COLAs, Raises Don

There apparently remains a misperception among federal employees and retirees that COLAs and pay raises are linked in some way, which sometimes is expressed as a belief that one acts as some type of floor for the other. In fact, the two are determined separately and one has no effect on the other. COLAs are for retirees and are set automatically according to an inflation index in which the average of one third quarter of a calendar year is compared to that of the next. Thus, the 2010 COLA decision will be announced in October when the September inflation number is released. Active employees get a pay raise—although many of them call it a COLA—that is set in the annual congressional appropriations process, where numerous political and budgetary factors are involved.