SUPP-
PFRF-2

DEPARTMENT OF STATE

PAYMENT TO THE FOREIGN SERVICE RETIREMENT AND DISABILITY FUND

For an additional amount for "Payment to the Foreign Service retirement and disability fund", $3,462,000.

SUPP-
PFRF-3

JUSTIFICATION

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.

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.

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.

44-119 O 79 - 2

State and ICA

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

* Calculation by Government Actuary, Treasury Department.