[Code of Federal Regulations] [Title 5, Volume 1] [Revised as of January 1, 2002] From the U.S. Government Printing Office via GPO Access [CITE: 5CFR591.205] [Page 673-674] TITLE 5--ADMINISTRATIVE PERSONNEL CHAPTER I--OFFICE OF PERSONNEL MANAGEMENT PART 591--ALLOWANCES AND DIFFERENTIALS--Table of Contents Subpart B--Cost-of-Living Allowance and Post Differential--Nonforeign Areas Sec. 591.205 Comparative cost index. (a) OPM calculates allowance rates for each area by comparing costs of four categories of expenses in the area to those in the Washington, DC, area. The four categories of expenses are: (1) Consumption goods and services. (2) Transportation. (3) Housing. (4) Miscellaneous expenses. (b) Costs are determined for several income levels and home occupancy types (renter or owner), and averaged. (1) The cost of consumption goods and services (excluding transportation and housing) will be estimated from appropriate consumer expenditure data at several income levels for a standard family size. The cost of goods and services in the Washington, DC area will be adjusted by a price index reflecting the estimated price difference between the allowance area and the Washington, DC area. (i) Goods and services surveyed. The types and amounts of consumption goods and services to be surveyed at each income level will be derived from appropriate consumer expenditure surveys. Whenever possible, exact brands and models are priced in each location. Price data are obtained from appropriate retail outlets in each area. Individual items are grouped into categories according to common functions or uses. (ii) The item and category weights are derived from consumer expenditure surveys. The category weights vary by income. (2) Transportation costs for each income level and area are estimated using data collected by or for OPM on automobile operating expenses and other factors affecting transportation costs. (3) Housing costs for renters and owners are estimated based on similar housing units. Standard shelter specifications (e.g., type, size, age) are selected for each income level. Appropriate living communities to survey based on the income level and housing type specified are selected for each survey location. Housing data on units within the selected communities meeting the specifications are then collected for newly purchased and previously purchased units. Mortgage interest rate and payment data are collected from lending institutions in the area, utility companies and other sources provide information about utility rates, and local governments provide information on real estate tax rates. These data are then combined to estimate dollar expenditures within each survey area for the specified shelter in the selected community. (4) Miscellaneous expenses. Miscellaneous expenses, including expenses for health care, gifts, contributions, savings and investments, retirement, life insurance, and education, are estimated from consumer expenditure surveys and other data appropriate for Federal employees for each income level. (c) The dollar amounts estimated for consumption, transportation, housing, and miscellaneous expenses are combined to produce a total dollar amount for renters and a total dollar amount for home owners at each income level. The dollar amounts for renters are combined with the dollar amounts for home owners for each income level by using weights, derived from appropriate consumer expenditure or census data, representing the proportion of renters and owners at each income level. The dollar amounts for each income level are weighted into one average amount to reflect the GS grade distribution for the allowance area. The average allowance area dollar amount is divided by the average Washington, DC, area dollar amount to generate a comparative cost index. The allowance rate for the area is based upon the index. (d) OPM will describe in detail the calculation of each allowance rate at [[Page 674]] the time the rate is published in the Federal Register for comment. [59 FR 43705, Aug. 25, 1994, as amended at 60 FR 46750, Sept. 8, 1995; 63 FR 56431, Oct. 21, 1998; 65 FR 44102, July 17, 2000; 66 FR 56752, Nov. 9, 2001]