Washington, D.C.- Today, the Non-Foreign Area Retirement Equity Assurance Act (S. 507) was introduced in Congress to ensure pay and retirement equity for federal employees in Alaska, Hawaii, and the U.S. territories. The legislation was sponsored in the Senate by Senators Daniel K. Akaka (D-Hawaii), Lisa Murkowski (R-Alaska), Daniel K. Inouye (D-Hawaii), and Mark Begich (D-Alaska), and 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).
Federal workers in Hawaii, Alaska and the U.S. territories currently receive a non-foreign cost of living allowance (COLA) based on the increased costs of living in those areas as compared to the District of Columbia. But unlike locality pay received by federal employees in the contiguous 48 states, COLA is not factored in for retirement purposes. Furthermore, while locality rates generally increase, non-foreign COLA rates have been gradually declining and are scheduled to drop for all non-foreign COLA areas later this year.
The bill would freeze non-foreign COLA rates at their current levels and phase-in locality pay over the next three years. Non-foreign COLA would be phased out at a slower rate than locality pay is phased in. At the end of the three year period, if the locality pay rate is less than the offset amount of non-foreign COLA for a particular area, employees would continue to receive the difference in non-foreign COLA and locality pay until the locality rate reaches the offset COLA rate. Only at that time would employees no longer receive non-foreign COLA.
Senator Akaka said: “COLA rates are scheduled to go down this year, and in this difficult economy, federal employees in Hawaii, Alaska, and the territories cannot afford a loss of pay. For years, these federal employees have been unfairly disadvantaged in their retirement calculations compared to their counterparts in the continental United States. This bill would address this disparity and improve efforts to recruit and retain federal workers in our states and the territories.”
Congressman Abercrombie said: “This is an important step in addressing the inequality between federal employees serving in the continental United States and those in more remote locations, such as Alaska, Hawaii and the territories. Federal employees throughout the nation are making an equal contribution to the health, well-being and security of our nation. They deserve equal treatment and should not be penalized in retirement for choosing to serve outside the 48 contiguous states.”
Senator Murkowski said: “We came so close last year to giving Alaska’s federal employees the certainty they need to make informed retirement decisions. The Senate passed the bill. The House of Representatives did not. Alaska’s federal employees have spoken loud and clear that they prefer locality pay which counts toward their retirement over their current tax free COLA which does not. I am hopeful that Congress will act expeditiously this year to clear this legislation for the President’s desk.”
Congressman Young said: “With the rising costs of living in these areas, the pay gap between federal and non-federal employees continues to grow. Switching from COLA to locality pay over the next three years would cut this gap and increase retirement benefits for federal employees outside the 48 contiguous states. This bill allows our federal employees to stretch their retirement dollars and plan for their futures.”
Senator Inouye said: “Today’s reintroduction of the Non-Foreign Area Retirement Equity Assurance Act by the Hawaii and Alaska delegations reaffirms our commitment to represent the best interests of our federal employees. We continue to work toward rectifying the difference in retirement benefits federal workers in the non-contiguous areas receive, versus their mainland counterparts, for their equally tireless and dedicated service to our country.”
Senator Begich said: “Facing the nation’s highest rates for gasoline and heating fuel, Alaska’s federal employees and their families have faced undue economic burdens from the continuing devaluation of COLA benefits. This legislation will work to correct the inequity between federal workers in Alaska, Hawaii, the U.S. Territories, and those in the continental United States through a gradual transition to locality pay. I look forward to working on this legislation so that we may properly compensate our federal employees and continue to attract and keep qualified federal workers.”
Congresswoman Hirono said: “Our federal employees serve us well, and should not be penalized in their retirement for choosing to serve outside the 48 contiguous states. I have heard from many constituents who feel they have no choice but to spend their final years of federal employment on the mainland, in order to receive the retirement benefits their mainland counterparts receive. Our public servants should not have to make that choice, and should be treated fairly for their services, regardless of where they live and work.”
Delegate Faleomavaega said: “This legislation is long overdue. It has always been unfair for federal employees in American Samoa because they face the same issues driving higher prices for goods, services and travel as federal employees everywhere else. I am hopeful that Congress will act on this legislation immediately.”
Last Congress, the Non-Foreign AREA Act passed the Senate by Unanimous Consent on October 2, 2008, but was never approved by the House. The Non-Foreign AREA Act as reintroduced today is nearly identical to the Senate-passed version, except that it would freeze the COLA rates on the date of enactment.
Senator Akaka, Chairman of the Senate subcommittee charged with oversight of the federal workforce, added: “I continue to encourage employees in Hawaii and the affected areas to provide me feedback on the reintroduced legislation through my website at http://akaka.senate.gov.”
Akaka’s statement in the Congressional Record is available at: http://akaka.senate.gov/public/index.cfm?FuseAction=Speeches.Home&month=3&year=2009&release_id=2570
A section-by-section analysis of the bill is available at: http://akaka.senate.gov/public/index.cfm?FuseAction=Speeches.Home&month=3&year=2009&release_id=2571