CONTENTS Bartlett, Hon. E. L., U.S. Senator from Alaska.. Brady, John G., chairman of the Legislative Committee of the National Association of Internal Revenue Employees... Burns, Hon. John A., Governor of Hawaii__ De Gracia, Hon. Herminio Concepcion, president of the Recreation Farbstein, Hon. Leonard, U.S. Representative from New York....... Fernós-Isern, Hon. A., Resident Commissioner of Puerto Rico.. Fong, Hon. Hiram L., U.S. Senator from the State of Hawaii_ Gilbert, Hon. Jacob H., U.S. Representative from New York. Gill, Hon. Thomas P., Ú.S. Representative from the State of Hawaii__ Grigsby, Fred S., St. Thomas, V.I... Gruening, Hon. Ernest, U.S. Senator from the State of Alaska- Hughes, Phillip S., Assistant Director for Legislative Reference, Bureau of the Budget; accompanied by David McAfee, management 153 153 38 -120, 150 141 Jaspan, Daniel, legislative representative, National Association of Inouye, Hon. Daniel K., U.S. Senator from Hawaii. Kabachus, John C., secretary-treasurer, International Association McAvoy, Harold, national president of the Post Office Mail Handlers, McCart, John, operations director, Government Employes' Council, MacKay, John, president, National Postal Union; accompanied by Macy, Hon. John W., Jr., Chairman, Civil Service Commission _ _ _ Matsunaga, Hon. Spark M., U.S. Representative from the State of Meagher, George, legislative representative, American Federation of Government Employees; accompanied by William Voss, director Moron, Alonzo G., president, Virgin Islands Federal Employees Murphy, John J., president, National Customs Service Association-- O'Connor, John, legislative representative, United Federation of Ortiz, Ramiro E., president, Council of Federal Employees of Puerto Owen, Vaux, president, National Federation of Federal Employees... Rademacher, James, vice president, National Association of Letter Riley, George D., legislative representative, International Association TERMINATING COST-OF-LIVING ALLOWANCES WEDNESDAY, FEBRUARY 26, 1964 HOUSE OF REPRESENTATIVES, COMMITTEE ON POST OFFICE AND CIVIL SERVICE, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., room 215, Cannon House Office Building, Hon. Morris K. Udall of Arizona (chairman of the subcommittee) presiding. Mr. UDALL. The subcommittee will come to order to undertake the business as scheduled this morning. This subcommittee, which is composed of Mr. Watson from South Carolina, Mr. Wilson of California, Mr. Gross of Iowa, Mr. Barry of New York, and myself as chairman, was appointed to consider H.R. 7401, introduced by Chairman Murray, providing for the termination of the cost-of-living allowances for statutory-salaried Federal civilian employees in nonforeign areas. (The bill H.R. 7401 and the official recommendation from the Civil Service Commission follows:) [H.R. 7401, 88th Cong., 1st sess.] A BILL To terminate cost-of-living allowances for statutory-salaried Federal civilian employees in nonforeign areas, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 207 of the Independent Offices Appropriation Act, 1949, as amended (62 Stat. 194; 62 Stat. 1205; 5 U.S.C. 118h), is further amended by (1) striking out the words "living costs substantially higher than in the District of Columbia, or" and the words ", or both such factors", and (2) striking out the second proviso which reads "Provided further, That no additional compensation based on living costs substantially higher than in the District of Columbia shall be paid under this section to any person who is entitled to receive a cost-of-living allowance under section 901(2) of the Foreign Service Act of 1946 or section 204 of this Act :". SEC. 2. The payment of additional compensation received as a cost-of-living allowance by an employee immediately prior to the effective date of this Act under section 207 of the Independent Offices Appropriation Act, 1949, as amended, shall be terminated within a period of not to exceed six years following the effective date of this section and shall be reduced within that period at such times, at such locations, and by such amounts or methods as may be prescribed by regulations issued by the President or by such agency or agencies as he may designate. SEC. 3. Section 504 of the Federal Salary Reform Act of 1962 (76 Stat. 842; 5 U.S.C. 1173) is amended by— (1) changing the proviso in subsection (a) to read as follows: Provided, That in no case, except in Alaska, shall any minimum salary rate so established exceed the seventh salary rate prescribed by law for the grade or level.", and (2) adding at the end of such section a new subsection to read as follows: "(d) Notwithstanding other provisions of law, the President or such agency or agencies as he may designate may, by regulation, prescribe the rate of basic compensation to be received by an employee who is transferred, reassigned, demoted, or promoted to or from a position to which increased rates authorized by this section apply." SEC. 4. Section 1009 of the Federal Salary Reform Act of 1962 (76 Stat. 868; 5 U.S.C. 1113, note) is amended to read as follows: "Except as provided in section 1005, and except in Alaska, no rate of compensation which exceeds $20,000 per annum shall be increased or established by or pursuant to this Act and no increase made by or pursuant to this Act shall cause any rate of compensation to exceed $20,000 per annum." SEC. 5. The foregoing provisions of this Act shall become effective on the first day of the first pay period beginning on or after January 1, 1964. Hon. JOHN W. MCCORMACK, Speaker of the House of Representatives. U.S. CIVIL SERVICE COMMISSON, DEAR MR. SPEAKER: We are submitting with this letter for the consideration of the Congress proposed legislation to terminate cost-of-living allowances for statutory-salaried Federal civilian employees in nonforeign areas. There are enclosed a draft bill, section analysis of the draft bill, and a statement of purpose and justification. This proposed legislation is intended to place Federal employees in Alaska, Hawaii, Puerto Rico, and the Virgin Islands on the same footing as employees in other parts of the United States with respect to compensation under statutory salary systems. The Federal Salary Reform Act of 1962 established comparability with private enterprise salary levels as the standard for determining Federal salaries for employees paid under the Classification Act, for employees in the postal field service, and for employees paid under other statutory systems. That law also provided authority to establish rates higher than those appearing in the statutory schedules when the Government is significantly handicapped in recruiting and retaining well-qualified persons due to substantially higher salary rates in private enterprise. In Alaska, Hawaii, Puerto Rico, and the Virgin Islands statutory-salaried Federal employees are receiving additional compensation on the basis of living costs under authority of section 207 of the Independent Offices Appropriation Act 1949, as amended. This method of compensation is inconsistent with the newly established principles governing Federal salary determination and is unnecessary since, where warranted by the level of private enterprise salaries, increased minimum rates and rate ranges can now be authorized under the Federal Salary Reform Act. The continuation of the cost-of-living allowances in nonforeign areas is illogical. It is unfair to employees in other parts of the country where living costs may be higher than in Washington, D.C., but where no authority exists to pay additional compensation for that reason. We urge enactment of this proposed legislation in order that the pay principles of the Federal Salary Reform Act may be properly applied in the areas where the allowances are now paid. Surveys are currently being conducted to determine levels of private enterprise salaries in Alaska, Hawaii, and Puerto Rico. To the extent warranted by the findings, increased rates will be authorized coincident with the effective date of this legislation. The bill includes a provision to permit the phasing out of the allowance over a period of not to exceed 6 years. We believe that even where increased base rates are not warranted, the allowances can be terminated through a series of small reductions so that, with very few exceptions, no employee will receive less gross compensation than he is now getting, provided that statutory adjustments are made annually to reflect Bureau of Labor Statistics findings on national averages of private enterprise salaries. The Bureau of the Budget advises that enactment of the recommended bill will be consistent with the administration's objectives. A similar letter is being sent to the President of the Senate. By direction of the Commission: Sincerely yours, Enclosures (3). (Signed) JOHN W. MACY, Jr. Chairman. |