How does OPM establish COLA rates?
Primary source
Verbatim text below is from the Electronic Code of Federal Regulations (eCFR), a public-domain U.S. government work. Always verify the current version with the eCFR before relying on it for any legal matter.
Full Text
OPM establishes COLA rates based on price differences between the COLA area and the Washington, DC, area, plus an adjustment factor. OPM expresses price differences as indexes.
(a) OPM computes price indexes for various categories of consumer expenditures.
(b) OPM combines the price indexes using Consumer expenditure weights to produce an overall price index for the COLA area.
(c) To combine overall price indexes for COLA areas with multiple survey areas, OPM uses employment weights to combine overall price indexes by survey area for COLA areas. The COLA areas that have multiple survey areas are listed in § 591.215(b).
(d) OPM adds an adjustment factor to the overall price index for the COLA area.
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