The FED Weekly

Lawrence: Welcome to The FED Weekly
for 10-16 August 2025, 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 past week.

Section 1: Issues That Affect
Current and Retired Federal Workers

Government Funding Uncertainty
and Potential Shutdowns

Both the House of Representatives and
the Senate adjourned for their August

recess with substantial unfinished
work, leaving a critical September 30

deadline looming to extend government
funding into fiscal year 2026.

The House, for its part, had only managed
to pass two of the twelve appropriations

bills through the full chamber, with
seven others having cleared committee.

The Senate, before adjourning on
August 1, passed three of the twelve

appropriations bills and approved
five others out of committee.

This ongoing legislative impasse
creates a considerable risk of a lapse

in appropriations and a subsequent
government shutdown on October 1.

The House's proposed non-defense spending
for the upcoming fiscal year stands

at $15 billion less than the previous
year's allocation and $148 billion

more than the White House's request.

Senate totals, conversely, are
anticipated to surpass the House

figures for both defense and non-defense
spending, setting the stage for

complex multi-party negotiations as the
fiscal year-end deadline approaches.

The immediate consequence of this
uncertainty for federal employees is

the potential for disrupted paychecks,
while retirees face concerns regarding

the continuity of agency operations
and services upon which they depend.

The divergent budget proposals from
the House, Senate, and the White House,

coupled with the Trump Administration's
stated refusal to spend all previously

appropriated funds based on ideological
opposition to certain programs, signify

a deep ideological battle over the
very scope and funding of government.

This is more than a procedural
disagreement; it reflects a

fundamental friction between the
executive and legislative branches.

The mention of potential "court
challenges" further emphasizes a breakdown

in traditional checks and balances.

This intense political friction makes
a straightforward resolution highly

improbable, likely pushing Congress
towards short-term continuing resolutions

that merely defer the problem and
prolong the period of uncertainty.

Broader Challenges to Federal Employee
Union Rights and Civil Service Integrity

The period also saw continued challenges
to the rights of federal employees and

the integrity of the civil service.

On August 13, 2025, the American
Federation of Government Employees (AFGE),

the largest union representing D.C.

public employees, publicly
condemned President Trump's D.C.

Takeover.

This action signals ongoing
political battles that extend beyond

agency-specific issues, reflecting
a broader administration agenda

impacting public sector employees.

Further underscoring these concerns,
the August 2025 NARFE Magazine

reported that NARFE submitted official
comments in opposition to the Office

of Personnel Management's (OPM)
Schedule P/C Rule, citing significant

risks to civil service integrity.

This refers to an ongoing concern
about the reclassification of

federal jobs, a move that could
shift them out of competitive

service and into at-will employment.

Such a change would substantially erode
civil service protections for current

employees and undermine the stability
of the federal workforce as a whole.

The National Treasury Employees Union
(NTEU) also mobilized its members

through "August Recess Actions,"
urging them to contact Congress.

Their calls included directives to
"Protect federal employee rights by

opposing bills and efforts by the
administration to undermine unions and

union rights" and to "Stop mass firings
and the dismantling of federal programs".

This demonstrates a unified front
among federal employee unions

against what they perceive as
systemic attacks on their collective

bargaining rights and job security.

These issues are not confined to
active employees; they affect the

entire federal workforce, including
retirees who have benefited from these

protections throughout their careers.

There is a clear, coordinated effort
by federal employee unions and advocacy

groups to resist administration policies
that they believe undermine civil

service protections and union rights.

The condemnation of the D.C.

Takeover , NARFE's opposition to the
Schedule P/C Rule , and NTEU's call

to action against "mass firings" and
the "dismantling of federal programs"

collectively illustrate a broad,
multi-front challenge to the established

framework of federal employment.

This is not an isolated incident but
rather a consistent pattern of executive

action and proposed policy changes
aimed at weakening the collective

power and job security of federal
workers across various agencies.

Such aggressive and widespread
actions against unions and civil

service protections, if successful,
could severely damage morale among

current federal employees, potentially
leading to a significant exodus

of experienced personnel, often
referred to as a "brain drain."

It would also likely make federal service
a far less attractive career path for

new talent, especially when compared
to opportunities in the private sector.

This erosion of institutional knowledge
and expertise could ultimately hinder

the effectiveness of federal agencies
in delivering critical services

to the American people, impacting
both current citizens and future

retirees who rely on these services.

The focus of federal employment could
shift from public service stability to

a state of increased job insecurity.

GAO Report on OPM Priority
Open Recommendations

The Government Accountability Office
(GAO) published a report titled "Priority

Open Recommendations: Office of Personnel
Management" on August 6, 2025, which was

publicly released on August 13, 2025.

While the specific recommendations
were not detailed in the available

information, the very existence of a
"priority open recommendations" report

signals areas of weakness or inefficiency
within OPM that require attention.

These are issues that affect the entire
federal workforce and its administration.

The GAO's role is to audit and investigate
how the federal government utilizes

taxpayer funds and to provide Congress
with objective, fact-based information.

A "Priority Open Recommendations"
report specifically for OPM indicates

that critical, unaddressed issues
persist within OPM's operations or

policy implementation that the GAO
deems important enough to highlight.

This suggests that despite OPM's
ongoing efforts to modernize, as seen

in other initiatives like the digital
retirement process, fundamental

or systemic challenges remain.

Addressing these challenges is crucial
for ensuring the effective and efficient

management of the federal workforce.

Section 2: Issues That Affect
Current Federal Workers

2026 Federal Employee Pay Raise
Outlook and Legislative Proposals

As of June 2025, the outlook for a
federal employee pay raise in 2026

remained uncertain, characterized
by divergent proposals from the

executive and legislative branches.

President Trump's fiscal year 2026
budget proposal notably includes a pay

freeze for federal civilian employees,
marking the first such freeze since 2013.

In contrast, this proposal suggests a 3.8%

pay raise for military service members.

On the other hand, Democratic
lawmakers have introduced the

Federal Adjustment of Income Rates
(FAIR) Act, which proposes a 4.3%

average pay raise for
federal employees in 2026.

While no new updates specifically within
August 10-16 were provided on this topic,

the discussion around the 2026 pay raise
is an ongoing and critical consideration

for current federal employees
monitoring their future compensation.

There is a significant divergence
in proposals for the 2026 federal

employee pay raise, with the
administration advocating for a

freeze and Democratic lawmakers
pushing for a substantial increase.

This stark contrast between President
Trump's proposed pay freeze for

civilian employees and a 3.8%

raise for military service members
highlights a potential widening of

the compensation gap between different
segments of the federal workforce.

This disparity, particularly when
viewed alongside reports indicating that

private sector employees already earn
significantly more than their federal

counterparts, could negatively impact
morale, recruitment, and retention

within the civilian federal workforce.

Employees may perceive themselves as
undervalued compared to their military

colleagues or private sector peers.

The administration's proposal for
a pay freeze can be interpreted not

merely as a budget-saving measure
but also as a strategic tool to

reshape the federal workforce.

By limiting pay increases, it could
disincentivize certain individuals from

joining or remaining in federal service.

This aligns with a broader agenda to
potentially reduce the size or alter the

composition of the federal bureaucracy.

In this context, pay policy transforms
from a simple compensation matter

into a powerful lever for workforce
control and ideological alignment.

New OPM Guidance on Performance
Awards and Management

On August 11, 2025, the Office of
Personnel Management (OPM) issued new

government-wide guidance concerning
awards for federal employees.

This updated policy directs agencies
to strengthen their performance

management practices, normalize ratings,
and explicitly reserve the largest

awards and bonuses for employees
who have demonstrated exceptional

contributions to their agency's mission.

The guidance also encourages agencies
to expand the use of non-cash awards,

such as time-off and quality step
increases, and to recognize real-time

accomplishments throughout the year.

OPM Director Scott Kupor articulated
the rationale behind this shift, stating

that "Too often in the past, awards
have been spread thinly across the

board in ways that dilute their impact."

He emphasized that this new approach
aims to incentivize excellence,

reward those who truly go "above and
beyond," and ultimately help build the

"high-performance culture the American
people deserve from their government".

OPM is thus implementing a more
targeted and merit-based system

for federal employee performance
awards, placing a strong emphasis

on exceptional contributions.

OPM's explicit directive to "normalize
ratings" and "reserve the largest awards

and bonuses for employees who have
demonstrated exceptional contributions"

signals a significant departure from
a more egalitarian approach to awards.

This move is designed to foster a more
competitive environment within agencies,

where performance differentiation
is not just encouraged but mandated.

It reflects a broader administrative
philosophy aimed at cultivating

a "high-performance culture" by
more substantially rewarding a

select group of top performers.

While the stated goal is to incentivize
excellence, a system that normalizes

ratings and concentrates rewards on a
small percentage of "top performers" could

lead to several unintended consequences.

Employees who consistently "meet
expectations" but do not "significantly

exceed" them might feel undervalued or
demotivated if they receive no or minimal

recognition, especially if a forced
distribution of ratings is implied.

This approach could inadvertently
foster internal competition over

collaboration, create perceptions
of unfairness if performance metrics

are subjective or inconsistently
applied, and ultimately affect

overall workforce morale and cohesion.

Updated Guidance on
Strengthening Probationary

Periods in the Federal Service

Updated guidance on President Trump's
Executive Order "Strengthening

Probationary Periods in the Federal
Service" was issued by Veronica E.

Hinton, Associate Director of the
OPM Office of Workforce Policy

and Innovation, on August 7, 2025.

This indicates ongoing implementation and
refinement of policies aimed at increasing

accountability and potentially making it
easier to remove underperforming employees

during their initial probationary periods.

This executive order was
initially issued in April 2025.

OPM continues to issue guidance related
to strengthening probationary periods,

aligning with the administration's focus
on federal employee accountability.

The updated guidance suggests a continued
emphasis on rigorous evaluation during

the initial phase of federal employment.

This implies that new federal employees
will face heightened scrutiny and

potentially a lower threshold for
removal during their probationary period.

This policy aims to make it easier for
agencies to dismiss employees who are

deemed not to be a good fit, thereby
reducing job security during this

critical initial phase of federal service.

Major Union Contract
Terminations and Legal Battles

On August 11, 2025, the Department
of Veterans Affairs (VA) terminated

its collective bargaining agreements
with AFGE and other labor unions

representing over 400,000 VA workers.

AFGE President Everett Kelley condemned
this action by VA Secretary Doug Collins

as a clear case of retaliation against
AFGE members for speaking out against

the Trump administration's "illegal,
anti-worker, and anti-veteran policies".

VA Secretary Collins cited Executive
Order 14251 as the basis for the

termination, despite OPM guidance
instructing agencies not to terminate

collective bargaining agreements
until the conclusion of litigation.

This termination affects most VA
employees, with the exception of

police officers, firefighters,
and security guards, who are

exempt from the executive order.

AFGE is currently assessing
its legal options to challenge

Secretary Collins' decision and
restore its members' union rights.

The union is also urging VA employees
to contact their congressional offices

and advocate for the "Protect America's
Workforce Act," a critical bill that

would overturn the executive order
and restore collective bargaining

rights to all federal workers.

In a similar development on
August 11, 2025, AFGE's council

representing over 8,000 employees
at the Environmental Protection

Agency (EPA) announced its intent to
continue fighting after the agency

cancelled their negotiated contract.

This indicates a pattern of the
administration targeting union contracts

across multiple federal agencies.

However, not all administration
efforts to cut or reorganize

agencies have been successful.

On August 11, 2025, a powerful Senate
committee rejected President Trump's

proposed budget cuts to the Centers
for Disease Control and Prevention

(CDC) and the National Institute for
Occupational Safety and Health (NIOSH),

marking a win for public health workers.

This demonstrates ongoing legislative
pushback against some executive actions.

Furthermore, AFGE announced a "Save
the Date August 14: SSA Day of Action"

for Social Security Workers United,
aimed at raising awareness about

administration attacks on SSA workers.

This highlights continued union
activism and organized resistance to

perceived threats to federal workers.

The Trump administration is aggressively
terminating collective bargaining

agreements with major federal employee
unions, leading to widespread union

resistance and legal challenges.

The termination of collective bargaining
agreements at the VA (affecting 400,000

workers) and EPA (affecting 8,000 workers)
on August 11, 2025, represents a direct

and aggressive executive action aimed
at weakening federal employee unions.

The fact that VA Secretary Collins
proceeded despite OPM guidance to

await litigation outcomes highlights
the administration's determination.

In response, unions like AFGE are not
only pursuing legal challenges but

also actively mobilizing members to
push for legislative remedies, such

as the "Protect America's Workforce
Act" , indicating a full-spectrum

battle to preserve union rights.

The termination of these major
collective bargaining agreements,

coupled with the ongoing legal
and legislative battles, signals a

fundamental and potentially irreversible
shift in federal labor relations.

If these actions stand, they could
severely diminish the ability of federal

employee unions to advocate for their
members on issues ranging from working

conditions and pay to job security.

This would leave individual federal
employees with significantly less

collective power and recourse,
potentially leading to a more

autocratic management style within
federal agencies and a decline in

employee protections and benefits.

AFGE Restructures Key Departments
to Meet New Challenges

On August 12, 2025, AFGE announced
that it had restructured key

departments to meet new challenges.

This internal organizational change
by the largest federal employee union

reflects its adaptation to the current
environment of increased challenges

and attacks on federal workers' rights.

AFGE's decision to restructure key
departments in mid-August 2025, amidst

the backdrop of aggressive union
contract terminations and broader

challenges to federal employee rights,
is a clear strategic adaptation.

This indicates that the union
perceives the current environment as

fundamentally altered and requiring
a more agile and effective internal

structure to defend its members and
counter the administration's policies.

This is a direct response to perceived
threats, aiming to enhance their

advocacy capabilities and effectiveness.

GAO Report on Federal
Workforce Name Change Process

The Government Accountability Office
(GAO) published a report on August

14, 2025, titled "Federal Workforce:
Selected Agencies Need to Improve

Employee Name Change Process".

This report identifies administrative
inefficiencies within federal agencies

regarding a basic personnel process.

It points to a need for improved
internal operations that directly

affect current employees' personal
records and, by extension, potentially

their benefits or identification.

A GAO report specifically highlighting
the need for improvement in the

"Employee Name Change Process"
suggests that even fundamental

administrative functions within federal
agencies are not operating optimally.

While seemingly minor, inefficient
name change processes can lead to

significant headaches for current
employees, impacting their official

records, benefits, and identification.

This points to broader systemic issues
in data management and administrative

responsiveness within the federal
bureaucracy, directly affecting

the daily lives and administrative
burdens of current federal workers.

Section 3: Issues That Affect
Retired Federal Workers

2026 Retiree Cost-of-Living
Adjustment (COLA) Projections

As of August 12, 2025, the projected 2026
Cost-of-Living Adjustments (COLAs) for

federal retirees have been announced.

For those under the Civil
Service Retirement System (CSRS),

the projected COLA is 2.5%,

while Federal Employees Retirement
System (FERS) retirees are

projected to receive a 2.0%

adjustment.

Additionally, the Federal
Employees' Compensation Act (FECA)

COLA projection stands at 2.4%

as of July 2025.

These crucial projections are based
on the July 2025 Consumer Price Index

for Urban Wage Earners and Clerical
Workers (CPI-W) data, which was released

by the Bureau of Labor Statistics.

These projections are vital as they
directly influence the purchasing power

of federal retirees in the upcoming year.

It is important to note that the
final COLA calculation for CSRS

and FERS benefits will be confirmed
in October 2025, following the

release of the September CPI-W data.

The FECA COLA, conversely, will be
finalized later, in January 2026, upon the

publication of the December 2025 CPI-W.

Federal retirees can thus anticipate a
moderate COLA for 2026, which is intended

to help offset the effects of inflation.

However, it is notable that FERS
retirees are projected to receive a lower

adjustment than their CSRS counterparts.

Ongoing Transition to Fully
Digital Retirement Process

The August 2025 issue of NARFE Magazine
highlighted an ongoing initiative by the

Office of Personnel Management (OPM): the
"Transition to Fully Digital Retirement,

Deadline for Federal Agencies...".

While OPM had initially announced the
launch of its fully online retirement

application system earlier in 2025,
specifically on May 12, 2025, the

continued mention in August implies that
this transition is an active and evolving

process with sustained relevance for
federal agencies and prospective retirees.

This suggests that OPM is likely
continuing its efforts to ensure

agencies adopt the new digital
process, possibly through established

deadlines or ongoing guidance.

OPM's initiative for a fully digital
retirement process is actively being

implemented, aiming to modernize and
streamline the retirement application

experience for federal employees.

This digital transformation aligns
with OPM's earlier memorandum on

"Implementing the President's Department
of Government Efficiency (DOGE)

Initiative for a Modernized, Efficient,
and Expedient Retirement Process,"

which was issued on May 7, 2025.

This connection suggests that the
digital transition is part of a

broader, administration-wide push for
government efficiency and modernization.

The mention of a "deadline for Federal
Agencies" further indicates a top-down

mandate for the adoption of this new
system, reinforcing the commitment

to this digital transformation.

A fully digital retirement process,
if implemented effectively, has the

potential to significantly reduce
processing times and alleviate backlogs,

thereby providing a more efficient
and expedient experience for retirees.

This would address long-standing
frustrations associated with the

traditional paper-based system.

However, for some older retirees or
those with limited digital literacy,

this transition could present challenges.

To ensure equitable service delivery,
it will be crucial for OPM and

individual agencies to provide robust
support, comprehensive guidance, and

potentially alternative access methods.

The ultimate success of this modernization
effort hinges on its user-friendliness

and the availability of thorough
support systems for all users.

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.