[Federal Register Volume 60, Number 91 (Thursday, May 11, 1995)]
[Proposed Rules]
[Pages 25150-25151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11543]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 60, No. 91 / Thursday, May 11, 1995 /
Proposed Rules
[[Page 25150]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 591
RIN 3206-AG73
Cost-of-Living Allowances (Nonforeign Areas)
AGENCY: Office of Personnel Management.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Office of Personnel Management (OPM) is proposing three
regulatory changes in the nonforeign area cost-of-living allowance
(COLA) program. One change would allow us to simplify living-cost
surveys and analyses used to determine COLA rates by permitting the
survey and analysis of living costs at fewer income levels than the
three levels currently used. The second change would clarify the types
of housing units to be surveyed. The third change would allow the
payment of foreign area post differentials without any corresponding
offset for the nonforeign area COLA. OPM is also announcing its
intention to change the timing of living-cost surveys conducted in
Hawaii, Guam, Puerto Rico, and the U.S. Virgin Islands and is inviting
comments on this change in timing.
DATES: Comments must be received on or before June 12, 1995.
ADDRESSES: Send or deliver written comments to Donald J. Winstead,
Acting Assistant Director for Compensation Policy, Personnel Systems
and Oversight Group, Office of Personnel Management, Room 6H31, 1900 E
Street NW., Washington, DC 20415.
FOR FURTHER INFORMATION CONTACT:
Allan G. Hearne, (202) 606-2838.
SUPPLEMENTARY INFORMATION: Under section 5941 of title 5, United States
Code, and Executive Order 10000, as amended, certain Federal employees
in nonforeign areas outside the 48 contiguous States are eligible for
cost-of-living allowances (COLA's) when local living costs are
substantially higher than those in the Washington, DC, area. Nonforeign
area COLA's are paid in Alaska, Hawaii, Puerto Rico, the U.S. Virgin
Islands, and Guam and the Commonwealth of the Northern Mariana Islands.
Number of Income Levels Surveyed
To determine COLA rates, OPM conducts living-cost surveys in each
of the allowance areas and in the Washington, DC, area. Under
Sec. 591.205(b) of title 5, Code of Federal Regulations, OPM is
required to estimate living costs at ``several income levels.''
Currently, OPM surveys and analyzes living costs at three income
levels.
Some COLA recipients have recommended that OPM simplify the COLA
methodology by using only one income level. Conceptually, a multiple
income level approach should yield a more balanced measurement of
living-cost differences. In application, however, the use of multiple
income levels requires certain subjective assumptions. Therefore, OPM
believes the overall integrity of the model will not be impaired if
fewer income levels are used.
In future COLA surveys and analyses, OPM proposes to use a single
income level approach. If we adopt this approach, we will use
Washington, DC, area Consumer Expenditure Survey (CES) data, provided
by the Bureau of Labor Statistics, Department of Labor, to develop
category and component expenditure weights for the COLA model. In the
past, some COLA recipients have criticized OPM for using nationwide CES
data to develop these weights. (Nationwide CES data are the only data
known to OPM that provide expenditure information by income level.
Detailed DC-area CES data are not available by income level.) By
adopting a single income level approach, OPM would be able to use base
area expenditure data to develop category and component weights. Since
Washington, DC, is the reference or base area for living-cost surveys,
use of DC-area derived weights would be consistent with the overall
COLA methodology.
Some COLA recipients have suggested that OPM should use weights
based on the expenditures of people in the allowance areas. As OPM has
stated in previous Federal Register notices, OPM is aware of such
consumer expenditure information for only two allowance areas:
Anchorage, Alaska, and Honolulu, Hawaii. Although it might be possible
to use allowance area derived weights for these two areas, OPM would
not be able to use similarly derived weights for the nine other
allowance areas. For this reason and because of the methodological
considerations noted above, OPM proposes to use Washington, DC, area
weights.
Types of Housing Units Surveyed
OPM is also proposing to clarify in Sec. 591.205(b)(3) the
parenthetical phrase ``(type, size, age),'' which modifies ``standard
shelter specifications.'' We believe it is not practical to obtain and
compare housing data for each of these three criteria. Since we are
modifying this paragraph to accommodate the survey of fewer income
levels, we are using this opportunity to clarify the phrase to read
``(type and size)''.
Nonforeign Area COLA and Foreign Post Differentials
OPM is further proposing to eliminate the requirement in
Sec. 591.210(d) that an employee's nonforeign area COLA be reduced if
the employee also receives a foreign area post differential and the two
payments combined would otherwise exceed 25 percent of basic pay. OPM
has received comments from Federal employees and agencies who believe
this regulation can create a disincentive for employees in nonforeign
allowance areas to accept long-term temporary assignments in foreign
areas. OPM agrees. Therefore, we are proposing to eliminate the
requirement that an employee's nonforeign area COLA be reduced if the
employee also receives a foreign area post differential.
Survey Timing
OPM is also announcing its intention to change the timing of the
summer COLA surveys to correspond with the winter COLA surveys. No
regulatory change is required to make this change, but OPM invites
comments on the proposed change in timing. Currently, OPM surveys
Hawaii, Guam, Puerto Rico, and the U.S. Virgin Islands (often called
``tropical allowance areas'') in the summer and surveys Alaska in the
winter. The Washington, DC, area is surveyed twice--once in the summer
and once in the winter.
[[Page 25151]]
Some Federal employees have suggested that OPM change the timing of
the tropical area surveys to the winter months. OPM reviewed
information from the Bureau of Labor Statistics; the Department of
Defense Per Diem, Travel, and Transportation Allowance Committee; the
Puerto Rico Department of Labor and Human Resources, and the Guam
Department of Commerce. With one exception, OPM did not find evidence
of significant seasonal variation in prices in the tropical allowance
areas or in the Washington, DC, area. The exception was hotel and motel
prices, which appear to vary significantly by season in Kauai, Hawaii;
Maui, Hawaii; San Juan, Puerto Rico; and the U.S. Virgin Islands. In
terms of lodging prices, the ``peak tourist season'' for these areas
seems generally to be the months of January through March.
Although lodging prices may vary significantly by season in some
areas, the evaluation of available information leads OPM to believe
that most other prices do not. Therefore, changing the timing of the
tropical area surveys should have little effect on the COLA rates and
will address suggestions made by some COLA recipients. In addition, the
change should reduce the survey's public burden and cost. If both the
tropical areas and the Alaska areas are surveyed in the January through
March time frame, Washington, DC, area prices would be surveyed only
once--not twice, as is currently the case. This will reduce the
reporting burden of the respondents in the DC area and some of the
Government's costs associated with the surveys. Therefore, in view of
the COLA recipients' suggestions, the potential benefit to the public
and the Government, and anticipated minimal impact, OPM plans to
conduct living-cost surveys in Hawaii, Guam, Puerto Rico, and the U.S.
Virgin Islands in the first quarter of the calendar year beginning with
the next survey, which will be conducted in the first quarter of
calendar year 1996.
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 would not have a significant
economic impact on a substantial number of small entities because the
regulation would 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
James B. King,
Director.
Accordingly, OPM proposes to amend 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. Section 591.205 is amended by removing the word ``several'' in
paragraphs (b) and (b)(1) and by adding the words ``one or more'' in
its place; in paragraph (b)(3) by removing the second and third
sentences and adding in their place the sentence, ``Standard shelter
specifications (type and size) and appropriate living communities are
selected for survey.''; and in paragraph (c) by revising the third
sentence to read as follows:
Sec. 591.205 Comparative cost index.
* * * * *
(c) * * * When two or more income levels are used in the analyses,
the dollar amounts for each income level are weighted into one average
amount to reflect the GS grade distribution for the allowance area. * *
*
* * * * *
Sec. 591.210 [Amended]
3. In Sec. 591.210, paragraph (d) is removed; and paragraphs (e),
(f), and (g) are redesignated as paragraphs (d), (e), and (f),
respectively.
[FR Doc. 95-11543 Filed 5-10-95; 8:45 am]
BILLING CODE 6325-01-M
