I 110th CONGRESS 2d Session S. 3013 IN THE HOUSE OF REPRESENTATIVES October 2, 2008 Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on Veterans' Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned AN ACT To provide for retirement equity for Federal employees in nonforeign areas outside the 48 contiguous States and the District of Columbia, and for other purposes.

1.

Short title

This Act may be cited as the Non-Foreign Area Retirement Equity Assurance Act of 2008 or the Non-Foreign AREA Act of 2008.

2.

Extension of Locality Pay

(a)

Locality-based comparability payments

Section 5304 of title 5, United States Code, is amended— (1)in subsection (f)(1), by striking subparagraph (A) and inserting the following: (A)each General Schedule position in the United States, as defined under section 5921(4), and its territories and possessions, including the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands, shall be included within a pay locality; ; (2)in subsection (g)— (A)in paragraph (2)— (i)in subparagraph (A), by striking and after the semicolon; (ii)by redesignating subparagraph (B) as subparagraph (C); (iii)by inserting after subparagraph (A) the following: (B)positions under subsection (h)(1)(D) not covered by appraisal systems certified under section 5382; and ; and (iv)in subparagraph (C) (as redesignated by this paragraph), by striking under subsection (h)(1)(D) and inserting under subsection (h)(1)(E); and (B)by adding at the end the following: (3)The applicable maximum under this subsection shall be level II of the Executive Schedule for positions under subsection (h)(1)(D) covered by appraisal systems certified under section 5307(d). ; and (3)in subsection (h)(1)— (A)in subparagraph (C) by striking and after the semicolon; (B)by redesignating subparagraph (D) as subparagraph (E); (C)by inserting after subparagraph (C) the following: (D)a Senior Executive Service position under section 3132 stationed within the United States, but outside the 48 contiguous States and the District of Columbia in which the incumbent the day before the date of enactment of the Non-Foreign Area Retirement Equity Assurance Act of 2008 was eligible to receive a cost-of-living allowance under section 5941; and ; and (D)in clause (iii) in the matter following subparagraph (D), by inserting stationed in the 48 contiguous States and the District of Columbia, or stationed within the United States, but outside the 48 contiguous States and the District of Columbia, in which the incumbent the day before the date of enactment of the Non-Foreign Area Retirement Equity Assurance Act of 2008 was not eligible to receive a cost-of-living allowance under section 5941; and before the semicolon. (b)

Allowances based on living costs and conditions of environment

Section 5941 of title 5, United States Code, is amended— (1)in subsection (a), by adding after the last sentence Notwithstanding any preceding provision of this subsection, the cost-of-living allowance rate based on paragraph (1) of this subsection shall be the cost-of-living allowance rate in effect on December 31, 2008, except as adjusted under subsection (c).; (2)by redesignating subsection (b) as subsection (d); and (3)by inserting after subsection (a) the following: (b)This section shall apply only to areas that are designated as cost-of-living allowance areas as in effect on December 31, 2008. (c)(1)The cost-of-living allowance rate payable under this section shall be adjusted on the first day of the first applicable pay period beginning on or after— (A)January 1, 2009; and (B)on January 1 of each calendar year in which a locality-based comparability adjustment takes effect under section 4 (2) and (3) of the Non-Foreign Area Retirement Equity Assurance Act of 2008. (2)(A)In this paragraph, the term applicable locality-based comparability pay percentage means, with respect to calendar year 2009 and each calendar year thereafter, the applicable percentage under section 4 (1), (2), or (3) of Non-Foreign Area Retirement Equity Assurance Act of 2008. (B)Each adjusted cost-of-living allowance rate under paragraph (1) shall be computed by— (i)subtracting 65 percent of the applicable locality-based comparability pay percentage from the cost-of-living allowance percentage rate in effect on December 31, 2008; and (ii)dividing the resulting percentage determined under clause (i) by the sum of— (I)one; and (II)the applicable locality-based comparability payment percentage expressed as a numeral. (3)No allowance rate computed under paragraph (2) may be less than zero. (4)Each allowance rate computed under paragraph (2) shall be paid as a percentage of basic pay (including any applicable locality-based comparability payment under section 5304 or similar provision of law and any applicable special rate of pay under section 5305 or similar provision of law). .

3.

Adjustment of special rates

(a)

In General

Each special rate of pay established under section 5305 of title 5, United States Code, and payable in an area designated as a cost-of-living allowance area under section 5941(a) of that title, shall be adjusted, on the dates prescribed by section 4 of this Act, in accordance with regulations prescribed by the Director of the Office of Personnel Management under section 8 of this Act. (b)

Department of Veterans Affairs

Each special rate of pay established under section 7455 of title 38, United States Code, and payable in a location designated as a cost-of-living allowance area under section 5941(a)(1) of title 5, United States Code, shall be adjusted in accordance with regulations prescribed by the Secretary of Veterans Affairs that are consistent with the regulations issued by the Director of the Office of Personnel Management under subsection (a). (c)

Temporary adjustment

Regulations issued under subsection (a) or (b) may provide that statutory limitations on the amount of such special rates may be temporarily raised to a higher level during the transition period described in section 4 ending on the first day of the first pay period beginning on or after January 1, 2011, at which time any special rate of pay in excess of the applicable limitation shall be converted to a retained rate under section 5363 of title 5, United States Code.

4.

Transition schedule for locality-based comparability payments

Notwithstanding any other provision of this Act or section 5304 or 5304a of title 5, United States Code, in implementing the amendments made by this Act, for each non-foreign area determined under section 5941(b) of that title, the applicable rate for the locality-based comparability adjustment that is used in the computation required under section 5941(c) of that title shall be adjusted effective on the first day of the first pay period beginning on or after January 1— (1)in calendar year 2009, by using 1/3 of the locality pay percentage for the rest of United States locality pay area; (2)in calendar year 2010, by using 2/3 of the otherwise applicable comparability payment approved by the President for each non-foreign area; and (3)in calendar year 2011 and each subsequent year, by using the full amount of the applicable comparability payment approved by the President for each non-foreign area.

5.

Savings provision

(a)

Sense of Congress

It is the sense of Congress that the application of this Act to any employee should not result in a decrease in the take home pay of that employee. (b)

Sense of Congress

It is the sense of Congress that the Bureau of Labor Statistics will conduct separate surveys pursuant to the establishment by the President’s Pay Agent of 1 new locality area for the entire State of Hawaii and 1 new locality area for the entire state of Alaska, and that upon the completion of the phase in period no employee shall receive less than the Rest of the U.S. locality pay rate. (c)

Savings provisions

(1)

In general

During the period described under section 4 of this Act, an employee paid a special rate under 5305 of title 5, United States Code, who the day before the date of enactment of this Act was eligible to receive a cost-of-living allowance under section 5941 of title 5, United States Code, and who continues to be officially stationed in an allowance area, shall receive an increase in the employee’s special rate consistent with increases in the applicable special rate schedule. For employees in allowance areas, the minimum step rate for any grade of a special rate schedule shall be increased at the time of an increase in the applicable locality rate percentage for the allowance area by not less than the dollar increase in the locality-based comparability payment for a non-special rate employee at the same minimum step provided under section 4 of this Act, and corresponding increases shall be provided for all step rates of the given pay range. (2)

Continuation of cost of living allowance rate

If an employee, who the day before the date of enactment of this Act was eligible to receive a cost-of-living allowance under section 5941 of title 5, United States Code, would receive a rate of basic pay and applicable locality-based comparability payment which is in excess of the maximum rate limitation set under section 5304(g) of title 5, United States Code, for his position (but for that maximum rate limitation) due to the operation of this Act, the employee shall continue to receive the cost-of-living allowance rate in effect on December 31, 2008 without adjustment until— (A)the employee leaves the allowance area or pay system; or (B)the employee is entitled to receive basic pay (including any applicable locality-based comparability payment or similar supplement) at a higher rate, but, when any such position becomes vacant, the pay of any subsequent appointee thereto shall be fixed in the manner provided by applicable law and regulation.(3)

Locality-based comparability payments

Any employee covered under paragraph (2) shall receive any applicable locality-based comparability payment extended under section 4 of this Act which is not in excess of the maximum rate set under section 5304(g) of title 5, United States Code, for his position including any future increase to statutory pay caps under 5318 of title 5, United States Code. Notwithstanding paragraph (2), to the extent that an employee covered under that paragraph receives any amount of locality-based comparability payment, the cost-of-living allowance rate under that paragraph shall be reduced accordingly, as provided under section 5941(c)(2)(B) of title 5, United States Code.

6.

Application to other eligible employees

(a)

In General

(1)

Definition

In this subsection, the term covered employee means— (A)any employee who— (i)on— (I)the day before the date of enactment of this Act— (aa)was eligible to be paid a cost-of-living allowance under 5941 of title 5, United States Code; and (bb)was not eligible to be paid locality-based comparability payments under 5304 or 5304a of that title; or (II)or after the date of enactment of this Act becomes eligible to be paid a cost-of-living allowance under 5941 of title 5, United States Code; and (ii)except as provided under paragraph (2), is not covered under— (I)section 5941 of title 5, United States Code (as amended by section 2 of this Act); and (II)section 4 of this Act; or (B)any employee who— (i)on the day before the date of enactment of this Act— (I)was eligible to be paid an allowance under section 1603(b) of title 10, United States Code; (II)was eligible to be paid an allowance under section 1005(b) of title 39, United States Code; or (III)was employed by the Transportation Security Administration of the Department of Homeland Security and was eligible to be paid an allowance based on section 5941 of title 5, United States Code; or (ii)on or after the date of enactment of this Act— (I)becomes eligible to be paid an allowance under section 1603(b) of title 10, United States Code; (II)becomes eligible to be paid an allowance under section 1005(b) of title 39, United States Code; or (III)is employed by the Transportation Security Administration of the Department of Homeland Security and becomes eligible to be paid an allowance based on section 5941 of title 5, United States Code. (2)

Application to covered employees

(A)

In general

Notwithstanding any other provision of law, for purposes of this Act (including the amendments made by this Act) any covered employee shall be treated as an employee to whom section 5941 of title 5, United States Code (as amended by section 2 of this Act), and section 4 of this Act apply. (B)

Pay fixed by statute

Pay to covered employees under section 5304 or 5304a of title 5, United States Code, as a result of the application of this Act shall be considered to be fixed by statute. (C)

Performance appraisal system

With respect to a covered employee who is subject to a performance appraisal system no part of pay attributable to locality-based comparability payments as a result of the application of this Act including section 5941 of title 5, United States Code (as amended by section 2 of this Act), may be reduced on the basis of the performance of that employee. (b)

Postal employees in non-foreign areas

(1)

In general

Section 1005(b) of title 39, United States Code, is amended— (A)by inserting (1) after (b); (B)by striking Section 5941, and inserting Except as provided under paragraph (2), section 5941; (C)by striking For purposes of such section, and inserting Except as provided under paragraph (2), for purposes of section 5941 of that title,; and (D)by adding at the end the following: (2)On and after the date of enactment of the Non-Foreign Area Retirement Equity Assurance Act of 2008— (A)the provisions of that Act and section 5941 of title 5 shall apply to officers and employees covered by section 1003(b) and (c) whose duty station is in a nonforeign area; and (B)with respect to officers and employees of the Postal Service (other than those officers and employees described under subparagraph (A)) section 6(b)(2) of that Act shall apply. . (2)

Continuation of cost of living allowance

(A)

In general

Notwithstanding any other provision of this Act, any employee of the Postal Service (other than an employee covered by section 1003 (b) and (c) of title 39, United States Code, whose duty station is in a nonforeign area) who is paid an allowance under section 1005(b) of that title shall be treated for all purposes as if the provisions of this Act (including the amendments made by this Act) had not been enacted, except that the cost-of-living allowance rate paid to that employee— (i)may result in the allowance exceeding 25 percent of the rate of basic pay of that employee; and (ii)shall be the greater of— (I)the cost-of-living allowance rate in effect on December 31, 2008 for the applicable area; or (II)the applicable locality-based comparability pay percentage under section 4. (B)

Rule of construction

Nothing in this Act shall be construed to— (i)provide for an employee described under subparagraph (A) to be a covered employee as defined under subsection (a); or (ii)authorize an employee described under subparagraph (A) to file an election under section 7 of this Act.

7.

Election of additional basic pay for annuity computation by employees

(a)

Definition

In this section the term covered employee means any employee— (1)to whom section 4 applies; (2)who is separated from service by reason of retirement under chapter 83 or 84 of title 5, United States Code, during the period of January 1, 2009, through December 31, 2011; and (3)who files and election with the Office of Personnel Management under subsection (b). (b)

Election

(1)

In general

An employee described under subsection (a) (1) and (2) may file an election with the Office of Personnel Management to be covered under this section. (2)

Deadline

An election under this subsection may be filed not later than December 31, 2011. (c)

Computation of annuity

(1)

In general

Except as provided under paragraph (2), for purposes of the computation of an annuity of a covered employee any cost-of-living allowance under section 5941 of title 5, United States Code, paid to that employee during the first applicable pay period beginning on or after January 1, 2009 through the first applicable pay period ending on or after December 31, 2011, shall be considered basic pay as defined under section 8331(3) or 8401(4) of that title. (2)

Limitation

The amount of the cost-of-living allowance which may be considered basic pay under paragraph (1) may not exceed the amount of the locality-based comparability payments the employee would have received during that period for the applicable pay area if the limitation under section 4 of this Act did not apply. (d)

Civil Service Retirement and Disability Retirement Fund

(1)

Employee contributions

A covered employee shall pay into the Civil Service Retirement and Disability Retirement Fund— (A)an amount equal to the difference between— (i)employee contributions that would have been deducted and withheld from pay under section 8334 or 8422 of title 5, United States Code, during the period described under subsection (c) of this section if that subsection had been in effect during that period; and (ii)employee contributions that were actually deducted and withheld from pay under section 8334 or 8422 of title 5, United States Code, during that period; and (B)interest as prescribed under section 8334(e) of title 5, United States Code, based on the amount determined under subparagraph (A). (2)

Agency contributions

(A)

In general

The employing agency of a covered employee shall pay into the Civil Service Retirement and Disability Retirement Fund an amount for applicable agency contributions based on payments made under paragraph (1). (B)

Source

Amounts paid under this paragraph shall be contributed from the appropriation or fund used to pay the employee. (3)

Regulations

The Office of Personnel Management may prescribe regulations to carry out this section.

8.

Regulations

(a)

In General

The Director of the Office of Personnel Management shall prescribe regulations to carry out this Act, including— (1)rules for special rate employees described under section 3; (2)rules for adjusting rates of basic pay for employees in pay systems administered by the Office of Personnel Management when such employees are not entitled to locality-based comparability payments under section 5304 of title 5, United States Code, without regard to otherwise applicable statutory pay limitations during the transition period described in section 4 ending on the first day of the first pay period beginning on or after January 1, 2011; and (3)rules governing establishment and adjustment of saved or retained rates for any employee whose rate of pay exceeds applicable pay limitations on the first day of the first pay period beginning on or after January 1, 2011. (b)

Other Pay Systems

With the concurrence of the Director of the Office of Personnel Management, the administrator of a pay system not administered by the Office of Personnel Management shall prescribe regulations to carry out this Act with respect to employees in such pay system, consistent with the regulations issued by the Office under subsection (a).

9.

Effective dates

(a)

In General

Except as provided by subsection (b), this Act (including the amendments made by this Act) shall take effect on the date of enactment of this Act. (b)

Locality pay and schedule

The amendments made by section 2 and the provisions of section 4 shall take effect on the first day of the first applicable pay period beginning on or after January 1, 2009.

Passed the Senate October 1 (legislative day, September 17), 2008. Nancy Erickson, Secretary