WASHINGTON, D.C. -- United States Senator Daniel K. Inouye announced that the Senate approved the extension of the Cost-of-Living Allowance (COLA) rates for Alaska, Hawaii, and the U.S. territories to the year 2000. The COLA rates help an estimated 17,000 federal employees in the State of Hawaii. The provision is included in the Fiscal Year 1998 Appropriations Bill for the Department of Treasury, Postal Service, and General Government Appropriations Bill.

"I am pleased that my colleagues in the Senate are sensitive to the additional needs of federal employees in Hawaii, Alaska, and the U.S. territories," stated Senator Inouye.

As a result of controversies and litigation surrounding the COLA program for federal employees in Alaska, Hawaii and U.S. territories outside the 48 contiguous states, the 1992 Treasury, Postal Service and General Government Appropriations Act directed the Office of Personnel Management (OPM) to conduct a study of the new methodology used to set COLAs, and while the study was underway, it barred any reduction of existing COLA rates.

In 1996, the Treasury, Postal Service and General Government Appropriations Act extended the deadlines both for the study and the expiration of the bar on COLA reductions to 1998. Because the study required more research and data, the Fiscal Year 1998 Appropriations Bill extends the deadlines to March 1, 2000.

The authority for the Hawaii COLA stems from Executive Order 10,000 signed by President Truman in 1948 to provide additional compensation for federal employees outside the continental United States. President Truman deemed such additional incentives necessary to ensure that qualified federal employees would accept positions in remote areas to perform necessary government functions. The criterion for this additional compensation was, and continues to be, that living costs are substantially higher than in the District of Columbia. While the Executive Order had been amended over time, its basic intent remains the same.

The provision will now face a joint House-Senate Conference and final Senate vote before its transmittal to the White House.