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SUPPS&E-6

ESTIMATES BY OBJECT CLASS

122

Personnel Benefits:

Other Obligations

Travel and Transportation of Persons

Transportation of Things

Communications, Utilities, and Other Rent

42

2 2 2 2 2 2 2

21

22

23

25

26

31

APR 2 0.3979

Other Services

...

Supplies and Materials

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11 Personnel Compensation:

Permanent Local Salaries
Miscellaneous Local Salaries

Allowances

Payments to Other Funds

Total Personnel Compensation and Benefits

Total Other Obligations.

Total Obligations.

$2,365,იიი

94,000

769,000
1.37,000

3,365,000

10,527,000

13,892,000

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To provide for payment to the Fund to finance the unfunded liability created by salary increases effective October 8, 1978 (E. 0. 12087)

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For an additional amount for "Payment to the Foreign Service retirement and disability fund", $3,462,000. A fiscal year 1979 supplemental appropriation of $3,462,000 is requested as a result of salary increases which went into effect on October 8, 1978 (E. 0. 12087). In addition to requesting its own needs, the Department of State is responsible for requesting funds to finance the International Communication Agency portion of payment to the Fund.

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PFRF-3

JUSTIFICATION

This supplemental appropriation request is authorized by Section 865(a)(3) of the Foreign Service Act of 1946, as amended which states that any new statute which authorizes increases in salaries on which benefits are computed is deemed to authorize appropriations to the Fund to finance the unfunded liability created by that statute in thirty equal installments (with interest) and with the first payment due as of the end of the fiscal year in which each change is effective.

44-119 0.79 - 2

The October 8, 1978 pay raise creates an estimated unfunded liability of $55,800,000 for State and ICA. Therefore, for fiscal year 1979, $3,462,000 is required to provide the first of 30 equal annual payments for salary increases effective in October 1978.

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Calculation of Annual Appropriation Authorized
By Section 865 (a)(3) of the Foreign Service Act for the

October 8, 1978 Pay Raise*

State and ICA

(in thousands of dollars)

Increase in present value of benefits payable from the
Fund, for both past and future service resulting from
the $12,236,000 payroll increase for participants in the
Foreign Service retirement system and employed by the
Department of State and ICA.

$76,400

Deduct present value of the estimated receipts for future service resulting from the $12,236,000 payroll increase...

-20,600

Estimated unfunded liability (increase in present value of benefits payable from the Fund for past service only) resulting from the $12,236,000 payroll increase...

55,800

Appropriation required each year for thirty years to equal a current investment of $55,800,000 at 5%
interest compounded annually: $3,462,000.

Note: An additional appropriation of $856,000 per year for thirty years is requested to amortize the $13,800,000 unfunded liability resulting from the $3,027,000 pay increase effective October 8, 1978 for Foreign Service employees in AID who are participants in the Foreign Service Retirement system.

* Calculation by Government Actuary, Treasury Department.

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