Resumption of Biweekly

UNCLAS SECTION 01 OF 02 STATE 017300 SIPDIS, PASS TO ALL USAID MISSIONS E.O. 12958: N/A TAGS: ALOW AMGT APER AFIN SUBJECT: Resumption of Biweekly Adjustments of the Living Quarters Allowance (LQA) for Exchange Rate Fluctuations STATE 00017300 001.2 OF 002 RefS: (A) Section 920 Standardized Regulations (GC,FA; (B) 98 STATE 211944 ¶1. Summary: Effective February 28, 2010, the Office of Allowances will resume the biweekly exchange rate adjustments of the Living Quarters Allowance (LQA). The biweekly exchange rate adjustments were halted in January 1999 in response to requests to reduce agency and administrative workloads. Advances in electronic technology since then now permit the resumption of biweekly adjustments. Allowances has been working with the payroll offices and the interagency community to ensure a smooth resumption of the adjustments. ¶2. As explained in 98 State 211944 (Ref B),the decision to cease making biweekly exchange rate adjustments of the LQA rates was based on recommendations of a Working Group and a comparison between a stable annual LQA rate and the actual biweekly adjusted LQA rate for 27 posts. The comparison indicated that the average stable rate for a year was almost the same as the average annual biweekly adjusted rate. It was determined that eliminating the biweekly adjustments would not financially disadvantage employees and had the benefit of reducing agencies? adjustment/verification workload as well as reducing the workload required by posts and employees in the annual reconciliation process. While automatic biweekly adjustments were eliminated, ad hoc adjustments continued to be made for individual posts when the situation warranted it. ¶3. In 2005, in response to concerns expressed by a number of employees, the Office of Allowances initated an automatic quarterly exchange rate adjustment for all LQA locations. The adjustments were scheduled for the first pay period in February, May, August and November of each year to ensure that the exchange rate adjustments occurred frequently enough to eliminate any substantial out of pocket expenses for employees. ¶4. Since 2005, there has been a growing trend of more dramatic fluctuations in the U.S. dollar exchange rate against some foreign currencies, resulting in a number of issues for employees. While the quarterly adjustments did help resolve some of the issues, input from the field over the past year and a half indicates that a quarterly adjustment schedule does not keep up with costs when there is a steady or sudden drop in the U.S. dollar against the host country's currency. ¶5. Development of electronic tools over the past ten STATE 00017300 002.2 OF 002 SUBJECT: Resumption of Biweekly Adjustments of the Living Quarters Allowance (LQA) for Exchange Ra years allows for elimination of much of the workload associated with processing biweekly LQA adjustments which existed in 1999. The Office of Allowances is also working closely with several agency payroll offices to further minimize the workload impact of resuming biweekly adjustments. ¶6. Biweekly adjustments should provide more current and more accurate payments, but they will not eliminate the need to reconcile advances with actual allowable expenses. At times, under certain circumstances, some employees may still receive less than their current expenses, although adjustments on a biweekly rather than quarterly basis should reduce any differences. ¶7. If you have any questions concerning the LQA process, please contact the Office of Allowances at AllowancesO@state.gov. CLINTON