The FED Weekly

Lawrence: Welcome to the Federal
Workforce Roundup, your essential

weekly briefing on the policies
and proposals shaping your career,

your benefits, and your retirement.

Whether you’re a current federal employee
navigating changes in the civil service,

or a retiree keeping a close watch on your
hard-earned pension and healthcare, this

is your source for the latest news from
Capitol Hill and the executive branch.

Each week, we cut through the noise to
bring you the critical updates on budget

negotiations, pay raises, workforce
policies, and the legislative battles that

directly impact the federal community.

Let's get you up to speed
on what happened this week.

The first week of June 2025 brought
several important developments

for the federal community.

Below is a roundup of
key news affecting U.S.

federal employees and retirees,
organized by category for clarity.

Issues That Affect Current
and Retired Federal Workers

Congressional Reconciliation Bill
– Civil Service Changes: A major budget

reconciliation package moving through
Congress contains sweeping provisions

targeting federal pay and benefits.

The House narrowly passed the “One Big
Beautiful Bill Act” in late May, and the

Senate is now weighing its own version.

The legislation would eliminate the
FERS annuity supplement (the “bridge”

payment for retirees under 62) effective
2028, with exemptions for certain

mandatory early-retirement personnel.

It also introduces an “at-will”
employment option for new hires – newly

hired feds would choose between
keeping normal civil-service job

protections but contributing ~14.4%

of salary to FERS, or giving up tenure
protections and contributing 9.4%

(a 5% increase).

Other provisions would impose a $350 fee
for Merit Systems Protection Board appeals

(refunded if the employee prevails) and
require audits to remove ineligible family

members from FEHB health insurance plans.

Notably, lawmakers removed some earlier
proposals – a switch to a “high-5”

annuity calculation and a general FERS
contribution hike – after opposition.

Federal employee organizations warn
these changes could be devastating:

the National Active and Retired Federal
Employees Association (NARFE) cautioned

that increasing FERS contributions
is essentially “a 5% pay cut” for

new employees while also undermining
merit-based civil service protections.

The American Federation of Government
Employees (AFGE) blasted the package

as “a direct assault on federal
employees” that would slash take-home

pay and obliterate workplace rights.

Unions are urging the Senate to
strip these provisions, and final

negotiations are expected by early July.

Supreme Court Expands Paid Military
Leave: In a victory for federal employees

who are military reservists, the U.S.

Supreme Court ruled on
April 30 in Feliciano v.

DOT that agencies must grant an additional
22 days of paid military leave per year

for reserve members called to active
duty during a national emergency.

The Court held that a federal employee
is “entitled to differential pay if the

reservist’s service temporally coincides
with a declared national emergency”

– without any need to prove a direct
connection to the specific emergency.

This means current or former
federal workers who served on such

active duty orders may have been
improperly denied paid leave and

pay differentials in the past.

Affected individuals (e.g.

veterans of post-9/11
contingency operations) can

file claims for compensation.

Successful claimants who are still federal
employees will have leave restored, while

those who retired or left government can
receive lump-sum back pay for the missed

leave, at their salary rate at retirement.

This court decision strengthens USERRA
rights and could benefit thousands of

veteran federal employees and retirees
who were previously forced to use personal

leave or take a pay cut when mobilized.

Issues That Affect Current Federal Workers

Federal Pay Raise Outlook: The White
House’s fiscal year 2026 budget,

released in early June, proposed no pay
increase for federal civilian employees.

President Trump’s budget was silent on
a 2026 raise (widely interpreted as a

plan for 0%), even as it included a 3.8%

raise for military personnel.

Unless Congress intervenes,
this could mean a freeze on

General Schedule pay next year.

(By contrast, for 2025 the
military received a 4.5%

increase while civilians got about 2%.)

Lawmakers and federal employee
advocates are already pushing back:

Representative Gerry Connolly (D-VA)
and Senator Brian Schatz (D-HI)

reintroduced their annual pay parity
bill, this time proposing a 4.3%

average pay raise for
federal employees in 2026.

While such bills (the latest version of
the FAIR Act) have historically failed

to pass, they signal growing pressure
to at least match military raises.

Unions argue that “pay parity” – equal
percentage raises for civilian and

military – is needed to maintain federal
workforce morale and competitiveness.

The final word on the 2026 raise will
likely come in late August (when the

President must formally announce any
alternative pay plan) and ultimately in

Congress or a December executive order.

Telework Guidance Amid D.C.

Events: In an interesting turn, OPM
is encouraging telework and flexible

schedules for Washington, D.C.-area

federal employees in mid-June
due to a large public event.

In a memo to agencies, OPM advised
that preparations for the Army’s

250th Birthday Parade (scheduled for
June 14 on the National Mall) could

snarl traffic starting Wednesday,
June 11, and urged agencies to

permit “situational/unscheduled
telework and other workforce

flexibilities” later that week.

Agencies can also approve employee
leave or alternative work hours

to alleviate the disruptions.

This guidance comes just months after
the administration’s push to curtail

routine telework – President Trump in
January ordered agencies to end widespread

telework arrangements – but practical
needs have prompted a temporary exception.

Notably, the USDA even instructed its D.C.

headquarters staff to work remotely
for three weeks because the agency’s

building is being used to quarter
soldiers participating in the parade.

Employees reporting on-site were warned to
expect delays and monitor road closures.

While brief, this flexibilities memo
tacitly acknowledges that telework

remains an important tool for
continuity of operations, even as

normal telework policies have tightened.

OPM Moves to Quicken Discipline
Process: The Office of Personnel

Management announced a proposed
rule on June 2 that would make it

easier to fire federal employees
for misconduct or poor performance.

The rule is meant to “enhance the
federal government’s ability to hold

employees accountable for serious
misconduct,” according to OPM’s statement.

It would implement President
Trump’s “Department of Government

Efficiency” workforce initiative
by streamlining the procedures for

removing employees who “break the
public’s trust,” effectively extending

the tougher suitability standards
used in hiring to post-hire conduct.

Currently, agencies face lengthy,
complex processes to discipline or remove

personnel, and administration officials
argue this breeds a culture with “no

recourse for lack of performance.”

OPM’s Acting Director Chuck Ezell
said the changes will cut red tape

and reinforce that public service
is a privilege, not a right.

The proposed regulations (set
to be published in the Federal

Register on June 3) will be open
for public comment through July 3.

Federal employee unions are expected
to object, as the rules would likely

curtail the time and appeals avenues
employees have in adverse actions.

This is one of several workforce policies
the administration is pursuing to speed

up hiring and firing in government.

Workforce Reduction Plans and Pushback:
The administration’s drive to shrink

the federal workforce by reorganizing
agencies and cutting staff continues to

unfold – and to meet legal challenges.

At the Department of Veterans
Affairs, Secretary Doug Collins

has proposed cutting around 80,000
jobs (about 15% of VA’s staff) to

bring headcount back to 2019 levels.

Additionally, agencies across
government have been directed to

prepare Reduction in Force (RIF)
plans as part of President Trump’s

initiative to “optimize” the workforce.

However, a federal court injunction has
blocked implementation of mass RIFs at

many agencies pending further review.

(This stems from a lawsuit by
federal employee unions, where a

judge in late April barred agencies
from executing the governmentwide

reorganization via layoffs; that case
is now headed to the Supreme Court).

In agencies not explicitly covered
by the injunction, some layoffs are

moving forward – for example, the
National Archives informed nearly

100 employees (about 3% of its
staff) of RIF separations this month.

Federal employee unions and advocacy
groups are actively protesting these cuts.

On June 6, hundreds of veterans and
federal workers rallied on the National

Mall to oppose the VA downsizing,
arguing it will harm veteran services.

AFGE National President Everett
Kelley (himself an Army veteran) noted

that “the VA is a place of veterans
serving veterans,” and warned the

“mass reorganization plans … are a
targeted attack on veteran jobs, health

care, benefits and union rights.”

Other speakers, including VA nurses,
warned that frontline capacity would be

stretched dangerously thin, impacting
medical care and benefits processing.

One Homeland Security employee at the
rally, an Army veteran, voiced concern

that “if they’re going to cut people,
benefits are going to go down…everything

is going to roll downhill.”

Despite these objections, agency leaders
insist that only “non-mission-critical”

positions will be eliminated and
that efficiencies will improve.

This tug-of-war between the
administration’s reform agenda and

employee protections is ongoing – with
further legal showdowns expected

if the Supreme Court weighs in,
and continued public pressure

from unions to protect jobs.

Postal Service Contract Agreement:
In labor news, the American Postal

Workers Union (APWU) and the U.S.

Postal Service reached a tentative
deal on a new union contract.

On June 6, APWU President Mark Dimondstein
announced a tentative 2024–2027 Collective

Bargaining Agreement (CBA) with USPS.

The agreement is set for three
years and covers postal clerks,

maintenance workers, and other
APWU-represented employees nationwide.

While full details of the tentative
contract were not immediately released,

such agreements typically address wages
(cost-of-living adjustments, general

raises), benefits, and work rules.

The deal now goes to APWU’s membership
for ratification in the coming weeks.

Reaching a negotiated settlement is a
positive development, as it averts the

need for binding arbitration and ensures
continuity of operations for USPS.

(The previous APWU contract had
expired in late 2024, and negotiations

had been ongoing for months.)

This is the second postal union contract
settled recently – the National Postal

Mail Handlers Union also approved
a contract earlier – indicating a

period of labor stability at USPS.

For current postal employees (who
are federal employees in a separate

personnel system), the tentative deal
likely means secured wage increases and

preserved benefits through September
2027, pending union ratification.

Issues That Affect Retired Federal Workers

Retirement Claims Backlog and Processing
Reforms: The influx of federal

retirements surged unexpectedly this
spring, straining the Office of Personnel

Management’s processing capacity.

OPM received 15,048 new retirement
claims in May 2025, an unseasonably

large number that far exceeds
May totals in recent years.

As a result, OPM’s retirement claims
backlog jumped by 33% in one month, rising

from about 16,100 pending cases at end
of April to 21,483 cases at end of May.

(For context, this backlog is nearly
as high as the peak seen each January,

when retirements typically spike.)

The unusual surge is likely driven
by the ongoing reorganization efforts

and voluntary early-out offers
prompting more employees to retire.

In response, OPM has just rolled out a
new fully digital retirement application

system aimed at speeding up processing.

As of June 2, all federal agencies must
submit retirement paperwork electronically

via OPM’s Online Retirement Application
(ORA) platform, and OPM will no longer

accept paper retirement packages.

OPM announced it successfully migrated
over 400 million personnel records to

a new electronic Official Personnel
Folder system as part of this overhaul.

The modernized system lets staff process
cases online (no more shipping paper

folders) and includes a more user-friendly
interface for reviewing files.

The goal is to dramatically
reduce the infamous backlog and

shorten processing times (which
currently average about 2 months).

If the new digital process works as
intended, retiring federal workers should

see faster annuity adjudications and fewer
delays in getting their pension payments.

OPM’s push to automate retirement
processing actually began in the

prior administration, but it has
accelerated under the Department of

Government Efficiency’s oversight.

Bottom line for recent and soon-to-be
retirees: expect improvements in

how quickly your retirement claim
is handled, though OPM is still

digging out from May’s large volume.

Social Security Fairness Act
Implementation: A significant

new law benefiting many federal
retirees is now being implemented.

In January 2025, President Biden signed
the Social Security Fairness Act,

which repealed the Windfall Elimination
Provision (WEP) and Government Pension

Offset (GPO) – two long-criticized rules
that reduced Social Security benefits

for those who also receive a government
pension (such as CSRS retirees) or

spousal benefits from such retirees.

As of mid-2025, the Social Security
Administration is well underway

in adjusting benefits and issuing
back payments under the new law.

About 3.2

million affected retirees are entitled to
benefit increases, including retroactive

payments for benefits since January
2024 (when the repeal took effect).

By late May, SSA reported
it had processed over 2.5

million retroactive payments to retired
teachers, police, federal employees

and others who had been “locked out”
of full benefits due to WEP/GPO.

This represents roughly 90% of the
cases, with the remaining complex cases

to be completed by the end of 2025.

Many CSRS retirees (who spent careers not
paying into Social Security) are seeing

their Social Security checks increase,
in some cases by hundreds of dollars per

month, now that the WEP penalty is gone.

Spouses and widows of federal
retirees are likewise now eligible

for full Social Security survivor
benefits without the GPO offset.

SSA’s guidance says most beneficiaries
should have received a one-time

lump sum by the end of March for
retroactive amounts, and higher

monthly payments began in April.

Those who haven’t seen an expected
adjustment can contact SSA, but the

vast majority have been automated.

This is a long-awaited change – the
culmination of decades of lobbying

by retiree groups – and it
substantially boosts retirement income

for affected federal annuitants.

Note: These changes do not affect
the basic civil service pension;

they only increase Social Security
benefits for those who earned them.

Retirees who spent part of their
careers in Social Security-covered

employment (or who are entitled to
Social Security via other non-federal

jobs) should review their new benefit
statements to understand the increases.

2026 COLA Predictions and Inflation
Trends: Though the next cost-of-living

adjustment for federal retirees
won’t be official until the autumn,

early indicators are emerging.

The COLA for 2025 (received
this January) was 2.5%,

reflecting cooling inflation
compared to the big 8.7%

bump in 2023.

So far, inflation in 2025
has remained moderate.

The Consumer Price Index for
Workers (CPI-W), which is the basis

for federal retirement and Social
Security COLAs, was up about 2.2%

over the 12 months through May.

If that trend holds, the COLA payable
in January 2026 would be modest.

The Senior Citizens League, a
retirees’ advocacy group, released

a projection of roughly a 2.4%

COLA for 2026 based on the latest data.

This is only a rough guess – the
actual COLA will be determined by CPI-W

averages in July, August, and September.

As of now, it appears 2026’s
adjustment will be in the low-2%

range, assuming inflation doesn’t
accelerate in the coming months.

It’s worth noting that FERS retirees
(who make up about 44% of federal

annuitants) receive COLAs that can be
slightly reduced if inflation exceeds 2%.

In other words, if the COLA
calculation comes out above 2%,

FERS COLAs are capped at 2% or CPI-W
minus 1%, depending on the level.

But with current inflation levels, that
likely won’t come into play this year.

All retirees will likely
get the full CPI-based COLA.

Meanwhile, Social Security
beneficiaries are on track for a

similar COLA in 2026 (since the Social
Security COLA is identical to CSRS

COLA and based on the same index).

We will know more after the
summer – and in mid-October,

the 2026 COLA will be formally
announced by the Labor Department.

Retirees should plan for a modest
increase, and keep an eye on

energy and food prices which
could still sway the final number.

Overall, the post-pandemic inflation
spike has abated, leading to more

typical COLA adjustments that help
maintain purchasing power without the

extremes of the past couple years.

Each of these developments from
early June 2025 carries implications

for federal employees and retirees.

Legislative proposals in Congress could
reshape benefits and job protections if

enacted, so many in the federal community
are watching the progress of the budget

bill and related reforms closely.

At the same time, executive actions and
court decisions are actively changing

the landscape – from how federal agencies
manage their workforces (telework,

discipline, staffing levels) to how
retirees receive earned benefits

(pensions, Social Security, COLAs).

Current federal workers should stay
informed about potential changes

to their pay, rights, and workplace
policies, while retired employees

should take note of benefit updates
that may affect their income.

This week’s news underscores the
dynamic nature of federal employment

– whether you’re still on the job
or enjoying retirement, staying

abreast of policy changes is key.

The Federal employee community, through
its unions and associations, continues

to advocate vigorously on these issues.

We will continue to provide updates
on any new developments impacting

pay, benefits, and the wellbeing
of federal workers and retirees.

And that’s a wrap on this week’s
Federal Workforce Roundup.

The landscape for federal employees
and retirees is constantly shifting,

with major decisions being made about
everything from pay and job security

to retirement benefits and the very
structure of the civil service.

Staying informed is your best tool.

Be sure to subscribe wherever you get your
podcasts, so you never miss an update.

Thanks for tuning in.

We’ll be back next week to
track the latest developments

and what they mean for you.

Until then, stay engaged and be well.