The FED Weekly

Lawrence: Welcome to The FED Weekly
for 4-10 January 2026, 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.

Issues That Affect Current
and Retired Federal Workers

The primary legislative development
this week concerns the Fiscal

Year 2026 appropriations cycle.

On 08 January 2026, the U.S.

House of Representatives passed H.R.

6938, a "minibus" appropriations package
titled the "Commerce, Justice, Science;

Energy and Water Development; and Interior
and Environment Appropriations Act, 2026."

The bill passed by a vote of 397 to 28.

This legislation consolidates funding
for multiple federal departments,

including Commerce, Justice,
Energy, Interior, the EPA, and NASA.

The bill explicitly rejects cuts
proposed by the administration

in its budget request.

For instance, while the President’s budget
sought to reduce NASA’s funding to $18.8

billion, H.R.

6938 funds the agency
at approximately $24.4

billion, maintaining levels
roughly equal to Fiscal Year 2025.

Senator Patty Murray stated that the
bill utilizes line-by-line spending

levels to assert congressional control
and prevent the Office of Management

and Budget from impounding funds.

Following House passage, H.R.

6938 moved to the Senate
on 09 January 2026.

Senate Majority Leader Chuck Schumer
filed cloture on the motion to

proceed, scheduling a procedural
vote for Monday, 12 January 2026.

While this bill addresses funding for a
significant portion of the government,

other major departments—including
Defense, Labor, and Health and

Human Services—remain funded by
a Continuing Resolution that is

set to expire on 30 January 2026.

Turning to compensation, the 2026
federal pay rates were finalized

during this week, which serves as
the last week of the 2025 pay cycle.

The new rates become
effective on 11 January 2026.

Under the President’s alternative
pay plan, implemented by Executive

Order, most General Schedule
employees will receive a 1.0

percent across-the-board
increase to base pay.

Locality pay percentages
remain frozen at 2025 levels.

An exception exists for federal
law enforcement officers.

The administration authorized a special
rate adjustment providing an additional

increase for Law Enforcement Officers to
align their total pay raise with the 3.8

percent increase authorized
for the military.

For the remainder of the civil service,
the total increase remains capped at 1.0

percent.

Regarding workforce efficiency
measures, the Public Employees for

Environmental Responsibility, or PEER,
released an analysis on 09 January

2026 regarding the "Department of
Government Efficiency," or DOGE.

The report alleges that the
administration’s strategy of placing

employees on paid administrative
leave rather than utilizing formal

reduction-in-force procedures
has resulted in financial losses.

PEER estimates that over 154,000 federal
employees—approximately seven percent

of the civilian workforce—have been
placed on paid leave or similar statuses.

The report calculates the cost of
compensating these employees for work not

performed at approximately $10 billion.

PEER noted that this occurs while
agencies such as the National

Park Service remain understaffed.

Data released by the Office of
Personnel Management on 08 January

2026 indicates that attrition across
the federal government is rising.

Between January and November
2025, approximately 335,000

workers left federal service.

While layoffs accounted for
approximately 11,000 of these

departures, the majority were
voluntary resignations or retirements.

The Department of Education has lost
approximately 40 percent of its staff,

and the Department of the Treasury is
down approximately 4,000 tax examiners.

Issues That Affect Retired Federal Workers

Retirees under the Civil
Service Retirement System,

or CSRS, are receiving a 2.8

percent increase.

This figure is based on the rise
in the Consumer Price Index for

Urban Wage Earners and Clerical
Workers from the third quarter of

2024 to the third quarter of 2025.

Retirees under the Federal
Employees Retirement System,

or FERS, are receiving a 2.0

percent increase.

Under FERS regulations, if the
CPI-W increase falls between 2.0

percent and 3.0

percent, the COLA is capped at 2.0

percent.

Regarding tax administration, the Office
of Personnel Management announced a policy

change on 08 January 2026 concerning
the delivery of tax form 1099-R.

Electronic delivery is now the
default method for annuitants

with an email address on file.

OPM will not mail paper copies to
these individuals unless they actively

opt out via the Retirement Services
Online portal or the telephone hotline.

For annuitants who requested paper
copies or do not have an email on

file, OPM scheduled mailings for
the last week of January 2026.

Concurrent with this policy, OPM launched
a new online tool on 08 January 2026.

This tool allows annuitants to
download 1099-R forms using alternative

identity verification methods that
do not require a full login to the

Retirement Services Online system.

In investment news, the Thrift
Savings Plan, or TSP, reported updated

interest rates and new features.

The interest rate for the Government
Securities Investment Fund,

the G Fund, increased to 4.250

percent for January 2026, up from 4.125

percent in December 2025.

Additionally, the TSP implemented a
new policy in January 2026 allowing

for in-plan Roth conversions.

This feature permits participants
to convert existing traditional,

pre-tax TSP balances to Roth,
after-tax balances within the plan.

Participants must pay taxes
on the converted amount in the

year the conversion occurs.

The National Active and Retired Federal
Employees Association, or NARFE, announced

governance changes on 06 January 2026.

The association initiated a special
referendum to amend its bylaws,

proposing to extend term limits for
National Executive Board members

from two years to three years.

NARFE leadership stated this change aims
to provide continuity during the current

period of government restructuring.

Voting for this referendum is
scheduled to open later in January.

Issues That Affect Current Federal Workers

On 07 January 2026, OPM Director
Scott Kupor issued a memorandum

titled "Guide to Telework and Remote
Work in the Federal Government."

This guidance establishes a "starting
presumption" that federal employees

will perform their entire bi-weekly
work requirement at an agency worksite.

The document states that remote
work is prohibited unless a

specific exemption applies.

Exceptions are limited to military spouses
requiring relocation, specific reasonable

accommodations for disabilities, and
limited cases for households where

both spouses are federal employees.

The guidance instructs agencies
to verify that employees are

working full-time in-person.

Regarding the implementation of these
policies for employees with disabilities,

reports published on 08 January 2026
indicate that some agencies are requiring

employees with existing reasonable
accommodations to return to the office

or undergo new recertification processes.

OPM Director Kupor published a blog
post defending the policy, stating

that remote work rates had risen
from 3 percent pre-pandemic to 10

percent, and arguing that a reset was
necessary to improve collaboration.

Union leadership responded
to this guidance.

On 07 January 2026, AFGE National
President Everett Kelley issued a

statement opposing the directive, citing
the Telework Enhancement Act of 2010.

NTEU National President Doreen Greenwald
stated that the union would enforce

existing Collective Bargaining Agreements
that include telework protections.

In agency-specific news, the
Federal Emergency Management

Agency, or FEMA, commenced workforce
reductions during this period.

Leaked documents reported by major news
outlets on 05 January 2026 outlined a plan

by the Department of Homeland Security
to reduce FEMA’s "CORE" workforce—the

Cadre of On-Call Response and Recovery.

The plan details a 41 percent
reduction in CORE disaster roles,

equivalent to over 4,300 positions,
and an 85 percent reduction in surge

staffing, approximately 6,500 roles.

Reports confirmed that terminations
began on New Year's Eve and continued

through the week of 04 January 2026.

These reductions impacted FEMA
Region 10 during active flooding

events in Washington state.

Legal actions regarding workforce
reductions continued this week.

Unions including AFGE and NFFE are
litigating against mass terminations

based on "Section 120" of the
current Continuing Resolution.

This section prohibits
agencies funded by the CR from

implementing reductions in force.

A preliminary injunction issued by
Judge Susan Illston in December 2025

remained in effect through 10 January
2026, legally blocking the finalization

of specific termination notices at
agencies covered by the Continuing

Resolution, such as the State Department.

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.