Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - May 13, 2008)

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By Mr. AKAKA (for himself, Mr. Stevens, Mr. Inouye, and Ms. Murkowski):

S. 3013. A bill 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; to the Committee on Homeland Security and Governmental Affairs.

Mr. AKAKA. Mr. President, today I join with my good friends Senators Ted Stevens, Daniel Inouye, and Lisa Murkowski to introduce legislation to ensure retirement equity for Federal workers in Hawaii, Alaska, and the U.S. territories. For years, Federal employees in my home state of Hawaii and in other non-foreign areas have been disadvantaged when it comes to their retirement due to a lack of locality pay. Federal workers in those areas may receive a nonforeign cost of living allowance, COLA, based on the differences in the cost of living between those areas and the District off Columbia, but this amount does not count for retirement purposes. Furthermore, while locality rates generally increase, nonforeign COLAs have been gradually declining. This lack of retirement equity has resulted, in several lawsuits against the Federal Government and hinders efforts to recruit and retain Federal workers in those areas.

On August 17, 2000, the U.S. District Court of the Virgin Islands approved the settlement of Caraballo v. United States, which was a class-action lawsuit in which employees in the nonforeign areas contested the methodology used by the Office of Personnel Management to determine COLA rates. However, on January 30, 2008, Judge Phillip M. Pro in the U.S. District Court in Honolulu ruled against the Federal employees in Matsuo v. the Office of Personnel Management, which held that excluding Alaska and Hawaii from locality pay did not violate the equal protection clause and substantive due process under the Fifth Amendment. Judge Pro acknowledged the disparity in his ruling saying that Congress ``discharged its legislative responsibilities imperfectly'' and recommended that Congress ``correct the incongruity made so evident by this case.''

While this issue has been discussed for years, a solution seemed out of reach given the lack of support for various proposed solutions. Last year, the Administration announced a legislative proposal to phase-out non-foreign COLA and phase-in locality pay. In May 2007 the Administration's draft bill was submitted. The draft bill would freeze nonforeign COLA rates at their current rates at their current rates and OPM would no longer conduct COLA surveys. Over the 7 years following the enactment of the proposal, locality pay would be phased in for General Schedule, GS, employees while nonforeign COLA is phased out. According to OPM, preliminary data indicates that the locality pay rate for Hawaii would be 20 percent. At the end of the 7 year period, if the locality pay rate is less than the amount of nonforeign COLA for a particular area, employees would continue to receive the difference in nonforeign COLA and locality pay until the locality rate reaches the COLA amount. Only at that time would employees no longer receive non-foreign COLA. However, the proposal did not address the impact such a change would have on postal employees, employees who receive special rates, members of the Senior Executive Service, and others who are in agency specific personnel systems or those who do not receive locality pay, such as employees under the National Security Personnel System at the Department of Defense.

Knowing of the growing interest in this proposal, I sent staff from my Federal Workforce Subcommittee to Hawaii last July to meet with employees and hear their questions and concerns about the Administration's proposal. Based on the questions and comments I have received, I submitted questions to OPM and other Federal agencies to obtain additional information. I also posted information on the Administration's proposal on my website, a link to a calculator created by OPM for Federal employees to determine exactly how their pay and retirement will be impacted by the proposal, and the agencies' response to my questions. Since then, I have received numerous letters and phone calls from constituents and Federal employees in the nonforeign areas about this issue. While there are still divergent views on this proposal, the vast majority of employees who I have heard from are supportive of a change to locality pay.

The legislation I introduce today is a collective effort of Senators Stevens, Inouye, Murkowski, and myself to find an equitable solution to a difficult and divided issue. The Non-Foreign Area Retirement Equity Assurance Act is not to be seen as the last word, only the latest step forward toward determining the best way to ensure retirement equity for Federal workers in the nonforeign areas. Our bill seeks to provide answers to the questions raised by the administration's proposal and to cover all employees. Most importantly, our bill seeks to protect employee's take home pay. During this current economic climate, we must be careful to do no harm.

Over the Memorial Day recess my subcommittee plans to hold a series of meetings in Hawaii on the Administration's proposal and this bill to hear remaining questions and concerns. I also plan to hold a hearing on these proposals in Honolulu on May 29, 2008. I continue to encourage employees in Alaska, Hawaii, and in the territories to write us with their questions and concerns on these proposals. My ultimate goal remains to ensure that Federal workers in the nonforeign areas are not disadvantaged when it comes to their pay and retirement.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

There being no objection, the text of the bill was ordered to be printed in the RECORD, as follows:

S. 3013

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