EXCLUSIVE: State Department Ends Decades-Long Program Paying Under-Performing Diplomats

The State Department is ending a program that for decades has given benefits and funds to low-performing diplomats rather than phasing them out of the department, according to a memo obtained by the Daily Caller.

Under the Annuity Exception, Foreign Service members have been able to remain on the State Department payroll beyond their scheduled departure from the administration, the internal memo explains. The memo states that the exception violates the Foreign Service Act of 1980, which dictates who receives retirement benefits. (RELATED: Deep State Bureaucrats Who Haunted Trump’s First Term Rear Their Ugly Heads)

“This program is unfortunately the perfect example of the corruption, waste, and abuse that has gone unchecked at the State Department for far too long,” a senior State Department official told the Caller. “This program had sent millions of unauthorized taxpayer dollars to underperforming diplomats and previous administrations simply turned a blind eye, but at the direction of Secretary Rubio this will no longer be the case. Under President Trump, this administration will be unwavering in their commitment to ensure Americans’ resources will no longer be squandered.”

It appears that the government has known about this violation for years. In 1995, the Office of the Legal Adviser recommended to the State Department that they eliminate the program, writing that there was a “possibility that a court would find that the current practice is an impermissible reading of the statute,” the memo states.

“[W]e could expect objections from Congress, who if they learn of the practice could argue that [it is] inconsistent with Congressional intent in creating an ‘up or out’ system and [it is] an inappropriate use of our authorities when more junior members of the Service face the prospect of RIFs [reductions in force],” the Office of the Legal Adviser wrote at the time, according to the memo.

During the last Trump administration in 2018, the State Department was advised that the Annuity Exception “illegally discriminates on the basis of age,” according to the memo.

“It was advised that the practice should be discontinued as no legal authority permits the Department to keep employees on the rolls beyond their TIC date, other than a maximum one-year extension allowed in special public interest circumstances. Yet again, the Department perpetuated this unauthorized, costly, discriminatory program,” the memo states.

U.S. Secretary of State Marco Rubio speaks during a meeting between U.S. President Donald Trump and Canadian Prime Minister Mark Carney in the Oval Office at the White House on May 6, 2025 in Washington, DC. Carney, who was elected into office last week, is expected to meet with President Trump to discuss trade and the recent tariffs imposed on Canada. (Photo by Anna Moneymaker/Getty Images)

The Trump administration, with the help of its Department of Government Efficiency, has been working to downsize the government and cut wasteful spending. The State Department’s cut of the U.S. Agency for International Development (USAID) earned the most attention. As of April, the State Department axed over $200 million in foreign grants funded by taxpayer dollars, according to the Washington Free Beacon. USAID officially came to an end on Tuesday, with remaining programs being moved under the direct purview of the State Department. (RELATED: USAID Staff Given 15 Minutes To Collect Belongings, Warned Against Bringing Weapons)

“Every dollar we spend, every program we fund, and every policy we pursue must be justified with the answer to three simple questions: Does it make America safer? Does it make America stronger? Does it make America more prosperous?” Rubio said two days into the Trump administration of his plans for the State Department.