Appropriate Rate of Cost-of-Living Allowances

The Professional Air Traffic Controllers Organization (PATCO) and the Federal Aviation Administration (FAA) requested a decision on the appropriate rate at which FAA employees should be paid cost-of-living allowances (COLA) at Kalae, Molokai, Hawaii. The specific issue was whether FAA employees residing in Federal housing on Molokai may have their COLA computed under the local retail-private housing category, as PATCO argued, or whether it should be computed under the local retail-Federal housing category as FAA had been doing. PATCO argued that, while FAA employees on Molokai do occupy Federal housing, they do not come within the Federal housing category because they do not occupy Federal housing as a condition of their employment. The provisions of Executive Order No. 12070 states that the reduced allowance shall not apply to persons who are furnished quarters but who do not use them. Implicit in this, therefore, is the intent to reduce the allowance of those who have the option of using Federal housing privileges and who, in fact, do so. While sections of the Federal Personnel Manual (FPM) were at variance with the Executive Order, the implementing instructions are governed by the Executive Order. Further, FPM has been amended to correct possible discrepancies in interpretation. Accordingly, GAO held that FAA properly computed COLA for its employees.