By Mar-Vic Cagurangan
Variety News Staff

EMPLOYEES of the federal government on Guam would lose their retirement benefits under President Bush’s proposal for the gradual phase out of the cost of living allowances for federal employees and their eventual conversion to locality pay.
The draft language, which has been included in the 2008 budget proposal, would give locality pay to employees in COLA areas and reduce COLA by a percentage to keep employees’ take home pay relatively constant.  
Manny Cruz, president of the COLA Defense Committee of Guam, said the panel will meet to ensure that hundreds of federal workers on Guam and the CNMI are included in Hawaii Sen. Daniel Akaka’s bill that seeks parity for federal workers in his state.
“The legislation that Sen. Akaka is proposing only included Hawaii and Alaska. He did not include Puerto Rico, Guam and the U.S. Virgin Islands, even though they are all part of the COLA program,” Cruz said.
Since 1948, federal employees in non-contiguous areas of the U.S., including Hawaii, Alaska, Guam, the CNMI, Puerto Rico, and the Virgin Islands, had been receiving a nontaxable allowance called non-foreign COLA to ensure that employees in high cost areas receive pay comparable to that of their U.S. mainland counterparts. 
In 1990, the Federal Employees Pay Comparability Act included provisions for what is termed locality pay which is paid to federal employees in the contiguous U.S.
Unlike COLA, locality pay is taxed and considered part of base pay, which is used to calculate an employee’s retirement annuity.  U.S. Postal Service employees receive COLA only if employed by the Postal Service in the non-contiguous areas.  However, postal employees in these areas do not receive locality pay.
“The locality pay issue is a very complicated issue. Why the U.S. Congress did not include the COLA areas when the locality pay legislation was enacted back in 1991 had been an ongoing issue with the COLA Team, even though we knew that the COLA payments in the COLA areas had a lot to do with it,” Cruz said.
“Nevertheless, it had always been raised as a pay equity issue. The federal employees in the COLA areas deserved the same treatment as any federal employee in the U.S. mainland when it comes to pay compensation,” he added.
In a press statement issued Tuesday, Akaka said his goal “is to ensure that federal workers in Hawaii and the other non-contiguous regions are not disadvantaged when it comes to their retirement.”
“Over the years, legitimate concerns have been raised regarding the differences between the pay and retirement benefits of general schedule employees in COLA areas and their counterparts in the contiguous United States.  Although COLA payments are not subject to federal tax, the allowance does not go toward base pay and retirement as with locality payments given to general schedule workers on the mainland,” he added.
 He said the introduction of locality pay in 1990 has put Hawaii federal workers at a disadvantage. “Since that time, these affected employees have continued to differ on how to protect their annuities,” Akaka said.