Buyouts would generate over $60,000 (up to 50 percent) more in net savings than RIFs for each vacated position over the 5 years. Employees separated from the federal government through buyouts are typically at higher grade levels than those separated through RIFs, thereby producing greater savings in salaries and benefits. However, if employees separated from the federal government through RIFs are retirement eligible and do not displace lower-graded employees, savings from RIFs could marginally exceed savings from buyouts over a 5-year period. For these cases, RIFs could generate around $29,000 (up to 12 percent) more in net savings than buyouts for each position vacated over the 5-year period. Bumping and Retreating Reduces RIF Savings

The right of federal employees to bump and retreat reduces the savings achieved under a RIF, because the savings realized represent the salary and benefits of the lower-graded employee who actually leaves the federal payroll. In such instances, any savings from buyouts or RIFs could be reduced by the cost of refilling the position or contracting out the work. More Buyouts Than RIFs May Be Needed to Reach an Agency’s Downsizing Target

An agency may need a larger number of buyouts than RIFs to reach its downsizing target. Buyouts Avoid Noneconomic Effects of RIFs on Workforce

Agency officials noted that buyouts avoid or reduce some of the negative noneconomic effects of RIFs, such as diminished workforce diversity. In addition, some agencies that recently conducted RIFs said they experienced other adverse effects historically associated with RIFs, including decreased productivity and lower employee morale. 2. 3. 5. 7. GAO Comments

1. 4. 6.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed federal workforce downsizing, focusing on the projected costs and savings from federal workforce buyouts and reductions-in-force (RIF) over a 5-year period.

What GAO Found

GAO found that: (1) employee buyouts could produce over $60,000 more in net savings over 5 years than RIF for each vacated position because buyouts can be used at higher grade levels that generate more savings in salaries and benefits when downsized; (2) if federal agencies separate retirement-eligible employees who do not displace lower-grade employees, RIF could produce about $29,000 more in net savings over 5 years than buyouts; (3) displacing employees in the same competitive areas but lower-tenure groups or with less service within the same tenure groups reduces RIF savings because those savings represent the salaries and benefits of lower-grade employees; (4) savings from buyouts or RIF could be reduced if the vacated positions are refilled or privatized; (5) federal agencies may need more buyouts than RIF to achieve their downsizing targets because normal attrition slows prior to buyouts; (6) buyouts avoid or reduce the non-economic adverse effects of RIF, such as reduced diversity, decreased productivity, and lower morale; and (7) buyouts may help federal agencies improve diversity, since buyouts typically affect older white males.