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WASHINGTON - A recent settlement over a cost-of-living dispute with the government means most of Alaska's federal workers won't get any back pay.
The settlement, however, does protect their current 25 percent tax-free bonus from any rapid erosion in the future. And it formally assigns a price to the hardships Alaska workers face due to their remote location.
Among those affected are approximately 850 non-uniformed federal workers in Juneau.
The settlement was approved Aug. 17 by a U.S. District Court judge in the Virgin Islands. The non-uniformed federal workers from Alaska, Hawaii, Guam, Puerto Rico and the Virgin Islands had been arguing with their employer for a decade about whether their cost-of-living adjustments were adequate.
The settlement provides the employees with $232 million, to be split in a yet-to-be-calculated manner. Alaska employees, however, won't get any of that money unless they worked in the territories because they have had a healthier cost-of-living adjustment.
The agreement will freeze the current, 25-percent untaxable adjustment for three years. During that time, the costs in Alaska will be studied to see if the adjustment is justified.
Even if that study finds the COLA to be too high, Alaska employees won't be hit immediately with any large cuts because the agreement limits reductions to 1 percent per year.
The agreement also orders the federal Office of Personnel Management to bump up Alaska pay to reflect availability of goods and services.
That additional pay will be 9 percent of the base pay. In Anchorage, it is set at 7 percent. The additional pay will be added to whatever is warranted based on Alaska's higher prices, the agreement states.
The Office of Personnel Management will collect prices for housing, goods and services once every three years in Alaska. In between those surveys, the agency will make annual adjustments tied to the Consumer Price Index for Anchorage.
The first study in Alaska is scheduled to begin in 2002.
Despite the 25 percent bonus, federal workers in Alaska have faced financial difficulties, said Pamela Finney, communications leader for the U.S. Forest Service in Juneau.
The bonus offset some price differences but didn't factor in shipping costs for locally unavailable items or transportation costs to obtain locally unavailable services, Finney said. Some things were entirely overlooked, such as car heaters for Fairbanks' extreme winters, she said. "There were numerous kinds of amenities we felt were not taken into account."
Thanks to U.S. Sen. Ted Stevens, an Alaska Republican who obtained the freeze on the cost-of-living adjustment pending the settlement, the Forest Service still was able to recruit and retain employees, Finney said. Otherwise, there would have been a question about some employees being able to make house payments, she said.
Finney said the 25 percent bonus does not count toward retirement. "I really don't want people to get the idea that this is this big windfall."
There are 250 permanent Forest Service employees in four offices in Juneau.
Empire staff writer Bill McAllister contributed to this article.