Some Feds Will See Decreasing Paychecks

By on August 15, 2006 in Current Events with 0 Comments

The complex federal pay system is rolling along. For many federal employees who are not in the "lower 48", their pay rate is different than the typical locality pay system used for most other federal employees.

FedSmith recently reported the results of a new survey from OPM (See COLA’s, Housing Costs and Lawsuits: How Pay is Determined for Some Federal Employees) The fall-out from that survey (both good and bad) will have an impact on the paychecks of federal employees in the affected areas this September.

OPM has released new figures for cost of living payments in Alaska, Hawaii, Guam, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands.

As you can see from reader comments on this issue when the new COLA payments were announced last year, some readers were not happy with their new pay levels. (See OPM Proposes COLA Changes for Some Federal Employees) Despite the new survey results, some employees will not be happy with the results from this year either.

Here is a small consolation for some: OPM cannot decrease the COLA rates more than one percent a year. So, even if the new survey shows that employees in some areas are receiving more than dictated by the survey, there will not be a dramatic decrease in any given year.

Federal employees in some cities in Alaska and in Puerto Rico will see a decrease in their COLA payments.

Payments in Puerto Rico will decrease from 11.5 to 10.5%. Feds in Anchorage and Fairbanks will see payments decreasing from 25 to 24%.

The rates are also going up in some areas. In Hawaii County (16.5 to 17%), Maui County (23.75 to 25%) and Kauai county 23.25 to 25%), as well as the US Virgin Islands (22.5 to 23%), COLA payments are going higher.

The COLA rates are unchanged in other areas including the "Rest of the State of Alaska" and Honolulu.

The COLA rate payments have been controversial. The payments are based on the cost of living increases in Washington, DC and OPM adjusts COLA rates according to the relative difference. If the cost of living goes up more in Anchorage than in the DC area, OPM increases the COLA rate subject to a statutory maximum. If living costs rise faster in the DC area than in Anchorage, OPM reduces the COLA rate, but it’s limited to a maximum reduction of one percentage point per year.

You can read the full explanation of the methodology used and the results of the recent survey all geographic areas covered in this Federal Register announcement.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.