[Federal Register: December 9, 2008 (Volume 73, Number 237)]
[Proposed Rules]
[Page 74857-74860]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09de08-23]
[[Page 74857]]
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Part III
Office of Personnel Management
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5 CFR Part 591
Nonforeign Area Cost-of-Living Allowances; 2008 Interim Adjustments;
2007 Nonforeign Area Cost-of-Living Allowance Survey Report: Pacific
and Washington, DC Areas; Proposed Rule and Notice
[[Page 74858]]
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OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 591
RIN 3206-AL72
Nonforeign Area Cost-of-Living Allowances; 2008 Interim
Adjustments
AGENCY: U.S. Office of Personnel Management.
ACTION: Proposed rule.
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SUMMARY: The U.S. Office of Personnel Management (OPM) is proposing to
change the cost-of-living allowance (COLA) rates received by certain
white-collar Federal and U.S. Postal Service employees in the Pacific
and Alaska COLA areas. The proposed rate changes are the result of
interim adjustments OPM calculated based on relative Consumer Price
Index differences. The proposed regulations would reduce the COLA rates
for the Pacific allowance areas and Anchorage, Fairbanks, and Juneau,
Alaska, by 1 percentage point.
DATES: We will consider comments received on or before February 9,
2009.
ADDRESSES: Send or deliver comments to Charles D. Grimes III, Deputy
Associate Director for Performance and Pay Systems, Strategic Human
Resources Policy Division, U.S. Office of Personnel Management, Room
7300B, 1900 E Street, NW., Washington, DC 20415-8200; fax: (202) 606-
4264; or e-mail: COLA@opm.gov.
FOR FURTHER INFORMATION CONTACT: J. Stanley Austin, (202) 606-2838;
fax: (202) 606-4264; or e-mail: COLA@opm.gov.
SUPPLEMENTARY INFORMATION: Section 5941 of title 5, United States Code,
authorizes Federal agencies to pay cost-of-living allowances (COLAs) to
white-collar Federal and U.S. Postal Service employees stationed in
Alaska, Hawaii, Guam and the Commonwealth of the Northern Mariana
Islands (CNMI), Puerto Rico, and the U.S. Virgin Islands. Executive
Order 10000, as amended, delegates to the U.S. Office of Personnel
Management (OPM) the authority to administer nonforeign area COLAs and
prescribes certain operational features of the program. OPM conducts
living-cost surveys in each allowance area and in the Washington, DC,
area to determine whether, and to what degree, COLA area living costs
are higher than those in the DC area. We set the COLA rate for each
area based on the results of these surveys.
As required by section 591.223 of title 5, Code of Federal
Regulations, we conduct cost-of-living surveys in the Caribbean,
Alaska, and Pacific COLA areas on a 3-year rotating basis, and in the
Washington, DC, area on an annual basis. For areas not surveyed during
a particular year, we adjust COLA rates by the relative change in the
Consumer Price Index (CPI) for the COLA area compared with the
Washington, DC, area. (See 5 CFR 591.224-226.) We adopted these
regulations pursuant to the stipulation for settlement in Caraballo et
al. v. United States, No. 1997-0027 (D.V.I.), August 17, 2000.
Caraballo was a class-action lawsuit that resulted in many changes in
the COLA methodology and regulations.
2007 Pacific Survey Results
We conducted living-cost surveys in the Hawaii COLA areas
(Honolulu, Hawaii County, Maui, and Kauai), Guam, and the Washington,
DC, area in the spring of 2007. We publish the results of these surveys
in the 2007 Nonforeign Area Cost-of-Living Allowance Survey Report:
Pacific and Washington, DC, Areas, which accompanies this proposed rule
in this separate part.
As described in the 2007 survey report, we compared the results of
the COLA area surveys with the results of the DC area survey to compute
a living-cost index for each of the Pacific COLA areas. Table 1 shows
the final 2007 Pacific survey living-cost indexes. These indexes are
superseded by the 2008 interim CPI adjustment indexes as discussed in
the section that follows.
Table 1--2007 Pacific Survey Indexes
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Allowance area Index
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Honolulu County, HI........................................ 121.37
Hawaii County, HI.......................................... 111.71
Kauai County, HI........................................... 118.14
Maui County, HI............................................ 123.62
Guam/CNMI.................................................. 119.98
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2008 Interim Adjustments
We computed 2008 interim adjustments for the Alaska and Pacific
COLA areas based on the relative change in the CPIs for these areas
compared with the Washington, DC, area. As required by 5 CFR 591.225,
we used the CPI, All Urban Consumers (CPI-U), published by the Bureau
of Labor Statistics (BLS) for Anchorage, Honolulu, and the Washington-
Baltimore area for the comparisons. We did not compute interim
adjustments for Puerto Rico and the U.S. Virgin Islands because we
conducted surveys in these areas in 2008.
Alaska Interim Adjustments
We computed the change in prices for the Anchorage area compared
with the change in prices for the Washington-Baltimore area using the
CPI-Us for each area. Table 2 shows this process.
Table 2--Anchorage and Washington-Baltimore CPI-U Changes 2006 to 2008
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Survey area CPI-U
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Anchorage 2006 CPI-U First Half........................... 176.7
Anchorage 2008 CPI-U First Half........................... 187.659
Anchorage change.......................................... 6.202%
DC-Baltimore 2006 CPI-U first half........................ 127.7
DC-Baltimore 2008 CPI-U first half........................ 138.49
DC-Baltimore change....................................... 8.4495%
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Next, we multiplied the price indexes from the four 2006 Alaska
surveys--Anchorage, Fairbanks, Juneau, and Rest of the State of Alaska
(represented by Kodiak)--by the change in the Anchorage CPI-U and
divided that by the change in the Washington-Baltimore CPI-U. We used
the Alaska area price indexes from the 2006 Alaska survey report,
published on January 3, 2008, at 73 FR 774. The price index is the COLA
survey index before the addition of the adjustment factor specified in
5 CFR 591.227. The adjustment factor reflects differences in need,
access to and availability of goods and services, and quality of life
in the COLA area relative to the DC area and is a fixed amount.
Therefore, it is not adjusted by the change in the CPI.
Table 3 shows the interim adjustment process. For example, the 2006
Fairbanks COLA survey adjusted index, as published in the Federal
Register, is 118.90. The Fairbanks adjustment factor is 9 points.
Therefore, subtracting the adjustment factor shows 109.90 as the price
index from the 2006 survey. We increased this price index by 6.202
percent (i.e., multiplied by 1.06202), the change in the Anchorage CPI-
U, and reduced it by 8.4495 percent (i.e., divided by 1.084495), the
change in the Washington-Baltimore CPI-U, to give a new price index of
107.62. We then added the 9-point adjustment factor to the new price
index, which yields a 2008 Fairbanks interim adjustment COLA rate of
116.62.
[[Page 74859]]
Table 3--Alaska COLA Area CPI-U Price Index Adjustments
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Anchorage Fairbanks Juneau Kodiak
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2006 COLA Survey Indexes.................................... 109.81 118.90 120.08 132.82
Adjustment Factors.......................................... 7 9 9 9
2006 COLA Survey Price Indexes.............................. 102.81 109.90 111.08 123.82
2008 CPI Adjusted Price Indexes............................. 100.68 107.62 108.78 121.25
2008 COLA Indexes with Adj. Factors......................... 107.68 116.62 117.78 130.25
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Pacific Interim Adjustments
The process we used to compute the interim adjustments for the
Pacific areas (i.e., Honolulu, Hawaii County, Kauai, Maui, and Guam/
CNMI) is identical to the one for the Alaska areas except we used the
BLS CPI-U for Honolulu, as specified in Sec. 591.225. Table 4 shows
the relative change in the Honolulu CPI-U compared with the Washington-
Baltimore CPI-U.
Table 4--Honolulu and Washington-Baltimore CPI-U Changes 2007 to 2008
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Survey area CPI-U
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Honolulu 2007 CPI-U First Half............................. 216.62
Honolulu 2008 CPI-U First Half............................. 227.334
Honolulu change............................................ 4.946%
DC-Baltimore 2006 CPI-U first half......................... 132.0
DC-Baltimore 2008 CPI-U first half......................... 138.49
DC-Baltimore change........................................ 4.9167%
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We multiplied the price indexes from the five 2007 Pacific
surveys--Honolulu, Hawaii County, Kauai, Maui, and Guam--by the change
in the Honolulu CPI-U and divided that by the change in the Washington-
Baltimore CPI-U. We used the Pacific area price indexes from the 2007
Pacific survey report, which accompanies this proposed rule. Table 5
shows the indexes, the interim adjustment process, and the final
results.
Table 5--Pacific COLA Area CPI-U Price Index Adjustments
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Honolulu Hawaii Co. Kauai Maui Guam
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2007 COLA Survey Indexes....................... 121.17 111.72 118.15 123.63 119.97
Adjustment Factors............................. 5 7 7 7 9
2007 COLA Survey Price Indexes................. 116.17 104.72 111.15 116.63 110.97
2008 CPI Adjusted Price Indexes................ 116.40 104.74 111.17 116.65 111.01
2008 COLA Indexes with Adj. Factors............ 121.40 111.74 118.17 123.65 120.01
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COLA Rate Reductions
As a result of the interim adjustments, we are proposing to reduce
the COLA rates for Anchorage, Fairbanks, Juneau, and the Pacific
allowance areas because we have determined costs in these areas have
decreased in relation to the DC area. Section 5941 of title 5, U.S.
Code, requires that the nonforeign area cost-of-living allowance be
based on living costs in an area that are substantially higher than
living costs in the DC area.
On January 3, 2008, at 73 FR 772, we published a proposed rule to
reduce the COLA rates in Anchorage, Fairbanks, and Juneau from 24
percent to 23 percent based on the results of the 2006 COLA surveys in
Alaska. On August 25, 2008, at 73 FR 50174, we published a second
proposed rule that would further reduce the COLA rates in Anchorage,
Fairbanks, and Juneau from 23 percent to 22 percent based on the
results of the 2007 interim CPI adjustments.
The 1-percent decrease proposed in this rule would further reduce
the rates in these areas to 21 percent. However, 5 CFR 591.228(c)
limits COLA rate reductions to 1 percentage point in a 12-month period.
Therefore, we would not implement COLA rate reductions in the Alaska
areas under this proposed rule until at least 12 months after the
effective date of the 2007 interim adjustment reductions. For example,
if the proposed reductions based on the 2006 survey results become
effective in mid-December of this year, we would not implement the
proposed 2007 interim adjustment reductions before mid-December of
2009, and would not implement the reductions proposed under this rule
before mid-December of 2010. Under this timeframe, the 2009 Alaska
survey indexes may supersede the 2008 CPI adjustment indexes.
The rate reductions proposed for the Pacific areas are not affected
by the 12-month delay on reductions under 5 CFR 591.228(c). Therefore,
we plan to implement the Pacific and Alaska reductions in separate
actions.
Executive Order 12866, Regulatory Review
This rule has been reviewed by the Office of Management and Budget
in accordance with Executive Order 12866.
Regulatory Flexibility Act
I certify that this regulation will not have a significant economic
impact on a substantial number of small entities because the regulation
will affect only Federal agencies and employees.
List of Subjects in 5 CFR Part 591
Government employees, Travel and transportation expenses, Wages.
Office of Personnel Management.
Michael W. Hager,
Acting Director.
Accordingly, OPM proposes to amend subpart B of 5 CFR part 591 as
follows:
PART 591--ALLOWANCES AND DIFFERENTIALS
Subpart B--Cost-of-Living Allowance and Post Differential--
Nonforeign Areas
1. The authority citation for subpart B of 5 CFR part 591 continues
to read as follows:
Authority: 5 U.S.C. 5941; E.O. 10000, 3 CFR, 1943-1948 Comp., p.
792; and E.O. 12510, 3 CFR, 1985 Comp., p. 338.
2. Revise appendix A of subpart B to read as follows:
Appendix A to Subpart B of Part 591--Places and Rates at Which
Allowances Are Paid
This appendix lists the places approved for a cost-of-living
allowance and shows the authorized allowance rate for each area. The
allowance rate shown is paid as a percentage
[[Page 74860]]
of an employee's rate of basic pay. The rates are subject to change
based on the results of future surveys.
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Allowance
Geographic coverage rate
(percent)
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State of Alaska:
City of Anchorage and 80-kilometer (50-mile) radius by 21
road..................................................
City of Fairbanks and 80-kilometer (50-mile) radius by 21
road..................................................
City of Juneau and 80-kilometer (50-mile) radius by 21
road..................................................
Rest of the State...................................... 25
State of Hawaii:
City and County of Honolulu............................ 24
Hawaii County, Hawaii.................................. 17
County of Kauai........................................ 24
County of Maui and County of Kalawao................... 24
Territory of Guam and Commonwealth of the Northern Mariana 24
Islands...................................................
Commonwealth of Puerto Rico................................ 14
U.S. Virgin Islands........................................ 25
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[FR Doc. E8-28832 Filed 12-8-08; 8:45 am]
BILLING CODE 6325-39-P