OPM Proposes COLA Changes for Some Federal Employees

OPM is published proposed COLA changes for a few federal employees outside of the Continental United States.

As most readers are aware, the vast majority of federal employees do not get a cost of living allowance (COLA). They usually get a raise that may be more or less than the inflation rate. Please keep that in mind when reviewing this article.

But Federal statute authorizes Federal agencies to pay COLAs to white collar Federal and U.S. Postal Service employees stationed in Alaska, Hawaii, Guam and the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.

The Office of Personnel Management (OPM) is publishing a proposed regulation to change the COLA rates received by certain white-collar Federal and U.S. Postal Service employees in these areas. The changes are the result of living-cost surveys conducted by OPM in 2002, 2003, and 2004.

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. OPM sets the COLA rate for this proposed rule. OPM compared the results of each of the COLA area surveys with the results of the DC area survey to derive a living cost index for each of the COLA areas.

The results of the living-cost surveys indicate that OPM should increase COLA rates in the U.S. Virgin Islands; Hawaii County, HI; Kauai County, HI; and Maui County, HI.

The results also indicate that OPM should not change the COLA rate for the rest of the State of Alaska; Honolulu County, HI; and Guam and the Northern Mariana Islands, but should reduce COLA rates in Puerto Rico and in Anchorage, Fairbanks, and Juneau, Alaska.

Federal and postal service employees may see their pay rates drop by 1 percent in Fairbanks, Anchorage and Juneau. OPM is proposing that the Cost of Living Allowance for those areas should be 24 percent, instead of 25 percent. COLA rate reductions are limited by law to one percentage point per year.

Here are the new rates for the employees affected by these proposed changes. The first figure is for the current rate and the second figure represents the proposed rate.

  • Puerto Rico 11.5 10.5
  • U.S. Virgin Islands 22.5 23.0
  • Anchorage, Alaska 25.0 24.0
  • Fairbanks, Alaska 25.0 24.0
  • Juneau, Alaska 25.0 24.0
  • Rest of the State of Alaska 25.0 25.0
  • Honolulu County, Hawaii 25.0 25.0
  • Hawaii County, Hawaii 16.5 19.0
  • Kauai County, Hawaii 23.25 25.0
  • Maui County, Hawaii 23.75 25.0
  • Guam and the Northern Mariana Islands 25.0 25.0

If you would like further information, send an e-mail to cola@opm.gov.

Written comments on the proposed changes need to be received by OPM before October 3, 2005. This is a proposed change. If you have any comments or suggestions on the proposal, send or deliver your written comments to:

Donald J. Winstead, Deputy Associate Director for Pay and Performance Policy, Strategic Human Resources Policy Division, Office of Personnel Management, Room 7H31, 1900 E Street, NW., Washington, DC 20415–8200; fax: (202) 606–4264; or email: COLA@opm.gov.