There is plenty of negative financial news filling the airwaves. As of this writing, the I fund is down almost 30% for the year; the C fund is down more than 23% and the S fund is down almost 19%.
But the news is not all bad for federal employees. Federal retirees are in line to get a COLA that is going to be about 6% in January (the final figure will be calculated in October.). In response to those readers who have sent email or asked a question on the 2009 pay raise in the our articles comments section, active duty federal employees do not get a cost of living adjustment (COLA). Federal employees get a raise.
So, while the COLA adjustment for federal employees will be in the range of 6% or so, federal employees will not be getting this same percentage. And, while the formula for determining the COLA for retirees is automatic (it is not a simple calculation but it is automatic and goes into effect regardless of whether Congress is in session), the method for determining the federal pay increase is long, convoluted and subject to political whims, pressures, and the ebb and flow of current events.
As of now, it appears that an average 3.9% pay raise for federal employees will become effective in January 2009.
Congress has passed a temporary funding measure for the federal government. (The ‘‘Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009”) The government’s fiscal year starts on October 1st. The temporary spending bill will fund most federal agencies into March of 2009. Unless Congress makes a change when it convenes in January, and it may do that, the temporary spending bill will actually fund the government for at least five months into the new fiscal year.
Buried deep within this multi-page continuing resolution that contains hundreds of earmarks for special projects and funding for federal agencies is this phrase: “The adjustment in rates of basic pay for employees under the statutory pay systems that takes effect in fiscal year 2009 under sections 5303 and 5304 of title 5, United States Code, shall be an increase of 3.9 percent….”
And, not surprisingly, there is another sentence in the legislation that will create some problems within some agencies. “The money for the pay raise will come out of existing projects, programs and expenditures. “Funds used to carry out this section shall be paid from appropriations which are made to each applicable department or agency for salaries and expenses for fiscal year 2009.”
But, as many readers know, an average 3.9% pay raise does not mean that everyone will be getting 3.9%. Employees in some high cost areas will be getting considerably more than that.
Here is an example. Last year, there was the possibility of an average federal pay raise of 3%. There was also the possibility of an average federal pay raise of 3.5%. The “real” pay raise in the Washington, DC metropolitan area would be 3.49% if the average raises was 3% or the “real” pay raise would be 4.49% if the average federal pay increase was 3.5%. (As it turned out, the average pay raise that was implemented was 3.5%.) The difference was the locality pay calculation.
While we do not know the actual amount readers will be getting in each locality pay area next year, we do have an estimate based on the formula used to calculate the pay raise in recent years.
For those readers who will be wondering why their city is not included among those in the pay table, check out the “rest of the U.S.” category. Many cities do not have a locality pay area and the “rest of the U.S.” category generally covers these folks.
So, Congress has passed the resolution with the pay raise included that means active federal employees will get a raise in January assuming that the bill is signed by the President. Federal retirees will also get a bigger check and the percentage increase will be available later in October.