GovernmentExecutive.com

The Office of Personnel Management on Monday recommended another cut in cost-of-living allowances for federal employees in some areas of Alaska, and another boost for employees in Puerto Rico.

The draft rule published in the Federal Register proposed decreasing the adjustment for employees in Anchorage, Fairbanks and Juneau, Alaska, by 1 percentage point, to 22 percent. The notice follows a January proposal to reduce the allowance from 24 percent to 23 percent. Regulations limit COLA decreases to 1 percentage point annually, so the two decreases must be spaced out by at least one year.

Employees in Puerto Rico are in line to receive another 1 percent hike, bringing their COLA to 14 percent. A final rule in late May increased the Puerto Rico allowance from 12 percent to 13 percent. The additional bump recommended on Monday would be separate from the Alaska change to avoid delays.

Federal workers living outside the contiguous United States receive COLAs in place of annual locality pay adjustments. OPM bases the allowances on regional surveys conducted every three years. In the off-years, the personnel agency calculates adjustments based on changes in the U.S. Consumer Price Index in a given area relative to those in the Washington region. This was an off-year for Alaska and the Caribbean, meaning Monday's proposal was based on changes in the index.

The COLA system has long been subject to debate, and a variety of groups have advocated shifting workers in faraway regions to locality pay. In May 2007, OPM proposed legislation to phase in locality pay and phase out COLA payments during a seven-year period. And in May 2008, Sen. Daniel Akaka, D-Hawaii, introduced a competing bill that would shift federal employees from COLAs to locality payments by 2012.

Comments on Monday's draft rule are due by Oct. 24. They can be e-mailed to COLA@opm.gov, faxed to (202) 606-4264 or mailed to:

Charles D. Grimes III
Strategic Human Resources Policy Division, OPM
1900 E St. N.W.
Washington, D.C. 20415

COMMENTS

• Brian, you think it's unfair for San Antonio, I work in Beaumont in Jefferson County which borders with Houston Locality Pay and we're stuck in the Rest of US also. Andrew Posted October 8, 2008 9:55 AM
• Speaking of locality, San Antonio, TX is sitting in the RUS table for locality at 13.18% and Huntsville, TX is grouped in with Houston at 27.39%!!!! I honestly think who ever is at the wheel on that one is self medicating. Whe need a revamp of the current state of affairs when it comes to locality pay because it just doesn't make any sense here in Texas. Brian M Posted August 28, 2008 9:32 AM
• I don't understand why OPM is adjusting the COLA based on 2007 prices; shouldn't this be the 2008 interim adjustment? BLS has the first half of the year's data available for 2008, so why is OPM using first half 2007 info? Also, the Caraballo settlement uses Anchorage's Consumer Price Index as a base. After the huge spike in fuel prices, Fairbanks and Anchorage have seen a dramatic differences in cost of living. Anchorage mainly heats with natural gas, and electric is based on the same. Fairbanks heats with oil, and power plants are fueled by the same. There are numerous people (including Federal Employees) that will be moving from the Fairbanks area because they can't afford to live there... yet the COLA goes down. Kris Posted August 27, 2008 10:40 AM