50176 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Notices 

OFFICE OF PERSONNEL 

MANAGEMENT 

Nonforeign Area Cost-of-Living 

Allowances; 2007 Interim Adjustments 

AGENCY: Office of Personnel 

Management. 

ACTION: Notice. 

SUMMARY: This notice publishes the 

2007 interim adjustments for the Alaska 

and Caribbean Nonforeign Cost-ofLiving 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 areas 

compared with the WashingtonBaltimore CPI. The Alaska and 

Caribbean COLA areas were not 

surveyed in 2007; therefore, OPM is 

calculating and publishing interim 

adjustments for these COLA areas. 

DATES: We will consider comments 

received on or before October 24, 2008. 

ADDRESSES: Send or deliver comments 

to Charles D. Grimes III, Deputy 

Associate Director for Performance and 

Pay Systems, Strategic Human 

Resources Policy Division, Office of 

Personnel Management, Room 7300B, 

1900 E Street, NW., Washington, DC 

20415–8200; fax: (202) 606–4264; or email: COLA@opm.gov. 

FOR FURTHER INFORMATION CONTACT: J. 

Stanley Austin, (202) 606–2838; fax: 

(202) 606–4264; or e-mail: 

COLA@opm.gov. 

SUPPLEMENTARY INFORMATION: Section 

5941 of title 5, United States Code, 

authorizes Federal agencies to pay costof-living allowances (COLAs) to whitecollar Federal and U.S. Postal Service 

employees stationed in Alaska, Hawaii, 

Guam and the Northern Mariana 

Islands, Puerto Rico, and the U.S. Virgin 

Islands (USVI). Executive Order 10000, 

as amended, delegates to the Office of 

Personnel Management (OPM) the 

authority to administer nonforeign area 

COLAs and prescribes certain 

operational features of the program. 

OPM conducts living-cost surveys in 

each allowance area and in the 

Washington, DC, area to determine 

whether, and to what degree, COLA area 

living costs are higher than those in the 

DC area. 

As required by section 591.223 of title 

5, Code of Federal Regulations, OPM 

conducts COLA surveys in the Alaska, 

Pacific, and Caribbean areas on a 3-year 

rotating basis, and in the Washington, 

DC, area on an annual basis. OPM sets 

the COLA rate for each area based on 

the results of these surveys. For areas 

not surveyed during a particular year, 

OPM computes interim adjustments to 

COLA rates based on the relative change 

in the Consumer Price Index (CPI) for 

the COLA area compared with the 

Washington, DC, area. (See 5 CFR 

591.224–226.) 

In 2007, we surveyed the Pacific 

COLA areas of Honolulu County, 

Hawaii County, Maui County, and Kauai 

County, Hawaii, and Guam. We did not 

survey the Alaska or Caribbean COLA 

areas. Therefore, we are adjusting the 

previous Alaska and Caribbean survey 

price indexes using the relative change 

in CPIs. As required by 5 CFR 591.225, 

we used the CPI, All Urban Consumers 

(CPI–U), as published by the Bureau of 

Labor Statistics (BLS) for Alaska and the 

Washington-Baltimore area and the 

Puerto Rico CPI as produced by the 

Puerto Rico Department of Work and 

Human Resources. 

2006 Alaska Survey Results and 

Interim Adjustments 

First, we computed the change in 

prices for the Anchorage area compared 

with the change in prices for the 

Washington-Baltimore area using the 

CPI–Us for each area. Table 1 shows this 

process. 

TABLE 1—ANCHORAGE AND WASHINGTON-BALTIMORE CPI–U 

CHANGES 2004 TO 2006 

Survey area CPI–U 

Anchorage 2006 CPI–U First 

Half ........................................ 176 .7 

Anchorage 2007 CPI–U First 

Half ........................................ 179 .394 

Anchorage change ................... 1 .5246% 

DC-Baltimore 2006 CPI–U first 

half ........................................ 127 .7 

DC-Baltimore 2007 CPI–U first 

half ........................................ 132 .0 

DC-Baltimore change ............... 3 .3673% 

Next, we multiplied the price indexes 

from the four 2006 Alaska surveys— 

Anchorage, Fairbanks, Juneau, and Rest 

of the State of Alaska (represented by 

Kodiak)—by the change in the 

Anchorage CPI–U and divided that by 

the change in the Washington-Baltimore 

CPI–U. We used the Alaska area price 

indexes from the 2006 Alaska survey 

report, published on January 3, 2008, at 

73 FR 774. The price index is the COLA 

survey index before the addition of the 

adjustment factor specified in 5 CFR 

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 fixed amount. 

Therefore, it is not adjusted by the 

change in the CPI. 

Table 2 shows the interim adjustment 

process. For example, the 2006 

Fairbanks COLA survey adjusted index, 

as published in the Federal Register, is 

118.90. The Fairbanks adjustment factor 

is 9 points. Therefore, subtracting the 

adjustment factor shows 109.90 as the 

price index from the 2006 survey. We 

increased this price index by 1.5246 

percent (i.e., multiplied by 1.015246), 

the change in the Anchorage CPI–U, and 

reduced it by 3.3673 percent (i.e., 

divided by 1.033673), the change in the 

Washington-Baltimore CPI–U, to give a 

new price index of 107.94. We then 

added the 9 point adjustment factor to 

the new price index, which yields a 

2007 Fairbanks Interim Adjustment 

COLA rate of 116.94. 

TABLE 2—ALASKA COLA AREA CPI–U PRICE INDEX ADJUSTMENTS

Anchorage Fairbanks Juneau Kodiak 

2006 COLA Survey Indexes .................................................................................... 109 .81 118 .90 120 .08 132 .82 

Adjustment Factors .................................................................................................. 7 9 9 9 

2006 COLA Survey Price Indexes .......................................................................... 102 .81 109 .90 111 .08 123 .82 

2007 CPI Adjusted Price Indexes ........................................................................... 100 .98 107 .94 109 .10 121 .61 

2007 COLA Indexes with Adj. Factors .................................................................... 107 .98 116 .94 118 .10 130 .61 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Notices 50177 

2005 Caribbean Survey Results and 

Interim Adjustments 

The process we used to compute the 

interim adjustments for the Caribbean 

areas (i.e., Puerto Rico and USVI) is 

identical to the one for the Alaska areas 

except that we used the Puerto Rico CPI 

as produced by the Puerto Rico 

Department of Work and Human 

Resources, as specified in 5 CFR 

591.225. The Puerto Rico Department of 

Labor and Human Resources 

implemented a revised methodology for 

producing its CPI calculations effective 

December 2006. As shown in table 3, 

the changed methodology had a 

substantial effect on the measured 

inflation rate, demonstrating a 

significant overstatement of the inflation 

rate under the old methodology. 

TABLE 3—PUERTO RICO CPI 

MEASUREMENTS 2006 TO 2007 

Period 

Old 

methodology 

New 

methodology 

December 2006 

CPI ................ 334 .8 100 .00 

June 2007 CPI .. 373 .5 103 .06 

Percent increase 

from January 

2006 to June 

2007 .............. 11 .5591% 3 .0600% 

The Puerto Rican Department of Labor 

and Human Resources estimated the 

inflation rate for the year beginning June 

2006 and ending June 2007 to be in the 

range of 5 to 6 percent under the new 

methodology. To provide more 

precision, we applied the 3.06 percent 

inflation rate for the last 6 months of the 

year to the first half of the year. This 

resulted in an annual inflation rate of 

6.2136 percent (1.0306 x 1.0306), 

exceeding the estimate by the Puerto 

Rico Department of Labor and Human 

Resources. Using this value for the 

annual inflation rate, we multiplied 

106.2136 by 312.2 (the June 2006 CPI) 

to arrive at a CPI of 331.60 for June 

2007. Table 4 shows the relative change 

in the Puerto Rico CPI from June 2005 

to June 2007 compared with the 

Washington-Baltimore CPI–U. 

TABLE 4—PUERTO RICO AND WASHINGTON-BALTIMORE CPI–U 

CHANGES 2005 TO 2006 

Survey area CPI–U 

Puerto Rico 2005 CPI first half 277 .2 

Puerto Rico 2007 CPI first half 331 .6 

Puerto Rico change .................. 19 .625% 

DC–Baltimore 2005 CPI–U first 

half ........................................ 122 .8 

DC–Baltimore 2007 CPI–U first 

half ........................................ 132 .0 

DC–Baltimore change .............. 7 .4919% 

We multiplied the Puerto Rico and 

USVI price indexes by the change in the 

Puerto Rico CPI and divided that by the 

change in the Washington-Baltimore 

CPI–U. We used price indexes for 

Puerto Rico and USVI from the 2005 

Caribbean survey report published at 71 

FR 63179. As noted in section 4.2.3 of 

the report, we calculated the Puerto 

Rico survey index (103.32) after we repriced water utilities based on a postsurvey increase in water utility rates. 

The CPI for Puerto Rico already reflects 

this increase; therefore, we reverted to 

the pre-increase index level (103.06) to 

avoid duplication in the interim 

adjustment calculation. Table 5 shows 

the 2005 indexes, the interim 

adjustment process, and the final 

results. 

TABLE 5—CARIBBEAN COLA AREA

CPI–U PRICE INDEX ADJUSTMENTS

Puerto 

Rico USVI 

2005 COLA Survey Indexes ......................... 103 .06 128 .21 

Adjustment Factors ....... 7 9 

2005 COLA Survey 

Price Indexes ............ 96 .06 119 .21 

2007 CPI Adjusted 

Price Indexes ............ 106 .90 132 .67 

2007 COLA Indexes 

with Adj. Factors ....... 113 .90 141 .67 

Interim Adjustments Summarized 

In a proposed rule published with this 

notice, we propose to adjust COLA rates 

based on the interim CPI adjustments. In 

Alaska, the results indicate that COLA 

rates in Anchorage, Fairbanks, and 

Juneau should continue to be reduced 

by an additional 1 percentage point in 

each area. (COLA rates may be reduced 

by no more than 1 percentage point in 

a 12-month period as provided under 5 

CFR 591.228(c).) In the Caribbean, the 

results indicate that the COLA rate for 

the U.S. Virgin Islands is currently set 

at the appropriate level and the rate for 

Puerto Rico should be increased to 14 

percent. 

Office of Personnel Management. 

Michael W. Hager, 

Acting Director. 

[FR Doc. E8–19593 Filed 8–22–08; 8:45 am] 

BILLING CODE 6325–39–P 


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