B-158499, MAR. 18, 1966, 45 COMP. GEN. 584

B-158499: Mar 18, 1966

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OBLIGATIONS FOR THE FULL AMOUNT OF SEVERANCE PAY DUE ANY EMPLOYEE INVOLUNTARILY TERMINATED BY REDUCTION IN FORCE ON OR PRIOR TO THE CLOSE OF THE 1966 FISCAL YEAR ARE CHARGEABLE AS "NECESSARY" EXPENSES AGAINST AVAILABLE FUNDS APPROPRIATED FOR 1966 FISCAL YEAR AGENCY OPERATIONS. THE FACT THAT SUFFICIENT FUNDS ARE NOT AVAILABLE IN FISCAL YEAR 1966 FOR SEVERANCE PAY OBLIGATIONS DOES NOT UNEQUIVOCALLY NECESSITATE DELAY OF WARRANTED EMPLOYEE SEPARATIONS. 31 U.S.C. 665 (E) AUTHORIZING APPORTIONMENT OF FUNDS ON A BASIS INDICATING NECESSITY FOR A DEFICIENCY OR SUPPLEMENTAL ESTIMATE WHEN EXPENDITURES ARE BEYOND ADMINISTRATIVE CONTROL. PROVIDE THAT: (C) AN OFFICER OR EMPLOYEE TO WHOM THIS SECTION APPLIES WHO IS INVOLUNTARILY SEPARATED FROM THE SERVICE.

B-158499, MAR. 18, 1966, 45 COMP. GEN. 584

APPROPRIATIONS - OBLIGATION - SEVERANCE PAY TO CIVILIAN EMPLOYEES PENDING DEVELOPMENT OF BUDGET PROCEDURES FOR HANDLING OBLIGATIONS ARISING WHEN EMPLOYEES INVOLUNTARILY SEPARATED FROM THE SERVICE BECOME ENTITLED TO THE SEVERANCE PAY PRESCRIBED BY THE FEDERAL EMPLOYEES SALARY ACT OF 1965, IN AN AMOUNT NOT TO EXCEED 1-YEAR'S PAY AT THE RATE RECEIVED AT TIME OF SEPARATION, PAYABLE IN REGULAR PAY PERIODS, OBLIGATIONS FOR THE FULL AMOUNT OF SEVERANCE PAY DUE ANY EMPLOYEE INVOLUNTARILY TERMINATED BY REDUCTION IN FORCE ON OR PRIOR TO THE CLOSE OF THE 1966 FISCAL YEAR ARE CHARGEABLE AS "NECESSARY" EXPENSES AGAINST AVAILABLE FUNDS APPROPRIATED FOR 1966 FISCAL YEAR AGENCY OPERATIONS, THE ACTION OF TERMINATION GIVING RISE TO AN OBLIGATION FOR THE FULL AMOUNT OF ENTITLEMENT, EVEN THOUGH AN EMPLOYEE MAY BE REHIRED BEFORE THE EXPIRATION OF THE SEVERANCE PAY PAY-OUT PERIOD, AND THE FACT THAT SUFFICIENT FUNDS ARE NOT AVAILABLE IN FISCAL YEAR 1966 FOR SEVERANCE PAY OBLIGATIONS DOES NOT UNEQUIVOCALLY NECESSITATE DELAY OF WARRANTED EMPLOYEE SEPARATIONS, 31 U.S.C. 665 (E) AUTHORIZING APPORTIONMENT OF FUNDS ON A BASIS INDICATING NECESSITY FOR A DEFICIENCY OR SUPPLEMENTAL ESTIMATE WHEN EXPENDITURES ARE BEYOND ADMINISTRATIVE CONTROL.

TO THE CHAIRMAN, SUBVERSIVE ACTIVITIES CONTROL BOARD, MARCH 18, 1966:

BY LETTER OF FEBRUARY 8, 1966, YOU REQUESTED OUR OPINION AS TO WHETHER THE APPROPRIATION TO THE SUBVERSIVE ACTIVITIES CONTROL BOARD FOR FISCAL YEAR 1966 WOULD BE AVAILABLE TO PAY SEVERANCE PAY IN FISCAL YEAR 1967 TO EMPLOYEES WHOSE SERVICES MIGHT BE INVOLUNTARILY TERMINATED BY REDUCTION IN FORCE ON OR PRIOR TO THE CLOSE OF FISCAL YEAR 1966.

SUBSECTIONS 9 (C), (D) AND (G) OF THE FEDERAL EMPLOYEES SALARY ACT OF 1965, PUBLIC LAW 89-301, APPROVED OCTOBER 29, 1965, 79 STAT. 1111, 1119, 5 U.S.C. 1117 (C), (D) AND (G), PROVIDE THAT:

(C) AN OFFICER OR EMPLOYEE TO WHOM THIS SECTION APPLIES WHO IS INVOLUNTARILY SEPARATED FROM THE SERVICE, ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION, NOT BY REMOVAL FOR CAUSE ON CHARGES OF MISCONDUCT, DELINQUENCY, OR INEFFICIENCY, SHALL, UNDER RULES AND REGULATIONS PRESCRIBED BY THE PRESIDENT OR SUCH OFFICER OR AGENCY AS HE MAY DESIGNATE, BE PAID SEVERANCE PAY IN REGULAR PAY PERIODS BY THE DEPARTMENT, INDEPENDENT ESTABLISHMENT, CORPORATION, OR OTHER GOVERNMENTAL UNIT, FROM WHICH SEPARATED.

(D) SEVERANCE PAY SHALL CONSIST OF TWO ELEMENTS, A BASIC SEVERANCE ALLOWANCE AND AN AGE ADJUSTMENT ALLOWANCE. THE BASIC SEVERANCE ALLOWANCE SHALL BE COMPUTED ON THE BASIS OF ONE WEEK'S BASIC COMPENSATION AT THE RATE RECEIVED IMMEDIATELY BEFORE SEPARATION FOR EACH YEAR OF CIVILIAN SERVICE UP TO AND INCLUDING TEN YEARS FOR WHICH SEVERANCE PAY HAS NOT BEEN RECEIVED UNDER THIS OR ANY OTHER AUTHORITY AND TWO WEEKS' BASIC COMPENSATION AT SUCH RATE FOR EACH YEAR OF CIVILIAN SERVICE BEYOND TEN YEARS FOR WHICH SEVERANCE PAY HAS NOT BEEN RECEIVED UNDER THIS OR ANY OTHER AUTHORITY. THE AGE ADJUSTMENT ALLOWANCE SHALL BE COMPUTED ON THE BASIS OF 10 PERCENTUM OF THE TOTAL BASIC SEVERANCE ALLOWANCE FOR EACH YEAR BY WHICH THE AGE OF THE RECEIPT EXCEEDS FORTY YEARS AT THE TIME OF SEPARATION. TOTAL SEVERANCE PAY RECEIVED UNDER THIS SECTION SHALL NOT EXCEED ONE YEAR'S PAY AT THE RATE RECEIVED IMMEDIATELY BEFORE SEPARATION.

(G) IF THE OFFICER OR EMPLOYEE DIES BEFORE THE EXPIRATION OF THE PERIOD COVERED BY PAYMENTS OF SEVERANCE PAY, THE PAYMENTS OF SEVERANCE PAY WITH RESPECT TO SUCH OFFICER OR EMPLOYEE SHALL BE CONTINUED AS IF SUCH OFFICER OR EMPLOYEE WERE LIVING AND SHALL BE PAID ON A PAY PERIOD BASIS TO THE SURVIVOR OR SURVIVORS OF SUCH OFFICER OR EMPLOYEE IN ACCORDANCE WITH THE FIRST SECTION OF THE ACT OF AUGUST 3, 1950 (5 U.S.C. 61F).

THE DEPARTMENTS OF STATE, JUSTICE, AND COMMERCE, THE JUDICIARY, AND RELATED AGENCIES APPROPRIATION ACT, 1966, PUBLIC LAW 89-161, APPROVED SEPTEMBER 2, 1965, PROVIDES FUNDS FOR THE FISCAL YEAR 1966 "FOR NECESSARY EXPENSES OF THE SUBVERSIVE ACTIVITIES CONTROL BOARD * * *.' 79 STAT. 641.

IN LIGHT OF THE QUOTED PROVISIONS OF LAW, THERE CAN BE NO QUESTION BUT THAT THE GOVERNMENT, AT THE MONEY ADMINISTRATIVE SEVERANCE ACTION NECESSARY TO VEST ENTITLEMENT THEREUNDER IS COMPLETED, BECOMES OBLIGATED FOR THE FULL AMOUNT OF SEVERANCE PAY AUTHORIZED THEREBY GIVING RISE TO A ,NECESSARY" EXPENSE. THE USUAL PRACTICE IN SUCH CIRCUMSTANCE WOULD BE TO CHARGE THE APPLICABLE APPROPRIATION CURRENT AT THE TIME WITH THE FULL AMOUNT SO OBLIGATED.

HOWEVER, THERE ARE CERTAIN ASPECTS OF THE PROVISIONS FOR SEVERANCE PAY WHICH MERIT EXAMINATION IN CONNECTION WITH DETERMINING THE PROCEDURES UNDER WHICH OBLIGATIONS THEREFOR SHOULD BE RECORDED. AT THE OUTSET IT MAY BE NOTED THAT THE INCURRENCE OF ANY OBLIGATION FOR SEVERANCE PAY IS IN ITSELF SOMEWHAT ANOMALOUS IN THE SENSE THAT IT ARISES BY VIRTUE OF ADMINISTRATIVE ACTION DESIGNED TO ELIMINATE RATHER THAN INCUR EXPENSE. THE SEPARATION OF AN EMPLOYEE FROM FEDERAL EMPLOYMENT WOULD ORDINARILY RESULT IN REDUCED EXPENDITURES AND STEMS FROM CONCLUSIONS THAT SERVICES OF THE EMPLOYEE WERE NO LONGER NECESSARY TO FULFILLMENT OF THE OBJECTS FOR WHICH THE APPROPRIATED FUNDS UTILIZED TO PAY HIS SALARY WERE PROVIDED. YET IF WE WERE TO REQUIRE THAT THE FULL OBLIGATION FOR SEVERANCE PAY INCURRED BE CHARGED AGAINST FUNDS CURRENTLY AVAILABLE AT THE TIME OF SEPARATION, THERE MIGHT WELL RESULT SITUATIONS NECESSITATING DELAY OF A WARRANTED ECONOMY MEASURE BECAUSE SUFFICIENT FUNDS WERE NOT AVAILABLE TO ACHIEVE IT.

ALSO FOR CONSIDERATION IS THE FACT THAT THE STATUTORY PROVISIONS COVERING SEVERANCE PAY AND IMPLEMENTING REGULATIONS ISSUED BY THE CIVIL SERVICE COMMISSION REQUIRE PAYMENT OF THE ENTITLEMENT THEREUNDER TO BE MADE AT THE SAME RATE AND PAY PERIOD INTERVALS AS IF THE TERMINATED EMPLOYEE WERE STILL EMPLOYED. UNITED STATES CIVIL SERVICE COMMISSION FPM LTR. 550-13, JANUARY 5, 1966. THUS, SEVERANCE PAY IS IN THE NATURE OF CONTINUED SALARY PAYMENTS AND BECOMES DUE AND PAYABLE PERIODICALLY AS IN THE CASE OF SALARY. AND UPON REEMPLOYMENT BY THE GOVERNMENT OF A PREVIOUSLY TERMINATED EMPLOYEE, ANY ENTITLEMENT TO AS YET UNPAID SEVERANCE PAY CEASES. IN SUCH CASES, THE RECORDING OF AN OBLIGATION FOR THE FULL AMOUNT OF ENTITLEMENT AT THE TIME OF SEVERANCE WOULD REQUIRE DETAILED ADJUSTMENTS IN THE ACCOUNTS OF RECORD AT THE TIME OF REEMPLOYMENT. THESE ADJUSTMENTS WOULD NOT BE NECESSARY IF OBLIGATIONS WERE RECORDED PERIODICALLY AS THE LIABILITY FOR PAYMENT MATURES.

WE UNDERSTAND THAT THE BUREAU OF THE BUDGET IS CURRENTLY EXAMINING INTO THE FISCAL ASPECTS OF PROVIDING FOR SEVERANCE PAY PREPARATORY TO ISSUING INSTRUCTIONS AS TO HOW THE AFFECTED AGENCIES OF THE GOVERNMENT SHOULD BUDGET FOR THE NECESSARY FUNDS. BECAUSE OF THE UNIQUE CHARACTER OF OBLIGATIONS ARISING OUT OF THE STATUTORY REQUIREMENT FOR SEVERANCE PAY, WE HESITATE TO LAY DOWN A RULE AT THIS TIME WHICH WOULD, IN EFFECT, REQUIRE THAT FUNDS BE BUDGETED IN A SPECIFIC MANNER AT THE EXPENSE, PERHAPS, OF GENERATING INHERENT INEFFICIENCIES IN THE BUDGET AND ACCOUNTING PROCESS. RATHER, WE BELIEVE IT WOULD BE MORE APPROPRIATE FOR THIS OFFICE TO AWAIT RESOLUTION OF THE MATTER BY THE BUREAU OF THE BUDGET AND TO BE GUIDED BY SUCH ACTION WHICH THE CONGRESS MAY TAKE WITH REGARD TO THE BUDGET PROCEDURES ULTIMATELY DEVELOPED.

HAVING REACHED THIS CONCLUSION, WE MUST NEVERTHELESS RECOGNIZE THAT WITH RESPECT TO THE CURRENT FISCAL YEAR PROVISION HAS NOT BEEN MADE FOR THE HANDLING OF SEVERANCE PAY OBLIGATIONS IN ANY SPECIFIC MANNER. AS STATED AT THE OUTSET, THERE IS NO QUESTION BUT THAT THE ADMINISTRATIVE ACTION TO TERMINATE AN EMPLOYEE ENTITLED TO SEVERANCE PAY GIVES RISE TO AN OBLIGATION FOR THE FULL AMOUNT OF HIS ENTITLEMENT. THAT THE FULL OBLIGATION MIGHT NOT BE PAID BECAUSE THE TERMINATED EMPLOYEE MAY BE REHIRED BEFORE EXPIRATION OF THE SEVERANCE PAY PAY-OUT PERIOD IS OF NO CONSEQUENCE, SINCE WHETHER OR NOT THIS COMES ABOUT IS ENTIRELY BEYOND CONTROL OF THE GOVERNMENT. CF. 42 COMP. GEN. 733, 734. THEREFORE, THERE WOULD NOT APPEAR TO BE ANY BASIS FOR CONCLUDING THAT THE FULL AMOUNT OF SEVERANCE PAY OBLIGATIONS INCURRED WITH RESPECT TO EMPLOYEES TERMINATED IN FISCAL YEAR 1966 MAY NOT BE CHARGED AGAINST AVAILABLE FUNDS APPROPRIATED FOR OPERATIONS DURING THAT YEAR. CF. 39 COMP. GEN. 422, 424. AGAIN REFERRING TO THE SPECIAL NATURE OF EXPENSES FOR SEVERANCE PAY, HOWEVER, AND NOTING THAT THE STATUTORY LIABILITY THEREFOR WAS IMPOSED AFTER COMMENCEMENT OF THE FISCAL YEAR, WE WOULD ADD THAT IF SUFFICIENT FUNDS ARE NOT AVAILABLE IN FISCAL YEAR 1966 TO ABSORB AN OBLIGATION FOR THE FULL AMOUNT OF SEVERANCE PAY LIABILITY INCURRED, THAT FACT ALONE NEED NOT BE REGARDED AS UNEQUIVOCALLY NECESSITATING THE DELAY OF ANY WARRANTED EMPLOYEE SEPARATIONS. SEE SUBSECTION 665 (E) OF TITLE 31, U.S. CODE, PROVIDING FOR APPORTIONMENT OF FUNDS ON A BASIS INDICATING A NECESSITY FOR A DEFICIENCY OR SUPPLEMENTAL ESTIMATE WHERE APPROPRIATE DETERMINATION IS MADE THAT SUCH ACTION IS REQUIRED BECAUSE OF LAWS ENACTED SUBSEQUENT TO TRANSMISSION TO THE CONGRESS OF THE ESTIMATES FOR AN APPROPRIATION WHICH REQUIRE EXPENDITURES BEYOND ADMINISTRATIVE CONTROL.