FISCAL YEAR 1985 BUDGET EXCERPTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP95B00895R000200050025-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 16
• Document Creation Date: December 21, 2016
• Document Release Date: December 2, 2008
• Sequence Number: 25
• Publication Date: February 6, 1984
• Content Type: MEMO

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ULN' L )
6 February 1984
OLL 84-0458
MEMORANDUM FOR: DD/OP/SP
Legislation Division
Office of Legislative Liaison
SUBJECT: Fiscal Year 1985 Budget Excerpts
Attached for your information are the relevant portion of
the Fiscal Year 1985 budget dealing with federal personnel. As
reported in the press, the budget seeks modified retirement
COLA's, a high-five retirement benefits formula, and increased
employee retirement contributions. Additionally, the budget
anticipates federal employee health benefits program reforms
and a 3.5 percent pay raise for civilian personnel.
cc: C/LEG/OLL
DISTRIBUTION:
Original - Addressee
- OLL Chrono
LEG File: Legislation general
1 - ROD Signer
1 - D/OLL
1 - DD/OLL
ROD:csh (7 February 1934)
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budget
OF THE
UNITED
STATES
GOVERNMENT
FY 1985
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TABLE OF CONTENTS
Page
PART 1. THE BUDGET MESSAGE OF THE PRESIDENT ................................... M1
PART 2. ECONOMIC ASSUMPTIONS AND THE BUDGET ................................. 2-1
Economic developments and outlook ........................................................................ 2-2
Economic assumptions ................................................................................................ 2-9
Cyclical and structural components of the deficits ............................................... 2-12
Changes in the budget outlook since last year ....................................................... 2-15
Sensitivity of the budget to economic assumptions ............................................... 2-17
PART 3. BUDGET PROGRAM AND TRENDS ......................................................... 3-1
The dramatic halt in domestic spending growth .................................................. 3-2
The 1985 spending restraint program ...................................................................... 3-16
Budget totals and savings plan .................................................................................. 3-54
PART 4. BUDGET RECEIPTS ...................................................................................... 4-1
Summary ....................................................................................................................... 4-2
Enacted legislation ....................................................................................................... 4-3
Receipts proposals ....................................................................................................... 4-9
Effect of enacted and proposed changes on receipts ............................................. 4-15
Changes in budget receipts ........................................................................................ 4-16
Receipts by source ........................................................................................................ 4-18
PART 5. MEETING NATIONAL NEEDS: THE FEDERAL PROGRAM BY
FUNCTION ............................................................................................................... 5-1
Introduction ................................................................................................................... 5-2
National defense ........................................................................................................... 5-8
International affairs .................................................................................................... 5-21
General science, space, and technology ................................................................... 5-32
Energy ............................................................................................................................ 5-38
Natural resources and environment ........................................................................ 5-48
Agriculture .................................................................................................................... 5-55
Commerce and housing credit ................................................................................... 5-61
Transportation .............................................................................................................. 5-73
Community and regional development .................................................................... 5-84
Education, training, employment, and social services .......................................... 5-92
Health ............................................................................................................................. 5-107
Social security and medicare ..................................................................................... 5-114
Income security ............................................................................................................ 5-118
Veterans benefits and services .................................................................................. 5-135
Administration of justice ............................................................................................ 5-142
General government .................................................................................................... 5-147
General purpose fiscal assistance ............................................................................. 5-153
Net interest .................................................................................................................. 5-158
Allowances .................................................................................................................... 5-161
Undistributed offsetting receipts .............................................................................. 5-163
PART 6. PERSPECTIVES ON THE BUDGET .......................................................... 6-1
Relationship of budget authority to outlays ........................................................... 6-2
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Page
Limitations on the availability of funds .................................................................. 6-5
Fiscal activities outside the Federal budget ............................................................ 6-7
Budget funds and the Federal debt .......................................................................... 6-24
The increase in total 1983 outlays over the initial budget estimate .................. 6-27
Comparison of relatively uncontrollable outlays and of receipts ....................... 6-31
Allocation of windfall profit tax receipts ................................................................ 6-37
PART 7. THE BUDGET SYSTEM AND CONCEPTS .............................................. 7-1
The budget process ....................................................................................................... 7-2
Coverage of the budget totals .................................................................................... 7-5
Budget authority and related transactions ............................................................. 7-8
The credit budget ......................................................................................................... 7-11
Collections ...................................................................................................................... 7-12
Other transactions ....................................................................................................... 7-14
Basis for budget figures .............................................................................................. 7-15
PART 8. THE FEDERAL PROGRAM BY AGENCY AND ACCOUNT ................ 8-1
Explanatory note .......................................................................................................... 8-2
Legislative branch ........................................................................................................ 8-3
The judiciary ................................................................................................................. 8-15
Executive Office of the President .............................................................................. 8-18
Funds appropriated to the President ....................................................................... 8-22
Department of Agriculture ......................................................................................... 8-31
Department of Commerce ........................................................................................... 8-47
Department of Defense-Military ............................................................................. 8-54
Department of Defense-Civil ................................................................................... 8-69
Department of Education ........................................................................................... 8-73
Department of Energy ................................................................................................. 8-78
Department of Health and Human Services .......................................................... 8-82
Department of Housing and Urban Development ................................................. 8-96
Department of the Interior ........................................................................................ 8-101
Department of Justice ................................................................................................. 8-113
Department of Labor ................................................................................................... 8-117
Department of State .....................................................s.............................................. 8-122
Department of Transportation .................................................................................. 8-127
Department of the Treasury ...................................................................................... 8-139
Environmental Protection Agency ........................................................................... 8-146
General Services Administration .............................................................................. 8-148
National Aeronautics and Space Administration .................................................. 8-151
Office of Personnel Management .............................................................................. 8-154
Small Business Administration ................................................................................. 8-156
Veterans Administration ............................................................................................ 8-157
Other independent agencies ....................................................................................... 8-160
Allowances ..................................................................................................................... 8-187
Budget totals ................................................................................................................. 8-188
Off-budget Federal entities ......................................................................................... 8-191
PART 9. SUMMARY TABLES ...................................................................................... 9-1
Explanatory note relating to the summary tables ................................................ 9-2
Table of contents .......................................................................................................... 9-3
Table 1. Budget summary ........................................................................................... 9-4
Table 2. Budget receipts by source and budget outlays by agency, 1983-89..... 9-5
Table 3. Budget outlays by function, 1983-89 ......................................................... 9-6
Table 4. Differences between current services and the budget: outlays by
function, 1984-89 ...................................................................................................... 9-8
Table 5. Budget authority by agency, 1983-89 .......................... :............................ 9-9
Table 6. Budget authority by function, 1983-89 ..................................................... 9-10
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Table 7. D
thority b.
Table 8. Bi
Congress
Table 9. Rr
Table 10. G
Table 11. B
Table 12. F
executive
Table 13. B
Table 14. B
Table 15. 0
Table 16. 0
Table 17. 1
the 1985 I
Table 18. N
Table 19. N
Table 20. G
Table 21. B:
Table 22. Bi
Table 23. Fe
Table 24. Fe
Table 25. Cc
1972) prix
Table 26. Be
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Page
6-5
6-7
6-24
6-27
6-31
6-37
7-1
7-2
7-5
7-8
7-11
7-12
7-14
7-15
8-1
8-2
8-3
8-15
8-18
8-22
8-31
8-47
8-54
8-69
8-73
8-78
8-82
8-96
8-101
8-113
8-117
8-122
8-127
8-139
8-146
8-148
8-151
8-154
8-156
8-157
8-160
8-187
8-188
8-191
9-1
9-2
9-3
9-4
9-5
iy
... 9-8
... 9-9
... 9-10
Table 7. Differences between current services and the budget: budget au-
thority by function, 1984-89 ................................................................................... 9-12
Table 8. Budget authority and outlays available through current action by
Congress ..................................................................................................................... 9-13
Table 9. Relation of budget authority to outlays ................................................... 9-14
Table 10. Obligations incurred, net .......................................................................... 9-15
Table 11. Balances of budget authority ................................................................... 9-16
Table 12. Full-time equivalent of total Federal civilian employment in the
executive branch ....................................................................................................... 9-17
Table 13. Budget financing and debt ........................................................................ 9-18
Table 14. Budget receipts by source ......................................................................... 9-19
Table 15. Offsetting receipts by type ........................................................................ 9-22
Table 16. Outlays by function and agency .............................................................. 9-25
Table 17. Legislative proposals for major new and expanded programs in
the 1985 budget, projections of costs ..................................................................... 9-40
Table 18. New direct loan obligations by agency ................................................... 9-42
Table 19. New guaranteed loan commitments by agency .................................... 9-43
Table 20. Controllability of budget outlays, 1975-85 ............................................. 9-44
Table 21. Budget receipts by source, 1975-85 ......................................................... 9-46
Table 22. Budget outlays by function, 1975-85 ...................................................... 9-48
Table 23. Federal transactions in the national income accounts, 1974-85 ....... 9-59
Table 24. Federal finances and the gross national product, 1966-87 ................. 9-60
Table 25. Composition of budget outlays in current and constant (fiscal year
1972) prices: 1965-87 ................................................................................................ 9-61
Table 26. Budget receipts and outlays, 1789-1989 ................................................. 9-62
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T/'r6r~1 7* ~~J- ore?iv / J D, , mei c
M14 THE BUDGET FOR FISCAL, YEAR 1985
program aimed at the root causes of Africa's economic prob-
lems.
Although now less than 2% of the budget, international pro-
grams are critical to American world leadership and to the success
of our foreign policy.
Civil service retirement.-There is growing recognition that civil
service retirement has far more generous benefits and is much
more costly than retirement programs in the private sector or in
State and local governments. Accordingly, the administration con-
tinues its strong support of the civil service reform proposals ad-
vanced in last year's budget. In 1985, the administration will focus
its legislative effort on three of those proposals, in modified form:
cost-of-living adjustment (COLA) reform, a high 5-year salary aver-
age for the benefit formula, and increased employee and agency
retirement contributions.
GI bill rate increase.-The budget proposes legislation to provide
a 15% increase in the rates of educational assistance and special
training allowances to GI bill trainees and disabled veterans receiv-
ing vocational rehabilitation assistance, effective January 1985.
The increase will offset increased costs since GI bill benefits were
last raised in 1981. It will provide an increase in monthly educa-
tion benefit checks to 544,000 veterans and their dependents and
survivors.
CONTINUING REFORM OF OUR FEDERAL SYSTEM
The overall efficiency of Government in the United States can
also be improved by a more rational sorting out of governmental
responsibilities among the various levels of government in our
Federal system-Federal, State, and local-and by eliminating or
limiting overlap and duplication.
In 1981, the Congress responded to my proposals by consolidating
57 categorical programs into nine block grants. In 1982, a block
grant was created for job training in the Jobs Training Partnership
Act.
The administration is improving the management of intergovern-
mental assistance by providing State and local elected officials with
greater opportunity to express their views on proposed Federal
development and assistance actions before final decisions are made.
Under Executive Order 12372, Intergovernmental Review of Feder-
al Programs, which I signed in July 1982, Federal agencies must
consult with State and local elected officials early in the assistance
decision process and make every effort to accommodate their views.
The Order also encourages the simplification of State planning
requirements imposed by Federal law, and allows for the substitu-
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THE BUDGET FOR FISCAL YEAR 1985
the wages of such persons for the first three years of employment
(the percentage declines by 10 points in the fourth year and each
year thereafter); an increase of 50 percent in the regular invest-
ment tax credit for investment in equipment; a 10 percent invest-
ment tax credit for new construction and reconstruction of build-
ings; and continued availability of tax-exempt bond financing
beyond the 1986 sunset date for small issue bonds. These incen-
tives, which generally will remain fully in effect for 20 years and
be phased out over the succeeding four years, are estimated to
reduce receipts by $0.1 billion in 1985, $0.4 billion in 1986, and $0.8
billion in 1987.
Tax treatment of health insurance premiums.-Under current
law, compensation paid in cash is fully taxable for both social
security and income tax purposes, while compensation in the form of
employer-paid health insurance premiums is nontaxable. The ad-
ministration proposes that effective January 1, 1985, employees be
required to pay social security and income taxes on employer-paid
health insurance premiums in excess of $175 per month or $2,100 per
year for a family plan, and $70 per month or $840 per year for a
single plan. Employer-paid health insurance premiums below these
amounts still will be excluded from taxation. The $175 and $70
amounts will be indexed to rise with inflation. This proposal is
estimated to increase receipts by $3.9 billion in 1985, $6.5 billion in
1986, and $8.0 billion in 1987.
Changes in contributions to civil service retirement (CSR).-Cur-
rently, employees contribute 7% of wages and salaries to CSR,
employing agencies contribute 7%, and the general fund of the
Federal Government contributes 50% of the remaining cost. The
administration is proposing several reforms that would reduce the
cost of CSR, and increase contributions to the fund. These changes,
which are estimated to increase governmental receipts by $0.7
billion in 1985, $1.4 billion in 1986, and $1.5 billion in 1987, include
the following:
? Increase employee contributions.-The administration's propos-
al increases employee contributions (including District of Co-
lumbia employees who are under CSR) from 7% of wages and
salaries to 8% effective October 1984, and to 9% effective
October 1985.
? Increase the District of Columbia (D.C.) employer contribu-
tion.-Matching the proposed contribution by D.C. employees,
the administration's proposal increases the D.C. Government
contribution from the current 7% to 8% effective October
1984, and to 9% effective October 1985. A corresponding in-
crease in the contribution of Federal employing agencies is
proposed; however, these employer contributions are shown
a
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on the outlay side of the budget and do not affect budget
receipts. 5
Extension of Federal/State unemployment insurance coverage to
railroad employment-Railroad employment is the only sector not
covered by the regular Federal/State unemployment insurance
system. The separate Railroad Sickness and Unemployment Insur-
ance Fund (RSUI), which is financed by payroll taxes paid by rail
employers, has been insolvent for a number of years.
In the past, when contributions have been insufficient to pay
benefits, RSUI has borrowed from the rail pension fund. Even
though RSUI will not be permitted to borrow from the pension
fund after 1985, and the Railroad Retirement Revenue Act of 1983
increased RSUI contributions and established a separate debt re-
payment tax, it is estimated that the RSUI debt to the rail pension
fund will grow to nearly $1 billion by the end of 1985.
The administration proposes to extend regular Federal/State un-
employment insurance coverage to railroad employment. Under
this proposal rail employment will be covered under Federal and
State unemployment insurance tax laws effective January 1, 1985.
Existing RSUI contributions and the special debt repayment tax
will remain in place to finance sickness payments and to ensure
that all debt to the rail pension fund is repaid. This proposal is
estimated to increase receipts by $0.1 billion in each year, 1985-
1987.
Taxation of Foreign Sales Corporation.-Under present law,
taxes on a portion of a company's income from U.S. exports sold
through a Domestic International Sales Corporation (DISC) can be
deferred. The administration proposes to replace the current DISC
provisions with a new system of taxing export sales income that is
intended to preserve the competitiveness of U.S. exports while
addressing concerns expressed by other General Agreement on
Tariff and Trade (GATT) members. This provision is estimated to
reduce receipts by a negligible amount in 1985 and 1986, and to
increase receipts by $0.1 billion in 1987.
Withholding on U.S. real estate gains of foreign individuals.-The
administration proposes to withhold taxes on gains realized by
foreign individuals on the sale of U.S. real property. It is estimated
that this proposal will increase receipts by $0.1 billion in 1985 and
negligible amounts in subsequent years.
Change in the taxation of Trusts for Investment in Mortgages
(TIMs).-Changes in the tax laws necessary to permit the develop-
? The administration proposes to increase the contributions of the Postal Service by the same amount.
Contributions of the Postal Service to (SR are shown on the outlay side of the budget and do not affect budget
receipts.
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NATIONAL NEED: HEALTH-Co
(Functional code 550, in millions of dot
i
Subtotal, health care services .......................
Health research:
National Institutes of Health research ...................
Other research
programs .......................................
Subtotal,
health research ..............................
Education and training of the health care work
force:
Research training ...................................................
Clinical training .....................................................
Other
.....................................................................
Subtotal, education and training of the
health care work force .............................
Consumer and occupational health and safety:
Consumer safety:
Existing law ......................................................
Proposed legislation
..........................................
Occupational safety
and health ..............................
Subtotal, consumer and occupational
health and safety ....................................
Total
, outlays .............................................
ADDENDUM
Off-budget
-budget Federal entity:
Federal Financing Bank:
Health care services:
Budget authority ...........................................
Outlays .........................................................
employees health benefits.-The budget includes savings
from the administration's proposal to reform the Federal employ-
ees' health benefits (FEHB) program.
FEHB is the world's largest, multiple-choice health plan. Since
Federal employees pay a share of the cost of the FEHB program
and have many plan choices available to them, competitive market
forces help to restrain FEHB cost increases.
Map missions and programs
d1983
ual
estimate
1985
estimate
1 986
estimate
e6mate
OUTLAYS
Health care services:
Medicaid:
Existing law .......:..............................................
Proposed legislation
18,985
20,237
23,196
25,045
27,392
.........................................
Health block grants:
...................
...................
-1,067
-1,117
-1,154
Existing law .......:..............................................
Proposed legislation
1,273
1,313
1,347
1,353
1,388
..........................................
Federal employees' health benefits:
...................
...................
76
198
206
Existing law .....................................................
Proposed legislation ..........................................
Other health care services
1,019
...................
1,309
...................
1,339
...................
1,554
-240
1,756
-328
:
Existing law ......................................................
Proposed legislation
1,760
1,788
1,663
1,429
1,427
..........................................
...................
-1
-4
-6
-6
23,037
24,647
26,550
28,217
30,681
3,555
3,987
4,296
4
440
4
529
418
447
491
,
504
,
510
3,973
4,434
4,787
4,944
5,039
194
325
205
200
208
169
216
117
220
120
59
36
33
18
18
578
442
410
351
358
720
769
795
798
797
...............
346
373
373
- 5
375
- 9
380
.
1,066
1,143
1,168
1,168
1,168
28,655
30,665
32,916
34,680
37,246
12
10
3
1
-14
- 7
-10
.................
-11
The large increase in 1984 budget authority over that in 1983 is due to a technical change in the appropriations language or 1984 and
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 In 1983, for example, the average cost of health benefit plans
offered by private-sector FEHB carriers increased by over 20%.
After Federal employees made health plan selections for the year,
however, the actual increase in costs was only 4%.
The administration's FEHB reform legislation would build on the
competitive features of the FEHB program:
? The Federal Government's contribution for FEHB would no
longer be based on the average premiums of the six largest
plans in the program, but would be based instead on a broad-
er measure of changes in cost.
? The current 75% limit on the Federal contribution to the cost
of any employee's health benefits would be dropped. If an
employee chose a plan with a cost lower than the Federal
contribution, he or she would be entitled to a rebate of the
difference. This would increase the incentives for employees
to select low-cost plans.
? A wider range of plans would be allowed to participate, in-
creasing the number of choices available to employees and
sharpening competitive forces.
? Off-budget entities (such as the Postal Service) would be re-
quired to pay the Federal Government their fair share of the
cost of health benefits provided to their annuitants.
Taken together, these measures are expected to reduce outlays
for the FEHB program by 15% below current levels, or about $240
million in 1986.
Other health care services.-Legislation will be proposed to assist
Federally-funded health maintenance organizations in competing
with other health care providers by removing unnecessary Federal
requirements.
For 1985, the administration is requesting $49 million in budget
authority for the direct Federal subsidy for the care of District of
Columbia residents at St. Elizabeths Hospital. This request is a
reduction of $19 million from 1984 and represents the third year of
a 10-year phasedown of direct Federal subsidies for these residents.
In 1984, the District of Columbia will place in the community 200
nursing home patients and 89 drug and alcohol patients from the
hospital, which both reduces the hospital's operating costs and
complies with a Federal District Court order to place specified
patients in settings less restrictive than St. Elizabeths Hospital.
Legislation will also be proposed to establish a corporation to ad-
minister the hospital and other public mental health services pro-
vided to District of Columbia residents. This proposal and the
phasedown of direct Federal subsidies for St. Elizabeths Hospital
will make Federal policy with regard to the District of Columbia
consistent with the Federal relationship to other States and juris-
dictions.
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5-122 THE BUDGET FOR FISCAL YEAR 1985
from all sources, the Corporation has a growing deficit that is
expected to reach $622 million by the end of 1985 under current
law. The budget reflects the administration's request that the Con-
ve an increase in the single-employer premium to a
level suffic' nt to cover projected claims and amortize the current
er a reasonable period of time. The administration also
supports legislation to revise the insurance program for single-
employer plans to prevent unwarranted assignment to the Corpora-
tion of liabilities for unfunded benefits.
ft
Federal employee retirement and disability.-There are a number
of employee retirement and disability programs in the legislative,
judicial, and executive branches of the Federal Government. The
largest program is civil service retirement and disability. Begin-
ning in this budget, payments to retired military personnel, previ-
ously classified in national defense, are included in income secu-
rity.
Civilian retirement and disability programs.-Benefits are paid
to former employees, and their survivors, who meet eligibility re-
quirements based on age and length of service. Currently, f&l
retirement benefits begin at age 55 for employees with 30 years of
service. Benefit levels are based on the employee's three highest
salary years, and are indexed tb the consumer price index (CPI).
Current workers and their employing agencies each contribute 7%
of wages toward retirement costs. The remainder-about 50% of
total costs-is paid by taxpayers through annual Treasury pay-
ments to the civil service retirement fund. This retirement system
is separate from the social security system. However, new Federal
employees hired after December 31, 1983 are covered under a com-
bination of civil service retirement and social security. Under exist-
ing law, in 1985 an estimated 2.0 million retirees and survivors will
receive payments totaling an estimated $23.6 billion in outlays.
The administration continues its strong support of civil service
retirement reforms proposed in the 1984 budget. In 1985, the ad-
ministration will focus its legislative effort on three proposals: cost-
of-living adjustment (COLA) reform, a high 5-year salary average
for the benefit formula, and increased employee and agency retire-
ment contributions.
? Cost-of-living adjustments (COLAs).-A set of proposals would
change the way civil service annuities are increased to reflect
changes in the cost of living. The payment date for the next
COLA increase would be shifted from June 1984 to January
1985, the CPI measurement period would be adjusted accord-
ingly, and subsequent COLA increases would be paid in Janu-
ary of each year, as proposed in both the Senate and House
versions of reconciliation legislation pending in the 98th Con-
7
tha
inc
ita)
tiol
19~
me
1
bill
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.....,...,... L 1 5-123
gress. The 1982 Reconciliation Act provision for a minimum
3.3% COLA in 1985 for retirees under age 62 would be elimi-
nated. Beginning in 1986, the civil ser
i
v
ce retirement COLA
would be limited to the lesser of the increase in Federal white
collar pay or the CPI
Thi
.
s ro
p posal is similar to a provision
of the recently enacted Social Security Amendments of 1983.
Finally, civil service retirement COLAs would be limited to
55% of regular COLAs on the amount of annuities that
exceed $10,000 in 1985. The $10,000 level would be adjusted
for inflation in future years.
? Base annuity calculations on the retiree's highest five years of
earnings, instead of the highest three.-Prior to 1970, a period
of relatively low inflation, the formula for computing annu-
ities was based on the average of an employee's five highest
salary years; since then the three highest salary years have
been used. Employees now eligible for retirement or within
three years of retirement eligibility would not be affected.
? Increase employee and agency contributions for retirement.-
Although retirement costs have skyrocketed, the portion with-
held from Federal employees' salaries has remained constant
at 7% since 1969. The budget proposes to increase the employ-
ee contribution to 8% in 1985 and 9% in 1986. Agency contri-
butions for retirement would also increase by equal amounts.
The increase would apply to all Federal agencies and off-
budget entities, including the Postal Service and the District
of Columbia government, for employees who participate in
the civil service retirement system.
The budget also proposes changes to Federal civilian retirement
that are consistent with enacted reforms in social security. These
include deleting the guaranteed minimum benefit for future annu-
itants and phasing out special benefits for adult students. In addi-
tion, new D.C. government employees hired after September 30,
1984 would not be eligible for coverage under civil service retire-
ment and employee life and health insurance.
In 1985, the total reform package would increase receipts by $0.9
billion, and would reduce outlays by $0.4 billion.
Military retirement.-Benefits are also
id
pa
to former military
personnel and their survivors. It is estimated that there will be 1.5
million military retirees and survivors in 1985 receiving a total of
$17.6 billion in outlays under current law. Normal retirement eligi-
bility is attained at 20 years of service. The initial benefit is 2.5%
of final basic pay per year of service. For personnel entering after
September 1980, the average of the member's highest three years
basic pay will be used instead of final basic pay. Benefits are
indexed to the CPI. Consistent with legislation for civil service
retirement, the budget proposes to shift the payment date for cost-
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 Approved For Release 2008/12/02 : CIA-RDP95B00895R000200050025-2
of-living adjustments for military retirement to January of each
year. This proposal would save an estimated $0.3 billion in 1985
outlays. Military personnel also make contributions to and are
eligible for social security.
The financing of military retired pay has been changed in this
budget. Through 1984, retirement benefits were financed by a
charge to the Department of Defense, and were included in the
national defense function. Beginning in 1985 a newly created trust
fund will make the benefit payments, and this will be included in
the income security function. The new trust fund will be financed
from charges to the Defense budget for the estimated cost of future
retirement benefits being currently earned by active military per-
sonnel, along with payments from the general fund for the cost of
retirement benefits earned by personnel who are already retired.
The establishment of this new trust fund will shift the funding of
military pensions to a basis more comparable to most Federal
civilian pensions. The new treatment of military retired pay sub-
stantially affects the figures for the income security function. For
1985, the income security function includes $27.3 billion in budget
authority and $17.3 billion in outlays for military retirement. Com-
parable levels of budget authority and outlays for 1983 and 1984
are shown in parentheses in the budget authority and outlays
table. In addition, the introduction to Part 5 provides a more
,detailed explanation of these changes.
Federal employees workers' compensation.-The Department of
Labor provides tax-free cash and medical benefits to Federal em-
ployees or their survivors for job-related injuries, illnesses, or
deaths. About 46,000 workers with long-term disabilities, or their
survivors, will receive monthly payments in 1984. As a result of
increased efforts to return recipients to work and to remove those
no longer eligible from the rolls, estimated 1985 recipient levels are
unchanged from 1984. Consistent with proposed legislation for civil
service retirement, the budget proposes to shift payment of the
cost-of-living adjustment from April 1985 to January 1986, with
subsequent COLA's to be payable in January of each year.
Unemployment compensation.-About 97% of wage and salaried
employment in the United States is covered by unemployment
compensation programs that pay benefits to individuals who are
temporarily out of work and are searching for jobs. Based on the
economic assumptions described in Part 2, an estimated average of
3.0 million workers per week will receive unemployment benefits
during 1984 and 2.8 million workers in 1985. Outlays are estimated
to decrease from $20.7 billion in 1984 to $20.1 billion in 1985 due to
a decline in the projected average unemployment rate from 8.0%
in fiscal year 1984 to 7.6% in 1985.
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 Approved For Release 2008/12/02 : CIA-RDP95B00895R000200050025-2
ALLOWANCES
The budget includes allowances to cover certain forms of budget-
ary transactions that are expected to occur, but that are not re-
flected in the program details shown in the preceding functions.
When these transactions actually take place, they are reported as
outlays or receipts for the appropriate agencies and functions
rather than as allowances. For this reason, allowances for complet-
ed years are always zero.
Three allowances are included in the budget: civilian agency pay
raises, increased employing agency payments for employee retire-
ment, and allowances for contingencies.
ALLOWANCES
(Functional code 920, in millions of dollars)
Program
1983
actual
1984 1985
estimate estimate
1986
estimate
1981
estimate
BUDGET AUTHORITY
Civilian agency pay raises .............................................
........... .....
................. 446
3,071
5.217
Increased employing agency payments for employee
retirement (proposed legislation):
Department of Defense ....................................................
.................
................. 229
487
516
Civilian agencies ..............................................................
................ .
................. 280
595
630
Allowances for contingencies:
Relatively uncontrollable programs ...................................
.................
................. .................
.................
...............
Other requirements ..........................................................
.................
..................................
.................
...............
Total, budget authority .......................................
.................
i.................
954
4,153
6,363
OUTLAYS
Civilian agency pay raises ................................................
.................
.................
430
2,968
5,134
ncreased employing agency payments for employee
retirement (proposed legislation):
Department of Defense .................................. ....... ...........
..............
.................
229
487
516
Civilian agencies ..............................................................
................
................
280
595
630
llowances for contingencies:
Relatively uncontrollable programs ...................................
................
.................
...............
.......
...
Other requirements ..........................................................
.................
.................
.................
.
......
.................
...............
...............
Total, outlays .......................................................
................. .
................. 938
4,050
6,280
Civilian agency pay raises.-This allowance covers the costs of
future civilian agency pay raises, including increases for Coast
Guard military personnel. Two other pay raise allowances are in-
cluded in the national defense function.
This allowance includes an assumed pay increase for civilian
personnel of 3.5% and a pay increase for the Coast Guard military
personnel of 5.5%, both effective in January of 1985. The Presi-
dent's final decision on the 1985 civilian pay increase will be made
after he reviews the recommendations of his pay agent and the
recommendations of the Advisory Committee on Federal Pay, as
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A
A
 provided for by law. The pay raise allowance includes amounts for
1986 and 1987 that are based on the assumption that Federal
civilian employees will receive the same average percentage pay
increase as private sector workers.
Increased employing agency payments for employee retirement.-
The administration is proposing reforms of Federal employee re-
tirement programs. One of the proposed reforms is an increase in
the contribution that Federal employees make toward their own
retirement, from the current 7% of salary to 8% in 1985 and 9% in
1986, with a matching increase in contributions by employing agen-
cies. This allowance is the amount necessary to finance the higher
employing agency payments. The allowance includes the amount of
the increased contribution both by civilian agencies and by the
Department of Defense. Upon enactment of the administration's
proposal, the allowance amounts will be distributed to individual
agencies. The administration's retirement reform proposals are dis-
cussed in more detail in the income security function.
Allowances for contingencies.-The Congressional Budget Act of
1974 requires that the budget include two specific allowances for
unanticipated spending or savings in relatively uncontrollable pro-
grams (such as social security) and in discretionary programs.
The estimates for each of these contingency allowances are zero
for all years. The contingency allowance for relatively uncontrolla-
ble programs is estimated to be zero because the chance of these
outlays being lower than the estimates is as great as the chance of
being higher. The contingency allowance for other requirements is
also assumed to be zero, with probable increases being offset by
anticipated decreases.
Allowances account for estimated net outlays of $0.9 billion in
1985.
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STAT
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