OPM proposes cost-of-living changes for Alaska and Puerto Rico

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

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