Cost-of-Living Allowances (Nonforeign Areas); Honolulu, HI

Federal RegisterOct 21, 1998

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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 591

RIN 3206--AI38

Cost-of-Living Allowances (Nonforeign Areas); Honolulu, HI

AGENCY: Office of Personnel Management.

ACTION: Interim rule with request for comments.

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SUMMARY: The Office of Personnel Management (OPM) is publishing an

interim regulation to increase the cost-of-living allowance (COLA) rate

paid to General Schedule, U.S. Postal Service, and certain other

Federal employees in the City and County of Honolulu, Hawaii. This

increase is a result of cost-of-living surveys conducted by OPM in

Alaska, Hawaii, Guam, Puerto Rico, and the U.S. Virgin Islands. This

regulation increases the Honolulu COLA rate from 22.5 percent to 25

percent. Additionally, OPM is broadening the composition of the

Miscellaneous Expense Category used in the COLA methodology. This

change allows the addition of other types of expenses to that category,

including the use of private education (K-12) data collected in the

1997 surveys. This amendment will permit OPM additional flexibility in

organizing survey data under the COLA model.

DATES: Effective date: October 21, 1998. Implementation date: The

rate increases authorized by these regulations are to be applied as of

the first day of the first pay period beginning on or after October 21,

1998. Comment date: Comments must be received on or before January

19, 1999.

ADDRESSES: Comments may be sent or delivered to Donald J. Winstead,

Assistant Director for Compensation Administration, Workforce

Compensation and Performance Service, Office of Personnel Management,

Room 7H31, 1900 E Street NW., Washington, DC 20415-8200, FAX: (202)

606-4264, or email at [email protected].

FOR FURTHER INFORMATION CONTACT: Donald L. Paquin, (202) 606-2838.

SUPPLEMENTARY INFORMATION: Under section 5941 of title 5, United States

Code, certain Federal employees in nonforeign areas outside the 48

contiguous States are eligible for cost-of-living allowances (COLAs)

when local living costs are substantially higher than those in

Washington, DC. Nonforeign area COLAs are currently paid in the

following locations: Alaska, Hawaii, Guam and the Commonwealth of the

Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.

During the summer of 1997, OPM surveyed Alaska, Hawaii, Guam,

Puerto Rico, and the U.S. Virgin Islands. Data were collected by OPM in

conjunction with COLA Partnership Committees and Subcommittees

established under the COLA Partnership Pilot Project. This is a 2-year

pilot project established to test and evaluate a new approach in the

administration of the COLA program, including the conduct of living-

cost surveys. At approximately the same time data were collected in the

allowance areas, OPM also surveyed the Washington, DC, area, which is

the base or reference area for living-cost comparisons. OPM is

publishing a separate Federal Register notice immediately following

this rulemaking that provides the complete ``Report On 1997 Surveys

Used to Determine Cost-of-Living Allowances in Nonforeign Areas.'' This

report explains the methodology, procedures, and results of the 1997

living-cost surveys.

The COLA rate increase is summarized in the following table:

Increase in Cola Rate

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Current New

Allowance area/category rate rate

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City and County of Honolulu, Hawaii

All employees...................................... 22.5 25.0

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OPM is adjusting the only rate for which the 1997 surveys indicate

an increase is warranted. Rates that would otherwise be reduced will

remain unchanged, as required by a provision in the Treasury, Postal

Service, and General Government Appropriations Act, 1992 (Pub. L. 102-

141), as amended.

OPM is also broadening the composition of the Miscellaneous

Expense Category, as described in section 591.205 (b)(4) of title 5,

Code of Federal Regulations. (The Miscellaneous Expense Category is one

of the four major expense categories used in the COLA methodology.

Currently, the composition of the Miscellaneous Expense Category is

defined to cover six types of expenses: health care, gifts,

contributions, savings and investments, retirement, and life

insurance.) This change allows the addition of other types of expenses

to the miscellaneous

[[Page 56431]]

category, including the use of private education (K-12) data collected

in the 1997 survey. These data could have been used under the

Consumption Goods and Services Category, and mathematically, the result

would have been the same. However, in terms of how data are organized

and analyzed within the COLA model, OPM believes it is more appropriate

to include the private education data within the Miscellaneous Expense

Component.

Application of 5 U.S.C. 553

Pursuant to paragraphs (b)(3)(B) and (d)(3) of Sec. 553 of title 5

of the United States Code, OPM finds that good cause exists to waive

the publication of proposed rulemaking and the 30-day delay in the

effective date of this regulation. Because it has taken longer than

expected to complete these surveys and calculate the living-cost

indexes, OPM believes it is in the public interest to implement the

COLA rate increase immediately. In the future, as in the past, OPM

plans to announce COLA rate adjustments in a proposed rule for notice

and comment.

Implementation of Rate Changes

For administrative purposes, the rate increases authorized by

these regulations will be applied as of the first day of the first pay

period beginning on or after October 21, 1998.

E.O. 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget

in accordance with E.O. 12866.

Regulatory Flexibility Act

I certify that this regulation will not have a significant

economic impact on a substantial number of small entities because the

regulation will affect only Federal agencies and employees.

List of Subjects in 5 CFR Part 591

Government employees, Travel and transportation expenses, Wages.

Office of Personnel Management.

Janice R. Lachance,

Director.

Accordingly, OPM is amending 5 CFR part 591 as follows:

PART 591--ALLOWANCES AND DIFFERENTIALS

Subpart B--Cost-of-Living Allowance and Post Differential--Nonforeign

Areas

1. The authority citation for subpart B of part 591 continues to

read as follows:

Authority: 5 U.S.C. 5941; E.O. 10000, 3 CFR, 1943-1948 Comp., p.

792; E.O. 12510, 3 CFR, 1985 Comp., p. 338.

2. In Sec. 591.205, paragraph (b)(4) is revised to read as

follows:

Sec. 591.205 Comparative cost index.

* * * * *

(b)* * *

(4) Miscellaneous expenses. Miscellaneous expenses, including

expenses for health care, gifts, contributions, savings and

investments, retirement, and life insurance, are estimated from

consumer expenditure surveys and other data appropriate for Federal

employees for each income level.

* * * * *

3. Appendix A of subpart B is revised to read as follows:

Appendix A of Subpart B--Places and Rates at Which Allowances Shall be

Paid

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Authorized

allowance

Geographic coverage/ allowance category rate

(percent)

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State of Alaska

City of Anchorage and 80-kilometer (50-mile) radius by

road: