This file was prepared for electronic distribution by the inforM staff. Questions or comments should be directed to inform-editor@umail.umd.edu. BALANCING WORK RESPONSIBILITIES AND FAMILY NEEDS: THE FEDERAL CIVIL SERVICE RESPONSE A Report to the President and the Congress of the United States by the U.S. Merit Systems Protection Board THE CHAIRMAN U.S. Merit Systems Protection Board 1120 Vermont Avenue, N.W. Washington, D.C. 20419 November 1991 Sirs: In accordance with the requirements of the Civil Service Reform Act of 1978, it is my honor to submit this U.S. Merit Systems Protection Board report titled "Balancing Work Responsibilities and Family Needs: The Federal Civil Service Response." The report examines the significant actions taken by the U.S. Office of Personnel Management in providing leadership to some of the Government's human resource management programs. Specifically, it reviews selected employee benefits which can help civilian Federal workers balance their work responsibilities and personal needs. Our analysis also addresses the role and responsibilities of Federal agencies in implementing these programs. Finally, the report examines how the Federal Government can improve its status as a "model employer" in the work and family benefits area. I hope you will find this report useful as you develop plans for the future of the civil service. Respectfully, [signature] Daniel R. Levinson The President President of the Senate Speaker of the House of Representatives Washington, D.C. A Report Concerning Significant Actions of the U.S. Office of Personnel Management BALANCING WORK RESPONSIBILITIES AND FAMILY NEEDS: The Federal Civil Service Response A Report to the President and the Congress of the United States by the U.S. Merit Systems Protection Board U.S. Merit Systems Protection Board DANIEL R. LEVINSON, Chairman ANTONIO C. AMADOR, Vice Chairman JESSICA L. PARKS, Member LUCRETIA F. MYERS, Executive Director Office of Policy and Evaluation Director, Evangeline W. Swift Deputy Director, John M. Palguta Assistant Director, for Special Studies Frederick L. Foley Project Manager, Charles E. Friedman CONTENTS Overview Introduction Methodology and OPM Review Methodology OPM Review Background Demographic and Sociological Changes The Evolving Nature of Benefits Status of the Federal Government as an Employer CHILD CARE Why Child Care Is a Concern? Range and Cost Effectiveness of Possible Solutions Agencies'Views on Child Care Benefits and Problems Availability of Onsite Child Care in Federal Offices Affordability of Child Care Government Subsidies for Onsite Child Care Centers ELDER CARE What Is Elder Care and How Does It Differ From Child Care Does the Government Need Elder Care Benefit Programs What Elder Care Benefits Can the Government Provide Use of Sick Leave to Care for Sick or Elderly Dependents ALTERNATIVE WORK SCHEDULES Definitions Historical Perspective on AWS Programs Current Federal Use of AWS Programs AWS as Work and Family Benefit The Future of AWS Within the Federal Civil Service PART-TIME EMPLOYMENT The Legal and Historical Framework for Federal Part-Time Employment Developments Since Passage of the Part-Time Employment Act Job Sharing Part-Time Employment as a Work and Family Benefit Government Plans to Learn About Flexiplace Progress of the Government's Flexiplace Pilot Program Results of EPA's Experiment With Flexiplace LEAVE-SHARING PROGRAMS What Are Leave-Sharing Programs Impact of Programs Cost Issues CAFETERIA BENEFITS What Are Cafeteria Benefit Plans Federal Initiatives to Implement a Cafeteria Benefit Plan Policy Considerations of a Cafeteria Benefit Plan for Federal Employees EMERGING BENEFIT AREAS Broad Philosophical and Policy Trends Benefits for Dual-Income Couples Other Emerging Benefits OPM PROGRAM LEADERSHIP OPM Objectives Assessment of OPM's Leadership POLICY ISSUES Should the Government Be a Model Employer in Its Employment Practices Federal Agency and OPM Perspectives Establishing the Government as a Model Work and Family-Friendly Employer CONCLUSIONS AND RECOMMENDATIONS ENDNOTES APPENDIX 1 Text of Letter from OPM s Director, providing comments to MSPB on a draft of this report OVERVIEW In order for the Federal Government to efficiently and effectively fulfill its many responsibilities on behalf of the Nation, it is imperative that it attract, motivate, and retain a highly qualified workforce. Toward this latter goal, it is becoming increasingly clear that many of yesterday's human resources management policies and programs are inadequate for the workforce and work environment of tomorrow. One particular area receiving increased attention is the change in workers' needs and expectations regarding the balancing of their work and personal lives. If the Federal Government fails to adequately respond to these changes, it will be at a competitive disadvantage compared to other major employers. The U.S. Office of Personnel Management (OPM) plays a key role in managing the Government's response to these needs. This report describes some of the major programs available and examines OPM's activities in what is commonly called the "work and family" benefits area. It discusses some praiseworthy OPM initiatives but also finds that there remain a number of unmet challenges, unanswered opportunities, and unresolved policy issues that need to be dealt with at several levels in the Government. The report concludes with several recommendations for improving the Government's attractiveness as an employer in a reasonable and fiscally responsible manner. In today's work environment, the Federal Government and other major employers have found that it is increasingly in their own best interests to offer some combination of benefit programs that can assist employees in meeting their personal needs and obligations while still becoming or remaining a productive member of the workforce. Taken collectively, these programs are often referred to as "work and family" benefits, although they potentially impact all employees--married or single, and with or without children. Changing demographic patterns, especially the critical role women have assumed in the American workforce, are helping to drive this quiet revolution. The challenge for the Federal Government is to respond to these changes in a way that enhances its ability to recruit, motivate, and retain a well qualified workforce while remaining fiscally responsible. In this regard, OPM, as the Government's central personnel management agency, is assigned some major responsibilities. Working with the laws provided by Congress, OPM establishes Governmentwide human resource management policy, guidance, and oversight for a workforce of over 2 million Federal civilian employees. The U.S. Merit Systems Protection Board (MSPB or Board), an independent Federal agency, has a statutory responsibility to provide the President and Congress with an annual oversight review and report on OPM's "significant actions." Within that framework, the Board examined various OPM activities in the work and family benefits area. This report contains the findings of that review. While it addresses a variety of programs, the report does not cover every benefit which could come under the work and family label (e.g., programs not covered include health insurance, life insurance, and retirement programs). The report acknowledges that in competing for the quality employees it needs, the Federal Government is not always competitive with other employers. Recent pay reform legislation promises to phase in some significant and beneficial changes in Federal white-collar compensation practices over the next several years, which should help with this problem. However, the availability and judicious use of work and family benefit progress can also substantially enhance the Government's attractiveness as an employer. Since the possibilities and limitations inherent in work and family programs vary depending on the program, much of this report is devoted to an examination of several major benefit programs. The major findings, by program area, are as follows: Child Care: This is one of the largest and most visible issues in the work and family arena today. While there are a wide range of benefits that could be offered to Federal employees--ranging from resource and referral services, to Government sponsored after- school and summer programs for school-age children--the one with the highest profile is onsite child care centers. Currently, only about 65 onsite child care centers in GSA-controlled space are serving civilian Federal employees, thus accommodating only a small fraction of potential employee needs. Furthermore, while the Government does provide a small subsidy to its onsite child care centers, most of the cost is borne by the users of these centers. This raises the question of affordability for lower graded employees who may well be in greatest need of this service but who can least afford it. The report notes that the military services find it enhances their mission accomplishment to subsidize child care centers serving the children of military personnel, and recommends that all Government agencies actively consider whether such an approach would increase their efficiency and effectiveness. Elder Care: Elder care is emerging as a major employee benefit need as the population ages and medical advances prolong the lives of people with chronic disabling conditions. As a result, increasing numbers of employees are faced with the need to provide care for aging parents or other dependents. Often this requires time away from the job. In keeping with the spirit of recent legislation which permits employees to use sick leave for adoption-related purposes, the report recommends that OPM consider changing its sick leave regulations to permit employees to use some of their sick leave to care for sick or elderly dependents. Alternative Work Schedules: The term "alternative work schedules" (or AWS) encompasses two different work schedule variations--flexitime, and compressed work hours. Each of these represents a different kind of adjustment to the traditional fixed schedule of 8 working hours per day, 5 days per week, which begin and end at the same times each day. The Federal Government is a leader in the use of AWS, with a substantially higher percentage of its employees on these schedules than found in the private sector. While AWS has had a positive influence on employee morale and productivity, agencies have not effectively used the availability of AWS programs as a recruitment or retention tool. Part-Time Employment and Job-Sharing: On a percentage of the workforce basis, the Federal Government employs substantially fewer part-time employees than does the private sector. This is true despite a 1978 law (the Federal Employees Part- Time Career Employment Act of 1978) which was specifically designed to increase the number of Federal part-time jobs, but which has had little net effect on numbers of part-timers employed. While there is no magic number of part-time employees that the Government should employ, there is also no persuasive reason why, overall, the Government could not create additional part-time jobs. To the extent that there are indications of interest and need among current and potential employees, increasing the number of part-time civil service positions would appear to be a desirable goal. While such an expansion of part-time opportunities could be helped somewhat by OPM's new job-sharing program, the inherent limitations of job-sharing arrangements (e.g., the need to have two or more employees who are sufficiently compatible to share one job) make it unlikely that this program will have a substantial impact on part-time employment. Flexiplace: The Government recently embarked on a pilot project, under the leadership of OPM and the General Services Administration, to test flexiplace--a program which allows some employees to work at home or satellite office sites. To date, the number of employees who are participating in this pilot is minuscule (less than 400 Governmentwide) but the long term prospects appear promising. The program has been endorsed by the President and other top Federal officials. Leave-Sharing Programs: In an attempt to provide a form of short-term disability coverage to its employees, the Government is currently experimenting with two leave-sharing programs...leave banks and leave-transfer programs. While both programs appear to be popular and useful to employees, the report raises some concerns about the conceptual underpinning of leave-transfer. Specifically, under leave-transfer, the Government relies on the generosity of some employees to fill the emergency leave needs of other employees. While the Government is not unique in this approach, there will be times or events which are beyond the ability of this program to provide relief. The question then becomes whether, and to what extent, the Government should provide some other type of short-term disability coverage. The report goes on to raise the possibility of Government action to provide a short-term disability insurance benefit under which employees could secure the benefits of group insurance rates, but fully pay the cost of the insurance themselves. "Cafeteria" Benefits: The Government does not offer a "cafeteria" benefits plan to its employees. However, there are studies currently underway concerning the possibility of having such a plan for the Federal Workforce. Under cafeteria plans, employees have a set dollar amount provided by their employer with which they call choose to "purchase" different fringe benefits. Thus, employees can tailor their benefits packages to their individual needs. One of the issues which makes a Government cafeteria benefits plan controversial is whether a Federal plan should include a "flexible spending account" provision. Flexible spending accounts allow employees to convert certain kinds of personal expenses (e.g., child care) into pretax fringe benefits, as opposed to having to pay for them from their regular wages which are subject to taxation). While flexible spending accounts are becoming increasingly common in nonfederal jobs, nonfederal employers do not concern themselves with the fact that flexible spending accounts reduce Federal tax revenues. For the Governments however, this fact needs to be considered as properly weighted in its decision making process. While flexible spending accounts for Federal employees are one of the policy issues which will ultimately need to be addressed, the report notes that the Government can implement a cafeteria benefits plan without a flexible spending account option. Based on the analysis presented in this report, while a flexible spending account certainly increases the attractiveness to employees of a cafeteria benefits plan, a cafeteria benefits approach would appear to be desirable for the Government even without a flexible spending account option. Conclusions: As an employer, the Federal Government has a long tradition of offering some types of work and family benefits (e.g., leave for maternity purposes), and may have been a leader at one point in time. Currently, however, the Government has been slow to respond to changing conditions. It now finds itself lagging behind both what many other major employers provide, and what many employees need. Further, the Government has not capitalized fully on some of the benefits it does offer (alternative work schedules), as it has failed to use the availability of such programs as an inducement in its recruitment efforts. This review of work and family benefit program has led us to a number of conclusions. The major findings are as follows: The Government is comprised of many different organizations in many locations with very different missions and major differences in workforce composition. Clearly, as OPM succinctly put it, "One size does not fit all not all agencies, or even all installations, much less all employees." Thus, flexibility in the availability and use of work and family benefit programs is crucial. By logical extension from the preceding finding, each individual agency (and major component within that agency) must be actively involved in identifying the unique needs of its immediate workforce. In this regard, it was disappointing to note that many agencies lacked the data and were therefore unable to respond to our requests for information on the need for specific work and family programs, or the effect these programs have had in meeting current needs. Clearly further work needs to be done by most agencies in the way of needs and benefits assessments. While individual Federal agencies are crucial components of the total picture, the Office of Personnel Management retains a key role in the overall leadership of Federal human resources management, in light of the need for it to issue enabling regulations and policy guidance. It is noteworthy, therefore, that in the opinion of the directors of personnel from the largest Federal departments and agencies, OPM has been largely successful in being attuned to customer needs, in the development of effective solutions to identified problems, and in the comprehensiveness of its approach. The only significant reservations expressed by the personnel directors concerned the questions of whether OPM was a forceful enough advocate for successful work and family programs, and that timeliness of OPM's actions in this area. On a program by program basis, OPM has clearly keen a leader in some areas (e.g., flexitime and flexiplace), but has not yet exerted the same influence in other areas (e.g., child care, elder care, part-time employment, and cafeteria benefits). To achieve the fullest beneficial use of the work and family programs that are available in the Government will require a greater degree of managerial and supervisory acceptance and involvement than is currently evidenced. This shift in the current management value system will not be easy for many managers, since it is foreign to their prior experiences. Part of the debate over work and family benefit programs links back to a larger policy question. That is, should the Federal Government seek to be a "model employer" in its work and family benefit programs which other employers might wish to emulate? Or alternatively, should Government follow the lead set by major private sector employers? The answer to this question affects the type and timing of work and family programs a initiatives appropriate for the Government pursue. Recommendations: 1. OPM needs to build on its successes in the area of work and family benefits and exert renewed leadership on those work and family issues on which the Government appears to be at a competitive disadvantage in the marketplace. Particular areas of emphasis could include: a. initiatives to better address employee elder care and child care needs (e.g., permitting some use of sick leave to care for sick or elderly dependents, and facilitating actions to permit agencies to subsidize child care centers), part-time employment needs, and accommodations for short-term disabilities not covered through leave banks or leave- transfer programs (e.g., providing short-term disability insurance obtained by the Government at favorable "group rates," but with the costs borne by employees desiring such insurance); and b. continued guidance and leadership vis a vis other executive branch agencies to encourage the greatest beneficial use of the work and family benefit programs currently available including the possible use of internal marketing, plans or other program management tools, to assure the programs are considered on their merits. 2. Strong consideration should be given to the adoption of a "cafeteria" benefits approach within the Government. Although a flexible spending account option would be preferable in a Federal cafeteria benefits approach, it need not be seen as a necessary condition to implementation of that cafeteria approach. 3. Individual Federal departments and agencies need to engage in more active needs assessments among their respective employees in order to make informed decisions about the work and family benefits that can and should be offered. 4. As OPM and individual Federal agencies engage in training and development activities for Federal managers, efforts should be made to specifically expand the managers' knowledge and understanding of the alternatives available in the way of work and family programs. Emphasis should be placed on the utility of these programs as a potential method of increasing workforce efficiency and effectiveness. 5. In framing the debate over the future of work and family benefits strong consideration should be given to the adoption of a "Federal Government as a Model Employer" orientation. This would be in keeping with the goals and objectives of a merit-based personnel system and consistent with the statutory merit system principles. INTRODUCTION The U.S. Merit Systems Protection Board (MSPB or Board) is required by 5 U.S.C. 1206 to report annually to the President and Congress on the significant actions of OPM. As a part of this report, the Board is also directed to include "an analysis of whether the actions of the Office of Personnel Management are in accord with the merit system principles and free from prohibited personnel practices." This study constitutes one part of MSPB's ongoing review of OPM significant actions. It reviews many of the more significant employee benefit programs through which Federal employees can help balance their work and personal lives. In the interest of keeping the report to a manageable size, however, it does not attempt to cover every benefit which could come under this rubric (e.g., programs not covered include health insurance, life insurance, and retirement programs). Benefit programs which are covered include child care, elder care, alternative work schedules (flexitime and compressed work schedules), part- time employment, flexiplace (work at home), and leave-sharing programs (leave banks and leave-transfer). In addition, the report also considers "cafeteria" benefit plans and other emerging benefit areas. These programs, which the media often label "work and family" programs, have a potential impact on virtually all employees--married or single with or without children--as they are tools through which employees can manage their work responsibilities and personal lives more flexibly. Moreover, to the extent these programs succeed, they can improve the quality of worklife for employees and therefore potentially enhance that recruitment, productivity, and retention of high-quality workforce. In our analysis, we set out to explore work and family benefit programs from three different perspectives: first, what is the nature of each program and how does the program typically operate; second, how do these programs fit into the Government's personnel systems, and, where appropriate, how might their effectiveness be improved; and finally, to what extent has OPM had a leadership role in installing or operating these programs. When the programs were viewed from all three perspectives, a broader question emerged. That was, should the Federal Government seek to be a role model for other employers in designing and executing its work and family policies? While this last question is not one that lends itself to a simple "yes" or "no" answer, the Board believes it is worthy of consideration by policymakers. Accordingly, this report surfaces some of the issues that are relevant to addressing the topic. Through this approach, we hope to both stimulate some debate on the topic and clarify any that might occur. Methodology and OPM Review Methodology In preparing this report, MSPB relied on responses to questions that we sent to the directors of personnel of the 22 largest Federal departments and independent agencies and to the Director of Policy for OPM. -1 The Board received responses during June through October 1990. We also invited comments from a number of Federal employee unions and employee organizations, but received few replies. In addition, we interviewed selected officials at OPM, the Department of Labor (Women's Bureau and Bureau of Labor Statistics), the General Services Administration (Office of Child Care and Development Programs), the Environmental Protection Agency (Research Triangle Park, NC, office), and the U.S. Chamber of Commerce. Rounding out our fact finding were information and insights gleaned from several conferences which addressed work and family issues, and from an extensive review of the relevant literature. Throughout this report, we attribute a number of quotations to Federal departments, agencies, and OPM. Unless otherwise noted, these quotations are drawn from the above-mentioned responses. Other quotations included in the body of the report are footnoted to show their origins. (Since the footnotes are largely limited to source citations rather than substantive information, they are grouped at the end of the report, in a chapter titled "Endnotes.") OPM Review The director of OPM was given an opportunity to review this report before it was published. Following her review, OPM provided written comments to MSPB on the draft report. We considered those comments in preparing the final report. A copy of OPM's comments is shown in appendix 1.