Civilian post allowance rates in Italy tied to survey results, not dollar’s decline

By KENT HARRIS | STARS AND STRIPES Published: February 12, 2008

If you’re a civilian living in the Naples, Italy, area and work for the U.S. government, your counterparts in the north have a message for you: Buy Italian!

Post allowance rates — the civilian equivalent of the military cost-of-living allowance — for people based in Vicenza, Aviano, and also Sigonella, Sicily, are tied to the Naples rate. So, unless Naples civilian employees indicate on government surveys that they do most of their shopping off base, the post allowance rate won’t be rising significantly any time soon.

“Everybody sees the decline in the dollar and you don’t see the change in the post allowance,” said Mark Fix, a teacher at Aviano High School.

That’s because the last living pattern survey — conducted in 2007 — indicated that civilians in Naples buy most of their goods on base. When that’s the case, changes in the exchange rate don’t have much of an impact. Those making most of their purchases on base are using dollars to buy products from American institutions, making the strength of the euro irrelevant.

Carl Paschall, director of the State Department’s Office of Allowances, said in a recent interview that post allowances are designed to give civilians who work for the U.S. government overseas the same purchasing power as someone working in Washington, D.C. The government does this mostly with the help of two surveys: a living pattern survey that determines where people shop and what they buy; and an annual retail price survey comparing specific items at those locations to the same goods in Washington.

In the years between reports — the next living pattern survey is planned for 2010 — there are other factors that can affect the post allowance rate, such as the exchange rate, according to Joyce McNeil, an allowance team supervisor in charge of Western Europe and much of Asia. But, McNeil said, swings in the exchange rate need to reach certain levels for civilians to notice a difference.

There are three reporting zones in Italy: Rome, Milan and Naples. The first two currently are listed with a 70 on the index meaning that a person living in those areas has a spendable income that is 70 percent higher than someone living in Washington.

The Naples index is 50.

The difference between those two indices is about $5,800 a year for an employee earning $50,000 annually with three dependents.

Several employees at Aviano, including Fix and fellow teacher Alan Scharff, have been wondering why Aviano is tied to Naples instead of Milan. Aviano and Vicenza are geographically much closer to Milan than Naples.

But McNeil and Paschall said that geography doesn’t trump buying habits. Vicenza, Aviano, Naples and Sigonella boast something that cities such as Rome, Milan and Florence do not: military commissaries and exchanges. Paschall said those facilities “have a big impact on the affordability of any location.”

That includes military communities in Germany, where the rates are also 50. The rate at the two largest U.S. bases in the United Kingdom is 35.

Just as in Italy, not all places where U.S. troops live conduct surveys.

Aviano and Vicenza haven’t been surveyed for at least a decade, McNeil said. Paschall said the command at any location is welcome to conduct a survey for its civilian work force, and the allowance office will then analyze the results.

But if Aviano were to decide to pursue that and the results showed either that prices were cheaper than in Naples or more people shopped on base than in Naples, the post allowance rate would go down.

That’s not a risk that Scharff said he’s willing to take in the current conditions.

“We could be shooting ourselves in the foot,” he said.

He and Fix both said they’ve been shopping more on base lately with the decline of the dollar and think that any survey conducted now would probably indicate most of their peers are as well.

As for their colleagues in Naples? The hope up north is that Italian stores down south are having lots of good sales.

For more information on post allowance, go to the State Department’s Web site.

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