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U.S. Department of State

Diplomacy in Action

 
Office of Allowances
Per Diem Rates
Allowance Rates
Standardized Regulations (DSSR)
General Information
Quarterly Report Indexes
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Answers to Frequently Asked Questions About
Post (Cost of Living) Allowance

General:
1. Q– What is a post allowance?
2. Q– Why are the overseas costs compared to Washington, D.C.?
3. Q– How do you calculate locality pay into the allowance?
Methodology:
4. Q– How do you determine the post allowance?
5. Q – Where do you get the cost of goods and services?
6. Q – What does the Retail Price Schedule do?
7. Q – Where do you get the living pattern information?
8. Q – What does the Living Pattern Questionnaire (LPQ) do?
9. Q – Why must employees of all agencies participate and be counted in the survey?
10. Q – What can we do if employees will not complete and return the questionnaire?
11. Q – Since it is more expensive for me to take a ski trip from my post than it was from Washington, D.C., how do I get reimbursed for the difference?
12. Q – Can you use the foreign country Consumer Price Index (CPI) to determine the appropriate allowance level instead of requiring the post to complete the voluminous retail price schedule?
13. Q – What is the source of exchange rate information used by the Office of Allowances in establishing and updating allowance rates?
Post Allowance Payment:
14. Q – Is the post allowance a percentage of our base salary?
15. Q – How do I calculate my post allowance payment?
16. Q – Is the allowance taxable?
Preparing the Retail Price Schedule Report:
17. Q - When is my report due?
18. Q – Can you give me some tips on preparing a quality report so my post can get the appropriate allowance?
19. Q – Can I ask a Locally Engaged Staff (LES) member or a foreign-born spouse or foreign-born domestic partner to collect and compile the price information?
20. Q – Why should we report local prices when the employees at post do not purchase them?
21. Q – Why do we have to complete the hotel and restaurant portion for the cost of living survey?
 

General 

1. Q – What is a post allowance?

A - It is a cost-of-living allowance under 5 U.S.C. 5924 intended to reimburse for goods and services more expensive than in Washington , D.C.  

2. Q – Why are the overseas costs compared to Washington, D.C.?

A – When Congress wrote the law pertaining to the post allowance, most of the civilians covered were individuals based in Washington when they were not living at a foreign post  The language in that law specifically indicates that any Post Allowance for civilians will be based on a comparison of costs at the foreign location and those in Washington, D.C.

3. Q – How do you calculate locality pay into the allowance?

A - Locality pay is not a cost of living allowance. It is a salary comparability benefit to attract workers in the continental US to the Federal Government versus private sector. When we compute the post (cost of living) allowance, we compare the prices of a market basket of goods in a foreign area to the prices of the same goods in Washington D.C. Locality pay has no effect on the price of goods either in Washington DC or in the foreign area.

Methodology 

4. Q – How do you determine the post allowance? 

A – An index is developed by comparing the cost of goods and services and living pattern information reported by the foreign posts to the cost of goods and services and living patterns in Washington , D.C.

5. Q – Where do you get the cost of goods and services?

A – The foreign post completes the Retail Price Schedule (Forms DS-2020,  and DS-2021). 

The Department of Labor's Bureau of Labor Statistics (BLS) is contracted by the Office of Allowances (A/OPR/ALS) to complete similar forms reporting on the cost of goods/services in the Washington , D.C. area.  BLS completes a Retail Price Schedule four times a year.

6. Q – What does the Retail Price Schedule do?

A - The Retail Price Schedule determines if USG personnel assigned to a foreign post qualify for a post (cost of living) allowance and the appropriate level by comparing local/Post costs to Washington costs. This survey is also used by the Department of Defense to determine the cost of living allowances for the uniformed service members. The indexes of living costs developed from the survey are published in a format so that the private sector may use them in determining the appropriate cost of living allowance for their overseas employees. 

7. Q – Where do you get the living pattern information?

A – For overseas locations, employees at the foreign post complete living pattern questionnaires every four years. For Washington , the Department of State's Office of Allowances develops consumer expenditure weights every 5 years from the Department of Labor's Bureau of Labor Statistics (BLS) consumer expenditure survey. 

8. Q – What does the Living Pattern Questionnaire (LPQ) do?

A - The LPQ survey determines the retail outlets and service providers frequented by the majority of employees at the foreign post. This includes information on where they shop for food, clothing and other items; source of medical and health care, auto repair, gasoline, and hair care outlets; restaurants used, entertainment, etc. It also proves the extent to which employees and family members use the local market compared to other sources. 

9. Q – Why must employees of all agencies participate and be counted in the survey?

A – The allowance is for all U.S. Government civilian employees assigned to the foreign area, so this ensures equity.  The Department of Defense (DOD) uses the same information to establish the COLA for the uniformed services members.

10. Q – What can we do if employees will not complete and return the questionnaire?

A – Post administration should make every effort to explain and put in force a plan to emphasize the importance of this survey and that it is a regulation required by the Office of the Inspector General (OIG) and enforced by the Department of State's Office of Allowances.  The OIG conducts periodic audits to ensure compliance. 

11. Q – Since it is more expensive for me to take a ski trip from my post than it was from Washington, D.C., how do I get reimbursed for the difference?

A – Recreational activities is one of the categories that make up the Cost of Living market basket. The average costs for a variety of recreational activities at the foreign post are compared with average costs in Washington, D.C. In addition, differences in the average costs for Vacation are measured by comparing the per diem rates of the locations near the overseas posts which are used for vacation to the per diem rate in Washington , DC .

12. Q – Can you use the foreign country Consumer Price Index (CPI) to determine the appropriate allowance level instead of requiring the post to complete the voluminous retail price schedule?

A - The foreign CPI is based on the local consumer living pattern and would not represent the spending patterns and products chosen by an American employee assigned to the foreign post. In addition CPI changes tend to reflect a number of expenditure categoreis such as housing and utilities that are not included in the post allowance because they are covered by other allowances. Thus, employees would not be appropriately compensated, especially in the under developed countries of the world. 

13. Q – What is the source of exchange rate information used by the Office of Allowances in establishing and updating allowance rates?

A – The Office of Allowances uses a variety of sources for exchange rates. If the majority of U.S.G. civilian employees at a locality have access to a Department of State-managed official accommodation exchange rate for currency exchange, we use information provided by the Department of State's Global Financial Services Center based in Charleston, South Carolina. These rates can change daily and represent the exchange rates at which the Department purchases foreign currency for official uses. In those countries where official accommodation exchange services are not available to the majority of USG civilian employees, we get data from other sources. For example, in euro countries, the majority of USG employees are affiliated with DOD and use the DOD Community Bank (Bank of America) (http://dodcommunitybank.com/) for personal exchange rate accommodation. For many locations where the Department of State does not offer official accommodation exchange, our diplomatic posts transmit information on a biweekly basis reporting exchange rates from the local banks most used by USG personnel.

Post Allowance Payment

14. Q – Is the post allowance a percentage of our base salary?

A – No. Post allowance is a percentage of spendable income. Spendable income is that portion of salary used to purchase the goods and services included in the cost of living market basket. The market basket includes food, household operations, home furnishings and equipment, apparel, transportation, health care, entertainment, personal care items, reading material, alcohol, tobacco, and miscellaneous goods & services.

15. Q – How do I calculate my post allowance payment?

A - The annual post allowance amounts are found in the six payment tables in DSSR 229.  To assist employees in calculating the amount they might receive on a biweekly basis, the Office of Allowances has created a 'COLA Calculator.'   

16. Q – Is the allowance taxable?

A – No. The post allowance is not taxable. 

Preparing the Retail Price Schedule Report

17. Q - When is my report due?

A – Click on Allowance Rates (Section 920); click on Select by Location; from the dropdown box select Country and click Go.  A list of locations within the country will appear.  Click on View Rates under the ‘Reporting Requirements’ column to see when your report is due.

18. Q – Can you give me some tips on preparing a quality report so my post can get the appropriate allowance?

A – The first and most important step is to review DSSR 074 to become familiar with the process.  The responsible officer must be completely familiar with the process in order to provide the necessary guidance to the price collectors and others involved in this important process. 

19. Q – Can I ask a Locally Employed Staff (LES) member or a foreign-born spouse or foreign-born domestic partner to collect and compile the price information?

A – The survey must accurately reflect foreign living costs for the average American family, and a LES member or foreign-born spouse or foreign-born domestic partner may not be familiar with the spending and buying patterns of the American family. This means that, in all likelihood, the survey results will seriously disadvantage the vast majority of post personnel. 

20. Q – Why should we report local prices when the employees at post do not purchase them? 

A – While all the items may not necessarily be used by U.S. Government employees at your post, each represents a broad class of goods and services important to Private Americans. The omission of any price quotation eliminates the type of expenditure it represents and thus makes a comparison with the Washington price more difficult and inaccurate. It also means data which is sought by other users (non-Governmental organizations, the U.S. Department of Defense cost-of-living allowances (COLA) for members of the Uniformed Services, and cost-of-living comparisons for American business firms and other organizations who maintain allowances for private Americans abroad, and contractors) will not be accurate. 

 

21. Q – Why do we have to complete the hotel and restaurant portion for the cost of living survey?

 A – Because these contribute to a portion of the Post Allowance -- the “away-from-home” meal costs. The cost of breakfast, lunch and dinner are obtained from the restaurant section and compared to similar type restaurants in Washington , D.C.