OPM announces cost-of-living changes

Cost-of-living payments are going up for some federal employees in Hawaii and the U.S. Virgin Islands and down for some of their Alaskan and Puerto Rican counterparts in September.

The Office of Personnel Management released new figures for COLA payments in Alaska, Hawaii, Guam, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands late last week.

In Anchorage, Fairbanks and Juneau in Alaska, COLA rates are decreasing from 25 percent of base pay to 24 percent. In Puerto Rico, COLAs are shifting down from 11.5 percent to 10.5 percent. For Kauai and Maui counties in Hawaii, the rates are increasing from 23.25 percent to 25 percent. In Hawaii County, COLAs are decreasing from 16.5 percent to 16 percent. In the U.S. Virgin Islands, they are rising from 22.5 percent to 23 percent.

The rates are based on a new survey methodology OPM adopted after settling a lawsuit in August 2000 from federal workers who thought they weren't being paid enough to work outside the 48 contiguous states.

But six years after the settlement, with all the surveys finally complete, the new methodology does not mean higher pay for everyone involved. In fact, the law prevents OPM from decreasing COLA payments more than 1 percent a year. So, Alaskan and Puerto Rican federal employees may be seeing the first of consecutive annual COLA decreases.

In July OPM announced that new research on housing expenses would not affect COLAs for these employees. The research had been completed in response to the same settlement to ensure that the rental data used to find housing costs was accurate.

While most federal workers receive yearly locality adjustments on top of their base salary that are derived from cost-of-labor surveys for various occupations, workers in the Alaska, Hawaii and overseas territories get a pay hike based on cost-of-living surveys that compare local prices for housing, utilities, food, transportation, furniture and other expenses with prices for similar expenses in the Washington, D.C., area.

In comments on the proposed rate changes released last summer, many federal employees in the losing areas protested the decrease, especially because of the methodology that compares their areas to the expensive Washington region. If living costs rise faster in Washington than in the COLA area, OPM reduces the COLA rate.

Not every COLA area is changing based on the surveys. Outside of Anchorage, Fairbanks and Juneau, the rest of Alaska is retaining its 25 percent COLA. Honolulu County, Hawaii; Guam and the Northern Marian Islands are keeping their 25 percent rates as well.

Most of the COLA employees with changed rates will first notice a difference in their Sept. 3 paycheck.