[Federal Register Volume 71, Number 208 (Friday, October 27, 2006)]
[Notices]
[Pages 63178-63179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-17952]



  Federal Register / Vol. 71, No. 208 / Friday, October, 27, 2006 / 
Notices  

[[Page 63178]]


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OFFICE OF PERSONNEL MANAGEMENT


2005 Nonforeign Area Cost-of-Living Allowance Survey Report: 
Alaska and Pacific Interim Adjustments

AGENCY: Office of Personnel Management.

ACTION: Notice.

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SUMMARY: This notice publishes the interim adjustments for the Alaska 
and Pacific Nonforeign Area Cost-of-Living Allowance (COLA) areas. The 
Federal Government conducts COLA surveys in Alaska, Hawaii, Guam, 
Puerto Rico, and the U.S. Virgin Islands to set COLA rates. These 
surveys are conducted once every 3 years on a rotating basis. In 
between COLA surveys, the Government adjusts COLA rates for the areas 
not surveyed using the relative change in the Consumer Price Index 
(CPI) for the COLA area compared with the Washington-Baltimore CPI. The 
Alaska and Pacific COLA areas were not surveyed in 2005. Therefore, OPM 
is calculating and publishing interim adjustments for these COLA areas.

DATES: We will consider comments received on or December 26, 2006.

ADDRESSES: Send or deliver comments to Jerome D. Mikowicz, Acting 
Deputy Associate Director for Pay and Performance Policy, Strategic 
Human Resources Policy Division, Office of Personnel Management, Room 
7H31, 1900 E Street, NW., Washington, DC 20415-8200; fax: (202) 606-
4264; or e-mail: [email protected].

FOR FURTHER INFORMATION CONTACT: Donald L. Paquin, (202) 606-2838; fax: 
(202) 606-4264; or e-mail: [email protected].

SUPPLEMENTARY INFORMATION: Subpart B of part 591 of title 5, Code of 
Federal Regulations, requires the Office of Personnel Management (OPM) 
to set nonforeign area cost-of-living allowance (COLA) rates that are 
paid to U.S. Postal Service and white-collar Federal employees in 
Alaska, Hawaii, Guam and the Northern Mariana Islands, Puerto Rico, and 
the U.S. Virgin Islands. Section 591.223(a) prescribes that we conduct 
these surveys on a rotating basis, once every 3 years. Section 591.224 
requires we adjust the previous COLA survey price indexes for the areas 
not surveyed by using the relative change in the Consumer Price Index 
(CPI) for the COLA area compared with the change in the Washington, DC 
area CPI.
    In 2005, we surveyed Puerto Rico and the U.S. Virgin Islands. We 
did not survey the Alaska or Pacific COLA areas. Therefore, we are 
adjusting the previous Alaska and Pacific survey price indexes using 
the relative change in the CPIs. As required by Sec.  591.225, we used 
the CPI, All Urban Consumers (CPI-U's), as published by the Bureau of 
Labor Statistics (BLS) for Anchorage, Honolulu, and the Washington-
Baltimore area.

2003 Alaska Survey Results and Interim Adjustments

    The first step is to compute the change in prices for the COLA area 
compared with the change in prices in the Washington-Baltimore area 
using the CPI-Us for each area. Table 1, below, shows this process. It 
also shows prices have increased slightly faster in the Washington-
Baltimore area than in Anchorage since the first half of 2003.

  Table 1.--Change in Anchorage and in the Washington-Baltimore CPI-Us
                              2003 to 2005
------------------------------------------------------------------------
                        Survey area                             CPI-U
------------------------------------------------------------------------
Anchorage 2003 CPI-U first half............................        161.1
Anchorage 2005 CPI-U second half...........................        174.1
Anchorage change in percent................................      8.0695%
DC-Baltimore 2003 CPI-U first half.........................        115.6
DC-Baltimore 2005 CPI-U second half........................        125.8
DC-Baltimore change in percent.............................      8.8235%
------------------------------------------------------------------------

    The second step is to multiply the price indexes from the four 2003 
Alaska surveys (Anchorage, Fairbanks, Juneau, and Rest of the State of 
Alaska) by the change in the Anchorage CPI-U and divide that by the 
change in the Washington-Baltimore CPI-U. The price index is the COLA 
survey index before the addition of the adjustment factor as specified 
in Sec.  591.227. The adjustment factor reflects differences in need, 
access to and availability of goods and services, and quality of life 
in the COLA area relative to the DC area and is a constant amount 
throughout time. Therefore, it is not adjusted by the change in the 
CPI.
    OPM published the 2003 Alaska survey report in the Federal Register 
on March 12, 2004, at 69 FR 12002. The report included the survey price 
indexes for each of the Alaska COLA areas. However, OPM revised these 
price indexes, incorporating methodological changes that OPM adopted 
pursuant to comments it received. The revised indexes were published 
recently in the Federal Register in a final rule that implemented COLA 
rate changes. Subsequently, OPM discovered it made a mathematical error 
in calculating Anchorage utility prices for the 2003 survey. This 
changed the Anchorage shelter and utilities index from 101.96 to 95.20 
and changed the overall index from 113.64 to 111.40. OPM is using the 
corrected overall index to calculate the interim adjustment for 
Anchorage.
    Table 2 shows the interim adjustment process. For example, the 2003 
Fairbanks COLA survey adjusted index, as published in the Federal 
Register, is 115.62. The Fairbanks adjustment factor is 9 points. 
Therefore, the price index from the 2003 survey is 106.62. We increased 
this price index by 8.0695% (i.e., multiplied by 1.080695), the change 
in the Anchorage CPI-U, and reduced it by 8.8235% (i.e., divided by 
1.088235), the change in the Washington-Baltimore CPI-U, to give a new 
price index of 105.88. We then added the 9 point adjustment factor to 
the new price index, which yields a 2005 Fairbanks Interim Adjustment 
COLA rate of 114.88.

                            Table 2.--Alaska COLA Area CPI-U Price Index Adjustments
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                                                            Anchorage     Fairbanks      Juneau        Kodiak
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2003 COLA Survey Indexes................................        111.40        115.62        118.09        135.84
Adjustment Factors......................................          7             9             9             9
2003 COLA Survey Price Indexes..........................        104.40        106.62        109.09        126.84
2005 CPI Adjusted Price Indexes.........................        103.68        105.88        108.33        125.96
2005 COLA Indexes with Adj. Factors.....................        110.68        114.88        117.33        134.96
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[[Page 63179]]

2004 Pacific Survey Results and Interim Adjustments

    The process we used to compute the interim adjustments for the 
Pacific surveys (i.e., Honolulu, Hawaii, Kauai, Maui, and Guam) is 
identical to the one described above for Alaska except that we used the 
BLS CPI-U for Honolulu, as specified in Sec.  591.225. Table 3 shows 
the relative change in the Honolulu CPI-U compared with the Washington-
Baltimore CPI-U. Once again, the table shows prices have increased 
somewhat faster in the Washington-Baltimore area than in Honolulu since 
the first half of 2004.

Table 3.--Change in Honolulu and in the Washington-Baltimore CPI-Us 2004
                                 to 2005
------------------------------------------------------------------------
                        Survey Area                             CPI-U
------------------------------------------------------------------------
Honolulu 2004 CPI-U first half.............................        189.2
Honolulu 2005 CPI-U second half............................        200.6
Honolulu change............................................      6.0254%
DC-Baltimore 2004 CPI-U first half.........................        118.3
DC-Baltimore 2005 CPI-U second half........................        125.8
DC-Baltimore change........................................      6.3398%
------------------------------------------------------------------------

    The second step is to multiply the price indexes from the five 2004 
Pacific surveys by the change in the Honolulu CPI-U and divide that by 
the change in the Washington-Baltimore CPI-U. OPM published the 2004 
Pacific survey report in the Federal Register on August 4, 2005, at 70 
FR 44989. This report included the survey price indexes for each of the 
Pacific COLA areas. However, as with Alaska, OPM subsequently revised 
the Pacific price indexes, incorporating methodological changes that 
OPM adopted pursuant to comments it received. The revised indexes were 
published recently in the Federal Register in a final rule that 
implemented COLA rate changes. Table 4 shows the revised indexes, the 
interim adjustment process, and the final results.

                            Table 4.--Pacific COLA Area CPI-U Price Index Adjustments
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                                              Honolulu      Hawaii Co       Kauai         Maui          Guam
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2004 COLA Survey Indexes..................        125.80        117.25        127.63        131.50        127.40
Adjustment Factors........................          5             7             7             7             9
2004 COLA Survey Price Indexes............        120.80        110.25        120.63        124.50        118.40
2005 CPI Adjusted Price Indexes...........        120.44        109.92        120.27        124.13        118.05
2005 COLA Indexes with Adj. Factors.......        125.44        116.92        127.27        131.13        127.05
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Interim Adjustments Summarized

    In a proposed rule published with this notice, OPM proposes to 
adjust COLA rates based on the 2005 Caribbean Survey results and the 
interim adjustments. The interim adjustments show both Alaska and 
Pacific prices are falling slightly relative to Washington-Baltimore 
prices. In the Pacific, the results indicate that COLA rates in all of 
the areas are currently set at the appropriate levels, and no 
adjustments are necessary. In Alaska, the results indicate that 
Anchorage, Fairbanks and Juneau COLA rates should continue to be 
reduced by an additional 1 percentage point in each area, from 24 
percent, which is the current COLA rate in each of these areas, to 23 
percent. However, Sec.  591.228(c) limits COLA rate reductions to no 
more than 1 percentage point in a 12-month period.

Linda M. Springer,
Director, Office of Personnel Management.
[FR Doc. E6-17952 Filed 10-26-06; 8:45 am]
BILLING CODE 6325-39-P