A federal employee who has spent thirty years earning step increases and finishing one four-year assignment after another no longer gets that cushion if an agency has to cut staff. Starting this past Wednesday, September 2, the Office of Personnel Management requires agencies to rank employees for a reduction in force mainly by a numeric performance score, pushing tenure and years of service down into a tie-breaking role. For the millions of people who work for federal agencies, and the households that depend on those paychecks, the rule rewrites what actually protects a job when the workforce shrinks.
OPM’s new point scale: 7 points for a top rating, zero for a mediocre one
Under the final rule OPM published in the Federal Register on August 3, an agency conducting a reduction in force must first build separate retention registers for competitive-service and excepted-service employees, then rank the people within each register mainly by a performance credit score. That score comes from an employee’s three most recent ratings of record inside the applicable four-year look-back period: a Level 5, or Outstanding, rating is worth 7 points, Level 4 is worth 5 points, Level 3 is worth 3 points, and a Level 1 or Level 2 rating is worth zero. An employee who has posted three straight Level 5 ratings starts with 21 points; a colleague who has coasted at Level 3 starts with 9, regardless of how many years either one has logged with the agency.
The rule also narrows who even has to compete. Employees serving an initial probationary or trial period, people on temporary or time-limited appointments of a year or less, and Schedule C or Schedule G political and confidential appointees are no longer treated as competing employees, so an agency can furlough, reassign, or separate them without running them through the retention register at all. Everyone else’s fate now turns on the points math above.
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Veterans’ preference now adds points instead of moving names to the top of the list
Under the regulations OPM just replaced, a veteran’s status placed them in an entirely separate tenure group ahead of non-veterans, regardless of performance. The new rule instead folds veterans’ preference into the same point total: a preference-eligible veteran with a compensable service-connected disability rating of 30 percent or more gets 5 points added on top of their performance credit, other preference-eligible veterans get 3 points, and employees with no preference get none. OPM says the change still gives real weight to military service; in the agency’s own worked example, a disabled veteran with three Level 4 ratings, worth 15 points, plus 5 for preference, outranks a non-veteran with two Level 5 ratings and one Level 4 rating. But a veteran no longer automatically survives ahead of a stronger-performing non-veteran the way the old categorical tenure groups guaranteed.
The August 25 correction didn’t touch the performance formula
Three weeks after the rule published, OPM issued a correction notice fixing dozens of citation and cross-reference errors, including a veterans’ preference provision that had typoed “30 percent of more” instead of “30 percent or more,” and another section that still cited a nurse-appointment law Congress repealed back in 1991. OPM called every fix non-substantive, and none of them changed a point value, a preference amount, or the effective date. The correction matters mainly because it confirms the rule that took effect Wednesday is the same one OPM finalized on August 3, not a revised version with different numbers.
Notices dated before Wednesday still follow the old rules
The effective date creates a hard line rather than a gradual phase-in. An agency that issued a reduction-in-force notice before September 2 has to keep processing that action under the regulations in place when the notice went out, meaning employees already mid-process under the old tenure-first system stay there. Any notice issued on or after September 2 has to run on the new performance-based formula instead. Length of service and an employee’s tenure subgroup still count, but only after performance credit and veterans’ preference are totaled up; they now break ties between employees who land on the exact same point score, rather than deciding the outcome on their own the way an adjusted service computation date used to under the old system.
The same workforce is also facing a frozen 2027 paycheck
The rule reaches a workforce OPM’s own data describes as more than two million civilian employees spread across hundreds of agencies. Those same employees are also looking at a year with no raise: in an alternative pay plan sent to Congress on August 26, the president determined that base and locality pay for most civilian federal employees will not change from the 2026 rates in 2027, while separately directing OPM to raise pay for law enforcement personnel by 3.8 percent. The letter notes that without the freeze, locality pay would otherwise have risen by an average of 20.6 percent, at a cost the letter puts at $26 billion in the first year alone, on top of a separate 3.1 percent across-the-board raise to base General Schedule pay.
Neither document was written with the other in mind, but together they change what a federal paycheck is worth holding onto heading into 2027: the wage isn’t moving, and the job itself is now scored on three recent performance ratings instead of on how long someone has already stayed. OPM defended the shift in the rule itself, writing that the changes are meant to give performance a more central role in determining retention standing rather than letting tenure decide outcomes on its own, a rationale the agency will have to stand behind the next time an agency actually runs a reduction in force under it.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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