use of overtime in processing our workload, I'll be better able to judge and project out what our capabilities are going to forecast up until July," Zawodny said.

Too much attention on the backlog?

Despite the progress made so far, OPM's inspector general suggested the all-hands- on-deck approach to reducing the pension backlog has diverted resources and attention away from other areas.

"What I think has happened is this backlog has caused a real problem for the other aspects of Retirement Services," said OPM IG Patrick McFarland.

In particular, cutting down on the rate of improper payments has received short shrift, he said. OPM pays out about $100 million in retirement benefits to deceased retirees, according to the IG.

The IG's office is also "troubled" by a decline in the number of cases of suspected fraud OPM's Retirement Services office brings to the attention of the IG.

In 2011, the retirement office flagged just 30 cases of suspected fraud, down from 92 fraud referrals in 2010.

McFarland faulted a lack of leadership and accountability in the retirement division.

"The Retirement Services' everyday workload has subsumed what were already weak management directives," he testified. "It has become management by happenstance rather than management by design and leadership."

Is OPM thinking long term?

The process for handling retirement claims is still a mostly manual, paper-based one. OPM has long struggled with upgrading its technology. It terminated the most recent modernization effort, RetireEZ, in February 2011, leaving the agency with about the same system for processing retirements it has used since the 1980s.

The new strategic plan eschews large-scale IT modernization in favor of more incremental improvements, which received a nod of approval from the Government Accountability Office.

"I think that the approach they're taking which is what we see right now — very modest, incremental steps to implementing or upgrading some of the technology that they do have — is probably a prudent and risk-based approach for them to take given the history of their inability to be successful with some intitiatives in the past," said Valerie Melvin, director of information management and technology resources issues at GAO.

But OPM needs to start thinking long-term, she said.

"Because this is still largely a manual process and because it does rely significantly on overtime to help maintain and bring down the workload that they currently have, there has to be a longer-term strategy and approach to making sure that the agency can, in fact, move to an overall electronic capability," Melvin said.

OPM has already laid the groundwork for moving to a modernized system. In its 2014 budget request, OPM requested $2.6 million in new funding for a case-management system to streamline retirement processing and digitally track data.

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