GovernmentExecutive.com

The Senate passed legislation (S. 3013) by unanimous consent late Wednesday that would shift federal employees in Alaska, Hawaii and the U.S. territories from cost-of-living allowances to locality pay, a move that lawmakers said was key to making sure that retirees living in those locations receive equal benefits.

"With prices for everything from housing and gasoline to bread and milk constantly rising in Hawaii, this bill will ensure that federal employees' take-home pay is protected and that they are treated fairly in retirement," said Sen. Daniel Akaka, D-Hawaii, who sponsored the bill and chairs the Senate Homeland Security and Governmental Affairs Federal Workforce Subcommittee.

Currently, the Office of Personnel Management does cost-of-living surveys every three years to determine the difference in costs among Washington, Alaska, the Pacific region and the Caribbean. Federal employees working in those localities receive COLAS ranging from 13 percent to 25 percent. Those payments are not taxed as part of employee income, but they also do not count toward federal retirement benefits or as part of basic pay eligible for Thrift Savings Plan matching funds.

That disparity raised concerns for lawmakers and advocates at a May hearing, some of whom expressed concern that families would feel obliged to split up so one could work on the mainland, earning higher pay for retirement.

The legislation will move employees in Alaska, Hawaii and the territories into the "rest of the U.S." category of locality pay over a three-year period. Akaka originally wanted to give federal employees a choice between moving to locality pay or keeping their COLAs, but he said OPM objected and the transition is now mandatory.

Akaka said he would monitor the bill if it became law and seek to modify it if the mandatory transition became a problem for federal employees.

Philip Doyle, assistant commissioner for the Office of Compensation Levels and Trends at the Bureau of Labor Statistics, expressed some concerns about the bill at the Tuesday meeting of the Federal Salary Council. BLS is phasing out compensation surveys in Anchorage, Fairbanks and Juneau, Alaska, because of budget concerns. That means, in effect, that the agency will not be able to compare Alaska's pay rates with those in other localities. Doyle said the only survey left in the areas affected by the legislation is in Hawaii.

"BLS will be unable to entertain requests for additional pay estimates using current survey methodology," he said, specifically citing Akaka's proposal.