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B-157665, FEB. 1, 1968

B-157665 Feb 01, 1968
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IS AT LEAST 3 PERCENT GREATER THAN THE BASE INDEX FIGURE OF 114.1 FOR THE ADJUSTMENT OF MILITARY RETIRED PAY UNDER 10 U.S.C. 1401A (B). IS IN FACT ONLY 2.979 PERCENT GREATER THAN THE BASE INDEX FIGURE OF 114.1 APPLICABLE TO RETIRED MILITARY PERSONNEL. SECRETARY: FURTHER REFERENCE IS MADE TO LETTER OF DECEMBER 22. THE REQUEST WAS ASSIGNED COMMITTEE ACTION NO. 407 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE. THAT ADJUSTMENT WAS BASED ON THE CONSUMER PRICE INDEX FIGURE OF 114.1 AND THE QUESTION IS WHETHER THE INCREASE IN THE CONSUMER PRICE INDEX FROM 114.1 TO 117.5 CONSTITUTES "AN INCREASE OF AT LEAST 3 PERCENT OVER THE BASE INDEX" WITHIN THE MEANING OF 10 U.S.C. 1401A (B).

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B-157665, FEB. 1, 1968

ARMED SERVICES - RETIRED PAY - CPI ADJUSTMENT DECISION TO SECY. OF DEFENSE AS TO WHETHER THE CONSUMER PRICE INDEX FIGURE OF 117.5 FOR OCT. 1967, IS AT LEAST 3 PERCENT GREATER THAN THE BASE INDEX FIGURE OF 114.1 FOR THE ADJUSTMENT OF MILITARY RETIRED PAY UNDER 10 U.S.C. 1401A (B). SINCE THE CPI OF 117.5 FOR OCT. 1967, IS IN FACT ONLY 2.979 PERCENT GREATER THAN THE BASE INDEX FIGURE OF 114.1 APPLICABLE TO RETIRED MILITARY PERSONNEL, SUCH INDEX DOES NOT MEET THE STATUTORY REQUIREMENT OF AT LEAST 3 PERCENT OVER THE BASE INDEX AND THEREFORE THE ADVANCEMENT OF 3.4 POINTS FROM 114.1 TO 117.5 DOES NOT PROVIDE A BASIS FOR A DETERMINATION BY DOD THAT THERE HAS BEEN AN INCREASE OF AT LEAST 3 PERCENT FOR ADJUSTMENT OF RETIRED PAY.

TO MR. SECRETARY:

FURTHER REFERENCE IS MADE TO LETTER OF DECEMBER 22, 1967, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER), REQUESTING A DECISION WHETHER THE CONSUMER PRICE INDEX FIGURE OF 117.5, AS REPORTED BY THE BUREAU OF LABOR STATISTICS FOR THE MONTH OF OCTOBER 1967, MAY BE CONSTRUED AS BEING AT LEAST 3 PERCENT GREATER THAN THE BASE INDEX FIGURE OF 114.1 FOR THE PURPOSE OF ADJUSTMENT OF MILITARY RETIRED PAY UNDER THE PROVISIONS OF 10 U.S.C. 1401A (B). THE REQUEST WAS ASSIGNED COMMITTEE ACTION NO. 407 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

THE LAST ADJUSTMENT OF MILITARY RETIRED PAY, AN INCREASE OF 3.7 PERCENT, BECAME EFFECTIVE DECEMBER 1, 1966. THAT ADJUSTMENT WAS BASED ON THE CONSUMER PRICE INDEX FIGURE OF 114.1 AND THE QUESTION IS WHETHER THE INCREASE IN THE CONSUMER PRICE INDEX FROM 114.1 TO 117.5 CONSTITUTES "AN INCREASE OF AT LEAST 3 PERCENT OVER THE BASE INDEX" WITHIN THE MEANING OF 10 U.S.C. 1401A (B), IT BEING STATED "THAT A 3 PERCENT INCREASE OVER THE BASE INDEX OF 114.1 FIGURES OUT TO 117.523.'

SECTION 1401A WAS ADDED TO TITLE 10, U.S. CODE, BY SECTION 5 (G) OF PUBLIC LAW 88-132, OCTOBER 2, 1963, 77 STAT. 213, 214. SUBSECTION (B) OF SECTION 1401A PRESCRIBED A NEW METHOD FOR FUTURE ADJUSTMENTS OF RETIRED PAY OF MILITARY PERSONNEL. AT PAGE 18, HOUSE REPORT NO. 208, TO ACCOMPANY H.R. 5555, 88TH CONGRESS (WHICH BECAME PUBLIC LAW 88-132) IT WAS STATED:

"THE PROPOSED NEW SYSTEM IS ESSENTIALLY THE SAME AS THE SYSTEM PRESCRIBED BY THE CONGRESS IN THE FEDERAL SALARY REFORM ACT OF 1962 (SEE SECTION 1102 (B), PUBLIC LAW 87-793, OCTOBER 11, 1962, 76 STAT. 869, 870, ADDING TO THE CIVIL SERVICE RETIREMENT ACT A NEW SECTION 18, PROVIDING FOR COST-OF- LIVING ADJUSTMENT OF ANNUITIES, 5 U.S.C. 2268, SUPP. IV, 1958 ED.), FOR ADJUSTMENT OF ANNUITIES OF CIVIL SERVICE RETIREES. FUTURE ADJUSTMENTS OF RETIRED PAY FOR MEMBERS OF THE UNIFORMED SERVICES WOULD BE BASED ON INCREASES IN THE COST OF LIVING AS REFLECTED IN THE CONSUMER PRICE INDEX. WHENEVER THE INCREASE IS EQUAL TO OR GREATER THAN 3 PERCENT SINCE THE LAST ADJUSTMENT OF RETIREMENT PAY OR RETAINER PAY, THEN ALL RETIRED PAY RATES WOULD BE INCREASED BY THE SAME PERCENTAGE.'

THE PERTINENT PROVISIONS OF 5 U.S.C. 2268, ABOVE REFERRED TO, WERE AMENDED BY SECTION 1 (C), PUBLIC LAW 89-205, SEPTEMBER 27, 1965, 79 STAT. 840, TO READ AS FOLLOWS:

"/B) EACH MONTH AFTER THE FIRST INCREASE UNDER THIS SECTION, THE COMMISSION SHALL DETERMINE THE PERCENTUM CHANGE IN THE PRICE INDEX. EFFECTIVE THE FIRST DAY OF THE THIRD MONTH WHICH BEGINS AFTER THE PRICE INDEX SHALL HAVE EQUALED A RISE OF AT LEAST 3 PERCENTUM FOR THREE CONSECUTIVE MONTHS OVER THE PRICE INDEX FOR THE BASE MONTH, EACH ANNUITY PAYABLE FROM THE FUND WHICH HAS A COMMENCING DATE NOT LATER THAN SUCH EFFECTIVE DATE SHALL BE INCREASED BY THE PERCENTUM RISE IN THE PRICE INDEX (CALCULATED ON THE HIGHEST LEVEL OF THE PRICE INDEX DURING THE THREE CONSECUTIVE MONTHS) ADJUSTED TO THE NEAREST ONE-TENTH OF 1 PERCENTUM.'

SUBSECTION (B) OF SECTION 1401A, TITLE 10, U.S. CODE, AS AMENDED BY SECTION 2 (A) (1), PUBLIC LAW 90-207, DECEMBER 16, 1967, 81 STAT. 652,EFFECTIVE OCTOBER 1, 1967, PROVIDES:

"/B) THE SECRETARY OF DEFENSE SHALL DETERMINE MONTHLY THE PERCENT BY WHICH THE INDEX HAS INCREASED OVER THAT USED AS THE BASIS (BASE INDEX) FOR THE MOST RECENT ADJUSTMENT OF RETIRED PAY AND RETAINER PAY UNDER THIS SUBSECTION. IF THE SECRETARY DETERMINES THAT, FOR THREE CONSECUTIVE MONTHS, THE AMOUNT OF THE INCREASE IS AT LEAST 3 PERCENT OVER THE BASE INDEX, THE RETIRED PAY AND RETAINER PAY OF MEMBERS AND FORMER MEMBERS OF THE ARMED FORCES WHO BECAME ENTITLED TO THAT PAY BEFORE THE FIRST DAY OF THE THIRD CALENDAR MONTH BEGINNING AFTER THE END OF THOSE THREE MONTHS SHALL, EXCEPT AS PROVIDED IN SUBSECTION (C), BE INCREASED, EFFECTIVE ON THAT DAY, BY THE HIGHEST PERCENT OF INCREASE IN THE INDEX DURING THOSE MONTHS, ADJUSTED TO THE NEAREST ONE TENTH OF 1 PERCENT.'

UNDER THE ABOVE-QUOTED STATUTORY PROVISIONS, COST OF LIVING INCREASES IN CIVIL SERVICE ANNUITIES AND IN MILITARY RETIRED PAY ARE AUTHORIZED ONLY WHEN THERE HAS BEEN AN INCREASE OF AT LEAST 3 PERCENT OVER THE BASE INDEX FOR THREE CONSECUTIVE CALENDAR MONTHS.

CURRENT INSTRUCTIONS GOVERNING COST OF LIVING INCREASES FOR CIVIL SERVICE ANNUITANTS APPEAR IN CIVIL SERVICE PAMPHLET BRI 49-296, JANUARY 1967. PAGE 1 OF THE PAMPHLET IT IS STATED THAT CIVIL SERVICE ANNUITIES ARE AUTOMATICALLY INCREASED WHENEVER THE COST OF LIVING, NATIONWIDE, GOES UP "AS MUCH AS 3 PERCENT AND STAYS UP FOR 3 MONTHS IN A ROW. SUCH ANNUITY INCREASES EQUAL THE PERCENTAGE RISE IN THE COST OF LIVING, ROUNDED TO THE NEAREST ONE-TENTH OF ONE PERCENT.' THE MOST RECENT COST OF LIVING INCREASE FOR CIVIL SERVICE RETIREES BECAME EFFECTIVE JANUARY 1, 1967, BASED ON THE OCTOBER 1966 CONSUMER PRICE INDEX FIGURE OF 114.5. THE PREFACE TO TABLE 2 ON PAGE 3 OF THE CIVIL SERVICE PAMPHLET STATES:

"THE PRESENT BASE MONTH IS OCTOBER 1966. SINCE THE INDEX FOR THAT MONTH WAS 114.5, THE INDEX MUST RISE TO 118.0 (OR MORE) FOR 3 MONTHS IN A ROW TO TRIGGER ANOTHER INCREASE. TABLE 2 SHOWS BY WHAT PERCENT VARIOUS INDEX READINGS WOULD INCREASE YOUR ANNUITY.'

THE VARIOUS INDEX READINGS AS SET FORTH IN TABLE 2 SHOW THE CORRESPONDING PERCENTAGE INCREASES OVER THE OCTOBER 1966 INDEX OF 114.5 IN PERTINENT PART AS FOLLOWS:

IF CONSUMER PRICE ANNUITY WILL BE

INDEX IS--- INCREASED BY---

117.9 OR LOWER 0**

118.0 3.1 PERCENT*

118.1 3.1 PERCENT*

118.2 3.2 PERCENT*

**BECAUSE PERCENTAGE INCREASE IN COST OF LIVING WOULD BE LESS THAN 3 PERCENT.

*THESE ARE THE SAME BECAUSE OF ROUNDING TO THE NEAREST ONE-TENTH OF ONE PERCENT.

THE SIMILAR CONGRESSIONAL INTENT AS TO THE PURPOSE OF THE STATUTORY PROVISIONS PRESCRIBING COST OF LIVING INCREASES FOR CIVIL SERVICE RETIREES AND RETIRED MILITARY PERSONNEL IS SHOWN IN THE LEGISLATIVE COMMENT PREVIOUSLY QUOTED AND THE SIMILARITY IN THE LANGUAGE OF THE STATUTES IS READILY APPARENT. IN THE CASE OF CIVILIAN ANNUITIES A CONSUMER PRICE INDEX FIGURE OF 117.9, THAT IS, AN INCREASE OF 3.4 IN THE CONSUMER PRICE INDEX POINTS IS NOT CONSIDERED AND APPLIED AS AN INCREASE OF "AT LEAST 3 PERCENTUM" OVER THE CIVILIAN CONSUMER PRICE INDEX BASE FIGURE OF 114.5 SINCE THE LATTER FIGURE INCREASED BY 3 PERCENT WOULD AMOUNT TO 117.935. WE PERCEIVE NO REASON WHY STATUTES SO SIMILARLY PHRASED AND HAVING THE SAME OBJECTIVE SHOULD NOT BE CONSTRUED IN THE SAME MANNER.

THE CONSUMER PRICE INDEX FIGURE OF 117.5 FOR OCTOBER 1967 IS IN FACT ONLY 2.979 PERCENT GREATER THAN THE BASE INDEX FIGURE OF 114.1 APPLICABLE TO RETIRED MILITARY PERSONNEL. IT IS OUR VIEW, THEREFORE, THAT THE OCTOBER 1967 CONSUMER PRICE INDEX OF 117.5 DOES NOT MEET THE PERTINENT STATUTORY REQUIREMENT OF AN "INCREASE OF AT LEAST 3 PERCENT OVER THE BASE INDEX" AND THAT THE ADVANCEMENT OF 3.4 POINTS IN THE CONSUMER PRICE INDEX FROM 114.1 TO 117.5 DOES NOT PROVIDE A PROPER BASIS FOR A DETERMINATION BY THE SECRETARY OF DEFENSE THAT THERE HAS BEEN AN INCREASE OF AT LEAST 3 PERCENT IN THE BASE INDEX WITHIN THE WITHIN THE MEANING OF 10 U.S.C. 1041A (B). THE QUESTION IS ANSWERED ACCORDINGLY.

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