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UPDATE: Informational Briefings for Hawaii Federal Workers scheduled on Oahu, Maui and the Big Island from December 1-8, 2009, with staff from U.S. Senate, OPM, and Honolulu-Pacific FEB to answer questions.
Office of Personnel Management's Frequently Asked Questions (FAQ) about implementation of the Non-Foreign Area Retirement Equity Assurance (AREA) Act.
October 29, 2009, President Obama signed into law the Fiscal Year 2010 National Defense Authorization Act (NDAA) conference agreement, which included Senator Daniel K. Akaka's Non-Foreign AREA Act to replace COLA with locality pay for Federal workers in Hawaii, Alaska, and the Territories. COLA rates will be frozen as of this date, and the transition to locality pay will start in January 2010. Senator Akaka plans to set up information sessions on implementation for federal employees in Hawaii.
October 22, 2009, the Senate voted 68-29 in favor of the NDAA conference agreement.
October 8, 2009, the House of Representatives voted 281-146 in favor of the NDAA conference agreement.
October 7, 2009, the House and Senate Armed Services Committees announced that Senator Akaka's Non-Foreign AREA Act (S. 507) was included in the conference agreement for the NDAA.
April 1, 2009, the Non-Foreign AREA Act was approved by the Senate Committee:
March 2, 2009, Senator Akaka reintroduced the Non-Foreign AREA Act to provide retirement equity to federal employees in Alaska, Hawaii, and the U.S. territories. Akaka's legislation was co-sponsored by Senators Lisa Murkowski (R-Alaska), Daniel K. Inouye (D-Hawaii), and Mark Begich (D-Alaska), and supported in the House by Representatives Neil Abercrombie (D-Hawaii), Don Young (R-Alaska) and Mazie Hirono (D-Hawaii), and Delegates Eni Faleomavaega (D-American Samoa), Madeleine Z. Bordallo (D-Guam) and Donna M. Christensen (D-Virgin Islands). The bill is similar to the version that passed the Senate by unanimous consent at the end of the 110th Congress, with some minor technical changes.
LEGISLATION DETAILS
BACKGROUND
Since 1948, federal employees in the non-contiguous areas of the U.S. have received Non-Foreign COLA to ensure that their pay reflects the high cost of living. COLA is not subject to federal or Social Security/Medicare taxes. In 1990, the Federal Employees Pay Comparability Act (FEPCA) included provisions for locality pay, which is paid to federal employees in the contiguous United States.
Key differences
- Unlike Non-Foreign COLA, locality pay is taxed and considered part of base pay, used to calculate an employee's retirement annuity.
- While Non-Foreign COLA reflects a cost-of-living adjustment, locality pay reflects a comparison of federal salaries to private sector salaries in specific geographic areas.
- U.S. Postal Service employees receive Non-Foreign COLA (called Territorial COLA or T-COLA) if employed by the Postal Service in the non-contiguous areas. However, postal employees in the contiguous United States do not receive locality pay.
History of legislation
On May 30, 2007, the Office of Personnel Management sent a legislative proposal to Congress that would phase-out the Non-Foreign Cost of Living Adjustment (COLA) and phase-in locality pay. President Bush proposed the change in compensation policy as part of his Fiscal Year 2008 budget.
On May 13, 2008, Senators Akaka, Ted Stevens, Inouye and Murkowski introduced S. 3013, the Non-Foreign Area Retirement Equity Assurance Act of 2008 to address unanswered questions in the Bush Administration's original proposal and advance the discussion on COLA and locality pay.
Senator Akaka's Subcommittee on Oversight of Government Management, the Federal Workforce and the District of Columbia held a series of meetings and a hearing in Hawaii in May 2008 to discuss these proposals.
On June 25, 2008, the Senate Homeland Security and Governmental Affairs Committee passed S. 3013. Two amendments were adopted by the Committee. The first was a technical amendment offered by Senators Akaka and Stevens to clarify various provisions of the bill. The second, offered by Postal Subcommittee Chairman Tom Carper (D-DE), altered the way postal employees would be treated under the legislation. Under the bill as amended, all current and future postal employees in Alaska, Hawaii, and the non-foreign areas would continue to receive Territorial COLA (T-COLA), but the way T-COLA is calculated would change. As such, postal employees would receive the greater of the T-COLA rates in effect on December 31, 2008, or the locality pay rate in effect for that area. No employee would receive less than their current T-COLA rate and the 25 percent cap on T-COLA would be removed.
Amendments to 2008 bill (S. 3013)
Homeland Security and Governmental Affairs Committee report on 2008 bill (S. 3013).
On October 2, 2008, the Senate approved S. 3013 by unanimous consent with an amendment that removed a provision offering employees a chance to opt-out of the transition to locality pay. The amendment addressed concerns raised by the Office of Personnel Management that the provision opened the door to future litigation and further retirement inequity. Given that the bill did not move through the Senate until late in the Session, the House was unable to pass the bill before Congress adjourned.
CONTACT SENATOR AKAKA
Senator Akaka encourages federal employees in Hawaii, Alaska, and the U.S. territories to contact him with questions and concerns about this legislation. Click here to contact Senator Akaka.
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