Federal Downsizing:

The Costs and Savings of Buyouts Versus Reductions-in-Force

GGD-96-63: Published: May 14, 1996. Publicly Released: May 24, 1996.

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Pursuant to a congressional request, GAO reviewed federal workforce downsizing, focusing on the projected costs and savings from federal workforce buyouts and reductions-in-force (RIF) over a 5-year period.

GAO found that: (1) employee buyouts could produce over $60,000 more in net savings over 5 years than RIF for each vacated position because buyouts can be used at higher grade levels that generate more savings in salaries and benefits when downsized; (2) if federal agencies separate retirement-eligible employees who do not displace lower-grade employees, RIF could produce about $29,000 more in net savings over 5 years than buyouts; (3) displacing employees in the same competitive areas but lower-tenure groups or with less service within the same tenure groups reduces RIF savings because those savings represent the salaries and benefits of lower-grade employees; (4) savings from buyouts or RIF could be reduced if the vacated positions are refilled or privatized; (5) federal agencies may need more buyouts than RIF to achieve their downsizing targets because normal attrition slows prior to buyouts; (6) buyouts avoid or reduce the non-economic adverse effects of RIF, such as reduced diversity, decreased productivity, and lower morale; and (7) buyouts may help federal agencies improve diversity, since buyouts typically affect older white males.

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