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Answers to Questions for the Record following a Hearing Conducted by the Senate Committee on the Budget on Running the Government for less 1 (June 16, 2017)

handle is hein.congrec/cbo3598 and id is 1 raw text is: JUNE 16, 2017 Answers to Questions for the Record Following a Hearing Conducted by the Senate Committee on the Budget on Running the Government for Less On May 17, 2017, the Senate Committee on the Budget convened a hearing at which Keith Hall, Director of the Congressional Budget Office, testified about the costs of operating the federal government.' After the hearing, Chairman Enzi, Senator Van Hollen, and Senator Warner submitted questions for the record. This document provides CBO's answers. It is available at www.cbo.gov/publication/52817. Chairman Enzi Question. You mentioned at the hearing that converting the defined benefit portion of the federal pension plans into a defined contribution would likely entail an up-front cost in the budget window, with savings achieved only beyond the budget window. Do you believe that having the federal defined benefit pension plans (under both FERS and CSRS) scored on a cash-flow basis-instead of a long-term accrual basis-is the best way to capture the budgetary impact of these pension programs? Do you think the current scoring methodology dissuades policy makers from appropriately considering the long-term impact of changes to these pension programs? Answer. There is no single best way to capture the budgetary effects of federal pension plans. As required by law, the Congressional Budget Office estimates the budgetary effects of federal defined benefit pension plans on a cash basis-that is, transactions are recorded when annuity payments are made or revenues are received. Although that method recognizes the cost of outlays when they occur, it does not reflect the cost of expected future outlays when the commitment to make those outlays occurs. Relative to cash estimates over a 10-year projection period, an accrual measure would offer three advantages: U The cost of providing defined benefit annuities in the future would be recognized as employees earned those benefits. By contrast, cash-based measures do not recognize such costs until after workers leave federal service, making it difficult 1. See Congressional Budget Office, CBO Director's Statement on the Cost of Government, CBO Blog (May 17, 2017), www.cbo.gov/publication/52729, and testimony of Keith Hall, Director, Congressional Budget Office, before the Senate Committee on the Budget, Costs ofFederal Civilian Personnel: A Comparison With Private-Sector Employees, 2011 to 2015 (May 17, 2017), www.cbo.gov/publication/52706.

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