THE DAILY FED
New COLA Project Proposed
About 43,000 federal employees who work in high-cost living areas of Alaska and other locations outside of the continental United States currently receive cost-of-living allowances of up to 25 percent of base salary. But now these allowances may change--either upwards or downwards--as a result of a new method of calculating the allowances that will be tried out on a pilot basis, the Office of Personnel Management has announced.
The employees who live and work in Alaska, Hawaii, Puerto Rico, the U.S. Virgin Islands, the Commonwealth of the Northern Mariana Islands and Guam may be affected.
The cost-of-living allowances are now determined through an annual survey conducted by OPM. It compares the cost of a typical "basket of goods" in Alaska and the other areas to the same "basket" available to consumers in the Washington, D.C. area. More than 200 items are priced, including such staples as food, clothing, housing and gasoline.
The pilot project, announced Aug. 12 by OPM, will establish local "COLA Partnership Committees" to revise the list of goods to be surveyed, and to examine current methods of producing the cost comparisons. The project will last two years.
The practice of paying the Non-Foreign Cost-of-Living Allowance began in the 1940s as an incentive to federal employees to work in high cost, often remote areas of the country.
OPM's pilot project was described in the Aug. 12 Federal Register.
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