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COLA Dispute Settled: U.S. Government To Pay $232 Million Federal government employees who have complained their Cost-Of-Living Adjustments (COLAs) are not fairly calculated will receive a total of $232.5 million to settle the dispute. As many as 70,000 current and former federal employees will receive an average of more than $3,300 each to retroactively increase their COLAs. All of the workers covered by the settlement worked outside the continental United States in Alaska, Hawaii, Puerto Rico, the Virgin Islands, and Guam. The federal workers charged that the COLA rates did not take into account such factors as the environment, locations, and increased travel costs which affect employees outside the continental United States. The settlement ends nearly two decades of litigation. Under the deal, the government and its workers agreed to use a new formula to calculate future COLAs for workers outside the 48 states and the workers waived any further claims. The government will calculate the COLA based on the Consumer Price Index (CPI) then add from five to nine percentage points for "non-price" factors. These factors can include such considerations as limited access to health care. Editor's note: TREA Senior Citizens League, seniors, and some Members of Congress contend that like the federal workers who live outside the continental United States, seniors also have costs that are not fairly reflected in their annual COLAs. TSCL supports legislation which would determine COLAs by using the Consumer Price Index For Elderly Consumers (CPI-E). The CPI-E gives greater weight to health care and prescription drug expenses, thus more fairly reflecting senior costs. Source: "U.S. Government Pays $230 Million To Settle Cost-Of-Living Dispute," CNN, June 23, 2000. "Proposed Settlement Stretches COLA Rules For Remote Regions," Stephen Barr, The Washington Post, June 26, 2000. This article first appeared in Volume 5, Issue 10 of "The Social Security and Medicare Advisor" newsletter (October/2000). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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